I’m not writing about portfolio management
Portfolio management is one of those topics that some project managers never worry about — whilst they might have heard of it, they don’t get involved. However, portfolio management is not only about portfolio components and their interrelationships; it is about the commitment to strategic growth.
And there’s more. To achieve strategic growth, a company must balance between what is feasible and what is not, determinine short and long term benefits and goals, manage resources including capacities and capabilities, and achieve and sustain the ability to execute.
In short, an organization cannot afford to waste precious resources and should find ways to “do the right projects at the right time in the right way.”
In 2000, consultants from McKinsey & Company, Inc proposed a portfolio management approach known as the Three Horizons. Each horizon describes the maturity and relative risk of projects, and is a way to allow companies to manage a portfolio of projects for current and future growth.
The Three Horizons provided an incredibly useful taxonomy. It has been used to characterize the relative business maturity of investment, with innovation occurring on three time horizons: Horizon 1 (H1) being focused on existing business, Horizon 2 (H2) on emerging business, and Horizon 3 (H3) on options for future business.
This article features a very interesting summary of horizon characteristics impacting investment.
And then, there’s the GE McKinsey Matrix.
The nine-box matrix helps to prioritize the limited resources in order to achieve the best returns. It plots the business units on its nine cells that indicate whether the company should invest in a product, harvest/divest it or do a further research on the product and invest in it if there’re still some resources left. The business units are evaluated on two axes: industry attractiveness and a competitive strength of a unit.
The GE McKinsey Matrix is recognised as one of the essential and the most popular business strategy tools used by companies to implement their strategic plans and achieve a sustained competitive advantage in today’s fast paced economy.
“In the 21st century the attackers have the advantage, as the incumbents are burdened with legacy. — Steve Blank”
The following links explain the GE McKinsey Matrix with examples:
