91% of organizations state that adopting Agile is a strategic priority. The need to balance speed, flexibility, and efficiency in delivering products and services has led many enterprises to adopt agile methodologies. However, while Agile frameworks have proven effective at the team level, scaling these practices across larger organizations remains a significant challenge.
One critical aspect of the SAFe framework is LPM—Lean Portfolio Management, which provides organizations with a systematic approach to aligning strategy, prioritizing investments, and optimizing the flow of value.
This article will explore the key principles and benefits of implementing Lean Portfolio Management within the Scaled Agile Framework. We will dive into the essential components of LPM and discuss practical steps organizations can take to adopt this approach successfully.
Before we start, remember, “Agile is not your goal—it’s only the best way to achieve your goals.” as Zuzana Šochová said in The Agile Leader.
So, let’s dive in and explore how to effectively implement Lean Portfolio Management within the Scaled Agile Framework, unlocking the full potential of agility at the enterprise level.
What is the Scaled Agile Framework?
The SAFe 6.0 Full Configuration consists of three levels (and two sublevels):
- Portfolio level: This is responsible for the overall portfolio of work, including the alignment of the portfolio with the organization’s strategic goals, the prioritization of initiatives, and the allocation of resources.
- Large Solution level: This delivers large, complex solutions spanning multiple teams or organizations.
- Essentials level: This is the foundation of SAFe and provides the basic practices and principles used in all SAFe levels. It includes two sub-levels:
- Product level: This is responsible for delivering products or services that meet customers’ needs.
- Team level: This is responsible for the delivery of work by individual teams.
To successfully implement the Scaled Agile Framework within your organization, it is crucial to understand its key principles, benefits, and roadmap for adoption.
Let’s start with the key principles and benefits of SAFe.
What are the key Scaled Agile Framework principles?
SAFe is guided by 10 key principles that drive its effectiveness at scale practices, which allow organizations to achieve better outcomes, drive employee engagement, and deliver value quickly in a changing marketplace.
Now that we have explored the key principles and benefits of SAFe let’s focus on the practical steps involved in successfully implementing it with the SAFe Implementation Roadmap.
How to implement Scaled Agile Framework in an organization?
Implementing SAFe follows a step-by-step roadmap to ensure a successful transformation.
Here are the key steps involved:
- Reaching the tipping point: This means identifying the need for change, creating a sense of urgency, and building a coalition of support.
- Train Lean-Agile change agents: This requires companies to ensure that individuals are equipped with the necessary knowledge and skills to lead and facilitate the transformation.
- Create a Lean-Agile Center of Excellence: This establishes a central body responsible for providing guidance, coaching, and support to teams and individuals.
- Train executives, managers, and leaders: Companies must educate leaders at all levels to understand and champion the Agile mindset and principles.
- Lead in the digital age: Leadership styles and behaviors must adapt to thrive in the digital age and enable Agile practices.
- Organize around value: This requires a shift from traditional functional structures to organizing around value streams to enhance collaboration and responsiveness.
- Create the implementation plan: This means developing a comprehensive plan that outlines the transformation journey, including milestones, timelines, and objectives.
- Prepare for ART Launch: This prepares the Agile Release Train by aligning teams, establishing a common vision, and defining program-level processes.
- Train teams and launch ART: Agile teams are provided training and the first Agile Release Train is launched to start delivering value incrementally.
- Coach ART execution: Ongoing coaching and support to ART is provided to ensure successful execution, collaboration, and continuous improvement.
- Launch more ARTs and value streams: Additional Agile Release Trains and value streams are launched across the organization to aid the expansion of SAFe.
- Enhance the portfolio: Lean Portfolio Management is implemented as a part of Portfolio SAFe practices to optimize the flow of value, prioritize investments, and align with strategic goals.
- Accelerate: Companies must look to continuously improve and accelerate the adoption of SAFe by leveraging feedback, applying Lean-Agile principles, and fostering a culture of continuous learning and innovation.
Having understood the practical steps in implementing Scaled Agile Framework through its Implementation Roadmap, let’s now explore the concept of Portfolio SAFe and its essential elements.
What is Portfolio SAFe and its elements?
Portfolio SAFe is a framework that enables organizations to align their strategy and investments with agile execution. It provides a set of guidelines and practices for managing portfolios of value streams, ensuring efficient resource allocation, and driving business outcomes.
At its core, Portfolio SAFe aligns strategy with execution through a collection of Development Value Streams.
These value streams develop solutions that support the business mission and vision of the portfolio. The framework operates under a shared governance model and provides essential funding and minimum governance to facilitate decentralized decision-making.
Now that we have understood Portfolio SAFe, let’s explore some key highlights and components at the portfolio level.
Portfolio SAFe level highlights
The portfolio level of Portfolio SAFe encompasses several key elements:
- Value Streams: Groups of people and activities that work together to deliver customer value. Each value stream has its budget and is responsible for funding the necessary resources to deliver value.
- Lean Budgets: Budgets are designed to enable fast decision-making and financial control. This is done by providing guardrails that ensure that budgets are not exceeded.
- Portfolio Kanban: This system makes work visible and matches demand to the capacity of value streams and Agile Release Trains.
- Portfolio Vision: A description of the future state of value streams and how they cooperate to achieve objectives are produced to provide a high-level view of the portfolio and how it will deliver customer value.
- Portfolio Canvas: A visual portfolio representation provides inputs to the portfolio vision, backlog, and lean budgets.
After exploring the key highlights and components at the portfolio level, let’s dive into the important roles in implementing Portfolio SAFe.
Roles within Portfolio SAFe
Portfolio SAFe defines several roles responsible for accountability and governance within the portfolio:
- Lean Portfolio Management: A framework for managing portfolios based on Lean and Agile principles. Individuals in LPM have decision-making authority and financial accountability for the SAFe portfolio.
- Epic Owners: These are responsible for defining and implementing epics. They work with stakeholders to collaboratively define epics, including a Minimum Viable Product and Lean business case. Once approved, epic owners facilitate their implementation.
- Enterprise Architects: These provide strategic technical direction and a comprehensive roadmap to support the portfolio’s current and future business capabilities. They work with stakeholders to understand the business needs and translate them into technical requirements.
Pro tip: If you’re looking for a way to create a Lean business case, consider using a SAFe-authorized template to ease case preparations
With a clear understanding of the important roles in implementing Portfolio SAFe, let’s focus on the significant events that drive collaboration and alignment within the framework.
Events within Portfolio SAFe
To ensure strategy and execution alignment, Portfolio SAFe incorporates the following events:
- Portfolio Sync: This meeting is held regularly to review the portfolio’s progress toward its strategic objectives. It includes discussing value stream and Agile Release Train execution and governance.
- Participatory Budgeting: This process determines the appropriate investments in value streams and involves collaboration between LPM, Business Owners, and stakeholders.
- Strategic Portfolio Review: This meeting is held to create alignment and provide investment guidance for the portfolio. It also enables LPM to make decisions about decentralized decision-making, adaptive responses to changing needs, and effective governance in response to new opportunities.
Having explored the significant events that foster collaboration and alignment in Portfolio SAFe, let’s shift our focus to the essential artifacts that support effective implementation and governance within the framework.
Artifacts within Portfolio SAFe
Several artifacts play a crucial role in articulating the strategic intent of the portfolio solution set:
- Strategic Themes: Defines portfolio-level business objectives that drive differentiation and strategic advantage.
- Portfolio Vision: Describes the future state of a portfolio’s Value Streams and how they will work together to achieve objectives.
- Solution Investments by Horizon: Helps balance the portfolio’s near- and long-term solution investments.
- Portfolio Canvas: Defines the value propositions, key resources and activities, cost structure, and revenue streams of the portfolio.
- Guardrails: These are policies and practices that govern the portfolio’s budgeting, spending, and governance.
- Portfolio Epics: Large-scale investments crossing multiple value streams and PIs, categorized as Business Epics and Enabler Epics.
- Portfolio Backlog: Contains business and enabler epics necessary for creating and evolving the portfolio’s products, services, and systems.
- Portfolio Kanban: A system for visualizing and managing the portfolio backlog and allowing epics to progress through various process states.
- Nonfunctional Requirements: Defines system attributes and constraints, such as security, reliability, performance, maintainability, scalability, and usability.
After understanding Portfolio SAFe and its essential elements, let’s now dive into the definition and concept of Lean Portfolio Management.
What is Lean Portfolio Management?
Lean Portfolio Management aligns strategy and execution through Lean and systems thinking approaches, encompassing strategy and investment funding, Agile portfolio operations, and governance.
The objectives of agile Lean Portfolio Management are:
- Align portfolio investments with strategic goals by clearly understanding the organization’s strategic objectives and then using them to prioritize and select portfolio investments.
- Optimize the flow of value by using Lean principles to identify and eliminate waste in the portfolio management process.
- Foster innovation by allowing organizations to experiment with new ideas and approaches without jeopardizing their overall portfolio.
- Improve decision-making using metrics and analytics to track the portfolio’s performance and identify improvement areas.
- Empower teams by decentralizing decision-making and giving teams the responsibility for managing their work (managers can additionally use RACI to specify the responsibility levels).
In SAFe, a portfolio consists of value streams delivering solutions aligned with the enterprise’s business strategy. For larger organizations, multiple portfolios may be needed for different business units or divisions.
With a clear understanding of the essence of Lean Portfolio Management, let’s explore the difference between LPM and traditional project portfolio management.
The difference between LPM and traditional project portfolio management
Fostering a robust, agile culture within your organization can lead to a 237% improvement in commercial performance. And all that is because of the difference between Agile and traditional approaches.
Lean Portfolio Management differs from traditional project portfolio management in several ways, such as:
- Focus on value: LPM focuses on delivering value to customers, while traditional project portfolio management focuses on delivering projects on time and within budget.
- Incremental delivery: LPM uses an incremental delivery approach, where projects are delivered in small, iterative increments. This allows for feedback from customers and stakeholders early in the process and helps reduce risk.
- Decentralized decision-making: LPM empowers teams to make decisions about their projects, while traditional project portfolio management typically requires decisions to be made by a central authority.
- Agility: LPM is designed to be agile so that it can adapt to changes in the market or customer needs. Traditional project portfolio management is often less agile, and it can be difficult to change projects once they have started.
- Focus on outcomes: LPM defines the desired results instead of the desired quantity of outputs. This helps ensure that projects align with the organization’s strategic goals.
- Defining value: LPM requires the organization to determine what “value” means to them. This helps ensure that projects focus on delivering value to customers and stakeholders.
- Revisiting decisions: LPM requires the organization to regularly revisit past decisions and plans. This helps ensure the portfolio is aligned with the organization’s changing needs.
Now that we have explored the definition and concept of Lean Portfolio Management, let’s dive into the essence of lean portfolio manager duties.
Who is a lean portfolio manager?
A lean portfolio manager is critical in driving the success of Lean Portfolio Management within an organization.
This role is responsible for aligning strategic goals with execution, optimizing resource allocation, and ensuring value delivery across the portfolio.
Let’s explore the key responsibilities of the SAFe lean portfolio manager:
- Strategic alignment with senior leadership to ensure initiatives align with organizational objectives.
- Resource optimization by allocating the right skills to initiatives and balancing capacity and demand.
- Value delivery governance by establishing mechanisms for oversight and performance measurement.
- Driving continuous improvement by fostering a culture of innovation and implementing feedback-driven enhancements.
Lean portfolio managers should have the following skills and qualifications to be productive:
- Strong strategic thinking and the ability to align initiatives with strategic goals.
- Solid financial acumen to manage budgets, analyze data, and make informed investment decisions.
- Excellent leadership and collaboration skills to foster teamwork and align stakeholders.
- Deep knowledge of Lean and Agile principles to guide the adoption of these methodologies.
Scaled Agile Framework certification is vital for all SAFe specialists like lean portfolio managers to ensure they possess the expertise and knowledge to implement the Scaled Agile Framework effectively.
Now that we have explored the lean portfolio manager position, let’s dive into the key elements forming this strategic approach’s foundation.
Key elements of Lean Portfolio Management
Here are the three dimensions of Lean Portfolio Management that ensure the alignment of the portfolio with business goals and the efficient and effective delivery of solutions:
- Strategy and Investment Funding ensures the portfolio is aligned with business goals and has the necessary funding to create and maintain solutions.
- Agile Portfolio Operations coordinate and support the decentralized execution of Agile Release Trains. It ensures that ARTs operate efficiently and effectively and are responsive to changing customer needs.
- Lean Governance provides oversight of the portfolio, ensuring that it adheres to necessary controls and provides visibility into financial aspects and compliance requirements.
With a solid understanding of the key elements of Lean Portfolio Management, let’s now explore the practical steps and considerations involved in building an effective Lean Portfolio Management system.
How to build agile Lean Portfolio Management?
To establish an effective LPM system, organizations need to follow a structured approach that aligns strategy, funding, governance, and delivery.
The following section outlines the key steps in building a robust LPM framework.
Here are some tips for overcoming challenges in implementing LPM:
- Start small and scale gradually: Begin with a pilot project or small-scale implementation to test and refine the approach before expanding.
- Secure stakeholder buy-in: Gain support from stakeholders at all levels of the organization to ensure commitment and success.
- Provide training and support: Offer training and support to employees involved in implementing effective applications.
- Measure and track progress: Continuously measure and track progress to identify successful areas and areas for improvement.
Remember: “The important thing is not your process, the important thing is your process for improving your process.” – said Henrik Kniberg, Agile coach.
Get these tips and mind, and let’s dive into the first step, defining strategic themes and business outcomes.
#1 Define strategic themes and business outcomes
Start by identifying and establishing strategic themes that align with the organization’s goals and provide a competitive advantage. These themes serve as guiding principles for portfolio decision-making and investment priorities.
Defining desired business outcomes helps ensure alignment throughout the LPM process.
- Example: Business outcome of transition to electric vehicles
- For instance, achieve a 20% market share in the electric vehicle segment within three years.
Having established the importance of defining strategic themes and business outcomes, let’s explore the next step in building Lean Portfolio Management: adopting value stream-based funding and allocation.
#2 Adopt value stream-based funding and allocation
Shift from traditional project-based funding to value stream-based funding and allocation. This approach ensures that resources and investments are directed towards specific value streams that deliver value to customers.
By funding entire value streams, organizations can prioritize and support the development of solutions that align with strategic objectives.
- Example: Electric Vehicle Value Stream
- Allocate a budget of $10 million to support research and development efforts in the Electric Vehicle Value Stream.
After implementing funding and allocation, the next step in Lean Portfolio Management is capturing and managing demand by value stream.
#3 Capture and manage demand by value stream
Implement mechanisms to capture and manage demand within each value stream.
Establish a structured process for identifying, evaluating, and prioritizing epics and initiatives based on their alignment with strategic themes and expected business outcomes.
“Build less, start sooner.” – said Jim Highsmith in Adaptive Leadership.
This approach helps ensure the portfolio continuously evolves to meet changing customer needs.
- Example: Development of charging infrastructure
- Assess the demand for developing a nationwide charging infrastructure for electric vehicles. Prioritize this demand based on its alignment with the strategic theme of “Transition to Electric Vehicles” and its potential to support achieving the market share goal.
With demand captured and managed by the value stream, the next vital aspect of Lean Portfolio Management is to embrace continuous and adaptive planning.
#4 Embrace continuous and adaptive planning
Move away from rigid, annual planning cycles and adopt a continuous and adaptive planning approach.
Implement techniques such as rolling-wave planning and Program Increment or PI planning to enable flexibility and responsiveness to market dynamics. Use Portfolio Backlog as a system that visualizes and streamlines the flow of business initiatives from inception to execution.
- Example: Quarterly review and adjustment
- Conduct quarterly reviews to assess the progress of electric vehicle development initiatives and adjust plans accordingly. Incorporate feedback from customers and stakeholders to refine objectives and allocate resources effectively.
After establishing a foundation of continuous and adaptive planning, the next focus in agile Lean Portfolio Management is to optimize resource management.
#5 Optimize resource management
Efficiently manage and optimize resources across value streams by adopting Lean principles.
Implement resource capacity planning and visualization techniques to ensure that resources are allocated appropriately to meet demand.
Continuously monitor resource utilization and make adjustments to maximize productivity and minimize bottlenecks.
- Example: Skills and capacity assessment
- Assess the skills and capacity of the Electric Vehicle Value Stream team. Identify gaps and determine the necessary training or recruitment activities to optimize resource utilization.
#6 Support continuous delivery and reporting
Establish mechanisms for supporting the continuous delivery of value and transparent reporting.
Implement Agile practices such as ARTs which enable frequent, predictable, and high-quality solution delivery.
Leverage tools and metrics to monitor progress, track KPIs, and provide real-time visibility into portfolio performance.
- Example: Bi-weekly deployment cycle
- Adopt a bi-weekly deployment cycle for releasing updates and features related to electric vehicles. Implement automated testing and deployment processes to ensure quality and timely delivery.
With continuous delivery and reporting in place, the next crucial aspect of Lean Portfolio Management is effectively managing business outcomes and value realization.
#7 Manage business outcomes and value realization
Place strong emphasis on managing business outcomes and value realization throughout the LPM process.
Regularly evaluate the impact of portfolio investments and initiatives on strategic goals and customer value.
Implement feedback loops, impact assessments, and value stream-based metrics to assess the effectiveness of delivered solutions and drive continuous improvement.
- Example: KPI and OKR tracking
- Track key performance indicators such as market share, customer satisfaction, and revenue growth; and objectives and key results to assess the value realized by the Electric Vehicle Value Stream initiatives. Adjust strategies and investment decisions based on performance insights.
Remember: “If you don’t collect any metrics, you’re flying blind. If you collect and focus on too many, they may be obstructing your field of view.” – said Scott M. Graffius in Agile Scrum.
After focusing on managing business outcomes and value realization, the final step in Lean Portfolio Management is implementing lean governance for effective oversight and control.
#8 Implement Lean Governance
Establish a lean governance model that provides oversight and control without stifling innovation and agility.
Define clear roles, responsibilities, and decision-making frameworks within the LPM structure.
Implement governance practices that align with Lean principles, promoting transparency, empowerment, and decentralized decision-making.
- Example: Value Stream Governance Board
- Establish a Value Stream Governance Board comprising executives, business owners, and relevant stakeholders. The board oversees aligning value stream activities with strategic themes, reviews investment decisions, and ensures adherence to governance policies.
With lean governance in place to provide oversight and control, the next crucial aspect is fostering collaboration and communication for effective execution and alignment.
#9 Foster collaboration and communication
Promote cross-functional collaboration and communication among teams and stakeholders involved in value stream delivery.
Encourage transparency, knowledge sharing, and active participation in decision-making processes.
- Example: Value stream collaboration workshops
- Organize value stream collaboration workshops to bring stakeholders from different Electric Vehicle Value Stream teams. Facilitate cross-functional communication, brainstorming, and decision-making to drive collaboration and alignment.
After focusing on fostering collaboration and communication, the next step in Lean Portfolio Management is to implement agile portfolio operations for streamlined and efficient value delivery.
#10 Implement Agile Portfolio Operations
Establish Agile Portfolio Operations to facilitate decentralized decision-making and coordination across value streams.
This includes mechanisms for synchronizing Agile Release Trains, conducting periodic Portfolio Sync meetings, and fostering collaboration between business owners and LPM representatives.
- Example: Portfolio Sync meetings
- Organize regular Portfolio Sync meetings where representatives from value streams, ARTs, and LPM come together to align priorities, address dependencies, and make decentralized decisions. These meetings ensure coordination and effective decision-making across the portfolio.
With agile portfolio operations in place for streamlined value delivery, the final step in Lean Portfolio Management is to foster a culture of innovation and learning to drive continuous improvement and adaptation.
#11 Foster a culture of innovation and learning
Promote a culture of continuous improvement, innovation, and learning within the organization.
Encourage experimentation, embrace feedback, and create opportunities for employees to enhance their skills and knowledge.
- Example: Hackathons and innovation labs
- Organize hackathons and establish innovation labs to foster creativity and experimentation within the Electric Vehicle Value Stream. Encourage teams to explore innovative solutions, learn from failures, and continuously improve their approaches.
After focusing on fostering a culture of innovation and learning, the final aspect of Lean Portfolio Management is to leverage technology and tools to enhance efficiency, collaboration, and value realization.
#12 Leverage technology and tools
Leverage appropriate technology and Lean Portfolio Management tools to support the implementation of LPM. For example, among agile marketers, 55% identified implementing a project management tool as the most valuable aspect of their agile transformation.
Utilize portfolio management software, collaborative platforms, and reporting tools to streamline processes, improve visibility, and enable effective decision-making.
- Example: Project portfolio management software
- Implement PPM Express that provides real-time visibility into the status of initiatives, facilitates collaboration, and generates reports and analytics. Utilize this platform to streamline portfolio management processes and enable informed decision-making.
With technology and tools leveraged to enhance efficiency, the next crucial step in Lean Portfolio Management is to align with the enterprise strategy for a cohesive and synchronized approach to value delivery.
#13 Align with enterprise strategy
Ensure alignment between the Lean Portfolio Management system and the overall enterprise strategy.
Regularly review and align strategic themes, objectives, and investments with the broader organizational goals.
- Example: Strategic alignment workshops
- Conduct strategic alignment workshops with key stakeholders to ensure that the Electric Vehicle Value Stream and its initiatives align with the enterprise strategy. Review strategic themes, objectives, and investment decisions to ensure coherence and maximize organizational value.
After ensuring alignment with the enterprise strategy, the next important aspect of SAFe Lean Portfolio Management is emphasizing value stream coordination for seamless collaboration and optimized value delivery.
#14 Emphasize value stream coordination
Place emphasis on value stream coordination to manage dependencies, exploit synergies, and optimize value delivery across the portfolio.
Establish mechanisms for cross-value stream collaboration, coordination, and shared learning.
- Example: Inter-value stream meetings
- Organize regular inter-value stream meetings where representatives from different value streams collaborate to address cross-value stream dependencies, share best practices, and identify opportunities for synergy. Foster a culture of collaboration and coordination across value streams.
Now that we have explored the practical steps to build Lean Portfolio Management let’s address the potential challenges that organizations may face during its implementation.
How to overcome challenges in implementing Lean Portfolio Management?
Implementing LPM can benefit organizations significantly, but like any transformative initiative, there can be challenges.
For instance, scaling agile beyond the team level is a major challenge in agile transformation, as 44% of organizations reported in the research by KPMG.
Here are some of the most common challenges and how to overcome them:
- Resistance to change: Overcome by communicating the benefits of LPM, providing training and education, and involving stakeholders in the decision-making process.
- Lack of alignment and communication: Establish clear communication channels and foster regular collaboration between LPM teams, value streams, and business owners.
- Insufficient governance and decision-making: Establish robust governance mechanisms, define decision-making authorities, and provide guidelines and guardrails to empower teams while maintaining oversight.
- Lack of portfolio visibility and transparency: Implement portfolio management tools and reporting systems that provide real-time visibility into the status and performance of initiatives.
- Inadequate resource management: Implement robust processes, leverage resource management tools, and establish regular capacity planning sessions.
- Balancing agility and governance: Strive for a dynamic governance approach that supports agility, decentralized decision-making, and risk management while providing necessary oversight and compliance.
- Scaling LPM across the organization: Start with a pilot project or a small-scale implementation to test and refine LPM practices before scaling up.
Remember: “Our goal when we face the complexity and uncertainty of work should be to understand our workflow as a minimum first step. Our next step is to actively manage items in that workflow and indeed the workflow itself.” – Andy Hiles in Applying Scrum with Kanban: A Pointless Book.
By following these tips, organizations can overcome the challenges of implementing Lean Portfolio Management and realize the full benefits of this approach.
Lean Portfolio Management with SAFe as a driving value at scale
Lean Portfolio Management is a powerful approach to portfolio management that can help organizations achieve their strategic goals.
By leveraging SAFe’s principles and practices, organizations can establish a robust LPM system that fosters collaboration, transparency, and continuous improvement across the portfolio.
Here are some key benefits of adopting Lean Portfolio Management with SAFe:
- Strategy-execution alignment: SAFe and LPM align portfolio initiatives with strategic objectives, ensuring that work is being done that will deliver value to the business.
- Value stream-centric funding: LPM prioritizes and allocates funds based on value streams, ensuring that resources are used most effectively.
- Agile governance and decision-making: SAFe and LPM empower decentralized decision-making with governance, allowing teams to make quick, informed decisions aligned with the overall portfolio strategy.
- Continuous adaptation and learning: LPM enables organizations to adapt, learn, and drive innovation by providing a framework for constant improvement.
Looking to enhance your portfolio management practices?
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