Portfolio Measures of Success (LPM)

As well as requiring a new definition of scope, the move to Lean Portfolio Management creates an opportunity to introduce new enduring measures of success. These are likely to be multi-faceted.

The recommendation is to start with a measure of customer value and a measure of cost as the primary measures of success – incentivising the delivery of value for money. Commercial organisations will often use revenue as a proxy for customer value, meaning their overall measure of success becomes profit (revenue over cost), although there are significant downsides to focusing on money as a short-term measure over a longer-term measure of customer value. For non-commercial organisations, this is often less obvious, will be different in each case, and will likely require proxy measures. One example might be measuring usage (in both people and time) as a proxy on the assumption that the more valuable users find the service, the more they will use it (assuming there is some level of choice). Customer feedback is also likely to be a large part of this. For enabling services where there’s an element of recharge, revenue could also be used. These metrics are likely to endure but should be regularly reviewed and adjusted to ensure they accurately reflect the benefit and value that’s being delivered. Ultimately, they are an agreement with the parent portfolio as to how success will be measured.

The successful delivery of objectives should always be a key measure of success, but potentially secondary to customer value and cost. It is unlikely that an objective should still be prioritised if it becomes clear the delivery of it will reduce customer value and/or increase costs without extenuating circumstances.

To supplement these, you should consider some enduring performance measures to understand performance, how effective and efficient delivery is, and where there may be opportunities for improvement. This should include key metrics of the delivery of change, run (including the usual operations metrics) and innovation. It should also include competency measures, for example through independent maturity assessments, to identify where potential improvements lie and where good practices can be identified for sharing with other portfolios.

Here are my views on this topic:

  • A Portfolio of Products and Services will naturally have a plethora of beneficiaries and customers. Individual Products may be quite different in nature and therefore have different ways of measuring success. It is important that Products retain the ability to choose their own measures based on what they are trying to achieve. Think about the Marvel franchise. What is their measure of success? We might anticipate that it was viewer figures on Disney+ or how much movies made in the first month at the box office. Noting your caution on using money as a measure of value, which I agree with, these measures probably do matter, but Marvel’s strategy was to create a universe in which many of there characters could come together. Therefore a measure of success for them might have been the number of characters that appeared on screen at the same time. This would have been a leading indicator perhaps.
  • My point is that with a Portfolio or organisation it is easy to fall into the trap of picking measures which are broadly applicable and these often get reduced to money, user count, NPS etc. But better measures of success are determined by the Portfolio strategy. The Portfolio should never be static. It needs to be constantly exploring new ideas and/or increasing efficiency. Depending on the zone (think Zone to Win) it is focusing on, the measures of success will shift.
  • In the Portfolio I manage, I focus on 4 Portfolio metrics which are more about the environment and not the success of the Products themselves. I focus on Transparency, Predictability, Responsiveness and <something else I’ve forgotten :slight_smile: >