Complete Details on Lean Portfolio Management
As the world is changing fast, the expectations of the customers are changing quickly. In fact, the speed of change has encouraged companies to greatly invest in Agile and digital transformations where the advantages of Agile teams are multiplied and scaled across the company. However, some companies gain the actual outcomes in the very end. Technology and business teams should stay and get aligned to recognize the full value of a digital or Agile transformation. Moreover, the linked company with complete alignment is access to competing in the modern economy.
The challenge of linking Agile teams into an enterprise of Agile is that a gap appears between the teams allocating the funding and the teams doing the work. To fill this gap, leaders require the power to:
- Discover what works – Look out the incremental result to figure out progress towards outcomes
- Gain visibility – Make the work visible in demos (for emerging solutions) and in backlogs (for plans)
- Maximize investments - Preserve or pivot by recollecting funds to optimize throughput value
- Businesses usually find the traditional methods of Portfolio Management ineffective as they see to stay aligned always. Therefore, most businesses implement the practices of SAFe lean portfolio management to bring alignment within the organization.
What refers to Lean Portfolio Management?
Lean Portfolio Management (LPM) is nothing but the practice that explains how senior leadership adopts Lean principles to link strategy with execution. The teams of Portfolio Management collect a budget towards the execution of that particular strategy by learning about the strategy of the company. As a matter of fact, the investments of an LPM portfolio are actively managed and creatively defined in the investment lifecycle. The main importance of SAFe LPM is to adopt alignment between Agile development and business strategy by concentrating on the value delivered to customers through the production of solutions as well as products. In addition, the combination of LPM and Agile development practices provide a way to enhance business agility.
Objectives of Lean Portfolio Management
The objectives of lean portfolio management are as follows:
- Avoid bottlenecks
Make use of the portfolio budget to balance between the demand for the highest-value opportunities and the funding for capacity.
- Optimize the throughput value
Manage WIP across a team of teams actively to pace the delivery of value into the marketplace and handle the investment backlog actively to discover the highest-value opportunities.
- Demonstrate better servant leadership
Eliminate obstacles to keep the times of the delivery cycle low.
In addition, LPM is different from traditional project portfolio management in several ways which are as follows:
- Concentrating on determining the desired results in place of the desired quantity of outputs
- Assigning the work to the individuals but not the individuals to the work
- Reviewing past plans and decisions each quarter on the basis of new feedback
- Focusing more on the delivery of value and developing a definition of “value” than managing costs
- Managing finances and budgets on a quarterly basis in place of annually
Top Six Steps to Lean Portfolio Management
Lean portfolio management is just like repairing a car that needs certain adjustments to make a way to trigger the engine and run. This section contains six steps that aid in adopting Lean Portfolio management for your next project which are as follows:
1. Arrange Funds
Money is very much important to make a good start with essential tools. Therefore, proper funding is required to be implemented in Lean Portfolio management to convert business strategy into execution. For that, you have to identify the projects that are of highest priority to key stakeholders and highest cost and then you can evaluate the company budget in order to allocate resources confidently.
2. Create an Operating Framework
Developing a plan is equally important to adopt Lean Portfolio management in the right way. In fact, every company portfolio requires a game plan that should be discussed effectively to transfer a leaner operational plan with proper lean methodology as well as identifying areas of waste in that particular method of portfolio management.
3. Gather Your Leaders
On the other hand, skillful people with mechanical knowledge play an important role when it comes to facilitating lean portfolio management. A properly assembled team consisting of financially skilled leaders can assist you in aligning business strategy with the execution of the project. In fact, it is the very first thing done by the Project Managers.
4. Adopting a Lean Work flow
This step includes the approach of Lean to decrease costs, increase customer satisfaction, and enhance product quality. Creating your lean workflow is one of the important steps that can be done by eliminating inefficiencies or unnecessary work from the process of your portfolio management. Delay in prioritizing projects due to delayed timely notifications from the project manager can be tackled by adopting a pull system that makes you aware when the previous stage is complete in the process.
5. Updates and Clarification
After the completion of the process, it is necessary to test the finished product especially when you feel something is not right around you. In fact, you can retest and clarify everything to ensure if anything is missing and if yes, you can add a finishing touch to deliver the final product. To make your portfolio management workflow operate smoothly, you have to focus on lean initiatives. Obviously, this framework would definitely be a great help for your project team and you have to add updates to make things clear. In addition, the achievement of operational excellence is only possible with the constant desire to improve and flexibility.
6. Celebrate Your Success
When you reach the goal by completing a project, you should celebrate your success so that you can get a special kind of satisfaction and happiness in the very end. It is actually rewarding to find your business satisfying the actual needs of customers and coming to life due to your lean budgeting.
Why Choose Lean Portfolio Management?
There are several businesses that concentrate on determining projects for more than a year and they usually face situations. At that time, teams gathered together to meet the outdated goals of the project in place of offering value earlier. Organizations can do the following with the assistance of lean portfolio management.
- Replace the focus of the operations to deliver incremental value for huge initiatives at shorter cadences.
- Make use of cadences to obtain shorter loops of feedback that has been collected from external as well as internal focus groups and end-users or clients that would aid you in estimating progress towards the targets of the company.
- Apply the feedback confidently so that you can reinvest in ideas that can bring greater results and leave the ideas that are of no use.
Based on Lean principles, Lean Portfolio Management has been designed through a deep understanding of customer requirements and value that resolves a few pain points and challenges in big companies. Moreover, the LPM aims:
- To balance the capacity of funding and avoid possible bottlenecks to get the highest-value opportunities with the help of the portfolio budget.
- To enhance the throughput of value by handling the backlog of investments to discover the highest-value opportunities. Furthermore, it manages WIP among a team of teams to boost the delivery of a valuable product into the marketplace.
- To determine efficient leadership by eliminating obstructions to lower the delivery cycle times.
Also, there are various factors that make SAFe Lean Portfolio Management different from traditional project Portfolio Management. In addition, where traditional project Portfolio Management concentrates on forming short-lived teams to execute the structured project plans, Lean Portfolio Management concentrates on rendering long-standing team-of-teams with loosely built value opportunities where they ask the project teams to determine the required work and tracking the developed solutions that fit the point of the market.
Eligibility for LPM Solutions
The solution for any SAFe Lean Portfolio Management should be made to allow value stream planning, lean budgeting and funding, Agile team capitalization, and Agile program management. Various effective tools are available in the market that let organizations make a transition from a traditional to a Lean-Agile portfolio management approach along with skills that allow them:
- Visualize value streams, strategic objectives across portfolios, and teams of teams
- Set financial targets and OKRs for the investments of the portfolio
- Identify value stream funding as well as planning
- Examine epics or investments
Final Words
It is quite challenging to define and execute a strategy successfully in an era of increasing uncertainty. For this, it needs the practices of Portfolio Management designed by adopting a portfolio organized around value streams and Lean-Agile thinking that offer a constant flow of value to the customers of the company. Moreover, the funding of investment and strategy make sure that the right work is taking place at the right time with no doubt. Besides, early and continuous feedback on present initiatives along with a lean approach to funding enables the portfolio to do the essential adjustments to achieve the organizational goals. In addition, the portfolio operations of Agile eases coordination through the value streams of the portfolio that foster continued operational excellence and keep alignment between execution and strategy.
References
- https://www.scaledagileframework.com/lean-portfolio-management/
- https://asana.com/resources/lean-portfolio-management
- https://www.atlassian.com/agile/agile-at-scale/lean-portfolio-management
