The article Using R&D portfolio management to deal with dynamic risk by Serghei Floricel.in the journal R&D Management has some interesting insights into why organizations adopt adopt specific approaches for project portfolio management. Here is what I took away:
- They theorize that portfolio management is driven by the competitive environment (characterized by velocity, turbulence, growth and instability).
- This competitive environment requires managers to develop approaches to address it and learn some preferred approaches (what I would call “gut feelings”).
- These approaches to portfolio management can be characterized in four dimensions (structure, commitment, emergence and integration).
They then surveyed 795 firms in a variety of sectors and on four continents to find the following results:
- high-velocity environments favor structured as well as integrated portfolio management approaches
- high-growth environments favor approaches that are structured but commit significant resources to each project as well
- Turbulent environments favor approaches that are emergent, but also, contrary to our expectations, have high resource commitment levels
- Finally, firms in unstable environments have a marginal preference for emergent approaches