Project portfolio anatomy v1.03

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Project portfolio anatomy v1.03

  1. 1. Product Management© 2013 Johan Oskarsson
  2. 2. Choosing the right path toachieve a company vision canbe very tricky, even if all Portfolio Anatomyparts are known and thevision is stable. It’s eventrickier when the vision ismoving and the roadmapneeds to change. Usually thetactical moves areinterdependent and a changewill have multipleconsequences.
  3. 3. Creating a vision for your company, “Drawings help people to work out intricatebusiness unit or product line involves relationships between parts.”laying out the bits of the puzzle in order,then choosing the right way forward. Thisis usually called a Roadmap. Roadmaps Christopher Alexanderare great for figuring out your next steps [patternlanguage.com]and milestones. What’s harder to figure Not only does the upper management become more distant fromout is how all of your projects interact and the different parts of the organization, the communication chasm between these parts becomes greater. Intercommunicationhow to coordinate many different projects diminishes.into tactical launches. When the market is changing fast and competition emerges overIn creating an effective roadmap you must be able to anticipate night, organizations need to close communication chasms notshifts in the market, adapt when more knowledge is acquired, and widen them. Everything has to become more interactive andunderstand and assess any risky assumptions contributing to the integrated, including planning. Many product solutions today areprocess. An effective roadmap includes all major projects and bundled and require that more people understand all internalactivities that you need to accomplish in order to reach a relationships in order to create new solutions. It is no longermilestone or strategic vision. possible to assume that picking a system wide solution apart and managing each part alone makes anything any easier.When changing your business model you usually need to startvarious projects in different areas of your organization. IS-IT, R&D, It’s a common occurrence that a planning process faces deadlock,after market, suppliers, etc. These areas are sometimes not very where one part is waiting for another to finish. This results fromwell coordinated with each other, or have little insight into each being unable to see and plan in interdependence, and can resultothers work. The different projects take different times to in huge waste and lost opportunities. Endless meetings andcomplete. Not only do you have to create new solutions but you discussions are unable to solve this dilemma. Resources are oftenhave to maintain or withdraw others from the market. It is a reallocated between different projects in the hope of a fast solutioncombination of everything. to the problem. Adding more people late is a known bad, but a common action. What else can you do?One way to handle such a situation is to separate projects andactivities and coordinate them from C-level management. I More holistic tools are necessary to manage complex systems.strongly believe that this is the wrong way. Tools that visualize relationships help identify interdependence, giving you the complete picture and triggering creativity.
  4. 4. Manage complexity “Leaders who try to impose order in a complex context will fail, but those who setPlanning and executing a strategy the stage, step back a bit, allow patterns tosuccessfully is truly complex. Many emerge, and determine which one are desirable will succeed.”interrelationships are sometimesunknowable in advance. Yet we tend to Dave Snowden, A leader’smake long term plans and large tactical framework for decision making [lean-kanban.eu]moves in the hope of staying competitive,all the while unable to see the We are good at predicting the future, too good actually, so that weinterdependent parts that need to fit tend to forget that everything cannot be predicted.together. The way to handle complexity is to probe, sense and respond,When we have vision in sight we make a strategy to reach that compare to sense, analyze and respond again. In other words wevision. We start to execute the strategy when we start spending should explore the near future (probe), acquire data from thatmoney on projects and activities. The biggest fallacy is that we exploration (sense) and then respond to that information. Thisthink we can control the future with long-term plans. contrasts with first gathering data, analyzing it and then responding. It is quite a different approach. The probe, sense and“The law of requisite complexity” states that an organization must respond approach is exactly what, I believe, we have alwaysbe adequately complex as the environment it finds it self in. wanted but been unable to use because of very long developmentMeaning, for strategy and portfolio planning, that it must be able to cycles. Instead of making in depth market research and analysishandle all the changes and variations that it might encounter. on which to base long term plans for meeting market demands,We have a tendency to group things together in order to we should make fast and cheap prototypes, test them in a safe tounderstand them. This is something we have been taught to do in fail environment, get rapid feedback and then adapt according toorder to handle variation and complexity. It is called attenuation, the findings.reduce complexity in order to understand the big picture. But inmanaging complexity an attenuator needs to be balanced with an By breaking elements of a portfolio into smaller pieces we canamplifier in order to match the complexity of the surrounding create the appropriate complexity needed to match both ourenvironment. This means breaking groupings up into smaller parts external market’s and our internal organization’s complexity. Itwhich need to be managed to handle a fast changing market. A does not need to be broken into smaller parts than necessary tocomplex environment requires us to change our way of trying to handle changes in the market, but still it is nice to be able to reactcontrol the future. fast. Nor is it recommended to break things down more than you can handle internally.
  5. 5. Visual Thinking “We can learn to solve complexWhen at a waypoint figuring out the next problem with simple pictures!”heading for a new product, portfolio orcompany milestone, we have troubleunderstanding how all the bits and pieces willfit together. We tend to use tools for our verbal Dan Roam, “The back of a napkin” & “Blah, blah, blah”mind, forgetting about the visual mind which [danroam.com]can help a great deal to make sense of problems.We can use pictures that encompass all Collective reference point. A picture can turn an implicitrelationships to complete a doubled sided assumption into explicit information. This is very useful to enhance communication and visualize unknown risks.mental approach.Albert Einstein didn’t say a word before he was two and half years Shared language. A visual Portfolio Anatomy uses a shared visualold. His nanny called him stupid. As it turns out Albert Einstein language. It need not include words but is still a means fordidn’t think in words. Is he stupid? No, I assume it is safe to say, communication that provides a shared picture for how bits andhe was not. Some people are able to think more in words, some pieces fit together.are able to think more in pictures (like me and Albert). To be ableto make good strategic moves we need both. Visual Thinking is Joint understanding. By visualizing the entangled way forward,about utilizing the right side of our brain. Here are some key you can achieve a shared understanding between people fromfeatures of Visual Thinking. different parts of an organization. It is priceless as a tool for alignment.Capturing the big picture. By sketching out all elements of aportfolio you will see just the right amount of information. Enough Idea trigger. Many times we are stuck with tunnel vision, unable toto grasp the idea, yet not too many details to distract. see new possibilities. In order to find new alternatives we can enable the creative process by understanding the whole.Seeing relationships. Understanding the the way forwardrequires understanding the relations between elements. This is Play. A Portfolio Anatomy provides you with the opportunity to play.easier to express visually than in words. For example, when there By simply adding, breaking, changing or removing elements youis interdependence between two projects, a drawing can show can be in the ‘sandbox’ until you have explored all the differentwhy one of these projects should be split in two in order to bring a possibilities. Don’t forget to have fun!complete solution to the market faster.
  6. 6. Design Attitude “Sometimes when you innovate, you make mistakes. It is best to admit them quickly,Everywhere we hear that the world is changing and get on with improving your otherfaster and faster, and with increasing innovations.”uncertainty. Traditional incremental growth ischallenged by disruptions that happen Steve Jobsovernight. There is not always time to figure outwhat to design. We need to use DesignThinking, instead of thinking what to design.When talking about prototypes we usually tend to talk about them Meet the real world. To solve a real problem for someone, weas they are close to the final product. Just a few modifications and have to understand, not only what they are doing right now, butwe are there. The original thought is the same, the prototype is what their unmet needs are. It is not certain that he or she knowsjust for verifying the concept. This is very narrow minded and what they need. To discover their real needs we have to visit themisses the discovery of new possibilities. By opening up to what real world, meet and observe people in their daily life.we can learn from prototypes, we could change the whole initialidea to something much better than what we first intended. This is System level. To create a solution for a problem usually involvesDesign Thinking. Design something just to see if we trigger any people from different parts of an organization. To be able tonew thoughts. The result of the design does not have to be a communicate with people from different parts we need aproduct intended to sell. The goal is new insight and learning. This framework that enables system level communication and modelsprocess can replace traditional design. A new and scary concept that can illustrate system wide interdependencies.for many, many people. Cheap, rapid prototyping. One of the best ways to reduce risk isSo prototype instead of specify. Writing a specification with to verify assumptions. By using simple, fast, cheap prototypes youforesight is hard, almost impossible. Yet it is what we have done can unveil risky assumptions. The lessons of a prototype can alsofor far too long. This may be why it is hard to convince managers make you change directions. Using prototypes like this helps youthat making a prototype is the best way to figure out what should stay one step ahead.be done. If you spend too much time trying to figure out things inadvance you are less likely to be flexible enough to adopt a better By adjusting to a design thinking mode you can make sure thatidea when it comes along. Design Thinking is a lot of things but you have a clear understanding of the real problem you intend tothree basics that I think (along with those who inspired me) are solve, aligning the way forward system wide and exploring thecore to this process are; to face the real world frequently, see the next step using cheap, rapid prototyping.whole, and rapid prototyping.
  7. 7. Portfolio AnatomyA portfolio anatomy is a visual aid for Deadlocks usually result in workarounds and temporarily solutions which off course increase cost and delay time to market.showing the relationships between theprojects and activities in your portfolio. When dependencies are broken and your flexibility increased, you can move into exploration mode, working iteratively with a rollingThere are many types of anatomies which can help you visualize wave of exploration, adaptation and mass release. When all yourintricate relationships between parts. The concept has been used projects were interdependent, there was little time for exploration,on many types of problem but mainly for visualizing different parts making your launch very risky. Imagine instead a rolling wave withof a project. A Portfolio Anatomy can be used at the corporate an iteration period of 3 months. By using the Explore, Adapt andlevel, with the entire portfolio, or with individual product line Produce sequence you can in the current iteration: explore whatportfolios. It visualizes all parts as viewed from 30 000 ft. A might be produced in six months time, adapt what you arePortfolio Anatomy will help you understand the big picture, producing in 3 months, according to exploration findings found inincluding when and how to break dependencies between the last iteration, while producing the result of previous iterationselements. now.A Portfolio Anatomy will help you align your tactical moves andmake communication easier. It is not so much a replacement forother tools than a compliment. Many common portfolio tools use Explore Explore Explorethe verbal, logical part of our brain, like financial models, businessproposals, etc. An Anatomy engages our visual side. Itcomplements your tool set for solving the complex problem of Adapt Adapt Adaptcoordinating many different projects. Produce Produce ProduceBy breaking projects up into smaller projects and identifyinginterdependencies between them, they become easier tocoordinate. When breaking a project down, you often end up withone part which is the platform/infrastructure/foundation and The anatomy technique is not at all difficult and no specific toolsanother part which is the value proposition. Normally these parts are necessary, though there are special tools just for this exercise.are aggregated in order to make the financial investment cut. The The easiest way to describe it is probably with a case study; Meetadvantage with breaking the project apart is that the Green Room Surfing.interdependent part can be executed earlier and then be availablefor the other parts of the project. This helps to avoid deadlocks.
  8. 8. The Greenroom Surfing storyGreenroom Surfing is California basedsurfing brand. They have been selling surfequipment and clothing since 1990. They arenot profitable and soon face downsizing ifsales don’t improve. There is a real crisis inthis fictive company.The surfing equipment and clothing business is fiercelycompetitive and all brands are competing for approximately thesame customers. That is anyone who surfs, wants to surf, wantsto be regarded as a surfer and those who just like their T-shirts.The company has seen a negative trend over the last 5 years and Current Business Modelis now facing downsizing. The board of directors still has one last Ben calls it the “Flip Side” service. This service is something newhope. One of the employees, Ben, has an idea. for the industry and will help help boost Greenrooms brand as a pure surfer brand. Surfers will also get exposed to GreenroomBens’ idea is a new business model where the company should Surfing retail stores and possibly buy things they need whileshift from selling to just about anyone, to focusing exclusively on traveling. Some might even buy a new custom shaped board.people who really surf. While surfers are not known to be rich,since they travel frequently and tend to prioritize waves over work, A possible cost reduction has also been identified. Instead ofthey will pay a premium for functionality, quality and durability. owning their warehouses, there is a new business utilizing a dynamic warehouse model where warehouse space can be rentedAnother idea Ben has relates to the problems surfers have as a service. This way Greenroom only has to rent the space theybringing surfboards when travelling. It can be ridiculously need.expensive, the boards can get broken and every other traveler youmeet seams to hate you (it’s true!). Bens’ idea is that instead of By changing the strategy to this new business model, Greenroombringing them on the airplane, you ship them using a service Surfing can move away from competition with mass producedprovided by the Green People Club. You bring the boards to your products with super low margins. Instead they will focus on onlyclosest Greenroom Surfing retail store where you live, they will on functional quality products where their margins are higher.ship them to your travel destination and you pick it up at either a They will also lower the cost by use of the new dynamicGreenroom retail store or partnered company when you arrive at warehouse service.your destination.
  9. 9. Projects PrioThe board have decided to go with the new business model andalso add an environmental factor. They will reduce non- Phase-out of old suppliers & phase-in of 1 newenvironmentally friendly material usage as much as possible. Kill own warehouse system & integrate to 1Greenroom Surfing is now launching a vision statement, lead by external 3:rd part warehouseBen who came up with the new strategy. Flip Side Service 1“We believe that surfers not only want good functional Update Product Design System 1products but also highest quality, produced with minimum Update B2B Order system 1effect on the environment.” Update PLM system 1 Update CMS system 1 Greenroom.com 2.0 update and new 1 layout Update return order system 1 Green People Club 1 IT projects needed to launch the new business model New Business ModelThe new strategy leads to many new projects. During the programplanning new ideas are popping up, from asset saving projects tonew products. However Greenroom don’t have enough time ormoney to do all of the projects identified. The reality is they needsome short-term revenue to avoid bankruptcy. Ben and his team isasked to cut the time plan, and costs, in half. The biggest problemis that it seems all projects need to be done before the newstrategy is effective. Greenroom Surfing IT architecture
  10. 10. The management team is asked to prioritize projects, since they Looking at this Portfolio Anatomy some projects can be startedcannot all be started and run at the same time. The simultaneously and some can be postponed for later. But it ismanagement team has not been able to prioritize since all status quo for the business model.projects are needed. All are musts. Ben and some creative people spend the evening trying toDuring the first planning phase Ann, one if the project leaders, figure out another way. What they discover is that almost all ofhas found a tool to visualize dependencies between projects the projects can be broken up into smaller projects. Ben alsoand to plan possible combinations. Below is her first prototype creates an alternative launch strategy.of a Portfolio Anatomy. She demonstrates it in the hope offinding a way to coordinate projects and move toward the newstrategy, at least far enough so they can launch something thatcan change their current fate. First round portfolio anatomy
  11. 11. Bens’ alternative launch strategy is a more iterative and, after a In the second iteration they plan to phase in the newcouple of hours bending and twisting, looks less risky but is still environmentally friendly products as well as launch the realprofitable. Ben split the launch up in iterations. surfer compliant products. They will finish the transition to dynamic warehousing and make an update on the currentIn the first iteration Ben plans to phase out the low margin website with the new products.products. He also phases in the new suppliers of organicenvironmentally friendly material and the integration with the In the last iteration they plan to phase out non-environmentally3rd party external warehouse system. This way they lower friendly products, phase out old suppliers, start the Greencosts significantly and turn the immediate cash-flow problem People Club and start the Flip Side service. New new businessfrom critical to manageable. strategy is finalized with a new layout on the website. Second round portfolio anatomy
  12. 12. Ok, what’s next? Guiding stepsIn theory this is easy. Not so easy in reality 1. Understand your Business Model strategybut you have to start somewhere. If you 2. Identify all that must happen to realize this strategydon’t know where you are going a Business 3. Visualize these elements in the portfolio of projects, assets andModel might be the first step. When the activitiesend of the road is clear then it is time to 4. Align the strategy with the whole organizationfind the way.The Greenroom case only illustrates the simplest way of using a 5. Decide in which order projects and activities should comePortfolio Anatomy. As you start using it you will discover otherbenefits. You can easily add other activities such as knowledge 6. Use internal competence to creatively explore new waysacquisition, organizational changes etc, as important elements. forward that might help speed things upWorking with a Portfolio Anatomy is not a one time event, its is an 7. Review and adapt on regular basis, minimum 3-6 monthsongoing planning activity and is part of the Agile ProductManagement Framework ©. This planning activity is a greatcomplement to Business Generation Modeling, PortfolioAlignment, and Project Decision-making. By visualizing theportfolio elements it tends to effect the decision-making process.This is a good thing!
  13. 13. Johan Oskarsson@johanoskarsson Inspirational sourceswww.captaintrouble.com Management 3.0 – Jurgen Appelo The Product Manager’s desk reference – Steven Haines Business Model Generation – Alexander Osterwalder A leader’s framework for decision making - Dave Snowden The back of a napkin & “Blah, blah, blah” - Dan Roam Steve Jobs - Walter Isaacson Thanks to David Jackson for editing and theoretical dialogues.

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