Lean Portfolio Management

The fierce competition driven by changing customer expectations, evolving market dynamics, and quick advancements in technology calls for an effective portfolio management strategy. A proper portfolio management strategy offers organisations a competitive edge - it helps businesses adapt, innovate, and deliver incredible results seamlessly. Here, the role of Lean Portfolio Management (LPM) comes into the picture. 

With the help of Lean Portfolio Management, organisations can ensure their procedures, programs, and projects are directed towards boosting customer satisfaction and improving operational efficiency. This blog will help you understand the basics, core components, and benefits of Lean Portfolio Management. We will also walk you through the steps you need to follow to implement the LPM strategy successfully. 

What is Lean Portfolio Management (LPM)?

Lean Portfolio Management leverages Agile practices and Lean thinking, which helps businesses to bridge the gap between strategy and execution. This strategic and modern discipline ensures every investment, initiative, and resource of the organisation is aligned with its end goals. An LPM strategy in place enables organisations to cope with changing market conditions and deliver value by implementing real-time feedback. 

Unlike the traditional project management approach that focuses on the delivery of isolated projects, LPM is a holistic framework that helps in informed decision-making, proper allocation of resources, and prioritising tasks. The framework promotes the agility needed to foster transparency, adaptability, decentralised control, accelerate innovation, meet customer expectations, and stay competitive. To achieve this, LPM focuses on the following attributes:

• Encouraging more agility
• Paving the way for Improvements, innovation, and reevaluation
• Prioritising value delivery
• Delivering incrementally
• Decentralizing decision-making
• Eliminating waste

Why Lean Portfolio Management?

LPM strategy is well-aligned with the Lean Project Management principles that emphasise the delivery of continuous value to the end client and discarding waste at each development stage. When an organisation’s portfolio management, investment, and strategy is aligned with its long-term goals, it can reap the following benefits:

Value-Driven: A conventional traditional project portfolio management strategy highlights the importance of meeting deadlines. Whereas, in the context of LPM, businesses follow procedures that aim to deliver value to end users. Businesses are required to define the meaning of ‘value’ precisely to ensure the project outcomes delivered are in alignment with the stakeholders' and customers' demands. 

Boosts Agility: The Agile framework is based on shorter sprints along with regular review sessions and feedback loops. These Agile practices also govern the Lean Portfolio Management. When teams focus on short sprints and have complete autonomy to come up with strategic decisions, it promotes agility. Most importantly, it enables teams to reevaluate and modify portfolio goals, backlog, strategies, and respond to market changes. 

Time to Market: When the investment strategy is in line with the business’s objectives of delivering valuable outcomes in real-time, it becomes easy for organisations to eliminate wastage of resources. This facilitates quicker delivery of products and services to the market.

Opportunity to Reevaluate: The business goals, product roadmaps, or specified budget can deviate from the standard plan in the case of traditional portfolio management. These deviations occur due to unexpected changes in market conditions. Lean Project Management encourages input from stakeholders and customers regularly and requires teams to adjust the goals accordingly. 

Improves Flexibility: LPM focuses on the delivery of products and services incrementally. Similar to other SAFe disciplines, LPM allows teams to break down large projects into smaller fragments. The objective is to complete and deliver each part of the project faster than a range of projects included in traditional portfolio management. Funding of the project in small development cycles minimises risk. This also boosts flexibility as teams get an opportunity to improvise the product by integrating customer feedback at each stage of the project. 

Core Dimensions of Lean Portfolio Management (LPM)

1.Agile Portfolio Operations

Agile portfolio operations promote collaboration and coordination among team members. This ensures each team member is on the same page and enables them to share progress and deliver outcomes smoothly. Key objectives of Agile Portfolio Operations are as follows:

• Motivate teams to leverage techniques that improve workflow
• Help teams adapt to Agile ways of working
• Supporting teamwork over silos

The use of tools such as Kanban boards offer insight into the tasks that are being carried out, unnecessary delays, and helps to optimise the overall workflow. 

2.Strategy and Investment Funding

Organisations can implement the strategy and investment funding element of Lean Portfolio Management to ensure the effort of teams is directed towards the common goal. By ensuring that essential resources, such as money, effort, and time, are invested in important projects, the task of delivering best value becomes easier. 

Teams can tailor their existing plans to accommodate the changing needs of the customers and market conditions. With strategic themes and clear goals in place, companies can stay on track. Additionally, teams have the flexibility to break down large organizational goals into small and achievable ones known as OKRs. This offers teams a clear picture of what needs to be accomplished on a priority basis. 

3.Lean Governance

Lean governance requires teams to control & track spending, outcomes, and performance, without disrupting the workflow. Hence, teams still have the freedom to carry out their work flexibly. It focuses mainly on:

• Smart tracking: Teams can check their progress continuously with the help of a few metrics
• Flexible budgeting: This factor allows teams to adjust budgets to accommodate sudden changes

The objective is to ensure the amount invested by the company doesn’t exceed the specified budget and continuous progress is being made. However, it is usually done without including several reports or rules. 

4.Lean Planning and Budgeting

This element of LPM highlights the importance of investing money in value streams over individual projects. The objective is to support factors such as a service or product, as it delivers customer value. Some of the key objectives of Lean planning and budgeting are:

• Equips teams with more flexibility when changes are required
• Encourage teams to implement new things after considering customer feedback
• Eliminate money wastage on things that don’t add value to the workflow

It helps the team focus on the delivery of features that are preferred by customers and adhere to a flexible budget.  

How to Implement Lean Portfolio Management?

To get started with LPM, organisations should prioritise Lean values such as driving continuous improvement, creating a work environment that increases team autonomy, and focusing on delivering valuable outcomes. 

1. List down priorities and roles: The first step in leveraging LPM is to make a clear note of the company’s strategic goals and highlight the task each team member will be performing to accomplish it. It’s important to have proper analytics and metrics in place to track the team’s progress and estimate the time needed to achieve the goal. After getting a clear idea of strategies, organisations can align their final objectives with the financial investments to get the best results.
2. Proper Funding: Once you’ve created a roadmap to bridge the gap between organisational goals and strategic investments, it’s important to decide how these investments will be funded. It should be done by calculating the anticipated return on investment and funding projects according to the value they’re more likely to deliver. This helps to set a budget that will ultimately ensure the organisation can achieve its goal and fund the projects included in the portfolio. Gain proficiency in setting Lean budgets and managing  flow-to-end workflows - enrol for the Lean Portfolio Management Training. 

3. Focus on Operational Plan: Upon getting insights into the organisation’s goals and important investments that need funding, the next step is to create a team structure along with a plan. This plan should enable an organisation to achieve its final goal of delivering continuous value.

   Besides, it requires the team to remain flexible throughout the project’s lifecycle. As the project moves forward, teams are more likely to come across data or information such as customer feedback or performance reports. This information can be used to segregate what is functional and what is non-functional. Eventually, this information can be used to modify the plans. 

4. Lean Workflow: The next step after developing an initial plan is to leverage a Lean workflow. This helps organisations to minimise waste across all stages. This is usually done by eliminating tasks that are unnecessary and don’t add any value, while finding new ways to leverage the existing resources judiciously. It also helps to iterate on new changes to the existing workflow.
5. Measure Performance: Organisations should be able to measure the success of their strategy with the help of metrics and analytics. This helps them to make changes as per the client feedback and market conditions. Consequently, LPM boosts the agility of organisations and helps them to eliminate procedures or sections of their workflow that are incapable of delivering value. 

          Also, check:Tips for Implementing LPM in Large Portfolios

Conclusion 

Lean Portfolio Management is a helpful strategy for modern businesses that want an edge over their competitors, boost customer satisfaction, and deliver products and services faster. Organisations can implement LPM in portfolio management to stay flexible, navigate changes easily, adapt to innovations, and deliver customer value. Learn more about Lean governance and setting up portfolio flow with Kanban - join the Lean Portfolio Management certification today. 

FAQs

1.What is the LPM process?

The Lean Portfolio Management allows organizations to leverage Agile and Lean practices for the following purposes:

• Managing workflow with the help of portfolio Kanban
• Funding multiple valuable projects over individual projects
• Making a list of investment priorities and strategic goals
• Implementing feedbacks to come up with informed decisions
• Improving autonomy through lean governance and decentralized decision-making

2.What are the three dimensions of lean portfolio management?

The structure of LPM is divided into three dimensions, namely:

• Strategy and Investment Funding: This dimension ensures the work portfolio is aligned with the business objectives. The goal is to ensure the funds are invested on initiatives that drive highest value
• Agile Portfolio Operations: The objective is to foster coordination and cooperation among teams to ensure the process of execution and value delivery is seamless.
• Lean Governance: Lean governance supports flexibility and agility. It also offers insights into budgeting,  compliance, and performance. 

3.What are the principles of lean portfolio management?

Some of the important principles of LPM are:

• Decentralising the process of decision-making
• Promoting transparency and  ensuring smooth workflow
• Focusing on continuous value delivery
• Implementing feedback and metrics for continuous improvements
• Eliminating inefficiencies and wastage of resources across the portfolio

4.What is the primary focus of lean portfolio management?

The objective of LPM is to improve customer satisfaction by delivering maximum value. It helps to ensure the initiatives are directed towards the strategic business goals. Some of its key focus areas are:

• Encouraging decentralised and fast decision-making
• Using metrics to track performance and drive continuous improvement
• Adapting to changes quickly
• Funding the investments that offer the highest return

5.What is SAFe LPM?

The acronym SAFe LPM stands for Lean Portfolio Management with the Scaled Agile Framework (SAFe). The SAFe LPM covers the core concepts such as:

• Lean budgets and strategic themes
• Portfolio Kanban systems
• Value streams and Agile Release Trains (ARTS)
• Professionals like Enterprise Architects, Lean Portfolio Management teams, and Epic Owners