Eight Distinctions Between Portfolio Management and Program Management
By Greg Githens
A leader of a strategic initiative needs to have an expert understanding of program management and be knowledgeable in the principles and application of portfolio management. He or she needs to be able to intelligently discuss this question:
“What are the differences between portfolio management and program management?”
The following table shows differences along eight use dimensions. In the attempt to write in a concise manner, I acknowledge that I have simplified numerous complex concepts of theory and practice. My goal is to provide useful insights to strategic initiative practitioners. Note that the table below also includes distinctions from project management.
Why Lump Together Project Portfolio Management and Program Management?
I mentioned that this is a complex topic. One complexity is that some practitioners use the term Portfolio Management to refer to both “Project Portfolio Management,” as well as what I call “classic Portfolio Management.”
It appears to me that Program Management and Project Portfolio Management have more similarities than differences; thus, I grouped them together and contrasted them with classical Portfolio Management. Do you agree?
Within the project portfolio or program, managers make goal-oriented decisions that are consistent with an intended strategic outcome. Each treats risk as uncertain events that affect the outcome and are subject to managerial control. The governance processes of Program Management and Project Portfolio Management are similar; for one example, both apply roll-up reporting of the individual components for the purposes of monitoring, control, and decision making.
I encourage you to place the term portfolio management into the search function of an online bookstore; you will get an excellent peek into the rich literature of portfolio management.
Implications for Leaders of Strategic Initiatives
The leader of a strategic initiative is accountable for delivering turning vision into results, and is navigating through considerable ambiguity with strategic thinking skills:
- A core problem is that “strategic alignment” is only useful in the context of the kind of strategy under consideration. For example, managers of functional strategies tend to be pre-occupied with resource availability and getting work done with assigned resources; thus, strategic alignment and functional mission are nearly identical. Business-level strategies place a higher emphasis on strategic alignment as a selection criterion. I recommend that you follow the below link for definitions of the three types of strategies (functional, business, and corporate).
The most successful organizations have fewer strategic programs, and these programs are staffed with the best resources. These successful organizations are skilled at portfolio management; that is, they understand how to invest and disinvest in programs and projects.
Strategic initiatives are transformative and involve stakeholders that do not have training in program and project management concepts. All strategic initiatives are programs, but not all programs are strategic initiatives.
Experienced professionals don’t always agree on the terms and distinctions. Standards in project portfolio management and program management are still maturing.
Do these distinctions make sense to you? How can this knowledge help you lead a strategic initiative?
Greg Githens is Vice President Strategic Initiatives and Innovation. Greg is the authority on how organizations use strategic initiatives to turn vision into results. He has substantial direct experience in designing, developing, leading, and coaching strategic initiative programs. Greg resides in Findlay, Ohio USA. Contact him at +1 419 424 1164 or email at GregoryDGithens [at] cs [dot] com. You can read more from Greg on his blog.