Key findings in the single disciplines

This study’s aim was to understand the way in which currently practiced portfolio management presents itself in the development of leading German industrial companies. The collected material enables us to unequivocally comprehend this, and we present our findings in detail in the previous chapters. The conclusion summarizes the central findings and presents the results of the superordinate analysis concerning weaknesses and key factors in the portfolio process, as well as recognized patterns of behaviors in portfolio process maturity.

Portfolio management is a management issue and is strongly dominated by financial concerns and seldom conducted interdisciplinary. There is a lack of clear project termination criteria.

We see rather classic portfolio management behavior in the data presented in the chapter Management, which poses a series of questions. In product development, portfolio management is conducted in relation to corporate strategy; however, 50 percent do so without concise assessment criteria and 10 percent entirely situationally. In these cases, it is not clear how the connection to strategy is maintained. Expectations towards the method’s results are extremely diverse, and in practice, they range from an overall control system down to detailed technical questions. The vast majority of participants form their economic sector’s entire product landscape in portfolio, or is going in this direction with sub-portfolios. We find sparse interdisciplinary activity. There are the traditional process owners, management, product management and R&D, which dominate the portfolio process, while other departments (e.g. HR, IT) are not integrated. The same is true for the key figures. They are dominated by financial criteria or benchmarks, with aspects concerning market needs, innovation, knowledge, and strategy that are less crucial.

Concerning risk, the investment in technology is seen as the biggest risk. The four most prominent aspects of risk taken into account during a project’s approval are the novelty of technology used, the competitive environment, the high program complexity, as well as insecurities due to long project lifespans. Evaluating success seems just a0s difficult. Asking for a definition of success or failure results in a broad spectrum of qualitative and quantitative answers, with the smallest common denominator being financial success. Indirect strategic goals or customer-oriented criteria are barely mentioned.

The comprehension of governance varies significantly, but not amongst best performers. They have successfully established a central PMO.

Companies do not have a very developed understanding of portfolio management being a decisive governance topic in product development. The responses show that the method is used for a variety of partially intersecting purposes. No pervasive, central guiding principle or safeguarding of the future is practiced, which leads to fragmentation of power amongst a highly diverse arrangement of purposes and groups.

The PMO (Project/Portfolio Management Office) as an organizational institution to support portfolio management processes shows itself to be the supporting form of organization. Each of the top ten companies has a highly positioned and interdepartmental PMO. Strategic perspectives, or so-called “strategic buckets”, are to be found more or less everywhere; categorization is surprisingly uniform by project and product type. Categorizations by different types, such as risk, target market, trends, or other innovation-inspiring perspectives are rarely mentioned.

Portfolio processes serve budgeting, and are practiced more communicatively than analytically, thereby being characterized as clearly inefficient.

Participants homogeneously describe their processes as standardized, transparent, and documented, but less so as efficient and automated. This corresponds with the insights gained from the chapter Systems. The collected data shows finance-driven behavior towards budget allocation and resource planning, monitoring and multi-project prioritization. Overall, the portfolio process is firmly tied into the companies’ planning calendars, but explorative portfolio observations towards new themes or portfolio reassessment are remarkable exceptions.

In processes, communicative and visual methods are noticeably preferred to analytical and mathematical procedures. This means that available data is discussed rather than analyzed. This reveals an interesting incongruence, as companies claim to use data that they largely do not have access to due to inferior IT systems.

Best performers use appropriate IT systems, yet criticize insufficient integration and lack of automation.

Portfolio management is an information and work intensive process – an ideal area of application for information and communication technologies. The insight here is: best performers do use IT systems but acknowledge that these are far from ideal. Low performers do either not use IT systems, or use drastically simplified ones. Insufficient integration and the degree of automation, lacking project data synchronization, user-unfriendliness, and inadequate reporting functions are named as deficits. This partially explains the reasoning behind the lack of analytical methods. As databases of sufficient quality are not available, information can only be evaluated communicatively, while at the same time, mainly financial criteria are of interest, so we only see such a profile in practice. The true value of the method is thus not sufficiently exhausted.

Despite extensive bottlenecks, resource management is gravely underutilized.

Resource bottlenecks are numerous and well known., e.g. missing capacity expansions.

Process and planning optimization, however, is still not a focus. This is especially true of companies with heavy use of external resources. Resource management has the worst average maturity of all maturity levels; best performers, however, continue to lead the rankings. They have a transparent and well-administered pool of resources at their disposal, which they allocate according to demand.

We can conclude that resources are predominantly individual-related and locally planned. Portfolio decisions are for the most part made after manual, company-wide adjustments. Resource management software is represented only occasionally, and those participants who use it only use tools with basic functions that do not meet the requirements of providing management with information, which is portfolio-adequate. Best performers, however, plan skill-based and company-wide.

Best performers remunerate in relation to goals, invest in training and decide in the long term, based on facts and are orientated towards processes.

We assume that an employee’s individual motivation to actively support and implement a procedure like portfolio management plays a crucial role in using it professionally. Therefore, we analyzed how this motivation could be increased and which aspects should receive particular attention. Regarding the procedure’s relevance

– relevance is an action, whose result influences actual behavior. This becomes especially apparent for the participants of the study. 64 percent bindingly integrate portfolio process results, and 26 percent at least take these results into consideration in their decision making process. The participants clearly show the direction in which potentials are to be found. In summary, these are aspects of management, process and IT. Management relates to increasing top-level management’s attention in terms of time and the higher relevance of the portfolio process in preparing decisions. This takes place in shape of active standards, more intense group discussions and the integration of external partners such as suppliers, customers, and cooperating partners. Process and IT generally relate as a prerequisite to the creation of a productive infrastructure of processes and IT tools, which gives those responsible a tool, with which they can offer their company truly professional portfolio management in the product development sector.

There is a significant ditch between best and low performers in this discipline. Best performers experience themselves as proactive, rewarded, well trained, and equipped with a useable tool, while a low performer’s world is distinctly more unfriendly. They see themselves as entangled in anonymous planning, which is drastically less related to personal goal systems and they are equipped with bad tools, less trained, and sanctioned, when mistakes occur. All participants accept the necessity of optimization but low performers see a greater need.

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The long-term success of an industrial company is largely dependent on the life cycle of its products and the innovative capacities to further develop these products.

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