If you're a change leader with responsibility for change portfolio management, Head of Internal Audit (HOIA), Chief Risk Officer (CRO) or a Board member (incl. Non-executive Director) then this article is for you.

We live in a constant state of flux. Delivering strategic change is a journey and few journeys go according to plan.

What Is a Change Portfolio?

A change portfolio is a collection of initiatives often structured as programmes, projects and epics (in agile delivery this term describes a significant solution development such as a new customer mobile app), used to deliver the organisation's strategic objectives and desired changes. A key goal of this approach is to balance the change initiatives alongside the maintenance of Business-as-Usual (BAU) while optimising return on investment.

Organisations don't deliberately increase their complexity, however with an ever-increasing number of interconnected change initiatives, limited budgets and resources, we're often asked by our clients:  "How do others successfully manage their change portfolio to improve the value being delivered...and recognise early when it isn't?".

Where change portfolio is not optimised, this can ultimately result in the organisation's strategic objectives not being met. This can mean delays in delivering customer value, not realising operational efficiency gains, and in some cases not meeting regulatory deadlines.

What are the early warning indicators that change portfolio management may not be working in your organisation?

• Buy-in: Delivery stakeholders not attending or contributing to governance groups.
• Mix and flexibility: Few change initiatives stopped or re-prioritised (as well as the portfolio focusing on incremental growth rather than balanced with a healthy pipeline of disruptive new products and services).
• Collaboration: Functional silos, project funding (rather than organising around a value stream) and ongoing portfolio politics.This is often compounded by middle and lower-level management practices and underlying mindsets and behaviour not shifting appropriately.
• Pilots: Testing ideas, learning from failures, and scaling up successes quickly is a great approach that reduces risk and builds an appetite for change. However, implementing pilots too quickly can distract focus and resources, and sometimes has bypassed portfolio governance all together.
• Outcome focused: Ongoing outcomes (value being delivered / benefits realisation) unclear, not measured and not informing portfolio decisions early enough.
• Status reporting: Status reports that change unexpectedly over short time periods with little warning (e.g. 'green' to 'amber' or even 'green' to 'red').
• Frustration: Staff on the ground viewing portfolio management as adding unnecessary complexity and cost.
  
  

Why Is Change Portfolio Governance Important?

It's really all about focusing on strategic goals and driving better decision making, enabling leaders to make a call on what starts, what stops and what resources should be transferred between change initiatives to meet the organisation's goals more effectively.

For example, a small financial services firm may have a single change portfolio, while a larger retailer or global insurer is likely to have several change portfolios focused on different strategic themes. The themes influence the portfolio strategy and provide business context for portfolio decision making. In both cases they should be aligned to the organisation's wider corporate governance processes (e.g. enterprise risk management, the change framework and Board oversight).

The objectives of change portfolio governance are to:

1. Ensure the change initiatives are continually aligned to deliver the organisation's strategy e.g. focused on value creation or risk reduction.
2. Make decisions with regards to the organisation's overall resource and funding to prioritise the change and value being delivered (start, stop, continue).
3. Align delivery across the change portfolio by challenging critical areas such as inter-dependencies (including balance of strategic and BAU change).
4. Challenge and support the ongoing delivery of the outcomes and benefits.
5. Ensure transparency and control over delivery by having a clear view of significant milestones and risks.

What Does Good Look Like?

There isn't a one size fits all approach and this is influenced by the strategic ambition of the organisation, as well as the scale, complexity and pace of change required.

There are three key areas of responsibility needed for change portfolio governance to achieve its objectives:

The DCR team also identified the following seven success factors for change portfolio governance during projects undertaken in 2022/23 at UK banks, building societies, insurers and retailers:

• Change culture: Changes can have unintended consequences for an organisation's customers and staff. Change culture is a pre-requisite for success and considering a right-sized change framework, with feedback that drives a change culture road-map (also included in the portfolio as a key initiative) to support the journey was invaluable.

When was the last time members of the change portfolio governance based themselves within the actual project or customer environment to experience firsthand the culture?

• Engaged sponsorship: The right business sponsor for each portfolio must be in place to provide guidance, judgement, and leadership for change teams by reviewing their progress, helping periodically to solve problems, suggesting and validating changes to execution plans, and focusing on the business impact.

The success of the change initiative should be linked to their personal objectives, and where appropriate their progression, remuneration and reward.

• Continuous improvement: The portfolio governance practices should adapt and evolve to remain optimal over time - they should be periodically assessed in collaboration with team members to identify learnings and prioritised improvements made.

As the portfolio governance learns and adapts, so should its approach and attendees.

• Transparency and risk management: The change portfolio (e.g. programmes, projects and epics), and constraints (e.g. resources and funding, risk and issues) should be visible to all stakeholders (ideally via up-to-date dashboard reporting).

If you can't see the big picture and inter-dependencies, this is likely to result in incorrect prioritisation and poorly informed decisions. The most common gap is business-as-usual demands not being considered. 

• Lean prioritisation and funding: Adopting a quantitative approach to ongoing prioritisation of the portfolio is needed to reduce the risk of emotional decision making.

The supporting funding model also needs to be flexible to consider this and adapt to the different types of portfolios the organisation has (e.g. programmes versus business-as-usual). There is an increased trend to adopt rolling wave planning and budgeting that encourages adapting to change.

• Value stream resourcing: Customers don't value projects, programmes or capabilities, they value usable products and services. Applying silo'd resources to individual initiatives (e.g. a project) rarely works and instead the aim should be to adapt to changes and be nimbler. Increasingly, we see organisational resources are organised around value streams (e.g a product).

• Measuring outcomes achieved: The outcomes actually realised (i.e. value delivered) should be assessed and learnings made, such as did the market conditions change and did you overestimate the value that actually could be delivered within the business case?
  

How Can DCR Help?

What makes us unique? We're Professional Services done differently.

Robust independent change advice and assurance does't happen by accident. Our team have extensive experience of working in both a 'hands on' delivery, advisory and assurance capacity across all industry sectors to help enable successful change.

We can work collaboratively with your own team to plan, execute, quality assure and provide assurance over your change portfolio governance and practices.

Change is inevitable and we therefore focus on building your own sustainable internal capability for the long-term - we want you to measure us not just on the quality and insight of our deliverables and outcomes, but also on the successful knowledge and skills transfer with your own teams.

We are passionate about building a change community and have established a quarterly roundtable where we aim to build our collective skills, experience and knowledge together. Are you responsible for leading, delivering or assuring change and would like to join our community of change professionals? Get in touch to let us know!

Please visit our website or contact a member of the DCR team: Change Assurance and Advisory