Effective Strategy Execution Begins With Portfolio Management and Benefits Management

Effective strategy execution is a critical component of an organisation's success. It begins with the two vital disciplines of portfolio management and benefits management, which ensure organisations achieve a clear line of sight. It is a technique that seeks to ensure a transparent chain is continually demonstrated from strategic intent through to benefits realisation (Jenner and APMG International, 2014). The synergy between these two disciplines ensures that not only are programmes and projects delivered successfully, but the organisation also reaps the expected planned and emergent benefits from the investment. This contributes to the successful execution of its strategic objectives. Organisations that master this combination are better positioned for sustainable success in today's growing digital economy.

The one thing I want you to remember today is what the terms strategy, portfolio management, and benefits management mean. Firstly, strategy is the deliberate 'choice to perform activities differently, or to perform different activities, better than market competitors' in the delivery of your organisation's value proposition (Porter, 1996). Portfolio management involves the selection of programmes and projects, their categorisation and prioritisation. It then continues with regular balancing of the corporate portfolio (both pipeline and inflight programmes and projects) assessed against progress towards strategy execution and benefits realisation (Dooley, 2014). Lastly, benefits management is the identification and quantification, evaluation and appraisal, planning, realisation and continual review of benefits, both financial and non-financial. Specifically, a benefit is defined as a measurable improvement from investment in change perceived as positive by one or more stakeholders that contributes towards organisational (including strategic) objectives (Jenner and APMG International, 2014).

To achieve organisational (including) strategic objectives, these two functions typically performed by a portfolio management office must operate in parallel to ensure benefits that justify investment in programmes and projects are baselined and captured in a benefit profile and reported through the organisational performance management system. The portfolio management office also ensures key performance indicators (KPIs) and metrics are established for tracking both strategy objectives and benefits across the corporate portfolio, particularly as regular measurement and monitoring provide a clear view of progress and whether strategy execution and benefits realisation are on track. It is this measurement and continual monitoring at both a portfolio and initiative level that forms the very heart of effective benefits management and understanding the actual contribution of the corporate portfolio to strategic objectives.

A key input into both portfolio management and benefits management is the programme and project business case. It begins with options analysis in the strategic outline case, investment appraisal of the outline business case and portfolio prioritisation of the full business case prior to full funding allocation. It should be a 'thinking exercise' that results in a well-scoped and planned investment supported by a document that provides 'the repository for the evidence base' in the delivery of strategic objectives and the expected benefits (HM Treasury, 2018). As such, the organisation should adopt benefits-led change initiatives that 'start with the end in mind' and where the scope of the initiative is determined by the benefits required. In short, the benefits are required to determine the scope and requirements for the program or project (Jenner and APMG International, 2014).

Remember, if there is one thing you take away, it is that effective strategy execution requires a combination of portfolio management and benefits management. Portfolio management ensures that the right projects and programmes are funded to achieve both strategic objectives and expected benefits, whilst benefits management focuses on realising the benefits from these initiatives that form the crux of continued business justification. This is why the business case, investment logic map and benefit profile/s should always be developed together and periodically re-evaluated at the same time, particularly during a post-implementation review. Eventually, an organisation must focus on the hard economics of every spending proposal to determine the achievement of a clear line of sight. That is strategy objectives through benefits realisation.

References 

1. Dooley, A, 2014, Praxis Framework: An integrated guide to the management of projects, programmes and portfolios. Association of Project Management, Buckinghamshire 
2. HM Treasury, 2018, Guide to developing the project business case, viewed 17 October 2023, available at: https://www.gov.uk/government/publications/the-green-book-appraisal-and-evaluation-in-central-governent 
3. Jenner, S and APMG International, 2014, Managing Benefits: Optimizing the Return from Investment, 2nd Edition. The Stationery Office, Norwich. 
4. Porter, M.E, 1996, What is Strategy? Harvard Business Review. Viewed 17 October 2023, available at: What is strategy