Portfolio management in a small company

Construction worker cutting iron beams in a structureYou may be familiar with project management, but what can portfolio management do for your company? In a project-based organization, where you take in clients and work and provide either a good or a service, a good portfolio manager is going to align all of the work done within your organization so it supports the mission of the organization, and they’re going to select projects that further that mission and reject projects that don’t support it. In this article, I’m going to provide a couple of examples of this to help provide context, both from the IT service industry and the manufacturing perspective, and then give you some tips on managing your company’s portfolio.

Your company’s portfolio is all of the projects that your company is doing and is planning on doing. The portfolio manager is going to know about and have some control over all of those projects, but they’re also going to align other areas of the organization like sales, marketing, and recruiting to support the portfolio and mission. Let’s start with a quick look at some different examples of what a portfolio manager would do.

Portfolio Management in an IT Service Company

Best Tech Co. provides a variety of consulting and support services in addition to doing some custom programming to help their clients. They’re very good at what they do, but without portfolio management, that expertise means they’re not very focused because they take any sort of job that comes to them. They have the skills and capabilities to do anything, so there’s no real reason to turn down a job.

Because of this wide focus, it is hard for Best Tech Co. to recruit and hire new people because you really need to know something about everything to work there. And for the people already working there, the lack of focus means that they can’t pursue professional development and training very well because they’re too busy working on so many different things–there’s nothing to tell them what to study and what not to study. Sales takes any job that matches the company’s overall skills profile, but this regularly leads to over-commitment of staff and scheduling conflicts because new work isn’t brought into the company with current work taken into account.

A portfolio manager might observe that Best Tech Co. has written some very nice custom programming tools that help them do their work, and these tools only really support two types of projects out of the dozen different types that are currently handled by the company. Because of these tools, those two types of projects are more successful and more profitable. Subsequently, a portfolio manager might suggest that the company re-align and develop a new mission that emphasizes those two types of projects.

With this new mission in mind, the portfolio manager would begin work with all the different parts of the company. Recruitment could focus on hiring people with those two types of skill sets. The staff that do the work would become better and better at handling those projects through familiarity and repetition, and the company would develop a better economy of scale for handling that kind of work. Sales could focus on pursuing the type of work that supports the mission, and politely decline the work that doesn’t (which wasn’t as profitable or successful anyways). And with a portfolio manager in place to oversee it all, more certainty in project completion dates and a better pipeline of new work would be established to make sure there were no scheduling conflicts, bottlenecks, or stoppages.

The portfolio manager wouldn’t be managing the projects directly, but they would work with every part of the business to provide visibility into the portfolio, assist with decision making of what work to take on and what work to reject, and keep the company focused on their mission.

Portfolio Management in a Manufacturing Company

Skilled manufacturers can be hard to find, and one of the few areas I have some familiarity with is steel grinding. So let’s take a look at Very Good Steel Co.

Very Good Steel Co. already has a focus to the type of work they do, and they only take in four different types of projects. This focus has already helped Very Good Steel Co. with their recruiting and training because they can focus staff on specialty and advanced skills. But like Best Tech Co., their sales team isn’t well-coordinated with the grinders, who all have a range of skill-sets. There are two people per skill, such as polishing steel or polishing carbon, and the company often runs into scheduling challenges when the sales team sells too much steel polishing work. This results in the steel polishers needing to work overtime, which costs the company extra and reduces the margin on the projects. Meanwhile, the other grinders have little work to do, which means the revenue of the company is going down while the cost of staff remains the same.

A portfolio manager in this context would be meeting regularly with the sales people to let them know what the company’s current and projected capacity was. This would enable the sales people to do two different things. First, they could better set expectations with clients and schedule the work further into the future, thereby eliminating expensive and stressful overtime. And second, they could seek out and pursue the type of work for which the company currently has capacity, thereby increasing revenue.

How To Manage Your Company’s Portfolio of Projects

Hiring a Portfolio and Project Manager (PPM) can be an expensive proposition. I think that we’re well worth it and can provide tremendous value for your company, but it’s especially difficult in smaller organizations to bring somebody in with that skill set. Hopefully these tips and suggestions will help you think about your mission and aligning your work to best support it.

Step 1: Evaluate your organization’s strengths

This first thing you need to do is figure out what your company is good at and what type of work is best for your organization to be doing. This decision may be helped by seeing what is most profitable for your company, but obviously that doesn’t apply in a non-profit.

A SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis can be helpful in this stage, whereby you would think through what your company is good at, what it’s bad at, what opportunities are available given the current state of the industry or community, and what threats to the organization exist due to skill shortfalls, regulation, finances, or other issues.

The goal is to bring some focus, so if you’re in an organization that has a tremendous number of strengths, you may need to find a slightly different focus than just, “What are we good at?” This might be a good time to think about One Metric That Matters (OMTM) for your organization, which is something that is measurable and is important to the success of your company. Figure out what that one metric is in combination with your strengths and it will help bring some focus.

Step 2: Develop your mission

The mission of the organization is a means of pursuing and furthering those strengths, or that one metric. There is a lot written elsewhere about how to write mission statements and what does and does not need to go into them, so I’m not going to write about that here. To me, a mission isn’t all about a formal mission statement, it’s about a rallying cry. It’s a more emotional thing to me, something that keeps me going day to day.

When I worked at Missouri State University in Computer Services User Support, my colleague Jeremy and I came up with the slogan “User Support is Action.” That became my mission for us, the one thing that mattered: when something needed done, we would do it. No passing the buck, and no delays. There was work that was out of scope for our group, and we had to turn that down, but for everything that was our responsibility, we jumped on it and took care of it.

Your rallying cry might just be four words, but you should probably write some more things down to establish the scope of your organization and set some boundaries. This will help prune and craft the portfolio and align the rest of the business in support of it.

Step 3: Communicate Priorities

Next, we need to talk with the leaders in the organization to get them going the same direction. Human resources, sales, marketing, line management, and project managers all need to understand the mission, and there needs to be buy-in from the top. This can’t be a grass roots effort, it needs executive leadership and for the CEO to empower the portfolio manager to manage the work coming in. The portfolio manager will have the final say on what work comes in and what work doesn’t, and they’ll be guiding the development and assigning of staff to different projects, so it’s important that everyone in the company understand their role and the goals the organization is working to achieve.

It is important to dissuade any sort of territoriality or siloing of work and departments. The organization really needs to work together transparently and openly, and align behind the mission. If we all work to support the organization, we’ll all advance together. If we let politics and personal agendas get in the way, the portfolio and the work of the organization can be undermined.

It’s a topic for another day, but this is why it’s important to develop pay and bonus schemes that don’t emphasize personal goals and instead emphasize organizational goals. That way, approaches that benefit the entire organization, even if they don’t have direct benefit for a particular person or group, are still a positive for everyone involved.

Step 4: Observe, Analyze, Adjust

Meetings between the portfolio manager and the rest of the managers at the organization should be happening often, and in-between these meetings, the portfolio manager needs to be tracking the work happening, seeing the impact of that work, and adjusting accordingly. There may be opportunities to expand the portfolio and bring in a new type of work that complements the rest of the portfolio and provides additional value. Conversely, more focus may be needed in regards to sales opportunities or training for staff. More than likely, a company like Best Tech Co. would find after a little while that they can add a third or fourth type of work to their portfolio that allows them to advertise a deeper specialization because the original two types of work have become routine and easy for staff to handle.


You don’t need to hire a PPM to do these things for your company, though I think there is value in doing that. There’s a lot of art and science that goes into managing a portfolio, and the mathematics behind portfolio management, risk management, and project management can quantifiably help your company be more successful. But for a small company, one person or a small team of people who have the support of executive leadership can bring the benefits of portfolio management to everything your organization is ding.

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