The Lean Portfolio Management (LPM) competency aligns strategy and execution by applying Lean and systems thinking approaches to strategy and investment funding, Agile portfolio operations, and governance. These collaborations give the enterprise the ability to execute existing commitments reliably and better enable innovation by building on the foundation of the four other core competencies.
The reason for Lean Portfolio Management is straightforward: traditional approaches to portfolio management inhibit the flow of value and innovation in the enterprise. They were not designed for a global economy and the impact of digital disruption. This new reality puts pressure on enterprises to work with a higher degree of uncertainty yet deliver innovative solutions much faster. Despite this new reality, many legacy portfolio practices remain. Typically, these include: Annual planning and rigid budgeting cycles Measures of progress that focus on document-driven deliverables and task completion, versus objective measures of value Perpetual overload of demand versus capacity, which decreases throughput and belies effective strategy Phase-gate approval processes that don't mitigate risk and discourage incremental delivery Project-based funding (moving people to the work) and cost accounting, which causes friction and unnecessary overhead, finger pointing, bureaucracy, and delays Overly detailed business cases based on highly speculative and lagging ROI projections Centralizing and developing requirements with people who will not be doing the actual implementation Iron-triangle strangulation (fixed scope, cost, and date projects), which limits agility and does not optimize the total economic value Traditional Supplier management and coordination, which favors win-lose contracts, and focuses on the lowest short-term cost, rather than the highest lifecycle value Also, when portfolio management is unfamiliar with software capitalization in Agile, it often impedes the transformation to Lean-Agile approaches. Clearly, portfolio management approaches must be modernized to support the new Lean-Agile way of working. Fortunately, many enterprises have already gone down this path, and the change patterns are fairly clear, as illustrated in Figure 1. Most of these will occur naturally in a SAFe transformation, but change is hard, indeed. Caution and awareness are warranted.
There are SAFe portfolios that manage a set of value streams for a specific area of the business. LPM function conducts its work with the help of a series of three collaborations that include:
- Strategy and investment funding
- Agile portfolio operations
- Lean governance
These collaborations provide the ability to execute existing commitments reliably and enable innovation to the enterprise by building on the foundation of four other competencies.
