It’s 1AM and I’m on my way back to New York after a flying visit to Boston to speak about portfolio management in front of almost 200 people at the Mass Bay PMI Chapter. I won’t lie, I thought I’d be like the proverbial lamb to the slaughter as I am the co-author of the UK Standard for Portfolio Management and not the American PMI Standard… how wrong I was.
As I was designing the talk I realized that I didn’t want to speak about all the lovely processes, practices or diagrams in Management of Portfolio (MoP) or the PMI equivalent The Standard for Portfolio Management. What I wanted to talk about was the reality of portfolio management and the value it will add to you, your team and your organisation within 100 days (if you do it right).
As an English guy in New York I hear conversations like, “I’m PMI, I’m PRINCE2, I’m PMI, I’m Management of Portfolios blah blah blah”…To be very honest with you, I really don’t care. However, what I will say is that the most interesting and skilled people in this field don’t just eat at one type of restaurant. They’ll have Chinese one night, Italian the next and maybe a burger the next. The point is if you’re really into portfolio management you should have a good understanding of both, you should have read both books as minimum and ideally have both qualifications. As you might have guessed, my favorite restaurants are the fusion type.
So what’s the big deal between the two books? Let’s start with the similarities; firstly, both are fundamentally very cool. Both focus on the same really important elements like strategy, prioritization, categorization, balancing, portfolio planning, and defining. Both make it clear about the roles of the key people involved. Both have great graphical example of things like categorization and weighted scoring so you can’t go wrong with either.
So what are the differences? The first thing that strikes me is that the PMI publication is massively process based. There’s inputs and outputs for everything and each process is defined in detail, so much so that it gave me a flashback from learning PRINCE2 back in the day. MoP, on the other hand, doesn’t have a process anywhere. It has principles and practices which are all happening at the same time because that represents the real world. In fact, you show me a portfolio manager that waits for the completion of portfolio categorization to start planning the portfolio and I’ll show you a portfolio manager that shouldn’t be a portfolio manager.
You’ll find some really useful case studies from real portfolio situations in MoP but there’s none in the PMI guidance which is a shame. Moving onto people, you notice that MoP puts people and Organisational Energy at the heart of the portfolio management model. However there’s no reference to any people focused stuff in the PMI Guidance, which in my view is a massive mistake.
I have to say though, one thing that stands out about the PMI version is the amount of bloody marvelous diagrams, especially the Weighted performance scoring and probability and impact diagram. Don’t get me wrong. MoP has some great ones too but they are diagrams from a few years ago, whereas the latest PMI book was released in May.
So all in all, if you’re seriously into portfolio management you should definitely read both books and you should get certifications in both if you can. I can hear you asking “but what would you do if you only had budget for one?” Well, appreciating that I’m massively biased, I would have to say get the MoP certification and use the PMI book when you get stuck. The reason I say this is in my view, MoP truly reflects the reality of a portfolio management situation, while PMI’s portfolio guidance is so processed based that in my opinion it moves it away from the real world… and I’m a big fan of the real world, and the Rolling Stones.