Value-driven management represents a major evolution in project and project portfolio management. It repositions investment and the pursuit of benefits at the heart of organizational strategy.
The project portfolio is an orchestration mechanism for strategic resources, aimed at producing tangible benefits and a lasting competitive advantage.
Project management has historically, and rightly, in my view, focused on operational performance (cost, schedule, scope) to successfully deliver projects.
But of course, the "technical" success of a project does not guarantee its contribution to the company's finances, nor to its competitive advantage in the medium and long term.
Value-driven management rests on a central premise: projects are not merely execution units, but instruments of change and strategic deployment.
I'd like to take a step back and revisit the foundations of value.
When I was an IT manager, my director recommended I read Competitive Advantage by Michael Porter, in which he conceptualizes the value chain. That reading genuinely shifted my "technical" view of projects toward a value-oriented perspective.
Porter defines value as the gap between the cost of production and what the customer is willing to pay for your deliverables.
The well-articulated value chain allows you to identify the activities that will truly create competitive advantage. Within it, he distinguishes support activities (procurement, human resources management, technology development, finance, infrastructure, etc.) from primary activities (Logistics, Operations, Marketing, Development, Sales, Services).
Additionally, Porter's 5 Forces provide a solid framework for analyzing your position, and that of your products and deliverables, relative to your ecosystem:
Intra-industry competition
Substitute products
New entrants
Bargaining power of your customers
Bargaining power of your suppliers
At the project portfolio level, value-driven management is (or should be) a major mechanism for selecting projects based on their contribution to optimizing or transforming your value chain.
As such, a strategically aligned and well-balanced project portfolio targets:
Cost reduction (cost leadership)
Differentiation (innovation leadership)
Focus on a specific customer segment (niche leadership)
And to produce deliverables your clients will compete to get their hands on, you need exceptional resources.
Jay Barney added to Michael Porter's postulates the resource-based perspective, known as the Resource-Based View (RBV).
In broad strokes…
Jay Barney's article "Firm Resources and Sustained Competitive Advantage" is widely cited as a foundational work in the emergence of the resource-based view. The RBV is grounded in the idea that firms are inherently heterogeneous because they possess heterogeneous resources. If they can adopt different strategies, it is because they are made up of different resources.
The RBV therefore focuses managerial attention on the firm's internal resources in order to identify assets, capabilities, and competencies likely to yield superior competitive advantages over rivals.
These strategic resources are:
Valuable
Rare
Inimitable
Difficult to substitute
From this perspective, projects are mechanisms for developing, acquiring, and recombining strategic resources to produce high-value deliverables.
The project portfolio is an allocation system aimed at strengthening these strategic resources alongside other organizational know-how:
Organizational and managerial competencies
Reputation
Human capital
Technical skills
Production and information systems
Capacity to learn and transform
Value-driven management therefore consists not only of maximizing benefits, but also of optimizing the configuration and use of strategic resources.
The Project Portfolio as a Strategic Governance Mechanism
For optimal corporate governance, the project portfolio functions as a mechanism for allocating capital and resources under informational constraints.
Trade-off decisions must overcome several biases:
Optimism bias in business cases
Internal political dynamics
The disproportionate weight of large projects over smaller ones
The degree of mastery of new technologies required by projects
The development of new skills that appeal to technical staff but yield low financial returns
The low short-term return of certain projects that nonetheless lay the groundwork for future strategic advances
Status quo bias and risk aversion
From a purely financial perspective, projects can be likened to investment options — they offer the possibility of exploiting, or not, strategic opportunities.
This value-based approach is critical for all projects, and particularly challenging for innovation projects, whose value is uncertain but potentially deeply transformative.
The case for factoring value into project portfolio creation and management is clear — and it is nothing new. How to do it well, however, remains harder to articulate.
Limitations of Value-Driven Management
Value-driven management requires a high level of organizational maturity and very strong integration between portfolio strategy and project management.
Indeed:
The portfolio must function as a primary orchestration mechanism for strategic resources.
The project manager must be a strategic actor, not merely an operational one.
Measuring value remains complex and must incorporate both financial indicators and more intangible ones.
Governance must balance control with flexibility.
The portfolio must reflect near-real-time progress on projects and the realization of the benefits they promised.
Despite its conceptual contribution, value-driven management still gives me pause — particularly due to the difficulty of measuring intangible benefits. This dangerously increases the risk of reducing value to short-term financial metrics, losing sight of the often longer time horizon required for strategic value creation.
That said, portfolio management proves once again to be a fundamental mechanism of strategic governance and organizational transformation.
