By: Tom Perry
Companies’ budgets are shrinking by the second, headcount is being cut, and employees at all organizational levels are hearing that they must do more with less. It may not be said explicitly, but the threat is real as layoffs are happening left and right. Entire departments are getting eliminated.
In this climate of belt-tightening, your Agile tool belt needs a particularly versatile resource. What is it? Lean Portfolio Management (LPM), of course. And not just any LPM will do. You need to know new Lean Portfolio Management.
Let’s explore what it is, why it’s a must-have skill for your specific role, and how you can get it.
What is Lean Portfolio Management?
According to the International Consortium for Agile, Lean Portfolio Management is a mechanism for organizations to fund and manage the flow of initiatives and activities across the whole enterprise, maximizing the value delivered to customers and other stakeholders.
This facilitates an alignment of work to the organization’s overall strategy and enables prioritization of the most important work while limiting work in progress and respecting the teams’ capacity to deliver. This domain draws on lean thinking, systems thinking, agile development, and business agility to achieve business goals and rapidly adapt to changing circumstances.
Project Portfolio Management vs. Lean Portfolio Management
Traditional portfolio management, or Project Portfolio Management (PPM), is different from Lean Portfolio Management.
Traditional Project Portfolio Management’s antiquated approaches lack the techniques that enable fast response to market conditions and customer needs. These also fail during times of economic stress where the only conversation is cutting resources and capacity versus more productive decision-based techniques.
Lean Portfolio Management gives leaders the ability to sense and respond to market changes without bringing chaos to teams responsible for “doing” the work. It enables value-based prioritization, adaptive funding, accelerated data-driven decisioning, and active stakeholder alignment.
Through the lens of Lean Portfolio Management, you see the whole organization, not just a single department silo. LPM allows you to see how the organizational organism works (and, therefore, what can be improved) so that the product delivery pipeline is effective and efficient for your strategic initiatives. It enables Business Agility.
A New Kind of Lean Portfolio Management
SAFe Lean Portfolio Management has recently been introduced but has drawbacks. Because it has most often been implemented within the SAFe framework, it has been used primarily by those in IT and is challenged by not getting business partners engaged. Moreover, that approach has the risk of adding more complexity and overhead than necessary.
You need LPM that goes beyond SAFe. You need a new kind of Lean Portfolio Management that amplifies any framework. Regardless of the method - whether your teams are using Scrum, Kanban, SAFe, or waterfall - your budgets and funding need to keep everything aligned so that your finance partners and senior leaders can have the power to pivot without unknowingly overwhelming the company.
Because the new LPM is framework agnostic, it helps you deliver on your programs even more effectively and efficiently without all the extra time and cost associated with framework-specific efforts. It makes it easier to bring Agility beyond the IT department. It aligns planning and delivery by aligning executive business decisions, strategic intent, as well as integrating operating model decisions that cross departmental agendas such as IT, Finance, Sales, Marketing, Operations, Risk & Compliance, and Production. Consider it the Swiss Army Knife of Agile tools.
New LPM applies an even more macro lens and eliminates major obstacles clouding the view on your Business Agility journey. What an amazing vantage point from which to start an agile revolution!
Beyond the Portfolio Manager Role
Don’t let the name fool you. LPM is not just for current Portfolio Managers; it’s a vital skill for leaders across organizational levels and departments.
Individual Project Managers and the PMO can use it throughout the organization to create lightweight reporting, reduce budgeting hassles, and improve flow and transparency.
On the Product side, the more agile way of working with the PMO can ensure products get to market faster and provide product leadership with better ways to fund, deliver, and get feedback on their product portfolio. Likewise, Program Managers can streamline their governance processes, tighten their value streams, and move to a lightweight financial oversight model that reflects the principles of LPM.
For Agile Coaches and Consultants, understanding and being able to apply LPM ensures that they can offer a more holistic approach to coaching, not only at the product level but at the organizational level as well. The new PMO will need their coaches to help identify, manage and optimize core value streams and bring Finance and HR into the new processes. At the executive leadership level, aligning vision and mission with budgeting, processes, and decision-making will ensure the success of the transformation.
But make no mistake, the transformation to a lean portfolio needs more than just an enlightened PMO. It requires engagement at all levels: Product owners who can help create feedback loops with customers, enabling the organization to respond more rapidly to the needs of the marketplace. Project managers who understand the need for stable, empowered, high-performing teams informed directly by the customer. Program managers who can use Kanban to help optimize the flow of product features. All of this and more is critical because true organizational transformation happens at all levels.
The LPM Champion as Change Agent
Ultimately, Lean Portfolio Management is for people who like to question the status quo. Let’s take reporting, for example. Those skilled in LPM don’t ask for more data. Instead, they ask, “Am I getting the right data?” They are interested in discovering how they can streamline reporting to just the facts that matter so that an excess of data doesn’t cloud the judgment of leadership. In this way, there might be less ‘information,’ but there’s more value.
They are also seeking ways to connect the people who have the least information on the work (the executives) with those closest to the work—the teams. In true agile fashion, this creates trust so that the leadership can lean out of the on-the-ground work and leave decision-making to the teams who know the customer needs best.
Further, a proponent of LPM looks for ways to enable transparency in the organization. One way of doing this is by eliminating the sources of waste and promoting information-rich collaboration. As the questioner-in-chief, they are asking, “What data don’t you use?” and eliminating it. They ask, “How often do you need this information?” and then create feedback loops to match that need.
By focusing on 1) What the stakeholders (both the team and executives) need and 2) What can be eliminated, the LPM practitioner is iterating their way toward a better process, a more effective team, and an organization that is more aligned in goals and execution.
The LPM goal in this example is not simply to eliminate non-value-adding work. It’s to have close relationships with the people doing the work and for everyone to have the information they want at their fingertips (but prepared only as needed).
New Lean Portfolio Management End Goals
The overarching goals of LPM, which are enhanced by new LPM, are to:
- Maximize efficiencies and effectiveness in delighting the customer
- Prioritize alignment and achievement of business outcomes
It’s the most critical component of your Agile operating model. Why?
Because LPM enables the funding and people management policies that create a fertile environment for the growth of empowered, autonomous, high-functioning teams — the goal of Agile itself. When work flows between teams as the product evolves toward the customer, it is because organizational decisions enable delivery in a timely fashion instead of blocking it.
Add New LPM to Your Agile Arsenal
Traditional portfolio management has evolved to Lean Portfolio Management, which has progressed to the new framework-neutral LPM. This new LPM is now the must-have skill set for the future. So how can you add it to your Agile tool belt?
Get ICP-LPM Certified
Hyperdrive has created and is the first provider of the trailblazing framework-neutral Lean Portfolio Management certification (ICP-LPM) course, which will teach you everything you need to know, including how to implement LPM. Be a change agent and start an agile revolution with the new Lean Portfolio Management.
Learn More About LPM Before You Register
Want to get a taste of what to expect from the course before you sign up? Watch this free recording of our LPM Lunch & Learn from January 11th to understand the goals of modern portfolio management and how these skills can benefit your career and your company.
Questions? We Can Help.
When you’re ready to move beyond piecemeal resources and take your Agile skills or transformation efforts to the next level, get personalized support from the world’s leaders in agility.