10-1 chapter 10 balancing portfolios © david o’sullivan
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10-1
Chapter 10
Balancing Portfolios
© David O’Sullivan
10-2
Reflections Explain new product development. What are the main sources of funding for
new product development? List the ways in which new product
innovations can be protected. What are the key features of a market
launch plan? What is the commercialization of new
products? What are the main traits of an
entrepreneur?
10-3
Activities
[Discussion of selected student ‘Activities’ from previous chapter]
10-4
Learning Targets Explain the main ideas behind project portfolio
management Describe four key strategies used in portfolio
management Name a number of tools that can be used for portfolio
management Explain the use of bubble diagrams as a means of
evaluating portfolios Understand the difference between the portfolio
dominant and project dominant approaches Discuss why organizations often have a mix of low-
risk and high-risk projects
10-5
Portfolio Approaches Portfolio management is about
continuously choosing, managing, and adapting the mix of projects to match resource availability and contribute to organizational goals
Key approaches include: Maximizing the value of a portfolio Creating the right mix of projects Maximizing alignment with goals Optimizing resources
Portfolio and Project Management
Portfolio Management
Project Management
TeamsIndividualsTeamsSkillsLearningReview
GoalsStatementsRequirementsStrategiesMeasures
ResultsStatus ScorecardTrends
InnovationsStimuliCreationsProblemsIdeas
ProjectsSpecificationRankingSchedulesDeployment
10-7
Maximising Value
10-8
Creating the Right Mix
10-9
Right Mix > Quadrants
Pearls- Low risk and high reward projects.
Oysters Risky projects with potential of high reward
Bread and Butter Often small, simple projects – high likelihood of
success, but low reward. White Elephants
Low probability and low reward projects. One third of all projects and about 25% of spending are White Elephant.
10-10
Right Mix > Types of Bubble Diagrams
Risk Vs. Reward Technical Newness Vs. Market Newness Ease Vs. Attractiveness Strength Vs. Attractiveness Cost Vs. Timing Strategy Vs. Benefit Cost Vs. Benefit Etc. etc.
10-11
Right Mix > Examples
Risk
Reward
High
High
Low
Low
Uncertainties
Risk-Reward
10-12
10-13
Actions“Expenditure of your effort”(what are your major current and planned activities?)
Goals“Objective of your effort”(what do you want to achieve in the future?)
Results
Relationship
Results“Outcome of your effort”
(what is the current status of your ‘goals’ and ‘actions’)
(which goals have no actions? which actions have no goals?)
10-14
Scope Matrix
10-15
Maximizing Alignment With Goals
10-16
Optimizing Resources
Optimizing resources is the process of balancing the
Funding Worker hours Skill
requirements of the project portfolio with the resources available over a period of time
10-17
Portfolio Resource Loading
10-18
Portfolio Budgeting Budgeting is an important mechanism
for controlling and reviewing the progress of an innovation plan
Allocated budget will determine the overall investment in terms of resources and commitment
Common budgeting methods Top-down budgeting Bottom-up budgeting
10-19
Balancing the Portfolio Maximizing contribution based solely on
financial methods can lead to short-term, low-risk projects.
A solely strategically aligned portfolio, may not yield any short-term benefits necessary to maintain momentum.
Too rigid pursuit of the screening process can result in behavior such as: Abandoning the more radical of proposed
innovations Focusing too heavily on a particular technology Concentrating too much on existing markets
10-20
Dominant Assessment Approaches
Gates dominant Focus on reviewing each stage gate within the
individual projects in the portfolio Suitable where portfolios are static
Portfolio dominant Favors a portfolio view over an in-depth review
of individual projects Suitable in fast, dynamic organizations where
projects are changing regularly and where the business environment is fluid
10-21
Classification of Projects
10-22
Summary Explain the main ideas behind project portfolio
management Describe four key strategies used in portfolio
management Name a number of tools that can be used for portfolio
management Explain the use of bubble diagrams as a means of
evaluating portfolios Understand the difference between the portfolio
dominant and project dominant approaches Discuss why organizations often have a mix of low-
risk and high-risk projects
10-23
Activities
10-24
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