Lean Portfolio Management-Basic Concepts
written By : Muhammad Faisal Faheem
Lean Portfolio Management (LPM) within the Scaled Agile Framework (SAFe) consists of several key components that work together to ensure an organisation's portfolio is managed effectively, aligning strategy with execution while fostering a lean-agile mindset. Here are the primary components of LPM in SAFe:
1. Strategy and Investment Funding
This component emphasises aligning the enterprise's strategic objectives with the execution workstreams. It involves defining the budget for each value stream and Agile Release Train (ART) in alignment with the organisation's strategic themes and priorities. The goal is to ensure that funding is dynamic and can be adjusted based on shifting priorities and the value delivered.
2. Agile Portfolio Operations
Agile Portfolio Operations focus on the operational aspects of implementing LPM, including coordinating and supporting ARTs and value streams. This involves facilitating Lean governance, lean budgeting and forecasting, and connecting the strategic portfolio and the execution teams. It's about ensuring smooth operations and the flow of value through the portfolio.
3. Lean Governance
Lean Governance involves establishing policies, practices, and metrics that guide investment decisions, project oversight, and outcomes measurement. It aims to create a flexible, responsive, and lean governance model. This includes decision-making processes that empower teams, performance monitoring based on lean-agile metrics, and compliance with regulatory and organizational standards.
Key Practices in LPM
In addition to the core components, several key practices underpin LPM in SAFe:
- Establishing Lean Budgets and Guardrails: This practice involves setting financial boundaries within which value streams operate, promoting autonomy while ensuring alignment with strategic objectives.
- Applying Objective and Key Results (OKRs): OKRs are used to set and communicate clear objectives and measurable results at all levels of the organization, aligning and motivating teams around common goals.
- Implementing Participatory Budgeting: This is a collaborative approach to budget allocation that involves stakeholders from across the organization in the decision-making process, ensuring that investments are aligned with strategic priorities and the value expected.
- Building a Lean-Agile Center of Excellence (LACE): A LACE supports the transformation to and continuous improvement of Lean-Agile ways of working within the organization, serving as a hub of expertise and guidance.
- Using the Portfolio Kanban: This tool manages the flow of portfolio initiatives from ideation through to implementation, helping to visualize work, limit work-in-progress (WIP), and improve the delivery flow of value.
Outcomes
The combination of these components and practices within LPM in SAFe aims to achieve several outcomes:
- Strategic Alignment: Ensuring that all portfolio investments are directly contributing to the organization's strategic goals.
- Adaptive Governance: Creating a governance model that allows for rapid decision-making and adjustments based on feedback and changing market conditions.
- Optimized Portfolio: Continuously optimizing the portfolio to focus on delivering the highest value initiatives.
- Increased Agility: Enhancing the organization's agility to respond to opportunities and threats in a timely manner.
Implementing LPM within SAFe helps organizations manage their portfolios more effectively. It aligns strategy with execution to maximize value delivery and organizational agility.
Summary
Lean Portfolio Management (LPM) within the Scaled Agile Framework (SAFe) is a strategic approach to managing a company's portfolio of initiatives, ensuring they align with the organisation's business objectives and strategic themes. LPM advocates for funding value streams, allowing for flexibility and adaptability in response to changes. It supports the formation and funding of Agile Release Trains (ARTs), which deliver value in a value stream. LPM introduces lean governance practices that empower teams and decentralise decision-making. Metrics and KPIs evaluate the portfolio's health and performance, focusing on value delivery, efficiency, and strategic objectives. Dynamic budgeting and forecasting are promoted, using Lean budgets and reallocating funds based on shifting priorities and emerging opportunities. A Lean-Agile Center of Excellence (LACE) is often established to support implementing and continuously improving LPM practices. Implementing LPM within SAFe requires a shift in mindset, collaboration, transparency, and commitment to continuous learning and improvement.
