A VERY SHORT INTRODUCTION

TO THE HISTORY OF PROJECT

PORTFOLIO MANAGEMENT AND
SOME RECOMMENDATIONS
FOR THE FUTURE

V/LARS K HANSEN

DEPARTMENT OF MANAGEMENT LARS KRISTIAN HANSEN

AARHUS UNIVERSITY 18 OCT. 2018 ASSISTANT PROFESSOR
WHO AM I?
Educations & Certification Teaching
• PhD in Information Systems, Aalborg  Projects and business development
University  IT Projects and program management
• M.Sc. in Social science (Cand.soc), Aalborg  IT projects and portfolio management
University  Agile portfolio management
• Certified Project Manager
(PRINCE2, MS Project, IPMA)  IS Philosophy of Science and Research

Experience Research Areas

• Started at Aarhus University 1. Oct. 2017  Rethinking project portfolio
• External lector at ITU management
• Municipality of Copenhagen
 Agile and adaptive project portfolio
• Projectum
• Økonomi- og Erhvervsministeriet management

• +10 years experience

in project and portfolio management

DEPARTMENT OF MANAGEMENT LARS KRISTIAN HANSEN

AARHUS UNIVERSITY 18 OCT. 2018 ASSISTANT PROFESSOR

2
MINDMAPING THE PLOT

What is project
portfolio Historical
management? trends

Project portfolio
management
Dynamic
capabilities – Trends in the
what to do future?

3
MINDMAPING THE PLOT

What is project
portfolio Historical
management? trends

Project portfolio
management
Dynamic
capabilities – Trends in the
what to do future?

4
PROJECT PORTFOLIO MANAGEMENT
(PPM)

The overall organizational

ability to manage project
portfolios strategically and
holistically to support the
success of the organization
(Clegg et al., 2018)

5
MINDMAPING THE PLOT

What is project
portfolio Historical
management? trends

Project portfolio
management
Dynamic
capabilities – Trends in the
what to do future?

6
MANY YEARS AGO…

 In Shakespeare’s the Merchant from Venice:

Antonio understands that the portfolio principle
“diversifications” makes his business more robust
for temporary and local fluctuations.
 “Thankfully my financial situation is
healthy. I don’t have all of my money
invested in one ship, or one part of the
world. If I don’t do well this year, I’ll still
be okay”. (Act I scene 1)

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1950S: RESEARCH BEGINS
In the postwar period research begins using
mathematics to more precisely understand how
portfolios can be put together to make them
more effective, e.g. by lowering the overall risk.
A very famous figure in this regard is Markowitz
(1952), who later received the Nobel Prize for
his work.

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1950-1960S: THE POST-WAR ECONOMY
BOOM

• In parallel, a more practical orientated need

for PPM arose in the post-war economy
boom. The western world’s companies asked
for principles and methods to speed up
conversion of new ideas into products, as
they were unable to keep up with marked
demand.

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THE 1970-1980S: THE ECONOMIC CRISIS
 This focus changes in the seventies with the
economic crisis, this toward a focus on how
organizations exploit their existing resources.

 This inspired research to develop

models advising organizations
how they handle the, apparently
chronic, problem of organizations
having too many projects
compared to the amount of
available resources.
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THE 1990S: STAGE-GATE MODELS
CONCURS THE AGENDA
 The Stage-Gate model by Robert Cooper and
his collages (e.g. Cooper and Edgett, 1997).
 The basic idea is that organizations have a
number of gates, where projects are required to
provide some pre-specified information before
proceeding to the next gate.

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THE 1990S: STAGE-GATE MODELS
CONCURS THE AGENDA

(Cooper 1990)

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2000S MATURITY MODELS BECOMES
POPULAR
• Emerging need for IT PPM as amount and
importance of IT projects grows (Nolan and
McFarland, 2005)
• Interest for maturity models, these assuming
that organizations by adopting defined
guidelines improve organizations’ PPM success
• Maturity models undeniable popular – still in our
• .However, we still need to see convincing
research results showing the desired
effect in practice
2000S MATURITY MODELS BECOMES
POPULAR

(Jeffery and Leliveld, 2004)

2010S: ADAPTABILITY AND UNCERTAINTY

• Entering a global innovation economy

• Research agenda shift towards organizations'
ability to change and adapt
• Agility becomes the buzzword, but how do we
expand agility from project level to the portfolio
level?
• Scaled agile frameworks such as SAFe, seem to
be adopted by many organizations these days

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2010S: SCALING AGILE

Builds on Leffingwell (2007; 2010)

MINDMAPING THE PLOT

What is project
portfolio Historical
management? trends

Project portfolio
management
Dynamic
capabilities – Trends in the
what to do future?

17
Macro
economic Innovation
trends economy

Information
Economic Economic technology
optimism crisis revolution

1950s 1960s 1970s 1980s 1990s 2000s 2010s 2020s

Improve Exploit exciting Deal with

though put resources new
technology

Focus of Deal with

deep
PPM research uncertainty
WHAT DID WE LEARN BY TAKING A
HISTORICAL PERSPECTIVE ON PPM?

• In the past, organizations tend to have more

centralized, hierarchical and static structures.
• In such more static environment it makes sense to
diversify the portfolio to reduce the risk of external
and local influences.
• More organizations experiences of deep
uncertainty were constant organizational
transformation is necessary (Teece at at.,
2016)

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1
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MINDMAPING THE PLOT

What is project
portfolio Historical
management? trends

Project portfolio
management
Dynamic
capabilities – Trends in the
what to do future?

20
ADVICE FROM RECENT RESEARCH

 Organizations in an innovation economy

should develop so-called dynamic capabilities
(Killen and Hunt, 2010).
 This enable organizations to adjust faster to
new types of work and to collaborate in
networks across organizations, functions and
geographical locations
 Such capabilities have costs, but will properly
be key for future organizations’ survival

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HOW TO BUILD DYNAMIC CAPABILITIES

Sensing
Seizing
Transforming

Teece et al (2016) 22
SENSING

What is it?:
Identification of opportunities for development,
co-development and use of new technology

What tool can be used?

Real option, scenario planning, generative
hypotheses about the future (abduction)

Teece et al (2016) 23
SEIZING

What is it?
Mobilization of the “right amount” of resources to
address needs and opportunities and capture
value from doing so

What tools can be used?

No vertical integration,
self-organizing (network),
sourcing, open innovation,
remove slack
Teece et al (2016) 24
TRANSFORMING

What is it?
Continued renewal or shifting by build-measure-
learn
What tools can be used?
Build->measure->learn.
MVP (minimum viable product).
Difficult in large companies
and airline industry..[..]

Teece et al (2016) 25
MINDMAPING THE PLOT

What is project
portfolio Historical
management? trends

Project portfolio
management
Dynamic
capabilities – Trends in the
what to do future?

26
QUESTIONS AND COMMENTS?
REFERENCES
 CLEGG, S., KILLEN, C. P., BIESENTHAL, C. & SANKARAN, S. 2018. Practices, projects and portfolios:
Current research trends and new directions. International Journal of Project Management, 36, 762-
772.
 COOPER, R. G. & EDGETT, S. J. 1997. Portfolio management in new product development: Lessons
from the leaders--I. Research Technology Management, 40, 16.
 HANSEN, L. K. & HANSEN, A.-S. 2018. En meget kort introduktion til Projekt
porteføljeledelsens historie og nogle perspektiver for fremtidens organisationer (in press).
Dansk Projektledelse, 4.
 JEFFERY, M. & LELIVELD, I. 2004. Best practices in IT portfolio management. MIT Sloan
Management Review, 45, 41.
 KILLEN, C. P. & HUNT, R. A. 2010. Dynamic capability through project portfolio management in
service and manufacturing industries. International Journal of Managing Projects in Business, 3,
157-169.
 MARKOWITZ, H. M. 1952. Portfolio selection. The journal of finance, 7, 77-91.
 NOLAN, R. & MCFARLAN, F. W. 2005. Information technology and the board of directors. Harvard
business review, 83, 96.
 SCHOPER, Y.-G., WALD, A., INGASON, H. T. & FRIDGEIRSSON, T. V. 2018. Projectification in Western
economies: A comparative study of Germany, Norway and Iceland. International Journal of
Project Management, 36, 71-82.
 TEECE, D., PETERAF, M. & LEIH, S. 2016. Dynamic capabilities and organizational agility: Risk,
uncertainty, and strategy in the innovation economy. California Management Review, 58, 13-35
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THE END

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 DEPARTMENT OF MANAGEMENT
AARHUS UNIVERSITY

DEPARTMENT OF MANAGEMENT LARS KRISTIAN HANSEN

AARHUS UNIVERSITY 18 OCT. 2018 ASSISTANT PROFESSOR