Elevate Your PMO
Transcript of Elevate Your PMO
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Make the value leap from a PROJECT mindset to an INVESTMENT mindset.
#PMO3.0
Executive BriefingElevate your PMO.
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Meet thePMO’s Favorite Tool!
The GANTT Chart
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What happens when the PMO’s Gantt Chart meets the PMO’s Bosses?
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Cost, Schedule & Scope!
Strategic Growth,Value Creation,
Risk-Return & Execution?
PMO C-Suite
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The PMO of the future will be a portfolio office…it will think and speak in the
language of money…
The PMO Mission: “Move TheStrategic Needle For The Company”.
In organizations the focus is now shifting to what is competitive
advantage…that makes the success of the planned
investments more important...
Sixty-one percent of respondents admit that their firms often struggle to bridge the gap
between strategy formulation and itsday-to-day implementation.
42 percent of PMOs believe a more strategic orientation among project owners
and stakeholders is a top way to increase the effectiveness of the PMO.
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The PMO is “speaking in PROJECTS”, while the C-Suite is “thinking in INVESTMENTS”.
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Make the value leap from a PROJECT mindset to an INVESTMENT mindset.
Time to ElevateYour PMO?
7 Key Principles
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1 With an investment mindset, the Project Management Office and the basic “project” unit of management becomes the inherently more strategic Portfolio Management Office with “investments” as the basic unit. An investment approach begins with viewing business units, initiatives, or strategic opportunities not as independent entities, but as logical portfolios of investments. This holistic view is a pre-condition for the value-based dialogue, decision-making, day-to-day investment management and governance that maximize value and performance across the portfolio.
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2 Successful companies make strategic choices about where and how much to invest their finite resources in order to realize their strategic ambitions. With an investment mindset, PMOs equip their companies to operationalize those choices by informing the difficult trade-offs between what to do and what not to, and rationalizing investment resources between existing sources of revenue and emerging revenue streams in ways that are most closely aligned with strategic success.
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3 Companies with investment mindsets can use the power of strategic portfolio management to maximize the performance and value of their investment portfolios by maximizing returns per unit of risk. The principle of risk-return optimization involves maximizing upside revenue capture, while minimizing downside risk exposure by quantifying (in financial terms) the material risks associated with investments, providing insight into the volatility inherent in those investments, and actively mitigating and exploiting risks in ways that turn them into new sources of opportunity.
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4 At the end of the day, "it's all about execution”. With an investment mindset, execution means taking preemptive action to reallocate resources, adjust course and optimize the portfolio - the opposite of passive management or reacting to competitor moves. PMOs can apply active management and promote preemptive action by using value-based metrics and leading indicators to monitor the real-time performance and health of individual initiatives and in aggregate across the investment portfolio.
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5 Even after discovering the need for it, many companies don't adjust to changing business conditions, choosing instead to stay locked into unattractive businesses, low-value opportunities, or poorly performing initiatives. Investment-minded PMOs can help overcome this behavior through the principle of “optionality”. Borrowing from the financial industry concept of "real options” and applied to portfolio execution, this proven management concept provides senior business leaders with options - the “right”, but not the “obligation” to invest, or continue to invest in strategic initiatives based on changing business circumstances.
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6 Responsibility for strategic and commercially-focused initiatives, and the investment resources that they require, is often spread across multiple organizations such as corporate strategy, finance, M&A, product, R&D or individual business units. With an investment mindset, the PMO takes on the role of integrating these disparate pools of investments, and bridging critical governance and organizational gaps. With this principle, the PMO provides a higher level of transparency across the investment life-cycle, allowing CEOs, CFOs, Boards and senior business leaders to make decisions that make the whole greater than the sum of the parts.
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7 Next-generation strategic initiatives, revenue streams and growth platforms are expected to deliver multiple times their actual capital investment in returns. Communicating value and measuring performance in this context requires management in business terms vs. project terms. With an investment mindset, PMOs can expand their visibility and management focus beyond the “traditional cost-schedule-scope of project management” to “managing the aggregate strategic growth, capital efficiency and risk-return across portfolios of investments” with the net present value (NPV), internal rate of return (IRR), benefits-cost ratio (BCR) and other investment controls to paint a more complete portfolio picture, and answer critical governance and value questions over the investment life-cycle.
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The PMO starts to speak the investment-grade language that CFOs, CEOs, Boards and other stakeholders understand and REALLY care about…
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Opportunities Risk-Return
Strategy Execution
Portfolio Management Office (PMO 3.0)PMO3.0
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