Implementing A Product Portfolio Council And The Role Of The Portfolio Manager
How to transform governance and enable product leadership shifting from project to product operating models
Many organisations have traditionally used a Project Management Office (PMO) to oversee their portfolio of projects and ensure they are delivered efficiently and effectively. However, in recent years there has been a shift towards establishing a Product Portfolio Office (PPO) instead. This shift coincides with company’s shifting to a product driven operating model from project based operating models. This fundamentally shifts the way a company operates and organises itself, particularly when it comes to customers where there is a much closer relationship, supported by frequent experimentation feedback loops to continuously provide value. This shift requires a company to change its governance to embrace customer relationships, improved data and insights, improved experimentation and more flexibility for product teams to be autonomous, focusing on the outcomes over outputs.
I believe from supporting companies across the globe in their journeys to become more customer-centric, i and adopt a product operating model, there are key ingredients for this to be successful, which include, but are not limited to :
Establishing a strategic direction and making clear what the OKR’s are.
Cascading these OKR’s through the organisation, allowing product teams to attach their goals, KPI’s and progress against these.
Evolving the organisational design around products and customer needs, then aligning these to OKR’s
Dissolving abstraction to the customers and putting in place hypotheses based forecasting, with supporting product operations to inform direction.
Putting in place a portfolio function which moves governance away from project (delivery transactions), to long term product success. This requires a portfolio strategy, underpinned by lifecycle structures and governance, and taxonomy’s to it’s clear how products, platforms and capabilities are connected to internal and external customers.
Based on this I’m sharing some guidance on how to establish a portfolio council and the key role of the portfolio manager in this context.
What You Need To Know When Moving From A Traditional PMO To A PPO
1. Strategic Alignment : A PPO takes a more strategic role, aligning the product portfolio to the overall business strategy and goals. Rather than just delivering projects, a PPO focuses on developing products that provide the most value to customers and the business. This ensures the product portfolio supports the organization's strategic objectives.
2. Customer Centricity : With a PMO, the focus tends to be on internal project delivery and pushes onto customers presumed value. A PPO adopts a more customer-centric approach, evaluating products based on end-user value rather than just on-time/on-budget project completion. Prioritizing products that truly meet customer needs leads to greater customer satisfaction. It also requires a long term view and budgeting consideration, where customers need to be support beyond projects, and products in this context are not just the entity of a product, but extend to reach the customer experience and support functions.
3. Lean Product Lifecycle Management: A PPO takes responsibility for products across their entire lifecycle, from ideation to launch to eventual retirement. This end-to-end view ensures products are evaluated at each stage and resources are allocated to the right products at the right time. This also means the portfolio performance as whole should be managed, surfacing where there might be duplication, difference and cross-over to better leverage resources and connect the wider customer experience. In doing so this can elevate capabilities and customer insights to improve decision quality and connections, and allows companies to be more ambidextrous, balancing innovation exploration, with maturity to exploit and accelerating growth opportunities.
4. Portfolio Optimization : A PPO takes a holistic view of the product portfolio to optimize it based on factors like time-to-market, development costs, strategic alignment, and risk. This allows the portfolio to be shaped over time to maximize business value. Weaker or redundant products can be culled and recycled teams can work on higher value initaitives. Many companies lock down resources in low performing products, which compounds over time, impacting the organisations bottom line and ability to take on new innovation opportunities.
5. Agility & Innovation : With a PMO methodology, launching new products or pivoting existing ones can be slow due to formal project approval processes. A PPO aims to encourage agility, rapid experimentation, and innovation so the product portfolio stays competitive.
Note when moving to a product operating model, projects do still exist. I get this question a lot so, here is a more detailed response to explain this further : The Life Of Projects In A Product Organisation
The Benefits Of Having A Dedicated PPO Function And Role
Having a dedicated portfolio manager/function leading the PPO offers significant advantages. This cannot be a passive role, but requires sponsorship and engagement from the top to empower the function. It also requires leadership support to move towards a data-oriented decision making culture, distributed decision making, alignment on product operations and enablement and engagement from roles like finance, operations and support, not just product and technology. Some of the benefits of this include:
Holistic Portfolio Oversight: Portfolio managers can take a high-level view across all products in the pipeline and portfolio to identify synergies, gaps, and opportunities. This helps take a big picture approach to company performance, which should improve the connectivity from strategy to execution.
Risk/Reward Evaluation: Portfolio managers assess both risk and strategic value to guide decisions on which products should receive funding and resources. I liken this to having a combination culture adopting a VC like approach to innovation, and a disciplined portfolio approach like Private Equity companies have on more mature products. Enterprises have the unique benefit of managing these products and strategies end to end.
Portfolio Balancing: The portfolio can be shaped to achieve balance across dimensions like product type, time horizon, markets, and risk levels. A product taxonomy and lifecycle overlay, will allow you to have improved dimensions to understand customers, markets, products and platforms; improving opportunities to balance innovation from the edges with federated core systems.
Consistent Decision Framework: Defined portfolio management processes ensure product-related decisions are made consistently and align with strategy. This helps people understand what is important, what the direction of the company is and how decisions get made; providing a clear, consistent and unbiased objective language to prioritise decisions.
Resource Optimisation: Scarce resources can be allocated across the portfolio to maximise overall value. Lower priority or underperforming products may be scaled back or discontinued, or unified to unlock resource allocation in duplicate areas.
Performance Tracking: Portfolio managers establish metrics to track product and portfolio performance aligned with strategic goals and customer needs. They can provide interlocks between product teams and present aggregated contribution relationships into performance, included a stronger correlation to TCO, assuming there is a supporting product operating model with clear taxonomies and stable product teams.
Governance: Portfolio management provides oversight and governance for product-related decision-making across the organisation. The portfolio makes it clear, who is doing what, where and why. How decisions get made and provide clear objective performance and decision criteria. This also helps drive and launch initiatives to improve internal capabilities to advance data and analytic capabilities. It’s important to note, the portfolio manager isn’t a single decision maker by any means, but they act as an agent connecting decision makers to objective data to help decisions get made, resulting in improved portfolio health.
Creating An Effective Portfolio Management Team – Product Portfolio Council
An effective portfolio management team requires leaders from different funtions and departments to work together, connecting to an overall strategy. These teams can vary per company and domain, but it’s important to note they should be small, focused and decisive. Don’t think of these as committees, they are not think tanks, they are an empowered group with a responsibility to make clear, objective decisions to improve performance, and have an active role to play in inquiry and diving deeper where there are questions to be had.
I would also express you can have aggregated portfolios and different levels of the organisation. For instance at the executive level they will want to see the entire business, at a business unit level, just the products within that business area. You may also have a portfolio level at a product line level. These levels are contextual and focused on their level of the business, but should all interface upwards and downwards to help the organisation connect, revealing progress between strategy and execution.
By way of example here are some considerations in the roles you may consider. Note that I would advocate keeping the council small 5-8 people, and also distinguishing between roles that input into the portfolio review such as providing data, versus roles which review the portfolio and make decisions.
The roles can vary depending on org level, product type and domain.
1. Portfolio Manager: Leads the team and is responsible for overall portfolio strategy and oversight.
2. Product Managers: Responsible for defining product strategy and roadmaps for individual products or product lines. These can in some cases represent UX and customer research, but that is a choice you’ll need to make based on how your organisation is structured.
3. Operations/ Analysts: Conduct market analysis, financial modelling, and opportunity assessments to evaluate product options. You could also extend this to include the professional services team or customer support/services if this adds value to decisions.
4. Engineers/Architects: Provide input on technical feasibility, dependencies, and system-level impacts of product decisions.
5. User Experience Designer/Research: Represent customer needs and usability considerations in product evaluation and planning.
6. Marketing/Sales: Offer inputs on market demand, customer requirements, positioning, and go-to-market readiness.
7. Finance: Provides data on costs, revenue projections, ROI, and other financial factors to inform decisions.
8. Legal/Compliance: Weighs in on risk, regulatory, security, safety, and other compliance implications of product direction.
In addition to these roles I would highly recommend having an appointed administrator to help co-ordinate the events, ensuring that people and teams have submitted their inputs and updated data where needed for the portfolio council to review. This person can also help build a community, feedback loops and help with communication and comms strategy, which is a powerful addition to make sure things run smoothly.
I would also point out that there are different activities for the Product Council to manage. On the left of the Product Lifecycle ideas through to MVP/MLP are in fact “Pitching” for the council to Continue, Pivot or Stop. On the right side of the Product Lifecycle product teams are reporting on goals related to their goals and hypotheses. These require very different management mindsets. So it’s worth considering some different constructs, for example:
1. Having different cohorts of the Product Council to manage the left and right side of the Product Lifecycle stages. I would still advocate membership of the same Portfolio Manager and Finance Partner to sit in both if that’s your setup.
2. You can qualify which products require the most attention and discussion during the session as a pre-determined agenda item. You can invite the product lead just for this section of the meeting.
3. If you opt to have the same product council members across each stage, then I would advocate separating out the sessions into Pitching and Managing. The context matters and this will help.
The Role And Responsibility Of The Portfolio Manager
The portfolio manager plays a pivotal role in leading portfolio management and guiding the PPO team. They set the strategy for the PPO, drive and manage the capabilities of the portfolio management operations and tooling, and play a key role in setting governance standards. They also have to incorporate and steer many strategies into to the portfolio to be referenced in decisions making. This role is a key role for the organisation and requires a person to have strong skills in stakeholder management, able to communicate with all levels of the organisation, able to partner with SME’s across the organisation for input and support and is an advocate of data-driven decision making.
Exploring Just Some Of The Attributes And Responsibilities Of A Portfolio Manager
1. Working closely with executives to shape portfolio strategy and informing the portfolio and product roadmap aligned to business goals. They do not set the product roadmaps, but they need to understand the product direction and encourage linkage to OKR’s and data.
2. Leading portfolio reviews to evaluate new product proposals and make decisions on resourcing and fund allocation with key stakeholders and partners (including partnering with finance).
3. Monitoring the portfolio mix and product lifecycles to achieve the right balance of new, sustaining, and end-of-life products. This also requires advocating and applying a common taxonomy. This will require partnering and influencing maturity in product operations, data/analytics capabilities and tooling.
4. Driving the continuous refinement of the portfolio based on outcomes, market changes, technology shifts, and other dynamics. This would require partnering with marketing and customer research teams to inform the portfolio.
5. Identifying synergies, gaps, and opportunities across the portfolio to optimise its composition and weighting.
6. Establishing portfolio performance metrics and tracking progress vs. strategic targets. Driving and influencing in data and analytics is key for this.
7. Balancing short-term and long-term product investments and growth opportunities. This requires applying strategic lenses into the portfolio and encouraging product management functions to measure impact and outcomes.
8. Promoting governance, processes, and structured decision-making for product-related investments.
9. Fostering alignment and collaboration between involved groups such as Product, Engineering, Marketing, and Finance.
10.Championing customer-centricity in product plans, prioritisation, practices to maximise end-user value.
Summary
The portfolio manager role requires straddling strategic leadership responsibilities with hands-on oversight of the end-to-end product lifecycle and portfolio. They drive both strategy formulation and execution. Linking Portfolio Management To The Product Lifecycle.
An effective PPO adopts a lifecycle view of product management. The Lean Product Lifecycle model provides a useful framework, delineating 6 major phases:
Idea: Submitting an idea and connecting this to the company strategy and vision. In Amazon this is equivalent to the PRFAQ by way of example.
Explore: Initial research, experiments, and prototyping on high-potential ideas. This is about idea validation, not solution validation. (Design Thinking or Amazon’s Working Backwards is an example covering Explore-Validate)
Validate: Validation of product-market fit via MVPs, betas, pilots, and crowd testing. This is about solution validation; your solution is the right way to solve the already validated idea.
Grow: Ramping successful products to full production and commercialisation. Growing market share and expanding to later stage adopters and customer segments.
Sustain: Maximizing profitable sales and cash flow of mature products. This doesn’t mean sit back. You have a dominant position and you should be evolving your solution with the market shifts and changes. That means you should still need to innovation. Consider the iPhone market as an example and the evolving needs of customers.
Retire: The phase of identify products, platforms and capabilities to retire, managing the process and exploring residual value opportunities. Note the product lifecycle isn’t linear, retiring for instance can happen at any stage.
The PPO and portfolio management team oversee the progression of products through these lifecycle stages. Adaptive portfolio management and governance processes determine the transition criteria for advancing products to the next stage or discontinuing them. The PPO makes it clear how and what decions get made, when and by who, with the utmost objectivity. Thus it creates a language and prioritisation capability, making it clear how the company is connected from strategy through to execution.
Strategic portfolio oversight ensures the health of the portfolio across lifecycles. By taking this lifecycle view, adapting governance for each stage, and monitoring the portfolio mix across stages, the PPO can drive strategic product innovation, development, and commercialization. This maximizes the product portfolio's value.
Excellent guidance for portfolio management!
gold!