Project portfolio management – what, why & how with Stephen Jenner
Key takeaways
Learn how to optimise your strategic investment in projects and programmes.
- Project portfolio management ensures you do the right projects, do them right, and at the right time.
- Seven key techniques represent the difference between strategic success and wasted investment.
- Understanding portfolio management helps prove ROI and strategic value of your projects.
- Practical approaches to project prioritisation and benefit realisation you can apply immediately.
- Expert insights from an internationally recognised authority on portfolio and benefits management.
Introduction
Are you confident your organisation is investing in the right projects at the right time? This webinar explores how project portfolio management optimises the strategic impact of your investment in projects and programmes.
Stephen Jenner shares seven key techniques that represent the difference between strategic success and wasted resources. You’ll learn practical approaches to project selection, implementation, and timing that deliver real results.
Video
Access the presentation, audio version, or read the full transcript.
About the speaker
Stephen Jenner is author and Chief Examiner for APMG’s ‘Managing Benefits’ and ‘Managing Portfolios’. He is also co-author of ‘Management of Portfolios’. Stephen has authored multiple books on project portfolio management and benefits realisation. His Portfolio Management approach gained international recognition from the OECD and European Commission and won the Civil Service Financial Management Award.
Stephen is a regular keynote speaker at international conferences. He advises organisations worldwide on portfolio and benefits management. He is a Fellow of the Chartered Institute of Management Accountants with an MBA and Master’s degree from Cambridge University.
Transcript
Here’s the full transcript of the webinar.
00:00:00 Sevcan Valiyeva : Hello, everyone, and welcome to another session of our webinar. Today, we have Steve with us. Steve, thank you so much for joining. So, for a few minutes while people enter, we do have two very simple questions for you. Just while people wait, just to know if you can answer those, that would be fantastic. Again, as usual, feel free to introduce yourself and where you come from in the chat.
00:00:53 Sevcan Valiyeva : The first question is quite interesting. We’ve got developing in the lead, followed with basic and then advanced.
00:01:13 Stephen Jenner : I mean, in a way, it’s a trick question because we should all be developing. That’s the continuous learning.
00:01:26 Sevcan Valiyeva : The second question, one person selected other. If you don’t mind, it will be interesting to actually write in the comments which one actually describes your work experience.
00:01:37 Stephen Jenner : Yeah.
00:01:39 Sevcan Valiyeva : It’s Kevin, that’s absolutely fine. The session will be recorded, and you will receive the recording and other marketing materials alongside it via e-mail.
00:01:52 Stephen Jenner : Cool.
00:01:55 Sevcan Valiyeva : Yeah. Okay, let’s just end the poll.
00:02:03 Sevcan Valiyeva : Share all results. It’s a few minutes, seconds. Well, you know, if you want to look at the results and then we can head over to Steve.
00:02:12 Stephen Jenner : I suppose one thing, one point I’d make about the Project Programme Portfolio question is that too often there is this usually unspoken, thank God, no one feels brave enough to express it, but there is this unspoken assumption that somehow projects are for beginners. And once you get good at project delivery, then you’re going to swap to programme delivery. And then if you get really good at programmes, you could actually be go towards the portfolio or the portfolio is more complex than project approach, absolute rubbish. Different disciplines, people can come at portfolio management from a project management background, a programme management background, and even from a sort of financial strategic background.
00:03:02 Stephen Jenner : So, I think that’s one of the things that makes portfolio management interesting. It’s a combination of, you know, looking at things from a strategic perspective from a financial perspective, but also from the project and programme delivery perspective. It’s a combination; it doesn’t mean that portfolio people have bigger brains than project people.
00:03:26 Sevcan Valiyeva : I can’t hear anything. I don’t know if it’s me or if it’s Steve, but if anyone else can’t hear it, can you just let us know? We’ll try and figure out what’s going on.
00:03:40 Stephen Jenner : Yeah, sure. Well, if people can’t hear me, then we have a problem. Hopefully, can someone put in the chat whether you can hear me or not? In the meantime, up, lovely.
00:03:50 Stephen Jenner : Emma can hear me. So, Emma, it’s you, and me, and Paul and Mark, great and Michael.
00:03:58 Stephen Jenner : Yeah, Hi, everyone. I’m Steve Jenner, among other things, co-author of Management of Portfolios, which was the guide the OGC published, produced around about 2011. I was the chief examiner for the APMG for that qualification. And more recently, a lot of experience in portfolio management and benefits management and managing benefits for APMG, that kind of thing, portfolio benefits. And then about a couple of years ago, was invited to write an updated version of an updated portfolio management guide, which is managing portfolios. And so, what I’ll talk to you today is obviously the frameworks from managing portfolios because things have moved on. MOP, management of portfolios, I think was pretty good for its time and we had lots of good feedback, but things have moved on both from a professional perspective, but also from the way that we assess exams. So, we produced a new streamlined, more simplified exam process for the APMG. But anyway, so here today I’m really talking about portfolio management more generally. As I say, why is it important? What is it? Why is it important? What is it about? What’s the problem it’s trying to solve? Because that’s a, I think, a start point in all project programme portfolio work of every project. So why? What’s the problem it’s trying to solve? So, I think it’s important to kind of unpick that. And then just some six or seven insights about the main aspects, the main ways that we apply portfolio management.
00:05:51 Stephen Jenner : So, we’re going to use the bell for the advancing of the slides. It’s one of those weeks where the technology is, Anyway, what is portfolio management? Well, to kind of sum it up on the quote from the PMI on the left-hand side, it’s about two things. It’s about choosing which projects and programmes should we invest in. So, it’s the investment management question or practice. It’s therefore about finance, but it’s also about psychology. Because of the way we make decisions, it’s a mixture of science and art. Management judgment needs to be applied and beyond that, the choosing is about then executing those projects and programmes to realise benefits and optimise value.
00:06:47 Stephen Jenner : Now, two points on that. Secondly, to the last point. The fundamental purpose is about optimising value. So, it’s about executing projects to realise value. That’s fundamental and you can see at the center of the diagram on the right-hand side, the model for managing portfolios, and it’s the subtitle of the book. It’s about optimising strategic, I say optimise strategic contribution, that’s what the objective is. And when it says execute, it doesn’t mean suddenly all the project and programme managers are reporting to me because I’m the portfolio guy. What it means is the project manager is still responsible for delivery; the sponsor or the project executive are still accountable for successful delivery. But who are they accountable to? They are accountable to the portfolio. And it’s the portfolio’s job to ensure that we address any barriers to delivery.
00:07:56 Stephen Jenner : We make it easier for projects and programmes to deliver because as we will see, one of the problems, one of the issues, one of the root causes behind project and programme failure or say less than optimum performance, one of the root causes is doesn’t lie within the control of the project, it lies outside. And so, it’s the portfolio’s job to identify those barriers and address them effectively. So, we see that in this model on the right-hand side, when we wrote MOP originally, it was portfolio definition and portfolio delivery. Craig and I who wrote MOP and Craig assisted with managing portfolios; we call it portfolio design. Designing the portfolio, which is fundamentally a part about structuring the portfolio, but then deciding this issue about prioritising. How do we prioritise our projects and pros? Which ones are the most important? Which collection of projects represents the best use of limited resources? So, it’s about doing the right things and on the other side, it’s about portfolio delivery. And I was doing the projects right and so, we have these 12 practices to ensure we do the right things, and the right things refers to optimum strategic contribution, and the doing things right, they actually deliver, on time to a budget, and we have actually deliver the impact that was originally intended. So, we achieve the objectives or the outcomes that were designed.
00:09:39 Stephen Jenner : But beyond that, and this is something that we kind of missed in MOP, but we’ve picked it up in managing portfolios, is not just about doing the right things and doing them right, it’s also about doing them at the right time. And I’ll come to that in a little while; it’s really fundamentally important. Yes, you need to prioritise your portfolio, but you also need to decide in which order should they be done and it’s of fundamental importance. I think it’s a major, one of the major gaps in MOP in hindsight that we didn’t address that. But as I say, it’s addressed in managing portfolios. So, oh, I just touched on one other thing. In this model, you’ll see the very centre is the purpose is to optimise strategic contribution. We have portfolio design, so we scope and structure the portfolio, decide what the objectives are. We prioritise our current and then we optimise, so we seek to ensure that we’ve got appropriate coverage of different objectives. And then we produce a plan with delivery, management oversight, benefits management, financial management, risk management, resource management and stakeholder management. But you’ll see those six in the dark pink and the dark blue, those we refer to as the key success characteristics.
00:11:06 Stephen Jenner : Because I invited questions and Lance actually asked me to say something about, you know, yes, you can implement portfolio management. And if you’re implementing, you’re focusing very much on the processes or the practices, you know, of prioritisation and monitoring and all that kind of good stuff. When it comes to sustaining progress, which I think is what Lance really was talking about, how do we sustain progress or build, making sure we continue to, the thing continues to work efficiently and effectively, then I think we need to start focusing on those six key success characteristics that portfolio management needs to be benefits led. Because it’s about delivering value, value being benefits take away the cost. So, everything we do in the portfolio should be about being benefits. Are we realising the impact? Are we making the difference that we said we would? Are we optimising that? It should be evidence-based. So, whatever we do in portfolio management, there should be some evidence-based for what we’re doing. And I’m going to refer to that but at the same time, we don’t want these huge algorithms. I was talking to on one webinar, I wasn’t talking, I was attending one webinar and someone said, when it comes to structuring the portfolio, every project should be in the portfolio. So, I typed in the question in the chat and Steve’s asked the question and Steve says, so what do you do if you’ve got 10,000 projects? And the response from the esteemed panel was, these experts was, well, you have a big PMO then, don’t you? And in managing portfolios, I call this the strategic planner syndrome. It’s just wrong, wrong, wrong. You should go, the sort of key themes underpinning managing portfolios in many ways are about focus, about focusing the portfolio on the most important initiatives. And it’s about flow, ensuring the projects flow through the delivery process.
00:13:08 Stephen Jenner : So, what we don’t want is huge algorithms trying to work out, which is the most important thing. It’s about fast and frugal decision making, being able to speed up decision making. Bob Cooper’s research in Canada, Professor Bob Cooper suggests no more than six criteria on average, around about six criteria maximum. It’s also about being active, it’s not about sitting in the office. It’s saying to the guys I was speaking to this morning, cutting the umbilical cord, getting people away from the computer screen, get out talking to project and programme managers and business people. It’s about being disciplined, and I come on to that, it’s really important. And it’s about being transparent, a transparent view so everyone can see where we are and what we’re delivering and what impact it’s having.
00:13:54 Stephen Jenner : Okay. Next slide, please.
00:13:59 Stephen Jenner : And to answer Lance’s question, apart from focusing on those key success characteristics, the McKinsey’s research says that if you’re implementing a transformational initiative, and you know, portfolio management would be, I think, a transformational initiative, where it should be, then your success is four times as likely to succeed if you use KPIs to actually measure the progress. So, you should have a series, and I would say, yes, you need your KPIs about portfolio performance so we can measure how the portfolio is performing as well as individual projects. But we should also assess stakeholder sentiment. We should assess what our stakeholders think about the way the system operates, and there is a survey that’s in managing portfolios. If anyone wants a copy of that, not the book, I can’t send you the book, but if you want a copy of the survey, just send me an e-mail and I will, I’ll ping that over to you.
00:14:58 Stephen Jenner : So, if anyone, the e-mail is Stephen with a ph.jenner25 at outlook.com. Anyway, so that’s broadly, what’s portfolio management? It’s about managing a portfolio of products and programmes and other activities to achieve, to optimise strategic contribution. It’s about choosing the right projects and then it’s about executing them in the PMIs language to ensure value is realised but that execute really means removing the barriers to delivery. So, what’s the problem it’s trying to solve? Well, it’s a combination of failures in strategy execution. I mean, the economist intelligence unit there, high rates of failure by any measure are a constant, oh dear, oh dear. Failures in project delivery, you know, the PMI talk about 50% of projects fail. Can you imagine, I say to guys, you’re the only profession that on earth, on earth that admits to making things worse, I mean, it’s crazy. We say 50% fail, can you imagine if the British Medical Association said we only fell 50% of our patients, you know, only 50% die. Or if you know, the teachers union said, you know, we only fell 50% of our students. What’s wrong with you people? Go and get some training; it’s supposed to be professionals. So not only should that rate be higher, but it should be getting better and yet there was some research from the PMI that actually said things may actually be getting worse.
00:16:31 Stephen Jenner : It’s wow, crazy.
00:16:33 Stephen Jenner : So, and we could debate that because there’s a whole load of ifs and buts and maybes around some of those stats. But whatever the rate of performance is, or the level of performance is, ultimately, it’s not as good as it should be, as it can be seen with some of the huge failures that we see. But as the root cause, so what’s the root cause though? But we’ll see that one of the root cause is as John Doerr and those of you of, many of you I think online will be aware of John Doerr. John Doerr is the OKRs guy, objectives and key results. OKRs being a performance, kind of strategic planning tool, delivery tool, not applied to projects and programmes, but applied to organisations more generally. And John Doerr, this is from Intel and Google and Disney and Samsung, people like that, they use OKRs. But what John Doerr says, unacknowledged dependencies is the number one cause of project slippage. So, the problem doesn’t rest with Sharon’s project, the problem rests with, you know, Luis’s project and Steve’s project getting in the way of Sharon. We have too many projects competing for constrained resources. And that’s actually, as we’ll see, one of the fundamentals that we need to address. A few years ago, Kendall and Rollins, you know, if you don’t do portfolio management, then you have too many projects. Most projects that don’t have, I mean, Kendall and Rollins said, if you want to get better at project delivery, it’s quite simple, just do fewer projects. Most organisations, they just try to do too much stuff and that seems to be a common finding from the research. And you have projects that don’t add value; they’re people’s pet projects. And people said to me, you know, well, it’s someone’s pet project, Steve. And I said, well, they’re all pet projects. If it wasn’t someone’s pet, it wouldn’t have got started, this is the problem.
00:18:35 Stephen Jenner : But so, we’ve got to have a more rational way of deciding, prioritising our projects and then scheduling the delivery or what’s called project staggering, staggering delivery to match the constraints in the organisation and ultimately our capacity to absorb business change. You get projects not linked to strategic goals, and people say, well, you go looking for a link. You get this language about strategic alignment; our projects are aligned with our strategic goals. What does aligned mean? You can align anything with anything. What matters, and it’s on the front of managing portfolios, what matters is on that previous chart. It didn’t say optimise strategic alignment, what matters is optimizing strategic contribution. What difference will these projects make to our strategic objectives? And you get an unbalanced portfolio. So, that’s the problem portfolio management is trying to solve. What makes it so interesting is it’s a mixture of finance and psychology and project management and stakeholder engagement, about engaging a wide range of stakeholders trying to solve these problems that cross organisational boundaries. That’s what makes it interesting, but that’s what makes it challenging as well. And I’ve got some insights into that as we advance through the slides.
00:20:05 Stephen Jenner : The bell rings again. By the way, the bell comes from when I was teaching in Australia. One of my fellow lecturers had the school bell and, after lunch, no one wants to come back. Everyone’s chatting away.
00:20:19 Stephen Jenner : Please, can you sit down? Please, can we start again, everyone? Hello? Use the bell and everyone becomes a child again. The bell’s run, I better go back to class. The power of the bell. So, number 1, aligning, having said strategic alignment doesn’t matter, forgive me for using the word, but aligning projects which strategy find benefits. The fundamental point, this is with OKRs, for example, objectives, key results, So, in other words, you have a set of objectives, prioritised objectives, which are the most important. So, we don’t do every objective. We say, which one should we do now? Which are the three most important, or five most important objectives to achieve now? When we’ve achieved them, then we’ll move on to something else. What are the key results? Three to five key results that would demonstrate that we’ve achieved our objectives. And then we do projects and programmes to deliver the key results and show we’ve achieved our objectives. As it is so with portfolio management. What are our portfolio objectives? What is the portfolio designed to deliver towards our strategic objectives? Let’s start with your portfolio objectives. What are the benefits that would demonstrate? Benefits are measurable improvements. What are the measurable improvements that would demonstrate that we’re achieving our objectives and then projects and programmes? And then gives you what the IPA and the UK government called two-way traceability from projects to strategy better projects.
00:21:53 Stephen Jenner : Those three headings, objectives, benefits, initiatives, projects and programmes. And wonderfully the PMI, I mean they paid me to do some research for them, but I would have paid them to say this definition. Project benefits synonymous with positive strategic impacts. And as I was saying to my group this morning, and one of the training courses that I’m delivering. Look guys, you know, Keris, you tell me you’ve got these 50 benefits; I don’t care. What I care about the benefits that demonstrate we’re achieving our objectives. From a portfolio perspective, that’s what matters and that’s what the New Zealand government put rather nicely. They said, project benefits that don’t contribute to strategy are a waste of limited resources. So, it’s really important that we have benefits that demonstrate strategic contribution. I was doing a session a few, James asked me to make sure Steve tells some anecdotes. So, I’m going to tell you some of the anecdotes. I was doing a session in London a few years ago, Antonio Nieto Rodriguez was talking and he’s the chair or past chair of PMI Global. So, a hugely influential writer and researcher and all-around, nice guy, clever guy as well. But anyway, and he was saying, senior managers don’t get it. They’re not interested in projects and programmes because they’re not trained to be interested in projects and programmes. They’re, you know, trained to run the factory, most MBAs don’t include a project module. And I said, though, but hang on a minute and even in the rooms, managers just don’t get it, senior managers just don’t get it. I said, but that’s the plaintive cry of middle managers for the last 100 years.
00:23:43 Stephen Jenner : If you’ve got a project and you bring it to me and I say, so what difference will it make to my strategy? And you can’t tell me, why would I be interested? Then go away, I’m a busy person. So, how do we make that link? by benefits. Benefits are the measurable improvements that show we’re achieving our objectives. And that means for every, as the PMI say there, each organisation needs a benefits framework, but not just the organisation, the portfolio. If you’ve got more than one portfolio, the benefit categories have to be tailored to those portfolio objectives. So, portfolio objectives, one, two, the benefits, measurable improvements that would demonstrate we’ve achieved our portfolio objectives, and then we commission projects and programmes to deliver those benefits. Do that, a lot of problems in the world kind of just disappear.
00:24:37 Stephen Jenner : That’s number one. Number two, again, having said, Steve, at the very first one, so what is portfolio management? Well, step back. Where does the idea of portfolio management come from? Ultimately, it comes from Harry Markovitz, modern finance theory. He won the Markovitz won the Nobel Prize in I think about 92, but his research was undertaking in the 50s and it kind of dominates a lot of thinking about modern finance and modern financial theory. At its heart, what it says is when we consider portfolios; we should consider not just the return; we should also consider the risk. And so, in project portfolio management, we need to consider the return or the value. In other words, the return, obviously, the benefits take away the cost, or the value; the benefits take away the cost. So, we could say in the private sector, it’s about return on investment. In the public sector, it’s about value for money. Having optimised the use of the money that we have available to us. But it’s not just about the return. When we’re looking at a project, it’s not just the, it’s also the risk or the achievability. So, to separate from the financial perspective is risk and return. From a project perspective, attractiveness, and achievability.
00:26:11 Stephen Jenner : Attractiveness being or representing the value of the return. But the risk, when we talk about risk in a project, we’re not talking about the normal approach to project risks. The individual risk that a project faces, we are talking about the risk, if Luis’s project says, we’re going to deliver a return of 50 million, okay, what’s the likelihood that it will be 50 million or 40 or 30 or 20? Trying to understand what are the range of outcomes that are available. It’s like, what is the chance that it’s presented as if it was 100%, but we know it’s not 100%. What is the risk that we won’t get that return? As the quote there from Mike Cypher in one of the PMI papers, “We can do anything, we just can’t do everything.” So, we’re going to prioritise and we prioritise on the basis of risk and return. That balance, how much risk, how much return is there? Is that an acceptable level of return for the level of risk? Trying to understand that. So, and it’s very hard making sure we consider the, what’s the likelihood? And so I will say for every project on the second page, I want to know, I want the sponsor and the business case writer, I want to sign the cover and then on the second page, I want two things. First of all, I want their track record. So, I want them to record their track record. How well did you say the last three projects you’ve worked on, how well did they deliver cost against budget, benefits against forecast and on time delivery? How well did the last three projects? And if you say, you know, they come in late, late, late, overspent, overspent, overspent, under deliver, under deliver. Well, why should I believe you this time? I wouldn’t understand, because if someone was operating on you, you’re given going from an operation, you said the doctor, doctor says, Oh, I think we’re going to have to take out the appendix, Steve, that’s all. Oh, how good are you at performance?
00:28:21 Stephen Jenner : Well, I haven’t done it before, I’m actually quite looking forward to it. It’s a bit of a job enrichment opportunity for me. I said, Well, hang on a minute, you know, before you start slicing into me, I want to have maybe I’ll choose a different doctor. So, yeah, I want to slow people’s track record on page two of the business. But also, I say, how confident are you that rate of return will be? Or what’s the range of outcomes? And then we can start thinking, okay, well, how can we minimise that range? How can we optimise the return?
00:28:55 Stephen Jenner : The bell. Three and I saw something, another anecdote. I saw a on LinkedIn, I mean, you meet the nicest people on LinkedIn, you have to say people like Louis and a whole host of others over the years, but you also, it’s the dregs in many ways. And the trouble is you get a lot of people claiming to be experts and then they say things you don’t even know what you’re talking about. You get people saying, I saw a question come up, they said, ask this person. So, when we come to prioritise our portfolio, should we have a common set of criteria that we apply to all projects or should we adapt those criteria on some occasions? So, they said, no, you have to have a single set of criteria for every project, otherwise you haven’t got a level playing field and it kind of seemed convincing, except it’s a load of rubbish. It’s like those guys saying the answer to having 10,000 projects is you have a large PMO, portfolio management office, to collect the masses of data, you know, to crank the handle. No, as with the first example, it’s important to focus on the projects that really make the difference. And if you disagree with that, well, you disagree with me, you’re disagreeing with Antonio Rodriguez, and you’re disagreeing with McKinsey’s. So, I think we win but anyway, the other one about tailoring the criteria, because you need to tailor the investment criteria to the investment driver. Why are we making the investment? Most organisations tend to use cost benefit analysis, net present value, internal rate of return. Well, that makes sense if you’ve got a financial driver. If the reason you’re investing in the project is to reduce cost or to increase revenue, all that matters is the cost benefit return. And so net present value, internal rate return, whatever metric you wish to use makes sense. If, however, you’re investing because you have to, there’s a legal requirement or there’s a regulatory requirement, or you’ve got a system or an asset that needs maintaining and will fail. In other words, the bridge is about to fall over, or a tunnel is about to collapse, or the road is full of potholes. So those sort of investments, it’s very difficult to do cost benefit or your payroll system is about to fail. Because the benefits in those investments aren’t realised.
00:31:27 Stephen Jenner : All your investing, you’re trying to stop bad things from happening and it’s very difficult to measure things that don’t happen. Because you tend to then say, look, oh, it’s been a huge success; nothing has gone wrong. Well, and then a week later it goes wrong or maybe you just got lucky, you don’t know. So, they’re not benefits in the normal sense of the word, we’re just investing to try to avoid the consequences of not acting. So what matters is cost effectiveness analysis. Is this the most cost-effective way of solving the problem? Because if you don’t, you end up spending a lot more on the mandatory stuff. And we want to drive down the mandatory stuff, so we’ve got money available for the strategic stuff. And again, if you’re investing to improve health outcomes, if you’re investing to improve educational outcomes, if you’re investing to improve defence capabilities, these are all non-financial and how would you measure? You wouldn’t use money to measure educational outcomes. So, you wouldn’t use money to measure health outcomes. You know, you wouldn’t use money to measure defence capability. If you’re investing to improve a customer engagement, that’s the benefit you’re buying. Now, hopefully in the private sector, you’re then hoping that customer engagement has a financial return eventually. But ultimately, some of these things aren’t about an immediate financial return. They are about improvements in non-financial and therefore we should have non-financial metrics. And so, it’s some sort of strategic bang for your buckets. How much strategic bang do we get from our investment? And so yes, there will be some non-financial criteria involved here and there will be some management judgment, but it’s this consistent application of management judgment. And it’s not, I say, not about trying to build huge algorithms, it’s about having the measures, as John Doerr says in OKRs, the book’s entitled Measure What Matters. And I should say, as OKRs talk about prioritised objectives and then key results, three to five key results. I say for every objective, no more than three benefits in managing portfolios. I say three benefits and someone else said, these people said to me, Steve, why three? And I said that to one of our consultants once, and he said, Steve, two’s not enough and four’s too many. So, it seems to work but I mean, ultimately, if you are investing to reduce cost, there is only one benefit. The benefit is how much cost have we reduced? If you’re investing to increase revenue, it’s the increased revenue, that’s what matters. If you’re investing to improve strategic contribution, it’s the metrics, the measures of strategic contribution. So, it’s really important for every project programme, what are the fundamental drivers for this project? Why are we making the investment? And then from that identifying those key benefits, the key measurable improvements that link to and demonstrate strategic contribution.
00:34:39 Stephen Jenner : Number three. So, this is Anand Sanwal was the head of Corporate Portfolio Management for American Express. He wrote a rather good book called Optimizing Corporate Portfolio Management. Had a forward by Gary Crittenden, who was the CEO of Amex at the time and ended up at Citigroup, I think. And Anand book, talked about these sinners of portfolio management, the six sinners, the closer, the screamer, the end-arounder, the strategist, the doomsdayer, the optimist. In other words, you can have all these portfolio processes, but what Anand was saying is people, they bypass the process. And you see the quote from McKinsey’s, as one executive observed, his company’s biggest failures occurred when senior managers overrode established processes and methodologies. And when I read this, I thought, oh my God, that’s painting a picture of the world I live in government. This was people used to bypass the process; they would try to find a tame minister; lots of games went on. People used to manipulate the numbers. And so, part of your job is trying to, as a portfolio, is making sure that you don’t, there’s one set of numbers and we don’t allow people to keep changing the numbers. People would report costs going down. I said, well, no, cumulative costs can’t go down. You know, if you spent 1,000,000 pounds last month, this month it can’t be. You’ve now spent a cumulative total of 900,000. It doesn’t go down, guys; it goes up. You know, once the money’s been spent, it’s spent, seems to be a challenge for some people. Now, when I wrote, I was in my, before I, the background to another one of these anecdotes, before I wrote Managing Portfolios, every now and again, people, I’d get an e-mail, say, Steve, are you thinking about doing, or you and Craig, Steve, thinking about doing an update to Management of Portfolios?
00:36:38 Stephen Jenner : Oh, it just seems like too much work, it’s there, it’s done. And I was in Spain, walking in Spain, middle of nowhere, and the phone rang. And it was a consulting firm and they said, Steve, we’ve got a job. We would like, UK government would like someone to come in and write some guidance on portfolio management for them and I said, well, they’ve already got some, we wrote it for them. They paid us to write it, you know, 10 years ago, 2011. And they said, yeah, but they want something more up to date and more tailored towards the, specifically towards government. So, this was the origin. So, I did this, I did a draft for them and then I refined it, enhanced it, doubled in size, and that’s what managing portfolios is now. But anyway, I did the first draft, bunged it in, and the feedback was, Steve, you’ve got lots of foreign examples. We don’t want any foreign examples, take them out. You’ve got all these foreign anecdotes, take them out. We want UK public sector. So, I took all the foreign examples out, and I took the six portfolio sinners out. And they ran to me the next day and said, no, not the Sandwell stuff; we love that. Can you put it? Oh, isn’t that interesting? The guys that sit at the centre of the UK government say this is the world in which we live.
00:37:56 Stephen Jenner : Wowza.
00:37:57 Stephen Jenner : And when we put the first draft out for review, the second draft out for review around government, the feedback from government departments was, love the Sandwell stuff. Can we have some more, please? And so, this is the reality. And I encourage my students that when I’m talking to them about, this is about not just about process, it’s not just about governance, it’s about culture. And it’s the interface of those three things, process, governance and culture. If you want to change the culture, it’s about being disciplined. But if you get the process and you get the governance, then you can start changing the culture. You can’t allow this to happen; I’ll be doing it one time. I mean, we had one day we had a my office had a phone call when I was doing this stuff for real.
00:38:46 Stephen Jenner : And they said, Steve, it’s Baroness Scotland’s office have just been on the phone. They’ve told us we’ve got to invest in Project X. And I said, well, I don’t know where it says find a tame minister but and so we put a note out to all stakeholders. You know, this project doesn’t meet our agreed criteria that were agreed by all four ministers, but this minister has instructed us to invest. Therefore, we’re going to give them the money. Black means, but the consequence is project A, B&C will be delayed by three months or whatever it was. When I got back to the office, another phone call, Baroness Scotland, would like to see you, Steve. So, when I see her, she says, Steve, what’s this? I said, well, Baroness, we’ve got these agreed investment criteria. That project does not meet those criteria, that’s why it hasn’t been funded. She says, doesn’t it? I said, no, it doesn’t, Minister. And it doesn’t mean, she goes, well, we don’t know what the costs are. Don’t we, Steven? No, we don’t, Minister. We don’t know what the benefits are. Don’t we? No. She said, oh, what do we do? I said, Minister, why don’t we just give them the money, some money for the first two months to develop their business and then we’ll look at it. Yes, let’s do that, Steve. So now we’ve got a sense, you start to have an intelligent debate. You can’t let people bypass the process and unfortunately, that’s what too often happens, it’s got to be called out.
00:40:12 Stephen Jenner : Okay. Oh, ring the bell.
00:40:18 Stephen Jenner : And I mentioned this, was when I was heading down to Salisbury about a year ago, stuck in the motorway. Brilliant, I’ve got a wasted an hour of my life stuck in this traffic jam. I might as well get a photograph of it, and I can use it in my slides. So, make use of the time and the opportunities available to you. So yeah, I mean, the analogy is to what are called phantom traffic jams. And there’s lots of research about phantom traffic jams. And the idea, the conclusions are that once, once road capacity, once the number of cars on the motorway exceeds whatever the level is, traffic jams are an inevitability because people don’t, if they’re supposed to drive at 70, then one person does 72, one does 68, and you get this ripple effect that starts off as just one person braking, and then two miles back, you get this, everyone comes to a halt. And you get this wave that goes, and so they said they’re called phantom traffic jams. And so, it is in organisations when they do too many projects. So, as we see that, resources are vastly over allocated, excessively multitask, and that’s the answer actually to Luis’s question, Luis emailed on LinkedIn and said, look, how do we approach resource management from a portfolio perspective? The answer is that we don’t try to do that Soviet planner stuff, try to control every resource. This is about the construct, this is an application what’s called the theory of constraints from Goldratt and his buddies. But Hanging Fire is the book that’s about the application of portfolio level. And there is a constrained resource in a factory or in a project or in a program or in a portfolio. There was always a constraint in all those scenarios. If you want to optimise the performance of the system, systems thinking, then you need to focus on whatever the constraint is.
00:42:17 Stephen Jenner : And that means, if the road could only accommodate 60% capacity, you don’t let it go above 60%. So that’s where you have these, link roads with red traffic lights and that only let additional cars on once it’s spread out. So, it should be of our projects and programmes that, you know, the Navy SEALs. If it works for the US Navy SEALs, it works for me. “Slow is smooth and smooth is fast.” We get, we achieve more by doing less. If you want to do 20 projects, do 5. When you’ve done those 5, the next 5 and the next 5. Make sure the projects can flow throughout that delivery process. So, we don’t exceed the capacity of the organisation to deliver projects and the capacity to absorb the business change that they’re delivering. So, number 5, trying to give you a flavour. I’m spending 28 hours with the group I was with this morning talking about this stuff.
00:43:20 Stephen Jenner : So, number 6. And having talked about what’s portfolio management about, it’s about doing the right things, it’s about doing them right, which includes doing them at the right time. But that decision about what are the right projects is not a one-off decision. We need to revisit the decision. Annie Duke wrote a rather good book called Thinking in Bets. And Annie Duke makes the point. She says, life is a lot less like chess and a lot more like poker. And she was a professional poker player, a successful professional poker player. And I ask you, is a professional poker player a gambler or are they risk managers? Do they go in and put their money down and go, I hope I win? Or do they look at the cards, look at the environment, and make small incremental bets. As their confidence in victory grows, so they make incremental bets, they stage release their funding, and they always keep something back for the next hand. A professional poker player is a hugely successful risk manager. What happens with most of our projects and programmes within our organisations? They put the business case in, they get the approval, they’ve got the money, unless something really radically goes wrong. No, we should have this stage or phase gate process regularly revisiting the project throughout the life of the project. Is it still the right thing to do if it is? So, these are go, no-go gates. You know, either stop, continue, or hold. Decision made on the basis of performance and likely performance going forward. Is it still the right thing to do? If it is, you continue, but you only get funding to get to the next gate. If you don’t have staged release of funding, then what was the point? And I have to say, almost every time I’ve spoken to people when a big programme has been cancelled, the execs say we should have cancelled it earlier. We are very, we are loath
00:45:41 Stephen Jenner : Tim Banfield of the National Audit Office calls it the conspiracy of continuation. He was in charge of defence, the big defence projects, reviewing them and he said there was this conspiracy. People find it very hard to stop projects once they’ve started. Well, I’m afraid, you know, the most successful organisations know, you know, one of the KPIs for a portfolio is how many projects do you stop at each gate? Now the trouble is, I don’t know what the answer is. Should it be 10? Should it be 20? I don’t know, but it should be more than 0. If you never stop a project, then what’s the point? So, a rigorous stage gate process linked to the release of funding so that we don’t continue to throw good money after bad. I’ll just get an example again, NHS again, one of the NHS IT programme the Connection for Health programme. Eventually, when it went down, it spent about 12 billion. Treasury bent over backwards to find some benefits, they found about 2 billion. In other words, it cost the UK taxpayer 10,000 million pounds. Now, you might ask, you know, which prison are the people that are involved? Where are they residing? So don’t tell me about accountability. 10,000 million pounds of taxpayers’ money lost on the project and the programme. I did a session for the guys a few years ago and one of them said, you hear what you say, Steve, let’s just go back about three or four years. This is our budget at the time was 7 billion. What are the first five things we should have done? I said, not five things, just one, give the money back. Why is anyone giving you 7 billion? It’s frightening. People play fast and loose with taxpayers’ money, it’s our money. And it’s shareholders’ money in companies. We should do something sensible with it.
00:47:41 Stephen Jenner : Sorry and number 7. As I said, it’s about removing the barriers to delivery. The job of the portfolio is to address those barriers, including the logical dependencies. That’s where project A has a dependency on project B. If project B doesn’t deliver on time, then project A is going to be delayed. So, making sure those dependencies, the dependencies between projects are managed efficiently and effectively, but also managing these logistical dependencies, these constrained resources. So, you know, marketing technology below the line in that diagram. Ensuring that we have the resource from legal when we require it. If we say, for example, legal can devote 30 hours to our projects and programmes a month. What we don’t want are projects turning up with 60 hours in February. We need to schedule it, so the schedule of projects matches the availability of legal resources or acquire more legal resources. So that’s a fundamental point. And I think that’s about me done, which with 10 minutes to spare, 11 minutes to spare. Hopefully I met James’s requirement to tell some anecdotes. Hopefully met Lance’s request to talk about sustaining progress. I said focus very much on those six key success characteristics, being active, disciplined, transparent, fast and frugal, evidence-based, and another one which I can’t remember for a second. But measuring performance, measuring customer sentiment as well as the have metrics of success. And Luis’s questions about resource management, focusing on any constrained resources rather than trying to manage the demand supply of all resources. But I’m sure we have other questions, Sevcan.
00:49:48 Sevcan Valiyeva : And we do have one question, but just before we go to the Q&A.
00:49:54 Stephen Jenner : Sorry, James. Yeah.
00:49:59 Sevcan Valiyeva : Just a reminder about Knowledge Train. We are a training provider, we sell various different courses from project management to AI to change management. So, you are always free to e-mail me. Just popping my e-mail in the chat. We have a survey, obviously while you enter your questions in the chat, we do have a survey.
00:50:31 Sevcan Valiyeva : Okay, so to go back to the question, let me find it. Yes, as a reminder, this webinar is being recorded, and you will all receive it next week. Okay, so the question is there any difference between other activities as a type of component and plane operations?
00:50:58 Stephen Jenner : I don’t know what that means. So, Louis, if you’d like to expand on your question, that would be great.
00:51:21 Stephen Jenner : I think, OK, I think, Louis might be. When we talk about the portfolio, we say, what is the portfolio? Well, the portfolio just means collection, that’s all it means. So, we’re talking with projects, we’re talking about the collection of projects. But in reality, almost all the definition of main professional, but PMI, APM, so forth, tend to refer to projects, programmes, and then other activities. I think what we’re talking about other activities or other related activity is just, it’s something that isn’t formally managed as a project or a programme, but nevertheless is something that contributes to whatever those projects and programmes are contributing towards. So, I think it’s about what’s the intention behind them, Luis, is the, I think the way you draw the line. You would say, if whatever our outcome or objective is, whatever language you use, if you’re using the outcome framework, okay, we’ll talk about outcomes. I tend to use objectives, I prefer the objectives language. But ultimately, it’s about objectives, benefits. And then so it’s about the combination of formally managed projects and programmes and any informal activities. Because otherwise, you know, we used to get projects that say, you know, you suddenly get a flyer would come around that some policeman in Kent had changed the process and improved things, and we said, no, stop it, stop it.
00:52:50 Stephen Jenner : We’ve got a project that’s going to do that. Well, if you can just do it, well, why don’t we just do it? So yeah, so it’s trying to focus very much on what’s the outcome or the objective. So, it’s formally managed projects, programmes, as well as other related activities that can make a contribution towards the achievement of that objective. So, it’s coming at it from an investment management mindset. Hence, the focus on return on investment or value for money. I don’t care whether you call it a project or programme or other related activity. Whatever it is, we’re doing it to help deliver some benefits which will show that we’ve achieved our objectives. Benefits being measurable improvements.
00:53:35 Sevcan Valiyeva : We’ve got a follow up from the same person. You mean operations are not included as a component authorised by portfolio management?
00:53:46 Stephen Jenner : Yeah, I mean, there may be other activities that are being delivered outside of the portfolio, and that doesn’t come within portfolio governance. But nevertheless, I would suggest that we should be thinking about how those activities interface with what the portfolio does. We should be encouraging project managers to consider that when they’re thinking about what their deliverables are. I mean, the whole PMI focus now is on value. So, you have to take into, there’s no point saying, we’re going to deliver 100 pounds of value, except we’re not because someone else is doing something else over there which is going to change it. So you’ve got to take cognisance of what else is happening. I mean, the reality is you can take it to the extreme. And Anand Samwal, his book, Optimizing Corporate Portfolio Management, was very much about saying, This is about all non, sorry, all discretionary spend. His approach to portfolio management was it goes way beyond projects and programmes. Now, you can make that argument, except I think from a portfolio perspective, what you’re saying is we don’t deliver our projects and programmes very well, but now we want to take over the world. And I think that’s a hard sell, I think let’s get delivering, solving the problems that we have within our portfolios of projects and programmes and any other related work that we’re aware of. We may not have direct control over it, but that’s the nature of the beast. A lot of this stuff, there will be soft rubber levers. This is not about the portfolio directing projects and programmes. It’s about the portfolio working with projects and programmes to help remove the barriers to delivery.
00:55:36 Sevcan Valiyeva : Okay, moving on to the next question. Where do you typically find portfolio management roles sitting in an organisation?
00:55:43 Stephen Jenner : Sorry, what was it something to do with roles?
00:55:46 Sevcan Valiyeva : Where do you typically find portfolio management roles sitting in an organisation?
00:55:51 Stephen Jenner : Okay, well, I mean, typically, ideally, you have a portfolio director who’s an independent and the portfolio. The portfolio manager reports to the portfolio director on the board and then you have a portfolio management office and EPMO, Enterprise Portfolio Management Office that reports directly into the board. In reality, sometimes it reports to the director of finance, sometimes it reports or CFO, sometimes it’s often with CIO because traditionally portfolio management has come from came originally from finance, sorry, from the, well, it was finance, but it was stocks and shares, mentioned Harry Markowitz’s work, then got adopted in the IT world. And so, a lot of the early texts, books and so on are about IT portfolio management. And of course, the IT portfolio, again, to Louis’s point, it’s about operations as well. Yeah, because the IT portfolio management looks not just at IT projects and programmes, but it looks at the whole IT spend. But since then, it’s been adopted by the projects and programmes. So, if you have, I don’t know, ideally it would be a portfolio director or chief project officer, that’s where the portfolio management office should report into, I would argue. But there should be a governance structure around portfolio management. There should be a portfolio committee or a portfolio investment committee. A committee that monitors delivery, that could be a single board, or you can have a twin board structure, lots of different titles, portfolio committee, portfolio board, investment committee. But what you need is a governance body that oversees the delivery of the portfolio, a delivery committee that monitors delivery actively and the legwork is performed by the portfolio management office headed by the portfolio manager reporting into a portfolio director.
00:57:52 Sevcan Valiyeva : Okay, moving on to the next question. What is the impact of AI on PPM? AI has to, there’s more to a question. AI has the potential to increase the capacity of an organisation by multiple times, running into the risk of more projects getting approved for execution. What is the framework to prioritise projects in that scenario?
00:58:13 Stephen Jenner : Well, I think the. So what’s the impact of AI? Well, I’ve got, it’s called Chapter 11, includes hot topics and a series of articles in the book about the implications of AI. The trouble is, when we talk about the implications of AI, it’s, you know, someone once said, it was a quote, you know, with transformational projects, we walk into the future backwards, seeing the future through the lens of past experience. So, it’s very often very difficult to tell what is the implication. But as you said, I mean, I think Bent Flyvbjerg talks about AI and refers to it as artificial ignorance. The risk is, as the person posing the question said, you can find ways suddenly people find a way of starting far too many projects. AI doesn’t affect the capacity of the organ of people to absorb business change. It doesn’t affect, or sorry, it can enhance the resources that we have by giving us better use of those resources if we can free up specialist time, so that’s great. So, I think as in all walks of life, there’s huge potential for making people more efficient, for using skills more efficiently. At the same time, issues risks as was posted in that question but I mean, last week my wife’s car wouldn’t start. She said, well, my car won’t start. So, she took my car to work instead. So, I went outside, looked at no, won’t start. Did a kind of Google on it, did an AI search, it said, you need to look at the fuses. You need to look at fuse 104 and fuse 525, so 20 amp fuses. So I went in the boot, managed to get in there, managed to find this 104 and 525, but they were 5 amp fuses. So, I typed in, but there are 5 amp fuses and AI came up and says, yes, you’re right. Sorry, made a mistake there, it’s not 20 amp, it’s like, crying out loud. So, yeah, we tend to believe it’s awfully clever. Well, so this is overconfidence in some of this stuff. Hence, I say it’s not about huge algorithms that can crunch data but it is about the using AI intelligently to help inform the exercise of management judgment. And that’s where I am on this. Is how do we use AI to enable professionals to deliver more?
01:00:47 Sevcan Valiyeva : Okay, so another question. Connecting strategy to execution is also seen as a role for business architecture to play with and use maturity of the business to identify where investment is needed that aligns to strategic goals. Lots of overlap with portfolio managers. Do you see them as two separate roles or being joined depending on the size of organisation?
01:01:11 Stephen Jenner : I think it’s how you structure it, whether you want to call it business architecture or portfolio management. Often this is a question of labels and in portfolio management, I’ve had some very experienced portfolio managers say to me, they were doing it. They never told anyone what they’re doing, they did it. And then one senior manager turned around and said, that’s portfolio management. So yeah, I don’t care what you call it, but if you’ve got an approach to identifying what your objectives are and what your measures of success would be, I would call that, you could call those key result objectives, then key results or benefits, measurable improvements. And then determining what we need to do to deliver those improvements and therefore achieve the objectives. If that, there’s overlap, with enterprise architecture, with business architecture, absolutely there’s overlap there. That’s partly then a portfolio management function. It tends to have traditionally been more sort of IT based, but absolutely. But I’m not worried about the, I’m not precious about the title. It’s just important that someone does it.
01:02:21 Sevcan Valiyeva : Next question, what tips do you have for getting buy-ins to introduce or recognise portfolio management improvements are needed in an organisation that won’t acknowledge their issues?
01:02:34 Stephen Jenner : Yeah, well, I suppose, I mean, what people tend to reach for is the kind of big maturity framework and then have a big assessment done, come in and tell you. Oh dear, hang your heads in shame, you’re all level one and you should be level 2 by next Christmas. And yet none of those frameworks have ever been validated in practice to show by moving from level 1 to level 2 to level 3, you will actually achieve more. I think it’s, I would say, almost all, sorry, take that back. Every implementation I’ve seen has been incremental. McKinsey’s back this, if you want to achieve some of these incremental, these transformational changes, when we did it in criminal justice at the end, you know, won lots of awards. James has encouraged me to tell the John Reed story. He was the Home Secretary from Glasgow. I’m John Reed, I’m the Home Secretary. Who are you? Very difficult people to deal with, I’ll tell that story another day. But anyway, sorry, James. James has heard it but sorry, what was the question?
01:03:42 Stephen Jenner : How do we persuade people? I think it’s about doing, you start with whatever opportunity you have, wherever there is. Perhaps it’s about working with project managers to remove barriers to delivery. Perhaps it’s about getting a basic benefit framework so we can start to demonstrate what impact projects are making. Wherever there is an opening, I think you do that and then you try to build on it. Now, when I say when we did it in criminal justice, at the end, I was able to write a book about it. But it was never planned. You look back and you see the path, but at the time, there was no path. You do what you can in those circumstances to get a more rational use of resources and work with projects to remove the barriers to delivery. So, I think you do what you can. And ideally, of course, if you get a new boss comes in, you’ve got their support, then you can actually start to think more, more strategically about what we’re going to do and when we’re going to do it, and you start to develop a roadmap and so forth. And that’s great but I mean, there’s one thing you can do, I mean, that Laura Barnard talks about in her book, that Craig Kilford, who I wrote Managing Portfolios with, I was telling the guys this morning about, he talks, Craig uses this value experience plan to engage senior managers. So, it says to the senior managers, in three months, this is what you will see, this is the difference. And in six months, this is the difference. So, on one page, what differences they will see at points in the future and what needs to happen for those improvements to be delivered. So, it’s about adding value for the senior execs, creating transparency about you’ll be able to see what difference projects and programmes are making. So I think, as I said, I think it’s incremental, I think if you wait for permission, you’ll be waiting forever. So as long as you don’t do anything illegal or immoral, I would say you start doing some stuff, which is what we did ultimately. We decided, we can either sit around waiting for permission or we can start to do it. I mean, I’ll tell you one more anecdote. We had a new boss come in and he said that we want to do this, wouldn’t that? I said, John, you can’t do that, you can’t do that, this is public setting, you’re not allowed to do that. And John said, Steve, I’m just sick of you telling me why we can’t do stuff.
01:06:11 Stephen Jenner : Will you do me? I want a one-page report. What are the top 10 things you would do if there were no barriers? So, no barriers. In an ideal world, I wrote what we would do. Put it on his desk, went back to my office, got a cup of coffee, got back to the office, and that bit of paper was back on my desk. I’d written on it was not radical enough. Now I want to please the boss, I want to make him happy, I thought, what does he want from me? And I went home that night, I’m on train, I’m arguing with myself in my head. What does he want from me? You know, you’ve got to live in the real world, I can’t order these people, I’ve got to bring them with me. And most of them are playing games, they’re like those Samwal’s, the six sinners. People are playing games all the time, it’s so political with a small P. Driving the car home from the station, got home and the wife said, my God, Steve, what’s the matter with you? Go and sit in the garden, I’ll bring you a beer. And I say to people, I don’t know where truth resides for you, but for me, truth resides at the bottom of the second pint. Because until the bottom of the second pint, I’m sitting there going, moan, moan, moan. And at the bottom of the second pint, I suddenly realised, what’s stopping me? What’s stopping me is me thinking, oh, it might upset Samwal’s or whoever. It’s going to be difficult and it was from there, I said, why don’t we just do it? Why don’t we just do what’s right? And so that’s when I came in and we started doing, and I made sure people were focused on the most important stuff.
01:07:50 Stephen Jenner : Making a difference where we could make a difference rather than saying it’s all so difficult, and we’ve got to carry everyone with us. If you wait for that, it’s never going to happen. Particularly in that environment the questioner was talking about, where no one wants to recognise they’ve got a problem and yet we had a huge problem. We were investing, I mean, it was 1.3 billion at the time of taxpayers’ money, and we couldn’t show a positive return on investment. You know, that’s money and non-money. Even when you counted everything, we were losing money and no one would face up to reality, you have to face up to reality. So, I say, you can either be a victim or you can take charge of your destiny. I would encourage the questioner, take charge of your destiny. Oh, and buy a copy of the book, obviously, and sit the exam.
01:08:40 Sevcan Valiyeva : Okay, next question. Different other frameworks align resource management to risk management as it allows the companies to measure investment correctly. Does portfolio management see it the same way?
01:08:54 Stephen Jenner : So, if the organisation has a resource management activity or process and risk management, whatever the portfolio does needs to align with resource management in the organisation with its risk management. And when it comes to financial management, I’m an accountant by training originally. You know, you can’t say, well, we don’t like what the finance function does. No, that’s the way the organisation has decided to manage finances. And so, the portfolio should be using the data from finance, and we should be using and managing the finances the way that the finance department or finance function encourages. Same with risk, same with resource management, absolutely. The portfolio function needs to be consistent. If you’ve got recommendations to improve it, absolutely, we need to have that conversation. And some of those processes will need to be adapted to the project and programme environment because it is a different, we’re not really concerned with managing finance, risk, benefits independently. The issue in project and programme management should be it’s where those 3 interface. So, you can be late, but if you’re underspending, oh, I’m losing my screen.
01:10:13 Stephen Jenner : So, it’s the, it’s almost as well, we deliver the benefits. So, but it costs you twice as much. So, it’s no good and delivering more benefits if it’s costing me twice as much. We need to, it’s that the balance between cost, benefits and risk. We need to be looking at them and that’s it because, ultimately it’s easy to measure or relatively easy to measure delivery on time because there is a common metric, time. Time doesn’t, your measures of time don’t differ from one project to another. A day is a day, a month is a month and the same with spend, when you’re measuring cost. But when it comes to benefit, then there are different metrics. And that’s why, as I say, those metrics need to be decided at a portfolio level. So, if you are a project that is designed to save money, you need to be using the same metrics for all your projects that are designed to save money. This is what’s called portfolio categorisation, not just tailoring the criteria, but applying A categorisation to your portfolio so you have sub-portfolios, so your cost-saving projects compete with other cost-saving projects. For the available funding for cost saving projects. And same with revenue generation, the same with the mandatory stuff.
01:11:40 Sevcan Valiyeva : Okay, so next question is by Paul. It’s A two-part, but I’ll let you answer the first question and then the second question.
01:11:46 Stephen Jenner : Okay.
01:11:46 Sevcan Valiyeva : First question, where would you draw the line in the understand phase in terms of business as usual change behind included in the portfolio?
01:11:59 Stephen Jenner : So where do I draw the line in business as usual change? I think they understand, I mean, the purpose of the understand is really to say, where are we in terms of doing, where are we now and where will we get to if we don’t do anything different? Do we need to consider including in the portfolio some business as usual change? I think if that business usual change influences the achievement of those portfolio objectives, it doesn’t necessarily mean suddenly we’re seizing control and including those things in the portfolio, but we’re saying we might need to have some oversight. The portfolio bodies need to oversight of that business change to understand what projects and programmes we need to fund, so they’re consistent with that business change and build upon it. So I’m less concerned about, the exact demarcation lines. Ideally, yes, it would be good to bring those, that business change within the portfolio, but sometimes you’ll have dotted lines.
01:13:10 Sevcan Valiyeva : The second part is, do you have any tips in terms of categorising programmes, projects and a business as usual change in a healthcare environment?
01:13:19 Stephen Jenner : In a healthcare environment? I think the environment doesn’t really matter. I mean, Andrew’s on he’s one of the on the cohort that I’m teaching. I don’t know if he was there this morning, but Andrew has lots of experience in he works in healthcare. So, look, in any environment, if we’re going to categorise, there will always be financial. So, the financial stuff is about saving money or increasing revenue. It’s not about stuff when people say, well, we’ve saved 100 hours of time, right? Because that’s not the benefit. The benefits of what you use with the time you’ve saved, it’s a fundamental difference. It’s A fraud that many organisations, particularly the public sector, commit on the taxpayer and it’s a game that people play. They say, look, we’ve saved all this money and you say, well, we’ve saved all this money. And I say, but you haven’t, you’re still spending the money. All you’ve done is you’ve saved something, we did another story. Well, no, there’s this project in a public sector organisation. This, you know, we’ve saved two members of staff.
01:14:21 Stephen Jenner : I said, great and what’s happened to the budget? They said, it’s got it’s those the cost of those two members staff has come off the budget of the function. So, I said, great, that you’ve delivered that saving. And then I said, well, but where are those two people? They said, they’re at home on gardening leave, they’re still being paid by the organisation, we just haven’t got anything for them to do. Well, then what was the point? Why would you do that? So, the project wasn’t done to save those two people. We just used that as a way of justifying doing the project. So, I think it’s important to basically say you start with a portfolio objectives and it has to be driven, but there’ll be financial, but there’ll be what’s the organisation, what does it exist to do if it’s in a healthcare setting, exists to deliver service. Well, all public sectors, this is Mark Moore’s classification, you deliver services, and you deliver outcomes. So, in healthcare, it’s about service health services, so operations, patients seen, patients treated, whatever you’ve got, and you have the metrics of that, but then there’ll be metrics about the patient outcomes. Life expectancy and so forth. And so, we need to kind of tailor those metrics under those headings. So, link it back to the organisation’s objectives. It’s not about inventing objectives for the portfolio that are independent of the business. These need to be business-related objectives.
01:15:49 Sevcan Valiyeva : Just on a side note, alongside the recording, you will receive the presentation; you will receive the transcription and an audio version. So, the next question is, I’d argue that high-end AI is now geared more towards heavy operational work than in-depth analysis and guidance in management. As you said, AI isn’t always reliable, so it should be taken with a grain of salt. With that in mind, do you think in the near future the increasing use of AI would eventually shift the role of portfolio managers away from analysis and towards judgment, strategic thinking and challenging AI generated insights.
01:16:30 Stephen Jenner : Easy answer, yes, absolutely, absolutely. But there are risks associated with that, as I say. But I think there’s huge potential there, but I think it’s that interface with, look, the. The AI can’t identify benefit categories for you, it can’t determine the criteria that you should use to assess your portfolio and give you some examples. But then any book can give you examples. Ultimately, this is about thinking. Portfolio management is about thinking, not about analysing data. What it will do is it will free up people from doing that analysis, I think, to using the results of the analysis to form, to make more informed decisions. But ultimately, this has depended and will always depend upon management judgment because fundamentally, you’re trying to balance. If you could do everything, then we could optimise whatever your criteria are. Ultimately, there’s going to be political decisions with a small P. How much money do we spend? And in all, within the organisation, and then between organisations. How much do we value? All that the argument at the moment publicly about, we need to put more money into defence and we’re spending too much money on social security. But where do you draw the line? That’s the problem. No one wants to say, yeah, stop spending here. You know, everyone wants to say blame someone else. So, there are trade-offs and portfolio management is about managing those trade-offs to ensure we optimise the contribution, whatever we mean by that. And then that we remove the barriers to deliver so we can deliver more and achieve more.
01:18:20 Sevcan Valiyeva : Thank you for that, Steve. Does anyone have any more questions? OK, someone is typing. I’m just going to wait a few minutes. But while I’m not on the subject, but thank you, Steve.
01:18:40 Stephen Jenner : Pleasure, my pleasure.
01:18:42 Sevcan Valiyeva : I really appreciate it and I hope everyone learnt something new there. If you do have any questions, please let us know and Steve can answer them. If not, I will start to end the session. Thank you everyone for joining.
01:19:19 Stephen Jenner : Cool.
01:19:24 Sevcan Valiyeva : Okay, I think it’s safe to say that we can end the session. Once again, thank you and thank you everyone for joining and have a nice evening.
01:19:33 Stephen Jenner : Thanks guys.
01:19:34 Sevcan Valiyeva : Thank you everyone.
01:19:35 Sevcan Valiyeva : Bye.
01:19:35 Stephen Jenner : Bye.