Which illustrates a 'key to success' for the balance practice?

Question

Options

• AUse algorithms and investment rules to guide decision making
• BUse financial investment criteria, such as NPV
• CClearly defining the scope of the portfolio and what constitutes a project
• DUse categorization to assess alignment to strategic objectives

• A
  89% (25)
• C
  7% (2)
• D
  4% (1)

Explanation

Using algorithms and investment rules is the key to success for the balance practice because balance requires objective, repeatable decision-making criteria to ensure the portfolio has the right mix of investments (e.g., risk vs. reward, short-term vs. long-term, innovation vs. BAU). Without structured rules, balance becomes subjective and inconsistent.

Why the distractors are wrong:

• B (NPV) is associated with the value practice, not balance - it evaluates individual project worth rather than the overall portfolio mix.
• C (defining portfolio scope) is a key to success for the governance/management control practice, which is about what belongs in the portfolio, not how to balance it.
• D (categorization for strategic alignment) relates to the strategic alignment practice - categorizing projects to ensure they support strategy, which is distinct from balancing the portfolio's composition.

Memory tip: Think "balance = scales = rules." Just as a scale needs consistent weights and rules to measure fairly, the balance practice needs algorithms and investment rules to objectively weigh and balance portfolio decisions - not strategy (D), not value (B), not scope (C).

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