Sep 15th, 2022

How To Implement Lean Portfolio Management?


Agilemania, a small group of passionate Lean-Agile-DevOps consultants and trainers, is the most tru... Read more

What is Lean Methodology?


The lean methodology is a systematic approach that aims to minimize waste and maximize value for the customer throughout the entire workflow or production process. It originated from the Toyota Production System and was later introduced to project management by John Krafcik in his 1988 article "Triumph of the Lean Production System."

The lean methodology is built upon five fundamental principles:

  • Identify value: The first step is to clearly define what constitutes value from the customer's perspective. This involves understanding the customer's needs and expectations, and determining which features or aspects of the product or service truly matter to them.

  • Map the value stream: Once value is identified, the next step is to map out the entire workflow or process involved in delivering that value. This includes visualizing all the steps, activities, and resources involved, from initial concept to final delivery. By mapping the value stream, organizations can identify areas of waste, inefficiencies, or non-value-adding activities.

  • Create flow: With a clear understanding of the value stream, organizations can focus on creating a smooth and continuous flow by eliminating waste and non-value-adding activities. This involves optimizing the workflow, removing bottlenecks, and ensuring that each step in the process adds value to the customer.

  • Establish pull: In a lean system, work should be "pulled" through the process based on customer demand, rather than being "pushed" through. This means that work should only be initiated when there is an actual customer need, rather than producing goods or services in advance and storing them as inventory.

  • Continuous improvement: The lean methodology emphasizes the importance of continuously seeking opportunities for improvement. This involves regularly reviewing processes, gathering feedback, and implementing changes to further optimize the workflow and enhance customer value.

By adhering to these principles, organizations can streamline their processes, reduce waste, increase efficiency, and ultimately deliver more value to their customers.

What is Lean Portfolio Management? 


Lean Portfolio Management (LPM) involves connecting strategy to execution by using lean principles. Budgets are allocated to execute an enterprise's strategy by portfolio management teams. An LPM portfolio of investments is creatively determined and actively managed throughout its investment life cycle, just like any other portfolio. Agile development and product development are aligned with business strategy through LPM, driving value to customers with products and solutions. Business agility can be improved by combining LPM and agile development practices.


What Are The Key Components Of Lean Portfolio Management?


The lean portfolio leadership team creates the goal of your company. Your team is granted funds that are decided by strategic needs, and they make sure your goals align with those needs. To synchronize and coordinate the planning and feedback loops, the leadership team makes choices at a fixed cadence that is followed by both the operations (the tasks they carry out) and the governance (the reviews they conduct).


LPM operations


In order to connect strategy to execution The leadership team evaluates these targets on a regular basis

1. Start making a goal: Establish (and reevaluate every three months) the outcome-based goals and strategic themes.

2. Look for opportunities: Convert new ideas into investment candidates that are linked to the strategic mission.

3. Target value delivery: Create roadmaps based on market needs and anticipated effort size, which should be gathered during agile estimation and planning.

4. Value optimization: Establish clear priorities for initiatives in order to: (1) drive detailed planning for the next quarter and (2) balance the roadmap against known capacity constraints.

5. Examine market fit: "Go see" the incremental value demonstrated in team demos and validate the value hypotheses.


LPM Administration


The leadership team facilitates periodic reviews to achieve enterprise agility:

1. Review of strategy alignment: Confirm that the work is in line with the strategic intent once a quarter.

2. Examining the portfolio budget: Confirm that the budget allocations funding the team-of-teams (and empowering their decentralized decision-making) are best supporting the mission once a quarter.

3. Retrospective of the Portfolio Team: Look for ways to improve the way the portfolio leadership team operates, makes decisions, and achieves continuous value flow once a quarter.

4. Financial analysis of the portfolio: Compare spending trends on initiatives to targets and guardrails once a month to close the loop on agile budgeting Portfolio roadmap review. Share the updated initiative roadmap with all stakeholders once a month.

5. Examining investment opportunities: Approve funding for new investment opportunities based on their business case once a week (or recalibrate past funding decisions based on new feedback)


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How To Put Lean Portfolio Management Into Action?


That being said, if you're not a startup, replat forming requires strong organizational change management practices. It will often feel like renovating a house while you live in it--experiencing high levels of stress and satisfaction.

To continue this analogy, here are some tips for a lean home renovation:


1. Find the owners 


Portfolio leadership teams are high-performing, cross-functional teams of servant leaders. Unleashing the power of a leadership team is no less important than empowering a development team. The first step is to find and form the group that will connect strategy to execution for a specific part of the organization. That is the portfolio leadership team.

To assemble a strong portfolio leadership team, assess the strengths of internal team members or collaborate with your hiring manager to recruit people with the right skills. Portfolio managers must excel at gathering data, monitoring project performance, and influencing those in charge of priority management. 

The focus areas of this team include strategy and investment planning, lean governance, and agile operations. 


2. Funding 


As a result of LPM, the strategy and investment model has shifted from funding projects to funding teams of teams. This requires a deeper understanding (and visibility) of how team-of-teams build plans in relation to the strategic aims of the business.

Traditional project funding is replaced by funding teams of teams aligned with strategic priorities. Establish a participatory budgeting event where stakeholders determine investments across the portfolio based on strategic importance, forecast costs, and other factors. 

This requires top-down budgeting, cost estimating, and effective cost management to monitor planned, forecast, and actual spend. 


3. Reconstruction 


This needs to meet the requirements and expectations of the portfolio leadership team including where they want to go between their current situation and future situation. Develop an operating structure that embodies key pieces of LPM, incorporating your specific needs.

Implement a Portfolio Kanban system to visualize and manage the flow of Epics (significant investments) through different states like Funnel, Reviewing, and Analyzing. Set WIP limits for each state and map traditional portfolio practices to these states. Use roadmaps to define strategies, decompose them into investments, and assign goals, objectives, and metrics


4. Re-move in 


It can be a good idea to recalibrate the active work into learner constructs that better support the flow of value. You might also consider revisiting the rationale for your work (pivot or persevere?).

Adopt a continuous and adaptive planning approach by continuously updating roadmaps based on emerging threats, opportunities, and performance variances during delivery. Integrate demand-driven adjustments to work with the roadmaps to keep plans synchronized. Consider recalibrating active work into leaner constructs that support better value flow.

5. Redecorate 


Lean Portfolio Management introduces new decision-making techniques, like the emphasis on aligning work with a company's strategic goals. This drives the need to restructure existing work management systems as well as introduce new disciplines and additional clarity.

Set up regular LPM events like monthly Portfolio Sync to review Epics, collect metrics, and address dependencies. Conduct a quarterly Strategic Portfolio Review to update OKRs, Epics, investment guardrails, and funding allocations. 

Restructure work management systems to align with strategic goals and introduce new decision-making techniques.


6. Throw a party 


Surface positive feedback from retrospectives, and make sure to celebrate improved flow of value through the organization. Implement a system to track performance against financial and non-financial metrics defined during planning, through delivery and benefits realization. 

Visualize performance, identify variances, model options, and execute portfolio adjustments seamlessly to optimize value realization. Celebrate successes and use mistakes as lessons for improvement.


7. Establish lean governance 


Apply governance at the value stream level, providing executives with the control they need while allowing investment owners the freedom to decompose work and deliver effective solutions. Value stream level governance and funding supports adaptive planning and seamless adjustments

Difference Between Traditional and Lean Portfolio Management

Traditional Portfolio Management
Lean Portfolio Management
(1) Team Structure
Team members are assigned work based on project requirements.
Team members are empowered to make decisions and contribute to the overall strategy.
(2) Work Allocation
Team members work on multiple projects simultaneously, often leading to context-switching and inefficiencies.
Work is delivered strategically and incrementally, allowing for better focus and flow.
(3) Planning
Detailed project plans are created upfront before the actual work begins.
Customer feedback and evolving requirements drive the planning process, enabling adaptability.
(4) Workflow
Work is rigidly laid out and structured before it starts, limiting flexibility.
Plans can be adapted and optimized continuously to increase customer value and meet changing needs.
(5) Driving Force
Project milestones and predefined timelines drive the workflows.
Customer value and desired outcomes drive the workflows, promoting a customer-centric approach.
(6) Customer Involvement
Limited customer involvement during the planning and execution phases.
Continuous customer feedback is actively sought and used to shape the work and priorities.
(7) Adaptability
Rigid adherence to predefined plans makes it challenging to incorporate changes or pivots.
Agile and adaptable approach, allowing for course corrections based on customer feedback and evolving requirements.
(8) Value Delivery
Focus on completing projects and deliverables according to the initial plan.
Emphasis on delivering customer value and achieving desired outcomes through iterative and incremental delivery.

Searching For The Training Of Lean Portfolio Management?


If you are looking for the training of Lean Portfolio Management, then you have come to the right place. We have a team of experts who will help you understand the concept and how it can help you in your business.

Our team of experts will teach you the fundamentals of portfolio management, which is a great way to increase productivity and improve your efficiency.


Wrapping Up


Implementing LPM requires a structured approach involving assembling a dedicated leadership team, realigning funding models, establishing lean operational structures, and promoting a continuous and adaptive planning mindset. Regular review events, performance tracking, and value realization management are crucial components of LPM, enabling organizations to make data-driven decisions and course corrections as needed.


Some of the key benefits of Lean Portfolio Management include reduced waste and inefficiencies, better alignment with strategic goals, improved customer satisfaction, increased agility and adaptability, and a more collaborative and empowered team culture. Additionally, LPM promotes continuous improvement and optimization of value delivery processes.

SAFe LPM training is designed for executives, PMOs and anyone managing teams. It'll equip you to:

  • Adapt plans quickly: Respond to changing markets and business needs with ease.
  • Empower your teams: Grant more freedom while keeping everyone focused on value creation.
  • Thrive in a remote world: Learn to collaborate effectively with distributed teams.

To ensure a successful transition to Lean Portfolio Management, organizations should follow a structured approach, starting with assembling a dedicated leadership team, realigning funding models, establishing lean operational structures (e.g., Portfolio Kanban), and promoting a continuous and adaptive planning mindset. Regular review events, performance tracking, and value realization management are also crucial components. Additionally, effective change management practices and continuous training and support for teams are essential for a smooth transition.


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