Investment and Portfolio
The decision to break an organization into multiple teams is in part an investment decision. The organization is going to devote some resources to one team, and some to another team. Furthermore, there will be additional spending still managed at a corporate level. If the results meet expectations, the organization will then likely proceed with further investments managed by the same or similar organization structure. How are these separate streams of investment decided on and managed? What is the approach for structuring them? How does an organization ensure that they are returning the desired results?
People are competitive. Multiple teams will start to contend for investment. This is unavoidable. They will want their activities adequately supported, and their understanding of “adequate” may be different from each other. They will be watching that the other teams do not get “more than their share” and are using their share effectively. The leader starts to see that the teams need to be constantly reminded of the big picture, in order to keep their discussions and occasional disagreements constructive.
There is now a dedicated, full-time Chief Financial Officer (CFO) and the organization is increasingly subject to standard accounting and budgeting rules. But annual budgeting seems to be opposed to how the digital startup has run to date. What alternatives are there? The organization’s approach to financial management affects every aspect of the company, including product team effectiveness.
The organization also begins to understand vendor relationships (e.g., your cloud providers) as a form of investment. As the use of their products deepens, it becomes more difficult to switch from them, and so the organization spends more time evaluating before committing. The organization establishes a more formalized approach. Open source changes the software vendor relationship to some degree, but it’s still a portfolio of commitments and relationships requiring management.
Project management is often seen as necessary for financial planning, especially regarding the efforts most critical to the business. The reason it is seen as essential is because of the desire to coordinate, manage, and plan. Having a vision is not worth much without some ability to forecast how long it will take and what it will cost, and to monitor progress against the forecast in an ongoing way. Project management is often defined as the execution of a given scope of work within constraints of time and budget. But questions arise. The organization has long been executing work, without this concept of “project”. This document discussed Scrum, Kanban, and various organizational levels and delivery models in the introduction to Context III. This Competency Category will examine this idea of “scope” in more detail. How can it be known in advance, so that the “constraints of time and budget” are reasonable?
As seen in this document’s discussions of product management, in implementing truly new products, (including digital products) estimating time and budget is challenging because the necessary information is not available. In fact, creating information, which (per Lean Product Development) requires tight feedback loops, is the actual work of the “project”. Therefore, in the new Agile world, there is some uncertainty as to the role of and even need for traditional project management. This Competency Category will examine some of the reasons for project management’s persistence and how it is adapting to the new product-centric reality.
In the project management literature and tradition, much focus is given to the execution aspect of project management – its ability to manage complex, interdependent work across resource limitations. We discussed project management and execution in Project Management as Coordination. In this section, we are interested in the structural role of project management as a way of managing investments. Project management may be institutionalized through establishing an organizational function known as the Project Management Office (PMO), which may use a concept of project portfolio as a means of constraining and managing the organization’s multiple priorities. What is the relationship of the traditional PMO to the new, product-centric, digital world?