PORTFOLIO
MANAGEMENT - GOALS
Goals of Portfolio Management
While the portfolio methods vary greatly from company
to company, the common denominator across firms are
the goals management is trying to achieve. According
to 'best-practice' research by Dr. Cooper and Dr. Edgett,
three main goals dominate the thinking of successful
firms:
1. Value Maximization
A llocate resources to maximize the value of the portfolio
via a number of key objectives such as profitability,
ROI, and acceptable risk. A variety of methods are used
to achieve this maximization goal, ranging from financial
methods to scoring models.
2. Balance
Achieve a desired balance of projects via a number of
parameters: risk versus return; short-term versus long-term;
and across various markets, business arenas and technologies.
Typical methods used to reveal balance include bubble
diagrams, histograms and pie charts.
3. Business Strategy Alignment
Ensure that the portfolio of projects reflects the company’s
business strategy and that the breakdown of spending
aligns with the company’s strategic priorities.
The three main approaches are: top-down (strategic buckets);
bottom-up (effective gating and criteria) and top-down
and bottom-up (strategic check).
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