In most R&D organizations, the portfolio management team walks a narrow line between the project teams and the executives. The portfolio staff polls the project teams for information about each new and ongoing initiative, builds portfolio views, and shares the updated state of the portfolio with executives. In an ideal world, the portfolio team members are like data shepherds, ensuring that critical R&D information stays up-to-date and ever-available for executive needs.
But when all is not well in the portfolio pasture, portfolio teams hear comments like this from the project teams and the executives:
- The review is tomorrow at 11? Oh, I’ll send you a project update tomorrow morning. Okay?
- Project A must have a bigger market than that. Your numbers are incorrect.
- We updated our project forecast yesterday–you aren’t using the latest information.
- We are using a different cost of capital so your numbers don’t tie out with our spreadsheet.
- I can’t use these data when over half the projects haven’t been updated since the last review.
- Who changed these schedule estimates? Nobody asked the operations committee if a six-month slip in deliverables was acceptable!
These comments are warning signs that your role in the organization is more like a data scapegoat, rather than a data shepherd. The processes you have in place are trapping you in a position of accountability for the data, without any of the required authority that the job demands.
All is not lost! You can take steps to shift your role within the organization to data shepherd by:
- Redefining the roles and responsibilities of those around you, and
- Deploying tools that take you out of the role as data gopher.
Let’s look at these in more detail, breaking down the roles, responsibilities, and platform requirements one-by-one.
Subject matter experts own their data: The teams that provide cost, benefit, and schedule information on each initiative need to be seen as the owners of that information. It should be clear to all involved that if the initiative data is missing or out of date, the portfolio team is not responsible because the project team did not need to be told the information was needed; the process in place already made that crystal clear.
Transparency begins with an understanding of who has changed what for each initiative’s forecast in the portfolio
All information has a clear pedigree, tracing it back to the subject matter expert: The systems you employ must provide the source of each piece of information, along with its time of entry. Having information that describes the ‘freshness’ of the information in days or review cycles is an added bonus, enabling discussions of which projects have been updated recently and which may have an outdated forecast or schedule.
Subject matter experts are responsible for submitting their project data: Rather than emailing information to a portfolio team, which puts the portfolio team in the middle of every project update (and there may be hundreds!), the project teams and associated experts should have the ability to enter and sign-off on their projects’ data themselves. The same system should provide the portfolio team with instant information on which projects have submitted, and which have not.
Middle-management stands behind each initiative’s updated forecast: Project information cannot move straight from the project teams to the executives. In most organizations, it’s appropriate for a group close to the project team to approve the complete set of cost, benefit, and supporting information. This approval indicates to management that the information is considered accurate and complete. The middle-management team shares the glory, and the blame, as the initiative is reviewed by management. The portfolio team, on the other hand, is not culpable for the project valuations in any way.
eNPV variance at the division and individual project level tells an important story about the portfolio today (click to expand)
Executives see and understand how each initiative has evolved over time: I’ve written many times about variance; it is critical that executives have instant visibility into which initiatives have increased in value, or decreased in value, since the last project or portfolio review discussion. It isn’t enough to know a project’s value to the company today. Without a system in place that tracks project cost, value and schedule over time, executives will rely on the portfolio team to perform variance analysis on every single project by hand, an untenable situation for all but the smallest R&D portfolios.
The Payoff
Ensuring that the portfolio team are seen as shepherds and not scapegoats is more than merely a matter of their personal comfort. To make effective R&D portfolio decisions, the accountability for each initiative’s forecast must be placed with those who provide the information, not those who deliver it to the executives. When roles are clear, project teams understand that their projects’ funding is contingent on a complete set of information, signed off by their team and their management. This removes the burden of chasing down the project information from the portfolio team, and increases the chances that the portfolio review includes a complete set of project information for every initiative.
So, are you a data shepherd, or a data scapegoat? What key changes in your tools and processes helped your organization improve your portfolio conversations and lead to better R&D portfolio decisions?
Each year, tens of billions of dollars in R&D investments are shaped, allocated, and refined with the help of Enrich’s EAP. Are you interested in learning how we can help streamline your portfolio reviews, turning months of long nights and frustration into a value-enhancing, confidence-affirming exercise for your R&D organization? Contact us, and learn what our clients already know about the value of the Enrich Analytics Platform.
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