Chapter 12: Integrating Portfolio and Project Management with the Product Development Process for Business Success

In many technology companies, especially smaller ones, the project portfolio (and the business) revolves around R&D. This actually makes perfect sense, since it is the technology that provides the competitive advantage for the company. The problem is in balancing the desire for innovation against the need for process (see Figure 12-1). Most creative engineers and scientists would much prefer to focus on the next technological breakthrough than portfolio management, project management, or any other process for that matter. These processes are often considered a necessary evil, and they are given less attention than is usually required to make them successful. Our quandary, then, is this: Do we emphasize the importance of project and portfolio management at the risk of killing innovation, or do we take a hands-off approach and encourage pure innovation, with the hopes that what is developed will, indeed, support the business strategy? These are tough questions that permeate many technology businesses. Of course, the answers are probably somewhere in between.

Figure 12-1: Balancing process and innovation.

Integrating Process and Innovation

Balancing the needs of the process against the needs of innovation is on the minds of technical project managers everywhere. The problem with this approach is that it implies that process (in this case, the portfolio management process, but it could also be the project management process) and innovation are two separate entities with different requirements that need to be balanced. This, in turn, suggests that process and innovation have separate owners and are at odds with each other—which is definitely not a recipe for agility. Much of the agile paradigm is about integrating activities, processes, and roles so that the right information flows in a timely fashion to whomever needs it. In this case, we should be looking for ways to integrate process and innovation in a supportive manner instead of trying to balance them against one another.

From the project team perspective, project management can be justified as a tool that helps the team meet the immediate project milestones. Portfolio management, on the other hand, is one step further removed from the team. It is more related to business-level objectives than project-level ones. This means that portfolio management activities are generally a lower priority than project management activities to the team, making it that much more difficult to instill an effective process.

Most companies that are successful in integrating process and innovation have managers and project managers with the right mix of technical, business, and interpersonal skills. These gifted individuals have earned credibility within their organizations by demonstrating subject matter and management expertise. They consistently add value and a host of other leadership qualities to the organization. The problem with depending on individuals to integrate innovation and process is that it is difficult to help people progress up the skill ladder. Experience is one common denominator of successful project managers in R&D, and even experience doesn't guarantee that they will be successful. Training certainly can help, but there isn't much training available on this specific topic of how to meld technical/subject matter capabilities and business/management processes, since it's tightly related to company-specific process development. We need to find new ways to help project managers become more effective at integrating the creative and business needs without relying solely on interpersonal skills.

While process is somewhat of an outlawed word in R&D, most good R&D managers realize that some level of process is necessary to efficiently develop good products. In many industries, a well-designed product development process (PDP) is mandated by government regulations, or it may be required to obtain certain certifications, such as ISO 9001. In the end, it just makes good business sense to have a robust product development process, since the structured methodology will help ensure that your product meets customer needs, functions as advertised, and is supportable and manufacturable. Most R&D organizations already have some type of product development process in place and in use. If there is any process that will be tolerated or even embraced in R&D, it is the product development process. Rather than inflicting the additional layers of portfolio management or project management process on the poor engineers, you should be looking for ways to extend their product development process to cover key elements of these other processes (see Figure 12-2.) In this way, the importance and requirements for effective portfolio and project management are more easily digested, thus creating a more optimized and integrated process.

Figure 12-2: Integrating project management and portfolio management into the product development process.

Acknowledgment of the product development process as the core business/technical process for the company (and also building on it) is often the most effective business solution for technology-centric companies. By cleanly extending the product development process to encompass key dimensions of portfolio management and project management, you add value to the established core R&D process (PDP), advance the effectiveness of R&D managers and project managers, and create the foundation for effective portfolio and project decision making.

Agile Strategy

Integrate core elements of project management and portfolio management into the already-established product development process, rather than attempt to establish two new processes.