• Lean Portfolio


19. Apr 2024

Many paths lead to effective portfolio management

Lean Portfolio Management (LPM) as a link between strategy and implementation

The avega LPM Journey

Lean Portfolio Management (LPM) gives us an overview of our major and important projects. We prioritize them clearly and implement them efficiently. We build a bridge between strategy and implementation, which allows us to approach strategic goals in short cycles and feed back valuable findings. All wonderful - but how do we get to the miracle tool LPM?

Organizations that are thinking about introducing LPM are usually not very small and have not just been around since yesterday. They have a history, a culture, ongoing and planned projects - perhaps structured in a project portfolio and governed by a project method/governance. So we very rarely start on a greenfield site. In our experience, this often results in a similar sequence of activities that start with the current situation and slowly lead us towards LPM. These activities form our avega LPM Journey. It consciously reflects on the Kanban wisdom "Start with what you are doing now" and "Visualize".

The avega LPM Journey shows steps in a clear sequence. But just because this is appropriate in many cases, it should not be applied blindly. It is likely that all the steps in it will be an issue at some point, but the order of the steps can vary greatly.

LPM Roadmap
  • Visualization of current issues
    Sustainable change requires us to know and understand the current situation. We therefore start by identifying the projects that are currently being implemented and planned and visualizing them in the workflow (see also Ohne Transparenz kein Portfolio Management)

  • Definition of epics & events
    Even if we have different artifacts on our portfolio board at the beginning, it is worth working towards a uniform format that contains all the information required for decisions in our portfolio workflow. We almost always call these artifacts (portfolio) epics. Epics have a clear focus on customer-oriented benefits. We cut them as small as possible, but large enough to deliver this benefit. Agile interactions between the relevant stakeholders (representatives of the business and implementation organizations, architecture, etc.) are required so that these epics are supplemented with the necessary information and the decisions for an efficient process are made. Regular events (meetings) have proven to be a good way of doing this, and we set them up (duration, frequency, participants, agenda) based on the necessary decisions and the information required for them.

  • Identifying and aligning value streams
    Value streams here refer to the value chains that are necessary to provide the products/services in our portfolio. These generally include the implementation of epics, as well as the operation, maintenance and support of our existing and new solutions. The great advantage of focusing on value streams is the consistent customer and product orientation, as well as the high degree of autonomy, which leads to greater efficiency with very few dependencies.

  • Define portfolio(s)
    Portfolios are defined by the products and services for which they are responsible. This includes the implementation organizations that provide the products. The portfolio definition helps everyone with alignment and creates focus. Perhaps we have also come to the realization that we have implementation organizations with few dependencies. In this case, it is worth considering splitting the portfolios. It also increases our value flow if we do not have to coordinate between organizations that do not need coordination.

  • Connection to strategy
    Doing the right thing probably has the greatest influence on the value flow. In our portfolio, alignment with strategy means that we derive the right epics from it, prioritize all projects based on it, and all employees in our portfolio align their daily decisions accordingly (see also Alignment und Priorisierung - Die beste Umsetzungsmaschinerie nützt dann am meisten, wenn wir das Richtige tun)

  • Financing & governance
    When it comes to investments, we have become accustomed to financing projects on the basis of the cost-benefit ratio (full business case). In our portfolio, it massively impedes the flow of value if we make these considerations per Epic. On top of this, we cannot have stable, customer-oriented and learning implementation organizations, but instead have to constantly reform and dissolve them for each project. This contrasts with the lean budgeting approach, with which we keep implementation organizations as stable as possible and finance them in the long term based on their potential. For each epic, the implementation decision is made lean, i.e. on the basis of a business case generated with reduced effort. During implementation, we operate with minimum viable products (MVP) in order to validate the benefit hypothesis from the lean business case and thus minimize the risks. The lean budgets provide guidelines (governance) for the implementation organizations to ensure that the funds are used in the interests of the company.

  • Improving portfolio performance
    It is good to believe that our organization and the performance of our portfolio are improving. However, it is always better to measure the important parameters in order to identify improvements (or, in the worst case, no improvements) and to make evidence-based decisions regarding epics. We typically measure portfolio performance in the three categories of strategy implementation (outcomes such as sales growth, customer satisfaction, etc.), portfolio workflow performance (e.g. flow time, lead time, etc.) and transformation/maturity (e.g. ratio of agile to classic, dimensions of portfolio assessments, etc.).

  • Expansion
    Our organization and our environment change over time, and we gain insights into our current portfolio structure. It is therefore important to regularly check whether our value streams and portfolios are still structured correctly and to make any necessary adjustments. And if LPM is not yet being used in all areas of the company, we could also make further portfolios lean.

If you want to know what the LPM Journey can look like for your organization → Speedcoaching, no strings attached!

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