The budgets for 2021 are ambitious. The wishlist of initiatives and projects for next year is long. Once again the question arises: How do we get as many strategic hp as possible on the ground? Time to taste the Strategic Lean Portfolio!

In recent weeks, management has placed its bets on the future: The new 5-year strategy is written down in PowerPoint. The decision makers have rolled options and made tough decisions. The direction and the main topics have been decided. The goal: to increase the probability of success in an unpredictable future. The orientation anchor: projected KPIs.

Affordability vs. value contribution

Now it’s getting serious. What does it take to achieve our goals? At this point, lists of ideas emerge that are intended to contribute to the strategic goals in sub-strategies of HR, marketing and other departments. The limiting factor: affordability. There is a lack of resources – primarily money, people and/or skills. To the fore comes the limiting factor „affordability“, when strategic investment decisions are discussed. This criterion overshadows „value contribution“ to the strategic goals. The catalog of measures is based on the question „What can we achieve with our existing resources?“ The advantage: the available resources are used, and every employee can make his or her contribution to strategy implementation. The disadvantage: The utilization of existing resources may limit the ability to work on new topics with a higher strategic value contribution – because you need different ways and means for new things. In other words: The whole organization is busy, but possibly does not address the most important tasks.

Building a strategic portfolio

Pursuing strategic goals, this is annoying, because you don’t get enough strategy horsepower on the ground. My recommendation: Postpone the resource question, focus on value contribution first, when you build up your portfolio. Which measures generate the most value? On this basis, you then consider how and with which resources you will start the implementation – and make compromises if necessary.

The following questions could help you to build a strategic lean portfolio:

1. What work is currently in the system?
Make visible all the work that keeps you busy. All that you have assessed as strategically relevant so far for the „expiring“ strategy. No matter, if it’s change or run, quality assurance or innovation. Put everything on Post-its and stick it to the wall. Seriously: touch it, write it down, make the current work visible!

2. Does all this work fit with the new strategy?
Allocate the Post-its to the new strategic initiatives. „Which work still fits the new strategy? And which work does no longer fit? Do we still need it? Can we delete the non-strategic work and thus free up resources for other things?“

3. What content do we have for the new initiatives?
Now allocate the new ideas and projects to the new strategic initiatives. Combined with the current work in your system, you now have a wall of post-its that gives you an overview of all current and planned work per strategic initiative.

4. Where do we have gaps?
Are the current and planned work topics sufficient to meet expectations? Are there still empty spaces to address strategic issues? Why is that so? How do you get to promising ideas? You may have to submit project proposals to your portfolio later on. And that is ok. Your portfolio is not a final plan. Rather, adapt over time.

5. How do I make work packages comparable?
You are now in the hot phase of building up your portfolio. First, you cut your activities and ideas into work packages of the same size. All work packages should have the same lead time. This creates comparability and means that the time span between the start of work and delivery is the same for all work packages, e.g. three months. With this approach you integrate aspects of agile working: continuous delivery in short time periods. So you break large projects down into smaller chunks. Try to get a better grip for the next six months, possibly twelve. But do not spend much planning effort for the second year – who knows which investments are appropriate then? The focus is to create value fast, not to secure resources for months ahead.

6 How do we prioritize our investments?
Here is the crucial consideration: The evaluation of the work packages. As an organization, you should jointly define the aspects and weightings that you consider to be the „value contribution“ criterion in terms of strategic implementation. Urgency? Efficiency? Sales potential? If you have that, evaluate each work package. The result is a hierarchy of activities in each strategic initiative. And across initiatives it becomes transparent, where the most value is generated. Voila, you have in front of you the portfolio with the largest strategic impact.

Conclusion

This all sounds simple. „Technically“ it is. The main effort are the dialog and discussions with colleagues: creating transparency, developing a common understanding, coordinating activities. The reward for this is not only an effective portfolio, but also a collaborative basis on which you will be able to make faster adaptation decisions in the future.

Not clarified at this point is the feasibility of the portfolio from a resource perspective. Despite high prioritization, some activities will have to be postponed, because you lack money, people and/or skills. This is where the strategic resource allocation starts. How do you get your resources set up so flexible, so that you can shift them to implementing short-term adjustments in the portfolio? No organization will solve this problem overnight. But you should start, try and learn. Because this situation will intensify in the future.After all, you now have a coordinated basis, on which you can make more conscious and comprehensible compromises in your investment decisions.

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