What are the factors that influence strategic portfolio alignment?

September 28, 2018 By

Aligning strategic objectives with the product portfolio is one of the foremost aims of most medium and large-scale organizations that are operational today. Browse for a guide and every management centric listicle available online talks of how your product portfolio suffers from a lack of conviction that has risen due to multiple factors – the most obvious being disjointed long-term objectives.

Yet the problem persists and manifests itself in terms of project failures, which probably justifies why this study by Walden University talks of how “Misalignment between IT projects and business strategy contributes to 30% of all project failures”. While a seamless alignment of higher-level strategic goals and product strategies may be too utopian an ambition to have, you can very well aim to make the ride far less bumpy than it currently is by factoring the different aspects associated with the portfolio and its propellers.

Strategic Portfolio Alignment

The 4 main factors that influence overall product portfolio alignment

1. Maximize the non-monetary value generated through the product

Priorities and roadmaps are best associated with common long-term goals that go beyond getting projects delivered with the stipulated deadlines and within the budget that was agreed upon. While the net high-worth product portfolio is where you’d like to go, factor the following in the strategy –

a. Innovation Value

With agility being the most preferred project management methodology as well as work culture route, factoring innovation is getting easier. Every iterative cycle can have a dedicated channel to draw into technology trends and the practicality of implementing them. However, the glitch is the velocity with which you’re required to catch up with the said ‘innovative’ value. Specifically when technology is being commodified and things go obsolete much sooner than you’d like for them to.
Therefore, experts often recommend that you look beyond the tendency to simply prioritize instant gratification in the form of monetary gains and instead also factor innovation as a  long-term effort that complements your long-term vision and overall competitive edge. It begins with building a roadmap that goes beyond today and tomorrow to actually factor ‘many moons’ of the coming future.

b. Competitive value

At the core, working on establishing a long-term competitive edge is a combination of different factors including your organization’s actual strengths, your ability to establish leadership over a market share and to actually begin understanding in the market that you can fill in. However, on a more executional level, the competitive edge is a derivative of iterative agility and how quickly you can fill in newer gaps that are caused by shifting market trends. The early adopters of the AI revolution, for example, are currently enjoying the benefits of predicting their consumers’ tastes and preferences much sooner than their competitors can, thereby slowly taking over a larger share of the market pie. When they’d decided to invest in niche AI development though, they’ve had to have long-term goals that validated allocating resources to technology that had very few short-terms benefits. Also remember that price points, customer service and quality though are contributing factors, cannot equate for a niche strategy that is present within the product.

c. Customer value

Your strategy has to factor in customer centricity on a rather holistic level, ultimately. This includes being able to talk the customer language and give them the support they need, much before they even ask for it. This acts as a direct relationship that besides delivering long-term value, also creates market goodwill that can last years. But largely, customer value in terms of relationships is not always the only factor that a product aspires for. The budget smartphone segment, for example, is all about a 6 to 12 months’ usage time for a buyer wherein, value for money goes beyond the long-term value or the relationship that the manufacturer shares with the buyer. Customer value, therefore, ties back to how you envision your product’s roadmap in the coming months.

2. Get the product mix right

When it comes to higher level strategic alignment, executives tend to get short-sightedness and this becomes a major deterrent to factoring in the long-term ambitions they would need to plan for. For example, getting the proportions of stars, cash cows, question marks and dogs right as you begin with the analysis of your portfolio is dependent on the product life cycle that you have. While in the development stage, even a potential cash cow will represent negative cash flow. However, as it goes into growth and maturity stages, the product begins to garner revenue and will contribute accordingly. So as you envision a portfolio, remember to have products in different stages of their life cycle factored. As DevOps get more iterative than ever, each stage becomes shorter, thereby leaving you with shorter time spells of a product in the ‘test bed’.

3. Invest in scientific resource management

Most often, resource allocations suffer from misaligned priorities of projects. Projects that require immediate attention, the ones that bring in the most revenue and the ones that generate the most value, are often competing priorities and as a result, resource allocations are based on constant fire fighting that mostly tries to fulfil pressing demands alone. However, this can lead to different situations ranging from overworked employees, last-minute sub-optimal hiring to spiralling resource costs and poor delivery on the whole. The science to resource management is, however, based on the well-rounded principles of visibility, optimized resource utilization, finding strategic fits for designated roles and ultimately forecasting upcoming capacity for the demand that is being generated. Resource allocations must be tied to project priorities in tandem to the overall strategy envisioned for the enterprise as well as the proportion of bandwidth associated with individual goals such as revenue, value, innovation among others.

4. Establish governance and overall alignment

Ultimately, governance ensures compliance and provides unified metrics to track both alignment and quality of deliverables. Governance is an indication of the degree of seriousness that has been associated with execution and provides management buy-in that often is all the motivation project teams need. Overall alignment is nothing if not the uniformity of decision-making trends and processes, which makes governance within technology transformation as challenging as it is necessary. This uniformity also safeguards predictable outcomes for teams to measure their actions by. In the loner-run, there will be consistency in all key processes and metrics that you operate with. The executive team on its end will benefit from visiting the objectives and outcomes of project progress and evaluating value in terms of EVM. In addition, feasibility and the needs of the project have to be evaluated constantly and when there are signs of failure, besides having to choose between schedule and budget variance, the steering committee must spend time understanding if the forecasts of revenue and value match up to actual execution.

Strategic alignment and the factors that influence it are often about the way you handle projects and the style of management you adhere to. Ultimately, executive buy-in fosters a sense of commitment and uniformity that determines the success of your strategy as well as the seamlessness of alignment.

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Nityashree Yadunath

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