Uncertainty is rarely an invited guest, but currently uncertainty has been assigned a permanent place on every planning and decision-making desk.

Uncertainty can be seen in the operating environment in many ways and is reflected in daily management and decision-making. It is important to accept uncertainty and risks as part of what we do, just like quality, data security or sustainable development.

Uncertainty and preparation for it is a matter for the entire organization, even though the management is responsible for decision-making. Uncertainty is visible in an organization in various ways to diverse people, and through people’s previous experiences, possible effects are also evaluated from different starting points. The fact is that later, one can know the best way, how one should have reacted and prepared for specific signals.

Portfolio management in its various forms brings certainty to the organization in both the public and private sector in evaluating effectiveness and thus better decision-making. Uncertainty can be modelled as part of different portfolio data models and ways of working.

Typical of the risk portfolio is the continuous assessment of the probability and influence of risks, as well as the multiple effects brought about by the connection between various uncertainties and risks. Multiple effects are those that can so-called capsize the boat. Multiple effects and dependencies between things are also a key reason why portfolio management is needed. We can control our car even in bad weather but anticipating the rest of the trafic is starting to become challenging – in traffic jams, at least we lighten the gas pedal.

Hurry is always expensive

It is the same situation with an individual project. The risks and uncertainties of one project can already be managed quite well with experience, but with hundreds of simultaneous projects progressing at variable speeds and possibly in diverse directions and at different stages, the situation is already very challenging. When one and eventually several projects are delayed due to uncertainty and risks, the organization’s work starts to get congested. The risk is that customer deliveries, investments, development work and even statutory tasks will be badly delayed or not done at all. Budgets and resource plans do not finalize as planned and things start to escalate. Hurry is very often the first weak signal recorded in the post-evaluation, which everyone recognized when everything seemed to be still fine.

Portfolio management helps to anticipate and look ahead

We always know the root causes of events later, but what we can do before is important. Project, risk, resource, application and service portfolio management are the best examples of what kind of forecasting tools are currently available. Each of these is offered and can be implemented independently of the business sector to support management by information, forecasting and uncertainty management.

Portfolio management is about looking ahead, forecasting and managing by information

Portfolio management is 80% looking ahead and 20% reporting and learning from what has happened. In uncertain times, one has always climbed the highest tower, tree or hill in the village to see what is coming. Today, this organization’s highest place to watch and anticipate is portfolio management and its good management.

Esa Toivonen

Senior Portfolio Advisor
Thinking Portfolio