How Project Portfolio Management helps companies develop effective strategies

by Francesco Pecoraro

If your organization is looking for a way to develop effective business strategies, project portfolio management holds the key. Organizations need to define a strategy in order to achieve success. Defining a strategy is a critical factor for the future of a company. The right strategy will produce growth, profit, or any other objectives the executives have set. At the same time, an inappropriate strategy will not only fail to yield benefits but also may result in disaster.

Strategic management

Strategic management helps companies to innovate their processes and products. Strategy allows organizations to determine the best configuration of systems, processes, products, and resources to reach their objectives. Once a company has chosen its strategy, it has to implement it. To implement their strategies, companies can use Project Portfolio Management. In fact, they can use PPM to identify projects and portfolios that best align with their objectives.

Here are the steps to determine the strategic orientation:

  • Analysis
  • Selections
  • Implementation


Strategic analysis starts with exploring the innovation space by identifying where innovation can take place and if it is worth doing so. Usually, it is useful to analyze markets, technologies, emerging customer needs, political trends, competitors, and social and economic indicators. It is also important to consider the resources the organization can use and their strengths and weaknesses.


There are different approaches to project selection. Companies can use Project Portfolio Management (PPM) in order to identify projects and portfolios that best align with their objectives. Project Portfolio Management (PPM) helps to select innovation projects which aim to convert an idea into an innovation and can include every step of the process, starting with idea generation and moving on to idea realization. Innovation projects develop or improve products, processes, and services.


Once organizations have decided what they could do and what will be done, they have to develop and implement the strategy. Companies need to analyze the resources, like roadblocks, partnerships, and the steps to implementation. It is in the best interest of the organization and management to be aware of the potential factors that oppose strategy implementation.

Project portfolio planning

Companies can use projects as a powerful strategic tool to gain a competitive advantage and business value. Unlike in the past, projects will become more and more important for driving the company’s strategy into new directions. Organizations should use project portfolio planning to plan their strategy.

Let’s see how to use PPM for different types of strategies.

Corporate strategy

Companies have traditionally implemented their strategy by splitting general strategies into functional strategies or business unit strategies. Thanks to PPM, you can develop effective business strategies. It is possible to translate corporate strategy into a portfolio of projects. PPM allows executives to link the company’s strategy with the expected results.

When making decisions, organizations need to keep their vision and mission in mind. According to those factors, companies plan their future by deciding which projects to start and with what priorities. In addition, to reach their goals, companies periodically decide which projects to cancel or delay in order to free resources for projects with higher priority.

Business strategy

Organizations can gain a competitive advantage over their competitors by using PPM practices. Project Portfolio Management can help companies choose the right portfolio based on their business strategy.

PPM offers companies methods and tools for different objectives. For instance, thanks to PPM, companies can compare costs through financial methods. They can analyze potential projects for differentiation. Furthermore, the organization could focus on a specific line of business by using tools for market analysis and then make operations more efficient by using resource distribution tools.

Functional strategy

Project Portfolio Management helps companies maximize their results. Here are the main objectives of PPM (Cooper, n.d.):

  1. maximize value
  2. balance the portfolio
  3. align the projects strategically
  4. have the right number of projects

These objectives represent the functional strategy that supports how the stream of projects will go. In addition, it is also critical to consider which projects best fit with the rest of the portfolio by considering their interconnections.

Keep in mind

A successful innovation plan requires a strategic orientation. Companies should know which work and functions need to be made in which market. Selecting innovation projects requires a lot of consideration to be taken on the internal and external factors.

Project portfolio management (PPM) helps companies achieve their objectives. Moreover, PPM helps companies develop effective business strategies by producing precious information.


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