Corporate Portfolio Management (CPM), a discipline which marries and balances modern portfolio theory with organizational behavior, represents a thorough and proven means for organizations to optimize their resource allocation portfolio. CPM is not a high-level, simplistic one size fits all metric, scorecard or technique which promises illusory benefits, but instead it is like, as some have referenced it, “6-Sigma for Strategy”. CPM pushes organizations to make data- vs decibel-driven decisions, remove silos and create a continuous feedback loop which improves resource allocation over time. CPM is rigorous and effective.
CPM is not about immaterial, immeasurable results and as a consequence, it can not and does not rely on simplistic and trite practices and recommendations which have no ability to succeed in a real organization.
What organizations use Corporate Portfolio Management?
CPM has been adopted by prominent leading organizations including American Express, Cisco, HP, TransUnion, the State of Oregon Department of Human Services are amongst the organizations that have adopted CPM to increase strategic alignment, improve execution and ultimately enhance results.
American Express is widely recognized as having the most expansive and robust Corporate Portfolio Management practices as evidenced by its enterprise-wide mandate and significant accomplishments. Many other organizations have embraced or are beginning to embrace CPM in a big way in the recent past.
The power of CPM lies in its flexibility. It is just as useful for large organizations as it is small and medium sized companies. It can be used by for-profit, non-profit and governmental institutions as well. It can also be used by functional areas within an organization, e.g., CPM can be deployed within IT, marketing, R&D, sales, operations, etc. Every organization has finite resource availability and so CPM is universally applicable.
Evolution NOT Revolution
CPM is different from frameworks, scorecards, KPIs, etc which are all the rage. It is different because it works. If you are looking for a magical silver bullet that will solve what ails your organization, keep looking (and you prob don't want to read any further). While the benefits of CPM are very tangible and massive, it requires spending time and effort and 'getting one's hands dirty'. Organizations that do this are rewarded with better strategy realization and execution which ultimately manifests itself in the metrics that matter most (revenue, net income, share price, etc).
Is Corporate Portfolio Management known by any other terms?
There are several terms that are related to CPM as given below:
IT Portfolio Management - This is a subset of Corporate Portfolio Management as applied to investments made within IT.
Project Portfolio Management (PPM) - This is also a subset of Corporate Portfolio Management focused on IT investments. PPM places a large focus on the project management aspects of managing a portfolio.
Resource Allocation - All companies inherently allocate resources so CPM is essentially the study of and effort to optimize resource allocation.
Enterprise Portfolio Management - Takes a more holistic view of portfolio management but has also begun to be widely thought of as a practice applied to IT investments.
Investment Optimization - This is the term American Express coined for its Corporate Portfolio Management efforts which Anand led. It has come to be used by others to connote Corporate Portfolio Management.
Portfolio Optimization - Similar to CPM but generally IT portfolio management specific.
Marketing Mix Modeling - If you are trying to optimize your marketing mix, you are optimizing your portfolio of marketing investments.
Other terms or practices that you may hear as it relates to Corporate Portfolio Management include marketing metrics, marketing ROI, new product development, strategic project management, stage gating.
If your organization is serious about realizing the benefits of Corporate Portfolio Management, The Corporate Portfolio Management Association may be worth getting involved with. Their website can be found at the following address - http://www.corporateportfoliomanagement.org.