Integrating Strategic Planning with Portfolio Management

October 2, 2018

In our “Integrating Strategic Planning with Portfolio Management” Master Class, Michael Tulaney and Craig Bangham of Sopheon focused on how strategic planning can help you manage your portfolio of investments. The duo explored different ways to structure portfolios and design governance models that ensure alignment. Other topics of discussions included: 

  • Why aligning portfolio and strategy is important
  • What factors complicate portfolio alignment
  • The best framework for creating an integrated portfolio.

Bangham and Tulaney are both innovation management consultants at Sopheon, an enterprise innovation management firm that is an IL partner. Read about some of the highlights, or download a PDF of the slide deck

During the webcast, Bangham discussed the vital importance of aligning a company’s innovation portfolio with its strategy. According to Bangham, only 13 percent of companies have met their strategic objectives, and only 56 percent of funded initiatives are considered successful. In today’s digital world, Bangham said, that success rate is inadequate for established businesses.

“The reason [companies] have gotten away with that level of performance is because the external markets have not been moving that fast. Today, in the digital age, that level of performance is insufficient,” Bangham said. “Predictions are that 75 percent of the S&P companies…won’t be there in just 10 years. … So executing on strategy is more important than ever to stay in business.”

In order to create an integrated portfolio strategy and avoid these pitfalls, Tulaney pointed to a framework created by the Sopheon team. The framework resembles a house (see below) and is composed of three sections: the incremental work associated with new product introductions (NPI), process governance, and defining an integrated portfolio.

“This framework is intended to be viewed like a house, where the foundational blocks of the house must be in place before you can achieve the different layers, or the roofs, that are in place,” Tulaney said. “Having an integrated portfolio definition…[is] that last piece of capstone house-building that will eventually get you to the top of this framework — that is the ability to have an integrated strategic plan with innovation portfolio management.”

According to Tulaney, a strong integrated portfolio definition includes the following elements: “The structure of this portfolio with respect to organizational hierarchies, market strategies, etc. …. Also, the ownership of a portfolio and the accountability of it’s performance must be clear.  … [E]very portfolio must have strategic performance targets. … And then, finally, we should know and be able to find out on an ongoing basis the performance of this portfolio against its targets.”

While some clients and companies excel in certain areas of the framework, Tulaney said having all the components is rare.”We talk about the components, but it’s very rare to see a fully-integrated structure,” he said.

For more best practices on how to align strategic planning and portfolio management, check out the full set of slides that Sopheon showed during the Master Class.