Quantum Portfolio theory 101: Portfolio-Project Duality.

Obviously I'm not going to claim to have found the single unifying theory of P3M, and for this blog I do admit that I have flipped the telescope through which I am observing; however bear with me.

Classical PPM (Project and Programme Management) deals with the micro management of change, where Classical Physics the macro. And conversely the emerging discipline of Portfolio Management is concerned with the macro while Quantum Mechanics the incredibly small, the micro.

"Quantum" incidentally comes from the Latin word for "how much" which as we all know is used more as an exclamation rather than a question these days. But I digress.

One of the areas which Quantum Mechanics explores is the difference between waves and particles and how something can display both properties simultaneously. So let's assume that Projects and Programmes are analogous to particles and Portfolios to waves.

Projects and Programmes are discreet, it may appear obvious but we can count them. Their features like particles are definable; cost, time, output/outcome, mass, velocity, position. Newton said multiply mass by velocity and we find momentum. In PPM we express effort as a product of cost and time.

However waves, like portfolios, pose other challenges to define. Waves are disturbances moving in something such as the pattern produced by a stone cast into a pond. We could take a snapshot and observe peaks and troughs. We could measure how far the surface has moved up and down, amplitude, and the distance between crests, wavelength. But how fast are the peaks moving and in which direction? We need to express the system over time to understand what we see, the frequency.

You can't point to a portfolio and tie it down in one position as you can with a Project or Programme. All you can do is attempt to describe the pattern of the disturbance it makes in the organisation. Portfolios are continuous where as Projects and Programmes are, like ducks bobbing on the pond, discreet; you can count the ducks and say how many you have, or attempt to assess their collective value, but you either have waves, portfolios, or you don't.

But then someone passing could casually toss a second stone into our pond and... Well waves and portfolios don't clump together the way projects and programmes or particles do. Combine the peak of one wave with the trough of another and they can cancel each other out. But when coordinated they result in a bigger wave. This interference and diffraction is one of the inherent differences between waves and particles, PPM and Portfolios. Diffraction patterns are the unmistakable behaviour of waves, the signature of portfolios.

Projects, Programmes, and Portfolios all display both particle and wave characteristics but we have to recognise which behaviour is dominant.

If you are in the process of establishing portfolio management in your organisation you couldn't go too far wrong than by taking the afternoon off and sitting by a pond with a few stones and rubber ducks. You're going to have to think hard and long and it may just be the distraction you need. And now I am colliding physics and philosophy which is another blog altogether.

Note:let's not get carried away applying quantum ideas to systems that are far too large to show quantum effects, and more importantly remember that quantum measurements are fundamentally random.