3 Steps to Lean Portfolio Management

To master today's challenges, organizations are increasingly looking to agile frameworks to manage their projects, and their costs while delivering value to their customers. Thus, many turn to adopting an enterprise-level model like Scaled Agile Framework® (SAFe®)*. But SAFe® is a complex and multifaceted scaling framework, and successful implementation requires commitment from program and portfolio management leaders.

While on the operational level, Scrum is widely used and understood, managing the portfolio level still causes big headaches to a lot of Program Managers and leaders. 

Lean Portfolio Management can help Portfolio Managers to align their portfolios with strategic business outcomes and improve investment decisions across the portfolio.

Here are 3 first steps to get started. 

Define the lean portfolio management function

 

Lean Portfolio Management function focuses on:

1. strategy and investment planning

2. lean governance and agile operations

The right talent should be identified within the organization for each focus area, having the respective expertise in: 

  • Ensuring the entire portfolio is aligned and funded to meet business targets

  • Coordinating and supporting decentralized program execution

  • Overseeing spending, audit and compliance, and forecasting expenses

2

Establish a visible Portfolio Flow

 

The Scaled Agile Framework® (SAFe®) suggests using the Portfolio Kanban system to manage and visualize the flow of the Portfolio Epics.

The portfolio Kanban is particularly important in that it helps align strategy and execution by identifying, communicating, and governing the selection of the largest and most strategic initiatives (Portfolio Epics) for a SAFe portfolio. 

Those Portfolio Epics flow through various states in the Kanban process, and a designated owner defines the Epic's minimum viable product and oversees its progress from concept to completion.

Successfully establishing flow requires knowing the total capacity available for new development work versus ongoing maintenance and support activities. Only when this balance is understood can the enterprise objectively evaluate and originate portfolio-level initiatives. Here is an illustration of how a Portfolio Kanban Flow system can look like: 



 

 

 

The first four states emphasize prioritization. Except for Funnel, it is essential to set WIP (Work-in-Progress)  limits for every state for a value-driven Kanban system. 

  • Funnel — It functions as a reservoir for ideas. Every topic that seems worth thinking about and considering should be placed here. Since this column is used for brainstorming, there is no need for a WIP limit. 

  • Reviewing — Epic Owners and other stakeholders define the Epic's intent, qualitative and quantitative benefits, business outcomes, and other non-functional requirements. A WIP limit should be set here to keep the focus on priorities. 

  • Analyzing — At this stage, the prioritized and most valuable Portfolio Epics should go through a round of careful analysis. Business owners, product managers, solution architects and other relevant stakeholders should come together and

    • Identify solution alternatives

    • Define the minimum viable product

    • Establish cost estimates

    • Create a lean business case

    • Assess technical and business viability 

  • Portfolio Backlog — Once the Portfolio Epics have passed the analyzing stage, and it has been decided to proceed with the topics, those should be ordered in the Portfolio Backlog. The most critical, important ones should go at the top and would therefore be the first topics that would be pulled further through the Kanban system. 

3

Set up regular Lean Portfolio Management Events

 

Like traditional portfolio management, Lean Portfolio Management requires a set of events to establish a cadence for reviewing and prioritizing the proposed work. 

Relevant and essential stakeholders should attend these events. There are three main events that should be at least included in the Lean Portfolio Management: 

  • Strategic Portfolio Review: the goal is to provide continuous strategy, implementation, and budget alignment. The event is focused on achieving and advancing the portfolio vision, thus, going through the Portfolio Epics at the first four stages and advancing those. To enable the value stream and the organization to respond to any change, the event should be held at least once a quarter. Investment guardrails and funding allocations should be discussed as well. 

  • Portfolio Sync: The portfolio sync provides visibility into how well the portfolio is progressing toward meeting its objectives. This event has a more operational focus than the strategic portfolio review. Topics typically include reviewing portfolio (sub)-epic implementation, the status of KPIs, addressing dependencies, and removing impediments. The portfolio sync is typically held monthly.

  • Participatory Budgeting: A less-frequent event, can be held for example twice a year, to determine investments across the portfolio.

* Note that many of the concepts and principles described herein are proprietary to Scaled Agile Framework® (SAFe®).

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