"Yes, portfolio management is great,
but what about the proverbial gut feel?"
An attendee of my Project Portfolio Management
workshop at a large German conglomerate
Sometimes there comes a proposal across the steering committee's table that scores very low across almost all of the scoring criteria and yet the key decision makers feel that this is a very important and valuable initiative that can become the next breakthrough project that would generate millions if not billions of dollars for their company.
Let me use a somewhat “fantasy” scenario to illustrate this concept. The work on the first iPhone started in Apple in 2004. I don’t know whether Apple used a portfolio scoring model to assess its project ideas. If they had one, I wouldn’t know what variables exactly they use in it. So, let us make two not-too-far-fetched assumptions:
- Apple does use a portfolio scoring model
- Apple’s scoring algorithm is not too dissimilar with other hi-tech product companies
If we continue our logical line of thinking, then it is safe to expand the second point and assume that their imaginary scoring model included parameters like:
- Financial value,
- Competitive advantage,
- Technical risk,
- Commercialization risk,
- Technical feasibility and
- Time to market
Let us try to pretend that we are in the same room with Steve Jobs where he just proposed to embark on creating something called a “smart phone”. What would the assessment of this proposal look like in 2004?