Managers' roles in strategic portfolio management

Organizations implement strategic portfolio management (SPM) through various routines of selecting, coordinating and reconfiguring the project portfolio. They often have a formal process for the more operative aspects of managing the portfolio (assessing, prioritizing and managing the projects), but its official routines are not necessarily used in a strategic way, as the environment faces uncertainty and managers and other personnel may employ individual situation-specific judgment in their practice of SPM. Particularly in highly innovative contexts, situation-specific flexibility and adaptation are even necessary, when the organizations face the dynamic circumstances of the business.
The purpose of this chapter is to explore the involvement of managers in implementing the organization’s SPM, especially in highly innovative contexts. We first introduce current state knowledge of managers’ practices and roles in SPM. We then report two illustrative examples of project portfolios in highly innovative contexts and managers’ involvement in SPM in such contexts. The examples from medium-sized firms represent completely different industries (construction and software), different degrees of innovativeness of the project portfolio (radical vs. incremental), and different ways of organizing the management of the portfolio (less vs. more formal). The results reveal context-specific management approaches to SPM, where the radicalness of the innovations and formalization of routines are reflected in the managers’ SPM practice.