Doing the Right Things: Portfolio Definition in the Royal Navy

Doing the Right Things: Portfolio Definition in the Royal Navy

Rear Admiral Malcolm CreeIn this guest blog post Rear Admiral Malcolm Cree, recently retired from the Royal Navy, describes how he led a major change programme to implement the new delegated defence operating model following Lord Levene’s Defence Reform report.

This was about bringing programme management “to life” and embedding portfolio management in Navy Command.

As part of a major Royal Navy change programme, that I led for three years until retirement, one of several aims was to embed Project, Programme and Portfolio Management (P3M) disciplines.

Much of the effort was to establish programmes on sound MSP® principles and to set up the Portfolio Office to manage portfolio delivery – ‘doing things right’.

Increasingly the focus of the Operating Board, in the face of significant financial and other challenges, has been on Portfolio Definition: ‘doing the right things’.

Management of Portfolios (MoP®)

The first task, to understand what is in the portfolio, required us to pick a ‘unit of currency’. Options included military capability (anti-submarine warfare, deep strike, etc.), defence lines of development (training, equipment, personnel, information, etc.), defence tasks and several others. However, because naval capability (except the Royal Marines) comes together mainly in ships, submarines and aircraft, ‘platforms’ were chosen as the anchor point for everything. It was also decided that because the management of in-service platforms involves considerable change (refits, upgrades, updates, etc.), all classes of platform, whether new procurement programmes or in-service, would be managed on a programme basis and included in the portfolio. The enabling functions would supply these major programmes.

Doing the Right Things: Portfolio Management at the Royal Navy

It seemed natural to categorize the portfolio by platform class: destroyers, frigates, hunter-killer submarines, Merlin helicopters, etc. The management of all current and future maritime capability (platforms and enablers) was put under the Deputy Chief of Naval Staff (in effect the MD), while the Fleet Commander concentrated on command of the Fleet and operations (the COO). In MoP® terms the former is responsible for portfolio management (change) and the latter more for ‘business as usual’, although the terms don’t work as well in a military environment.

With an annual budget of some £5.8 billion (which does not include nuclear submarine procurement), that was under considerable pressure, and with some notable gaps in capability, manpower and support, the Board turned its attention to prioritizing the portfolio. In line with MoP® guidance, we implemented a process of portfolio-wide balance of investment, using Multi-Criteria Decision Analysis (MCDA) modelling and independently facilitated Decision Conferencing (delivered by Catalyze Ltd). The aim was to overcome the multiple, conflicting objectives and account for delivery risk by analysing the whole portfolio and re-prioritizing on a risk-adjusted benefit/cost basis (‘bang for buck&rsquo - literally). The process aims to achieve a shared understanding of the issues, a sense of common purpose and a commitment to the way forward.

By implementing the process set out in MoP, the Royal Navy applied or enabled the portfolio management principles of:

  • Senior management commitment by involving two of the most senior staff in the Navy - the Second Sea Lord and Deputy Chief of Naval Staff and the Fleet Commander. This ensured that those with responsibility for introducing new capability and those tasked with exploiting the existing capability played a leading part in this process.
     
  • Governance alignment by tackling multiple and conflicting objectives.
     
  • Strategy alignment by ensuring decision criteria aligned with defence strategic objectives
     
  • Energized change culture by providing a common purpose and commitment to making this happen.

This demanded more support from the Portfolio Office while the balance of investment process, using Decision Conferencing, helped bring programme management to life and helped embed Portfolio Management in Navy Command. The process helped engender an energized, changed culture to arrive at a common understanding of the priorities and issues faced in implementing the Defence Reform.

See our Management of Portfolios (MoP®) section for more information.

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