10.1. PPM'S SEVEN PS

We developed this simple mnemonic as an outline and affirmation of PPM design principles to encourage one another and ourselves. The seven Ps refer to the first letter of key design principles we discovered that when used together make PPM work. The Ps are Passion, People, Politics, Process, Potential, Performance, and Payback. Let's look at each one in turn.

P¹ = Passion

We all share a real passion for the subject of PPM. This passion is what keeps the design alive within us, especially when things may not go as smoothly as we might hope.

Let's go back to the good old dictionary to gain a better understanding of what we mean by passion. We use passion along the specific definition Merriam-Webster describes as "a strong liking or desire for or devotion to some activity, object, or concept."

We have found that many of us have our business experience rooted in the discipline of project management. From that base we each moved on to take in the best from other disciplines, including program management, systems engineering, configuration management, financial investment, operations management, and enterprise architecture. Our journey found us each yearning for something more. We sought a better way to put the best of these disciplines together to more effectively and efficiently run our businesses. We each gravitated into the emerging discipline based on a more than half-century-old financial concept applied to the management of projects and programs.

Figure 10.1. The Seven Ps are key design principles that, when used together, make Project Portfolio Management work.

Dr. Harry M. Markowitz, the 1990 Nobel Prize winner in economics, is often called the father of modern portfolio theory based on his 1952 article "Portfolio Selection" published in the Journal of Finance. Later, in the 1990s, people such as Robert Cooper, Scott Edgett, and Elko Kleinschmidt (1997) began applying Markowitz's theories to the management of programs and projects. And so began the subject of this book—Project Portfolio Management.

Because of our wide variety of experiences from a multitude of industries ranging from pharmaceuticals to information technology to retail grocery to aerospace, we discovered that PPM became a logical arena into which we could all throw our hats. We have found this arena a great place to integrate the various disciplines noted earlier into an improved way of running a business. In fact, we actually refer to PPM as more of a practice than a discipline.

It's from this experience and practice that our passion has grown. And this passion only grows brighter the more we practice and experience PPM. Not that everything is always coming up roses. Wait, maybe it really is roses—we seem to find the beauty and wonderful fragrance, but also get stuck by a few thorns along the way.

Zander and Zander (2000) put it this way: "The access to passion gives momentum to efforts to build a business plan, it gives a reason to set up working teams, it gives power to settling individual demands, and it gives urgency to communicating across sections of a company."

So, passion is the first P. It is perhaps the one P that holds all the other Ps together.

P² = People

Although we tend to use a lot of numbers in the practice of PPM, it's not really that cut and dried. PPM is first about people. It's people who do the work of a project, who make decisions about projects, and ask questions about projects. But people also come to the table with all the idiosyncrasies that combine to make up a unique individual.

People are not numbers, and they usually do not want to be told that some calculation about a project is the answer to all their problems and issues. A PPM manager really needs to be a student of people, especially their behavior and motivations. They are the wild card in PPM, but they also make the job challenging and exciting. People keep us all reaching for the stars.

This is quite a contrast from the comments we sometimes hear, such as "This job would be great if only I didn't have to deal with people!" Every so often, all we need is a little attitude adjustment on how we look at people. It is also important to each of us to know that we're not alone and that we've all been there. We all need to cultivate a network of people we can trust and with whom we can comfortably bounce ideas around. The Enterprise Portfolio Management Council (EPMC) is one example of a network of people that fit this mold.

Realizing that so much of our job is about understanding human nature is a big step in the design of PPM. It may seem obvious, but working with people and understanding them is one of those difficult areas to master in PPM, and in life. In fact, it often may seem like more fun to work in the realm of PPM and its numbers, templates, charts, graphs, and computing systems, rather than deal with people. For example, when I went searching for information about dealing with people in project management and PPM, I discovered that the landscape is sparse. There are mountains of information on the tools, templates, computing systems, and procedures of project management and PPM, but not much on the "people side" of the equation.

But here's the one message we hope everyone gets from us loud and clear: PPM is about people. People make it work. People make it fail. People make it frustrating. People make it challenging. But people also make it fun and rewarding. PPM is about people we work with, people we impact, and also about PPM managers and business leaders. After all, PPM managers and business leaders are also people! Keeping this in mind, we can take comfort that we are not alone in trying to get PPM to work. We all are in the same boat—PPM managers, business leaders, stakeholders—everyone. If there is one thing we've learned being a part of the EPMC, it's that we are all in this together and it really doesn't matter what industry we're in; we are all dealing with the same big issues. And that's the beauty of it—we can all learn from each other.

P³ = Politics

"Ugh!" we may exclaim, "I hate politics." Why can't people just look at the facts and use logic to make decisions and agree with plans? I don't trust all those brown-nosing people at the office. They don't want to get any real work done, other than on their own careers."

We know at the sound of the word politics all kinds of sleazy, kowtowing images of smoke-filled back rooms with all the "good old boys" come to mind. But politics is really a good word to describe the essential tenets of this piece of the seven Ps.

What do we mean?

Politics is really about influence, negotiation, power, and autonomy. As Aristotle (2004) said, "man is naturally a political animal." Merriam-Webster defines politics as "1a: the art or science of government; b: the art or science concerned with guiding or influencing governmental policy . . .; 5: the total complex of relations between people living in society."

The P of people and the P of politics are very closely related. One deals with understanding people and the other deals with understanding the effective methods to work with people.

We've all probably learned when we were project managers that there are all kinds of different sources of power or authority, like boss/subordinate, charismatic, purse-string, bureaucratic, and so on. In the capacity of a project manager we usually had very little direct power or authority over the people we had working on the project. We had to learn how to convince folks to do the various tasks on the project, anyway. We were actually playing politics, even if we didn't call it by that "horrid" name.

Being a PPM manager is much the same; the people working on projects that are part of the portfolio aren't all reporting to us. Consequently, we have to learn how to influence people by using the power or authority available to us by negotiating an agreement while not stepping on the autonomy of others.

Autonomy is really about each of us feeling in control of our lives. Another way of putting it is being able to maintain our feeling of independence while keeping our egos from getting bruised. As PPM managers, we have to be very careful how we treat those around us. If we come on too strong and demanding, then we will have limited ability to influence those folks on later projects, even if they do what we ask this time. In the long run, we will hurt ourselves in being able to do our job.

P⁴ = Process

The fourth P is process. It is about creating, using, and following a PPM process.

This is one place where we have seen a lot of good intentions, but not always good results. We thought this would be one of the easiest parts of PPM, but it evidently is not. That being said, it really can work and when it does it's great!

The whole idea behind PPM is to make sure our business is doing the right work. Project management processes are how we do the work the right way. Cooper (2000) states these same two concepts as "Doing the right projects" and "Doing projects right." We've seen a number of different PPM processes, but they all boil down to the same basic elements. Some companies like to have few steps at the top; others want to see the flow of a project through the process from beginning to end. One simple process flow we developed at the EPMC has just 10 steps (see Chapter 8).

The real key is not so much whether you have a process. We've seen all kinds of processes documented down to the gnat's eyebrow, but they weren't being used or followed. And that last part is the real litmus test—is the process being used and followed? PPM is all about the right action—when it's done right!

The important thing about any PPM process is not so much the number of steps, but to have specific, understood, and documented decision points in the process. What we mean by this is that there needs to be at least four key decision points in the process:

There are a couple of things to watch out for in a process design. There may be a tendency to evaluate one project at a time as it goes through the various decision points. Each project needs to be examined and evaluated, but they also need to be put into the context of the portfolio, particularly before they are authorized for implementation. Also, it can become easy to try to simply compare one project to another at each decision point. Using some advanced techniques such as the Analytical Hierarchy Process (AHP) can do this most effectively. Thomas L. Saaty (1994), the originator of AHP, describes it this way: "AHP is about breaking a problem down and then aggregating the solutions of all the subproblems into a conclusion. It facilitates decision making by organizing perceptions, feelings, judgments, and memories into a framework that exhibits the forces that influence a decision."

Another key element in PPM is the management of resources. So we need to be vigilant that we are not authorizing projects into the portfolio without performing our due diligence about the availability of resources to work on the projects as they are currently planned.

Succumbing to these pitfalls may result in a suboptimized portfolio. One indicator that this may be happening as a process begins to be used is to measure how many projects are getting a yes vote at each decision point. If every project gets a yes, then there may be cause for concern that the PPM criteria are too vague. The unwanted result of this kind of situation is clogging our pipeline of projects and overburdening our people.

One technique that we have found useful in a PPM process is to introduce a classification system for projects. This is not the same thing as a priority or urgency schema. Rather, it is simply putting projects into categories that allow the process to operate more smoothly and ensure that the right projects rise to the top.

Some suggested classifications are as follows.

• Must do: projects that are strategically essential to the operation of the business, or are mandatory to complete. Mandatory projects may be from regulatory requirements levied on the business, or even company directives that mandate action. To determine if a project is really mandatory, ask: "Can we simply not continue to do business without this project being successfully implemented?" In a production environment this may take on the nuance of "stopping the line" and delivery of the product until this project's deliverables are in place. All too often we have seen where "mandatory" actually meant "I really want it!"

• Need to do: projects that are important for meeting customer requirements, improving a product in a significant way, or enabling major cost reductions, but are not mandatory in nature. These are the first projects in the discretionary pool.

• Should do: projects that fall deeper in the discretionary pool. These are ones that we may choose to do if enough resources are available. These are projects where there appears to be a moderate improvement in the product or cost savings or avoidance for the company.

• Could do: projects that are at the bottom of the discretionary pool. These are projects that are "nice" to do, if we can get to them given all the other demands we are attempting to meet.

P⁵ = Potential

The fifth P is potential.

This is the forward-looking part of the process. Ferreting out the right projects using the PPM process does the selection. But there is still the matter of balancing the portfolio.

We're not going to start talking accounting now, are we? No. Balancing the portfolio means making sure that our strategies and other key criteria are aligned the way we want them given the current environment.

That is understandable. But just how do we do this?

Remember those old vinyl records we had, or at least saw around our parents' or grandparents' house? A preschool teacher was putting an LP (long-playing record) on an old phonograph to play a song for the class. The room of three- to five-year-olds looked at that record and one wee one exclaimed, "Teacher! That's a really big CD!" Oh, the innocence of youth!

The way in which we all use the more sophisticated sound systems that seem to abound in today's culture can be used as an analogy in reaching the optimum potential in a project portfolio. In the "old" days, the really fancy phonographs that played those records had all these switches, dials, or levers we could move around until we got just the right sound. Now most sound systems, CD players, and MP3 players have those sound equalizers built right in. We can do the same kind of thing with our project portfolio.

What's a sound system got to do with balancing a portfolio?

When we set up the PPM process and use the business case, we create the decision criteria for the selection and prioritization of projects. That's not a static thing. If we weight the criteria, then we can let each criteria weighting act as one of the levers or dials on our portfolio equalizer. By doing this we can get just the right balance, or fidelity, we want from our portfolio based on our strategies and the environmental conditions our companies operate within. We can keep an eye on the portfolio, the strategies, and environmental conditions and make adjustments quarterly, annually, or whenever some major event occurs in our business or its environment.

We can move the weighting of each criterion to suit the outcome we want to get from the portfolio. We can determine the weighting of each criterion by looking at what is important right now in the business and even react to crises, if needed. That keeps the portfolio a living and dynamic business tool.