After attending a recent R&D portfolio and resource management conference, and listening to presenters from both large, established, and rising star pharmaceutical companies and life science organizations, we were surprised to hear how many companies were grappling with issues related to transparency and consistency of data, the ability to drive fact-based decision making, executive buy-in, enabling a holistic view of the portfolio, and company culture. It quickly became clear that the business processes forming the foundation of portfolio management must be both effective and consistently applied or it won’t matter what software you use or what analytical methods you apply. To put it another way, a fool with a tool is still a fool — unless they undertake the necessary business transformation to ensure their underlying processes align to maximize the effectiveness of the tool and associated analytics.
To be successful, portfolio management software and analytics must be built on a solid foundation that ensures your project portfolio delivers maximum value to the business. Four key items create this foundation:
- Single source of truth (data)
- Fact-based decision making
- A holistic view of the portfolio.
- Effective change management to drive behavioral and cultural changes
Let’s look at each of these in a bit more detail.
Establish a single source of truth
A key principle in optimizing and prioritizing projects in the R&D portfolio is enabling apples-to-apples comparisons across projects. Utilizing a single source of key data that applies assumptions and calculations consistently will help to minimize the variability and challenges of cross project comparisons. This is often a significant challenge in most organizations. Functional silos, concerns over data ownership and a lack of transparency make employing a single source of truth a difficult process to implement. Having confidence in the accuracy of the inputs used for project team analyses and presentations and identifying functions/people that will be accountable for ensuring that the data underlying the R&D organization’s decision-making is a critical first step.
Portfolio decision making in many large companies is generally based more on an advocacy approach, wherein project leaders or sponsors strongly campaign for their project, focusing on why the project is a good investment vs highlighting risks or potential issues. Establishing objective and fact-based decision criteria will provide more transparency to the process and help focus the discussion on risk/reward tradeoffs and alignment with the overall R&D portfolio and the company’s strategic objectives.
A holistic portfolio view
To ensure the project portfolio delivers on business objectives and is able to be executed with the resources available, business processes and decision-making need to be in place that provide a holistic view. It is critical to maintain both a project-level and consolidated view of resource demand/capacity, budget costs and key milestones such as launch dates or key decision points. Imagine preparing for a portfolio review where data of this type is held within several therapy areas, functions or business units. It could take weeks or months to gather all of the necessary data across projects. Establishing a standardized, centralized, database for key project data greatly reduces the complexity of preparation and helps to further establish a single source of truth. Other benefits to be derived from a portfolio-wide view include, but are not limited to the following: A) Enabling the organization to quickly make trade-off decisions regarding the impact of a new project on overall portfolio value and cost; B) Gaining insights into interdependencies or correlations relative to the timing of other projects in the portfolio; C) Understanding which projects can be accelerated or delayed to adjust to shifting market conditions or portfolio status. Lastly, it is critical that all individual project decisions be made in the context of the entire portfolio.
Based on findings from a recent survey, over 70 percent of change initiatives fail. A similar percentage of software implementations (like portfolio management systems) also are unsuccessful. While exact root causes are hard to come by, it is clear that ineffective change management is a significant contributor in as many as 50 percent of the projects, according to one estimate. While there are exceptions, many companies tend to drive change in a top-down, directive fashion versus managing key stakeholders, engaging employees in the process and crafting messages to drive behavioral change and engagement. Communication tends to be insufficient, relying on a few media types such as town hall presentations, leadership emails or cascading information through the corporate hierarchy. Effective change management requires a detailed change plan including, but not limited to, the case for change, stakeholder analysis and action plans, communication planning using multiple media channels and education and training.
If you have worked in a corporate environment, the importance of establishing a single source of truth or fact-based decision-making will resonate with you. Likewise, anyone who has tried to establish these in a business where they have not been part of the culture understands how challenging these transformative changes can be to implement. Often a well thought out and executed change management approach will help to overcome these barriers. At other times it may be necessary to also alter organizational structures or processes.
TayganPoint Consulting Group specializes in business transformation and change management to help organizations achieve their desired business results. Please reach out to us if you would like to continue the conversation on how TayganPoint can help with portfolio management or other strategic business initiatives which require a transformation in how you do your day-to-day work.
Mark A. Lane, PhD | Consultant | TayganPoint Consulting Group | email@example.com | @markalane15
Dan Patrick | Senior Consultant | TayganPoint Consulting Group | firstname.lastname@example.org