When organizations lack a value-based process to support strategic portfolio management decisions, they risk treating project/portfolio evaluation as an analytic exercise rather than as a collective conversation around value creation, supported by analytics. Because there is no inclusive process, they may not involve key stakeholders, resulting in lukewarm support for implementing decisions. Even worse, results may be used to blame, punish, or otherwise hold people accountable for performance when they have had little or no involvement in the decision-making process.
In their best-selling book The Smart Organization: Creating Value through Strategic R&D, SmartOrg co-founders David and Jim Matheson address the topic of “open information flow, “which directly relates to clear communication and learning. In a “smart company,” they assert that “Virtually all information is available to whomever wants it. Information is used in surprising ways to create value. The flow of information crosses functional boundaries. In such an organization, people feel safe in sharing what they know and feel obliged to contribute to information-sharing systems. They are excited about teaching and learning.”
The decision-making process in smart organizations is dynamic, following the principles of agile development, wherein the information that informs decisions is routinely updated to provide feedback to adjust decisions about further investment and changes in direction based on improved knowledge.
When a strategic portfolio management process is in place, results are used specifically to improve the project and develop a level playing field to support effective portfolio evaluation and management. Uncertainties are tracked and updated based on new evidence, and decisions are updated appropriately. Information is gathered as needed to fill information gaps.