Traditional ways of running a business, like funding and carrying out major projects, fail to keep up with the current pace of change and do not prepare organizations for the uncertainty and disruption we see in the digital age. Consider Microsoft and their Teams communication and collaboration tool in 2020. If they laid out and funded a detailed project that would take them a year or more to finish, they wouldn’t have planned to be a home-based educational platform used by schools and universities for millions of students all over the world. Microsoft’s ability to adapt and quickly react to changing user needs is an example of Agility in action. A customer-centric, Agile approach is the best fit for a rapidly changing environment and proved its value during the pandemic.
How do you plan, strategize, fund and deliver value with an Agile approach? Lean Portfolio Management applies Lean, Agile and Systems thinking to align strategy with funding and execution, ensuring resources go to what adds the most value and organizations can react and respond quickly to unexpected changes. Lean Portfolio Management was developed by Scaled Agile to support business Agility and the flexibility, speed and lower costs that come with it.
How Lean Portfolio Management Differs from Traditional Project and Portfolio Management
Funds Value Streams
Traditional Projects are based on forecasts and speculated return-on-investment. The planning and steps are established in detail, funded and the project is executed based on anticipation of future conditions. Lean Portfolio Management funds Value Streams that develop products or solutions for external customers or solutions for internal operations. Within the Value Streams, feedback loops with customers are established and teams work incrementally allowing them to adjust their efforts and leaders to adjust funding, based on customer needs and changing environments.
Rolling Wave Planning
With a traditional Project approach, detailed plans are made on a yearly basis, with the year devoted to precisely executing the plan on time and on budget. Lean Project Management planning occurs over a shorter time frame, typically in quarters where everything is assessed and can be adjusted as needed.
Initial Commitment for Resources Limited to Delivery of Minimum Viable Product (MVP)
Resources are assigned and committed for the entire project right from the beginning with a traditional Project approach. Lean Portfolio Management progresses in increments with no initial commitment beyond delivering an MVP. As the product is developed further, there is only a commitment to the next step until viability of the product is clearly established. There is no risk that a product destined to fail will be fully funded and developed.
Work with “Just enough, just in time” Information
Great time and effort are put toward forecasting what the market and customers will need and a traditional Project is not started until a detailed, end-to-end plan is developed. Organizations forecast the future and then assemble and fund a detailed project based on the forecast being certain. Lean Portfolio Management is guided by “just enough, just in time” information. Rather than forecast the future, teams focus on the now to identify problems, deliver MVPs as solutions, learn from customers and incrementally improve.
Alignment: Strategy, Funding, Operations, Governance
Lean Portfolio Management ensures that resources and funding align with the vision and business outcomes. By funding Value Streams, using rolling wave planning and focusing on customers, operational teams are empowered to learn from the customers, understand their problems and develop and deliver innovative solutions with negligible risk. Minimum viable versions of features and solutions are tested before being fully developed. Leaders can monitor and measure outcomes and pivot as needed. Lean Portfolio Management supports an Agile organization and allows it to be flexible and deliver value rapidly at lower cost.