Corporate Effectiveness and Business Excellence Value Management Approach

1. © IBT, Los Angeles, California, USA
Portfolio Management – A Value Management Approach
Sample Document – June 10th, 2013
Sandeep (Sandy) Muju
Innovative Business Transformation (IBT)

2. © IBT, Los Angeles, California, USA
Gain visibility on the innovation projects portfolio
Align the innovation investments with stakeholder objectives
Make the right choices when prioritizing investments and projects
Innovation Portfolio Management
Improve ability to execute on innovation value generation
A Value Management Approach

3. © IBT, Los Angeles, California, USA
 Project information is hard to collect
◦ No standardized way to document projects
◦ Incomplete documentation
◦ Non-centralized information
◦ Projects at different stages of their life cycle
 Inadequate portfolio view
◦ Project investments are unorganized No
framework, no tool, no time, no resource
◦ Too many projects or information to analyze
◦ Programs reflect capital authorization instead of
logical sequencing
 Ineffective communication about the
portfolio
◦ Business is not interested
◦ Unsure about what to communicate
◦ No clear executive view of the portfolio and its
business impacts
◦ Unclear strategy execution
Gain Portfolio-wide Visibility into Projects
The issues The propositions
A simple format to
collect project
information and to
guide project
managers about
what to document
A logical grouping of
initiatives in a
project-program
portfolio hierarchy
A single view of current
and proposed portfolios
(which projects, when,
at what cost, for what
purpose) highlighting
financial & non-
financial benefits, risks,
and payback periods
Project
B
Project
C
Project
D
Project
A
Program
1
Program
2
Portfolio
Project
E

4. © IBT, Los Angeles, California, USA
 Project value is hard to define
◦ Unable to scope projects to deliver optimum
value
◦ Can’t measure where the portfolio will have
the most impact on value
◦ No link between portfolio and share price
 Project performance targets are not
specified
◦ Measurement is different for each project
◦ Hard to capitalize on project process maturity
◦ Too many variables (or inconsistent variables)
complicate comparison of projects
 Strategic Alignment is unclear
◦ Unable to obtain clear sponsorship from
business (CSD versus BSD)
◦ No clear linkage between corporate strategic
objectives and investment strategy
◦ Can’t identify where the portfolio fails to
support business
◦ Corporate, Business and Innovation group
roles and responsibilities are unclear
Align Investments with Stakeholder Objectives
The issues
Our Objective: improve growth through innovation
Our Portfolio: 65% of initiatives support cost reduction?
(Better start asking questions…)
A standard
framework for
identifying project
impacts on balance
sheet, income
statement and share
price
MAINTENANCE
A clear categorization of
investment types, allowing
alignment to business
objectives (CSD, BSD)
An adapted business case that
reflects project diversity and
enables comparison and
prioritization of projects
The propositions

5. © IBT, Los Angeles, California, USA
 Projects can’t be compared
◦ Investments underway are not the ones with
the most value
◦ Projects types and benefits are too different
 Project prioritization process is unclear
◦ Business Units don’t participate in project
selection
◦ No common criteria to prioritize projects
 Investments can’t be justified
◦ Politics play a bigger role than business
value
◦ Incomplete or non-existent financial data
◦ Undocumented benefits
◦ Difficult to justify some types of projects
Prioritizing Investments
The issues
A value / risk matrix
clearly identifying
the projects with the
most enterprise
value and the least
risk or complexity
A view of the planned
benefits and their
impact on the
company for the next
several years, which
allows you to control
the portfolio’s
execution and impact
on the company.
The propositions
Risk/Value Matrix : All Projects
A1
A2
A3
A4
A5
A6
A7
A8
A9
A10
A11A12
A13
I1
I2
I3
I4
I5
I6
I7
I8
O1
O2
O3
O4
O5 O6
O7
O8
T1
T2
T3T4
T5T6
T7
T8
0
1
2
3
4
5
6
0123456
Risk
Value
Innovation Maintenance Productivity Growth
Low Risk
High Value
Low Value
High Risk
Overall
Benefits

6. © IBT, Los Angeles, California, USA
 Unable to adapt to changes
◦ Difficult to identify and discontinue troubled projects
◦ Portfolio does not adapt to changing objectives
◦ Business case evolves, but projects not re-assessed
 Lack of comprehensive, continuous view of the
portfolio
◦ Projects have conflicting objectives, timelines,
and priorities
◦ Redundant or overlapping projects with double-
counted benefits
◦ New opportunities at mid-year aren’t considered
 Inadequate integration with the other business
management processes and approaches
◦ Program Management not blended with 6-Sigma
◦ Portfolio management not linked with strategic
planning and budgeting processes
◦ Continuous reviews not tied to PMO
gates/checkpoints
Develop Strategy Execution Discipline
The issues The propositions
A rolling execution process
to monitor and maintain
portfolio alignment with
objectives.
An ability to compare and
prioritize projects of
different length, styles,
status at any stage of their
execution.
A consistent framework to
integrate all rewards
systems, standards,
governance approaches
into Risk/Reward balanced
Value generation.
Monitor Portfolio
Status and
Performance
Identify New
Opportunities
Reprioritize /
Optimize
Portfolio
Policies
and
Rewards
Roles
and
Respons.
Methods &
Approaches
Tools and
Enablers
Organizational
Structure
Deployment
and
Monitoring

7. © IBT, Los Angeles, California, USA
Determine Most
Relevant Costs and
Benefits for Each
Project Type with
Business Cases
Innovation Portfolio Management Landscape
Portfolio Landscape helps speed-up the journey through every step of Portfolio Management.
Set up
Portfolio
Develop
Prioritization
Model
CollectCollect
ProjectProject
InformationInformation
Collect
Project
Information
AnalyzeAnalyze
PortfolioPortfolio
Analyze
Portfolio
PrioritizePrioritizePrioritize
Project &
Programs
Communicate
& Report
Deploy &
Execute
Portfolio
Monitor
Programs
& Projects
Monitor
Changes
Determine your
prioritization criteria, input
constraints, success KPIs,
performance thresholds.
Collect project data
with standardized
template
Consolidate information
and produce reports to
highlight key Portfolio
and Project data in
support of the
prioritization process
Risk/Value Matrix : All Projects
A1
A2
A3
A4
A5
A6
A7
A8
A9
A10
A11A12
A13
I1
I2
I3
I4
I5
I6
I7
I8
O1
O2
O3
O4
O5 O6
O7
O8
T1
T2
T3T4
T5T6
T7
T8
0
1
2
3
4
5
6
0123456
Risk
Value
Innovation Maintenance Productivity Growth
Low Risk
High Value
Low Value
High Risk
Monitor the portfolio
performance
Completed per initiative sponsors
Team Established/
Well Underway
Target Identified
$x$x
$x
$x
$x
$x
Revised Original
Target Identified
Team Established/ Well Underway
Completed per Initiative Sponsors
Translates to a
$x MM annual
run rate
Benefit Tracking Report
Time
EBITDAImpact($M)
FY03 Opportunity
FY05 Target - ΔEP=$200M ΔEBITDA=$330M

8. © IBT, Los Angeles, California, USA
The Strategic Imperative
What should GX’s Innovation Strategy Look Like?
• Need seeker strategy
• Market reader strategy
• Technology driver strategy
What should GX’s Innovation Portfolio Look like?
• Incremental innovation
• Evolutionary innovation
• Disruptive/Radical innovation
What should GX’s Innovation Success Measures Look like?
• First to market disruptive innovations
• Substitute products developed or brought in-house
• New entrants converted into partners
• New to world products launched
• New product revenues generated
• Patents obtained and/or licensed

9. © IBT, Los Angeles, California, USA
Ways we may be able to help GX …
Driving
Business
Innovation
Business Strategy
& Portfolio
Management
Global
Sourcing
& DFx
Full Lifecycle NPD
& Technology
Commercialization
Market
Feasibility
Testing &
NPI

10. © IBT, Los Angeles, California, USA
Contact
Phone: +1 (323) 947-7029
Email: smuju@ibtransform.com
Dr. Sandeep Muju brings a versatile and seasoned techno-commercial background with
leading Fortune 500 global corporations in various executive leadership roles as well external
Advisory experience with global corporations drive transformational business performance
improvements.
He has a PhD in Applied Mechanics after which he also obtained an MBA in Strategy &
Operations. Additionally he has Six Sigma Master Blackbelt background (DFSS, Lean, Growth), and
PMI PMP experience. Over the years he has received several awards and honors including, R&D
100 Award, Patent & Trade Secret Awards, Quest for Excellence Award, Business Excellence
Awards & Honors, Industry Panelist, Conference Keynote Speaker, etc.
Sandeep “Sandy” Muju