In “New Problems, New Solutions: Making Portfolio Management More Effective,” a report published by the Industrial Research Institute, Robert G. Cooper and colleagues argue that traditional project portfolio management practices are no longer adequate for today’s fast-paced business environment.

The report identifies three key challenges facing organizations with respect to project portfolio management: 1) increased uncertainty and risk, 2) a growing need for flexibility and agility, and 3) greater pressure to achieve results quickly and efficiently. In response to these challenges, the authors propose a set of new approaches and tools for project portfolio management.

One of the key recommendations made by Cooper et al. is the need for a more flexible and dynamic approach to project portfolio management. The authors suggest that organizations should adopt a “stage-gate” process that allows for more frequent project reviews and adjustments. This approach involves breaking projects down into smaller stages or phases, with specific review and decision points at each stage.

Another key recommendation is the use of “real options” thinking to manage uncertainty and risk in project portfolios. Real options thinking involves treating projects as financial options, with the value of each project increasing or decreasing based on changing market conditions and other factors. By using real options thinking, organizations can more effectively manage risk and uncertainty in their project portfolios.

The report also recommends the use of portfolio optimization techniques to help organizations select the most promising projects for investment. These techniques involve assessing the potential returns and risks associated with each project and selecting a portfolio of projects that provides the best overall balance of risk and reward.

Overall, Cooper et al. argue that traditional project portfolio management practices are no longer sufficient for today’s complex and fast-changing business environment. Instead, organizations must adopt new approaches and tools that are better suited to the challenges of the modern business landscape.