Portfolio Management Insights: Opportunity Gap

This morning’s R&D had me reviewing some previous work on Expected Commercial Value calculations.  One of the flaws or should I say weaknesses at lower levels of Portfolio Management Maturity is a the assumption that delaying a project only shifts to the right when a project yields value.  This however is most often not the case.  When evaluating each project’s value for a Portfolio one needs to account for both NPV of funds expected, NPV of funds received, AND also a potential reduction is value received as a result of a short recovery period and project lifecycle.

Consider this first scenario: Buying a new automobile.  While the utility may not change on a new vehicle purchased towards the end of the year its market value certainly drops as one gets closer to the next model year.  Another scenario: The utility value is sensitive to when in the lifecycle a initiative is executed (e.g., having a large shipment of ice cream available for summer in New York vs. fall).

As such Enterprises with more mature Portfolio Management capabilities will consider this factor in portfolio decisions.

Opportunity Gap



Enterprise Portfolio Management insights

This weekend’s brainstorming and reading brought up some interesting insights.  So much so I couldn’t sleep and woke up around 2am with the following visuals in my head.

First of was a refinement? on Govindarajan and Trimble’s concepts about two competing engines within an enterprise in their book Beyond the Idea.  Their proposed model theorizes whay its so hard to get innovations deployed and adopted in existing concerns while startups do not seem to have this internal conflict issue.

Gravity Centers in Enteprise

Second was an idea I’ve been refining over the years; that portfolio selection is not just a single event but a series of filters applied to narrow down the pool to the portfolio member to actively work on.  There are lots of models on sections methods (BCG Matrix) Balanced Scorecard, etc.  What is common to all is a concept of sorting and filtering members into groups, which creates a group of members to actively work on.


Portfolio selection is a filtering process

While these are not likely the final visualizations of the presentation I’ve proposed for an internal conference in February.  The metaphors speak clearly to me; I wonder if they do the same to others?


Modern Enterprise Portfolio Management

Added “mho” to interesting discussing on the Enterprise Architecture forum this morning.  Below is the base premise I started with for creating a hierarchical portfolio which is acted upon in each enterprise from observation.

IT Asset Class Hierarchy

If, as presuppose IT is part of Enterprise, then asking IT or Enterprise Capability is moot.  If however, once recognizes the context switch we often go through doing these discussing you’re left with the following:

  1. Information Management Capabilities are a Enterprise Capability; Database Management is a unique configuration of multiple assets (people, software, hardware, etc.) that create one instance that capability.  This is where the Enterprise Portfolio Management R&D I’ve been doing is headed.  imho a Capability is defined as the ability to achieve a desired result from an action.  It is not the actual action itself (potential vs kinetic energy).  The exercising the capability often entails employment of a unique configuration of assets (people, process, technology classes).
  2. There can be multiple configurations of assets that create such a capability
  3. Assets can be combined in different capabilities to create different capabilities
  4. Time, Money, and People are dynamic assets ( Time is a self perishable/consumable asset; Money is a mutable asset as well success measure in Western Culture, it is often used as the medium of exchange for other assets; People are assets with unique properties and competencies that can increase or decrease in value based upon the social-economic-technological ecosystem they operate within.
  5. Information, Knowledge, and Wisdom hierarchy of asset value is time/context dependent (e.g., the Knowledge of how to build buggy whips has depreciated over time and current social-economic-technological ecosystem they operate within).

Enterprise Portfolio Management

Updated the CMM and Capabilities Roadmap yesterday still have a few more items to add.  The roadmap is slowly coming into shape.  Hope to have presentation and tools ready by February conference

Modern IT Portfolio Management CMM

Like the original CMM this version for Portfolio Management has 5 levels.  Taking a page from the CMMI work I did in the Marketing Domain for IBM/Samsung, et al. It will contain an assessment tool to help enterprises do it themselves.

I’ve been developing a CMMI for Enterprises Architecture similar to the Software CMMI.  Enterprise Portfolio Management will be the first subsection of the EA CMMI which will be part of the Structure in Threes book in works. Modern IT Portfolio Management CMM Capabilities

Capability Rationalization

Had a great weekend figured out the basic logic for Application Portfolio Rationalization, now I need to add upper and lower limits for fulfillment, interdependency, lifecycle and a few other factors for a balanced scorecard approach.

Capability Rationalization

WHY is EA broken?

Responding to my colleague Neil Rerup from his post yesterday:


EA has never been broken as it was never working to start with.  EA was a metaphor applied to a discipline that is still emerging.  The problem however is that EA was assigned by default to IT function (MIS when it was originally developed) due to its origins.  Years later the discipline is still maturing however, EA still does not have the right home or sponsors that understand the metaphor.

If we fully implemented the metaphor the EA Function would have specialists –like dwelling architecture practices that have HVAC, Electrical, Plumbing, etc.– in all the aspects of enterprise design (e.g., Organizational Design, Finance, IT, Marketing, Strategy, etc.) reporting to a chief architecture officer that directly reports to the CEO (The Client) who with the rest of his direct reports defines how the desired enterprise should be within the constraints they have.  Its up to the EA function to advise, offer alternatives, and implement such designs once directed.  Hmm sounds like a real architecture practice.

This infers though two things 1) Executive Recognition of the need to “design and build and enterprise with the same level of precision that engineers provide in other design and engineering professions 2) The discipline is mature enough to integrate all these dimension into a set of plans that have some referential integrity (i.e., holistic ). https://briankseitz.wordpress.com/2012/02/02/discipline-maturity-lifecycle-enterprsie-architecture-example/

Modern Enterprise Portfolio Management

Portfolio Management capabilities roadmap (initial) from last night’s brainstorming.  Planning (aspirational) to have Modern Enterprise Portfolio Management materials ready by February for a possible seminar at my home office over a holiday weekend.  The big question(s) will be if any of my colleagues and followers will be: 1) interested in attending a focused seminar, 2) willing to take the trek ~60 miles south of Seattle for a 1 to 2 day seminar.



Enterprise Portfolio Management CMM Roadmap

The nice thing about this research is I can leverage it as source materials for current projects I’m doing at work and for internal technical conferences.


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