Table of Contents

Introduction to Lean Portfolio Management

A brief overview of LPM and its importance

Definition of Lean Portfolio Management

Lean Portfolio Management (LPM) is an adaptive approach to traditional portfolio management that focuses on customer centricity, organizational agility, and waste elimination in the overall system. LPM aligns strategy and execution by applying Lean and systems thinking approaches to strategy and investment funding, Agile portfolio operations, and governance. In contrast to Project Portfolio Management, which typically serves the organization’s needs, LPM emphasizes delivering value to the customer and being inherently adaptive to changes in the business environment.

The role of LPM in modern organizations

LPM is crucial in helping organizations adapt and thrive as businesses face an increasingly dynamic and competitive landscape. LPM provides an alignment and governance model for portfolios containing a set of development value streams, each responsible for building, supporting, and maintaining solutions delivered to internal or external customers. Examples include developing an e-commerce website, medical device, or satellite and deploying a software application within an enterprise for internal customers. By prioritizing customer needs and fostering a culture of continuous improvement, LPM enables organizations to make better investment decisions, optimize resource allocation, and deliver value more efficiently and effectively.

Key benefits of adopting LPM Implementing

LPM offers organizations several advantages over traditional portfolio management methods and other less comprehensive frameworks. These benefits include increased responsiveness to market changes, improved decision-making, faster delivery of value, enhanced alignment of strategy and execution, and a focus on outcomes over outputs. LPM is considered a core competency essential to achieving business agility and can be assessed and improved upon to ensure continued growth and success. By embracing LPM, organizations can become more agile and customer-centric, positioning themselves for long-term success.

Understanding the Need for Lean Portfolio Management

Business Challenges

Traditional portfolio management approaches, such as Project Portfolio Management, were not designed to compete in the rapidly evolving digital landscape. These practices can be rigid, require laborious approval processes, and often do not align work to strategy. Enterprises face a higher degree of uncertainty and must deliver innovative solutions faster. However, many legacy portfolio practices remain in place despite the significant market changes and the new ways businesses operate in the digital era.

Solution and Benefits: The Shift to LPM for Business Agility

As organizations shift to customer-centricity and strive for business agility, there is a growing need to move from a project to a product focus. Companies need to align portfolios to value stream-based operational practices. This transition involves shifting to value streams, adaptive funding models, and continuous improvement to be successful. Lean Portfolio Management (LPM) addresses these challenges by providing the highest level of decision-making and financial accountability for an organization’s solutions and development value streams. LPM enables organizations to:

  • Define, communicate, and align strategy with execution, resulting in improved business outcomes and faster delivery of innovative solutions.
  • Establish a continuous feedback loop between strategy and execution, allowing for more informed decision-making and better resource allocation.
  • Improve risk management by adopting Agile practices that encourage early identification and mitigation of potential issues.
  • Enhance collaboration and communication across departments and teams, breaking down silos and fostering a shared understanding of goals and priorities.
AspectTraditional Delivery ApproachLean Agile Approach
Planning and BudgetingBig up-front, top-down, long-term planning and budgeting with detailed business cases based on speculative ROIFlexible, iterative planning with lean budgets, guardrails, and participatory budgeting
Scope and Business CasesFixed scope defined upfront; overly detailed business casesAdaptive scope based on evolving requirements and customer feedback; lean business cases with MVP, business outcome hypothesis, agile forecasting, and estimation
Delivery and GovernanceLarge, infrequent releases; projects governed by phase gates and big milestonesSmall, frequent releases and continuous integration; products and services governed by self-managing value streams, objective measures, and milestones based on working solutions
Risk ManagementRisks are managed through detailed upfront planning and change controlRisks managed through continuous learning, adaptation, and short feedback loops
Team Structure and OrganizationPeople are organized in functional silos and hierarchical management, temporary project teams.People organized in value streams for continuous value flow; cross-functional, self-organizing teams with decentralized decision-making
CommunicationFormal, documented, and infrequentInformal, face-to-face, and continuous
Customer InvolvementLimited to initial requirements gathering and final acceptanceActive collaboration and ongoing feedback throughout the project
Performance Metrics and Progress MeasurementFocus on utilization, process compliance, documentation, and task completion.Focus on value delivery, customer satisfaction, team empowerment, and objective measures based on working solutions.
Funding and Work IntakeFund projects; centralized, unlimited work intake, project overload, and project cost accountingFund value streams; strategic demand managed by Portfolio Kanban; decentralized intake by value streams and value stream budgets adjusted dynamically.

LPM Roles and Responsibilities (overview)

People fulfilling the LPM function may have various roles and titles and often reside in different parts of the organization’s hierarchy. Key individuals in LPM typically include executives and business owners who understand the financial, technical, and business contexts. They are responsible for strategy and investment funding and are accountable for the overall business outcomes.

What is Lean Portfolio Management (LPM)?

Definition and key components of LPM

Lean Portfolio Management (LPM) is a strategic approach to aligning an organization’s portfolio with its business objectives by applying Lean and Agile principles. It focuses on optimizing the flow of value through development value streams, making informed investment decisions, and ensuring effective governance.

The key components of LPM include:

  • Strategy and investment funding,
  • Agile portfolio operations,
  • and Lean governance.

Three Dimensions of Portfolio jpg

Relationship with Agile and Lean Methodologies

LPM is rooted in Agile and Lean methodologies, emphasizing continuous improvement, rapid adaptation to change, and delivering customer value. LPM incorporates these principles to ensure organizations respond more effectively to market demands and customer needs. By adopting Agile and Lean practices at the portfolio level, organizations can create a more flexible and adaptive approach to managing their investments, resources, and priorities.

The Objectives and Purpose of LPM

The primary objectives of LPM are to align the organization’s strategy with execution, optimize the flow of value, and ensure effective governance. This involves:

  1. Aligning portfolio investments with the organization’s strategic objectives, ensuring that resources are allocated to the highest-value initiatives
  2. Managing and prioritizing the portfolio backlog to deliver customer value frequently and iteratively
  3. Establishing a continuous feedback loop between strategy and execution to enable informed decision-making and rapid adaptation to changes in market conditions or customer needs
  4. Implementing Lean governance practices to provide oversight and ensure compliance without introducing unnecessary bureaucracy or delays

Organizations adopting LPM can better align their strategic objectives and initiatives, leading to improved business outcomes and increased agility.

Why Implement LPM?

Increased efficiency

  • Streamlined processes: LPM helps organizations optimize their processes by eliminating waste and focusing on delivering value.
  • Better resource utilization: LPM ensures that resources are allocated effectively and efficiently, resulting in higher productivity and cost savings.

Better decision making

  • Data-driven and evidence-based decisions: LPM encourages using data and evidence to make informed decisions, leading to more accurate and effective outcomes.
  • Enhanced strategic alignment: LPM ensures that investments are directed toward the most valuable initiatives by aligning the portfolio with the organization’s strategic objectives.

Faster delivery

  • Accelerated time-to-market: LPM enables organizations to deliver value more quickly by breaking work into smaller, manageable increments and focusing on high-priority items.
  • Improved responsiveness to change: LPM promotes a culture of continuous improvement and adaptability, allowing organizations to respond more effectively to changes in the market or customer needs.

Improved alignment

  • Clear communication of strategy and objectives: LPM fosters better communication of organizational goals and objectives, ensuring all team members understand their roles and responsibilities.
  • Greater collaboration across teams: By focusing on value streams, LPM encourages cross-functional teams to work together more effectively, fostering collaboration and knowledge sharing.

Increased transparency

  • Open communication channels: LPM promotes open communication channels, ensuring stakeholders access relevant information and progress updates.
  • Real-time visibility into progress and performance: With LPM, organizations can monitor progress and performance in real-time, allowing them to make informed decisions and adjustments as needed.

Better risk management

  • Proactively identifying and mitigating risks: LPM supports proactive risk identification and mitigation, helping organizations manage uncertainties and minimize negative impacts.
  • Improved adaptability and resilience: LPM enhances an organization’s ability to adapt to changes and disruptions, resulting in greater resilience and a reduced likelihood of project failure.

Executing Lean Portfolio Management

Strategy and Investment Funding

Lean Portfolio Management Strategy and Investment Funding Collaboration jpgConnect the Portfolio to the Enterprise Strategy: Aligning Objectives for Greater Success

Investment Themes

Investment themes (or product themes) embody the initiatives that guide an enterprise’s investment in systems, products, applications, and services. They represent crucial product or service value propositions that offer market differentiation and competitive advantage. Collecting strategic investment themes for an enterprise or a business unit within an enterprise establishes the relative investment objectives for that entity.

Lean Portfolio Investment Horizons

The Portfolio strategy plays a crucial role in supporting an organization’s broader objectives, making it vital to establish a strong connection between the portfolio and the enterprise strategy. This connection is facilitated through strategic themes and the portfolio budget and is further reinforced by providing feedback via the portfolio context.

It is necessary to go beyond mere prioritization and investment selection to ensure the entire portfolio is aligned and funded to achieve business objectives. In collaboration with stakeholders, Lean Portfolio Management must develop business and enabler Epics that feed the Portfolio Backlog, promoting continuous alignment of initiatives with the overarching strategy. This approach ensures that resources are allocated effectively and that the portfolio remains focused on delivering maximum value per the organization’s strategic goals.

The Bi-directional Connection

A bi-directional connection characterizes the relationship between the portfolio and the organization’s strategy. This dynamic interaction entails the portfolio receiving guidance from the enterprise strategy while providing valuable feedback to the enterprise through the portfolio context. This continuous exchange of information fosters better alignment, adaptability, and overall success.

  1. Receiving Direction: The enterprise strategy sets the strategic themes, goals, and priorities that inform the portfolio’s initiatives. By providing clear guidance on the organization’s objectives and desired outcomes, the enterprise strategy ensures that the portfolio is focused on initiatives that deliver the most significant value and impact.
  2. Providing Feedback: In return, the portfolio offers essential feedback to the enterprise through the portfolio context. This feedback can include insights on the progress of initiatives, resource allocation, and potential risks or opportunities. By sharing this information, the portfolio helps the organization make informed decisions, adjust its strategy as needed, and respond to changing market conditions.
  3. Continuous Adaptation: The bi-directional connection between the portfolio and the enterprise strategy enables continuous adaptation. As the organization’s strategic goals evolve or market conditions change, the portfolio can adjust its initiatives and priorities accordingly. This agility allows the organization to stay ahead of the competition and continuously improve its performance.
  4. Collaborative Decision-Making: The bi-directional connection promotes collaborative decision-making between Lean Portfolio Management and stakeholders. By working together to align initiatives with the enterprise strategy, the organization can make more informed choices about investments and resource allocation, leading to better overall outcomes.

The bi-directional connection between the portfolio and the organization’s strategy is essential for maintaining alignment and fostering adaptability. By continuously exchanging information and collaborating on decision-making, organizations can ensure that their portfolios are always focused on delivering maximum value in line with their strategic goals.

Maintain a Portfolio Vision: Communicating and Collaborating for Success

Defining and Understanding the Portfolio Vision

Describing the future state of development value streams and solutions, the Lean Portfolio Vision highlights the gap that LPM must address. To ensure effective collaboration across the portfolio, the vision, goals, ideas, and expectations must be communicated continuously and transparently. This clear and consistent communication promotes a shared understanding and alignment across the organization, helping to direct resources and efforts toward achieving long-term goals.

The Role of Communication and Collaboration in Realizing the Vision

Clear communication and collaboration are vital to realizing the portfolio vision effectively. Business owners should frequently communicate the vision and strategic themes during various events, such as PI planning and all-hands company meetings. A shared understanding of the vision promotes a ‘one portfolio’ mindset, enabling agility, alignment, and the ability to make mid-course corrections.

Creating and Managing the Portfolio Backlog

Lean Portfolio Kanban

The Portfolio Backlog is a crucial component in the SAFe framework. It captures and manages business and enabler Epics to create and evolve the portfolio’s products, services, and solutions. Lean Portfolio Management is responsible for developing, maintaining, and prioritizing the Portfolio Backlog. 

Building and refining the backlog

Building and refining the Portfolio Backlog means applying a flow-based approach to ensure Portfolio Epics are ready for implementation with an appropriate level of discovery and risk. Some activities involved in refining the Portfolio Backlog include

  • Reviewing new Epics
  • Evaluating Epic Hypothesis Statements
  • Prioritizing the backlog using Weighted Shortest Job First (WSJF) and other factors.

Managing the Portfolio Backlog with Lean Portfolio Kanban

The Portfolio Kanban system is a powerful tool that visualizes and streamlines the flow of Business Epics and Enablers from ideation to implementation. It is used to develop and manage Portfolio Epics through various process states until either approved or rejected. The key elements of managing the Portfolio Backlog with Lean Portfolio Kanban are:

  • The Portfolio Kanban system provides a visual representation of the progress of Business Epics and Enablers, making it easy to track their status and identify bottlenecks or opportunities for improvement.
  • Epic Owners are responsible for the essential collaborations to manage Epics within the Portfolio Kanban system. They ensure that Epics are effectively developed, prioritized, and moved through the process.
  • Enterprise Architects guide Enabler Epics, which supports the technical considerations for Business Epics. Their expertise ensures that the organization’s technical infrastructure aligns with its strategic goals.
  • The Portfolio Kanban system helps to align strategy and execution by identifying, communicating, and governing the selection of the largest and most strategic initiatives (Epics) for a Lean Portfolio.
  • Lean Portfolio Management (LPM) oversees the Portfolio Kanban, ensuring that it is effectively used to manage and monitor the flow of Epics within the organization.
  • Strategic Portfolio Review and Portfolio Sync Events: The Portfolio Kanban system is often used during these events to facilitate discussions around Epics’ prioritization, selection, and progress. This helps to maintain alignment between the organization’s strategy and the initiatives in the portfolio.

Scaled Agile Portfolio Kanban Workflow States

The workflow states describe an Epic’s stages, from initial ideation to completion. These states ensure that Epics are systematically analyzed, prioritized, and implemented based on their alignment with strategic themes and potential value.

Lean Portfolio KanbanThe following are the workflow states in a Scaled Agile Portfolio Kanban:

  1. Funnel: The Funnel is where all significant business and technology ideas are initially collected. Epics are described in the Epic Hypothesis Statement and are not WIP limited. If an idea doesn’t exceed the Epic threshold, it moves to the ART or Solution Train Kanban.
  2. Reviewing: In this state, an Epic Owner refines and elaborates the Epic Hypothesis Statement with stakeholders. A WIP limit is typically specified. If an Epic isn’t viable or aligned with the portfolio’s strategic themes, it moves to the Done state.
  3. Analyzing: Epics with high potential are further analyzed in this state. This involves collaboration among various roles, including Business Owners, Enterprise Architects, and Product Management. Activities include identifying solution alternatives, defining the MVP, establishing cost estimates, and creating the Lean Business Case.
  4. Ready: Epics with the highest WSJF are pulled into the Ready state, periodically reviewed, and prioritized.
  5. Implementing: Epics are implemented based on Participatory Budgeting or a similar process. The implementation step has two sub-states, MVP and Persevere.
  6. MVP: Epics with the highest WSJF advance to the MVP state. Work on the MVP continues until the money allocated for the MVP has been spent, or the hypothesis can be evaluated.
  7. Persevere: If the hypothesis is proven true, an Epic advances to the Persevere state, and teams will continue implementing additional features and capabilities.
  8. Done: An Epic is considered Done when sufficient knowledge or value is achieved or it is no longer a portfolio concern.

Achieving a better future state requires the Development Value Streams to adopt a ‘one-portfolio’ mindset, where they cooperate to achieve the portfolio’s higher-level objectives and the broader aim of the enterprise. The Kanban’s design should evolve to match the needs of a specific portfolio and reflect continuous improvements to the process. These improvements may include adjusting WIP limits, splitting or combining Kanban states, or adding service classes to optimize Epics’ flow and priority.”

Enterprise Architecture: The Key to Translating Vision into Action 

Agile Architecture Principles and Roles

Agile Architecture is a crucial aspect of modern software development, enabling organizations to create adaptable and scalable solutions. While some of its principles are informed by the Scaled Agile Framework (SAFe), Agile Architecture can be applied more broadly to benefit various organizations – even those not adopting SAFe. The following principles and roles are particularly important in Agile Architecture:

  1. Fast Learning Cycles: Agile Architects should leverage fast learning cycles to explore various design alternatives and approaches. This iterative process helps identify the best solutions quickly and minimizes the risk of investing in suboptimal architectures.
  2. Decentralized Decision-Making: Agile Architecture fosters an environment that encourages decentralized decision-making, empowering teams to make informed choices and respond to changes effectively. This approach enhances collaboration and ensures that the architecture is adaptable to evolving business needs.
  3. Collaboration and Coaching: Agile Architects are crucial in defining and communicating the architectural vision and strategy. They collaborate with development teams, providing guidance and coaching to ensure that the architecture is effectively implemented and aligns with the organization’s objectives.

In addition to these principles, Agile Architecture also includes various roles that address concerns at different levels of the organization:

  1. Enterprise Architects focus on the strategic, organization-wide perspective, ensuring that the architecture aligns with the overall business objectives and vision.
  2. Solution Architects work at the project or program level, addressing large-scale solutions’ design and implementation concerns.
  3. System Architects operate at the team level, ensuring that individual systems and components are designed and built according to the architectural vision.

Architects collaborate across different levels to ensure alignment and address issues as they arise. System Architects, for instance, communicate the technical path through the architectural runway, non-functional requirements, and the design and support of the Continuous Delivery Pipeline (CDP). They also coordinate with Enterprise and Solution Architects to ensure their solutions align with the larger vision.

Finally, architects in any role serve as Agile leaders, mentoring teams and enhancing the overall capabilities of development teams. Organizations can create scalable solutions that meet their ever-evolving business needs by embracing Agile Architecture principles and roles.

Enterprise Architects’ Role in Strategy and Investment Funding

Enterprise Architects are crucial in converting the business vision and strategy into practical technology plans. They promote adaptive design, engineering practices, and architectural governance to drive the portfolio’s architectural initiatives. Agile Architects support business alignment by optimizing the architecture to support the value stream end-to-end, enabling the company to achieve its goal of continually delivering value in the shortest sustainable lead time.

Balancing Intentional and Emergent Design

The right balance between intentional and emergent design is essential for maintaining a healthy Architectural Runway across the portfolio. Enterprise Architects help strike this balance, ensuring the organization can develop large-scale systems effectively while remaining adaptable to change.

In addition to balancing intentional and emergent design, architects and teams should prioritize understanding system goals and requirements, identifying areas where intentional design is necessary, adapting and evolving the design during development, and striving for consistency and cohesion in the design. By doing so, they can build a flexible, adaptable, and responsive system that caters to changing business needs while maintaining a clear direction and vision for future development.

Portfolio Roadmap: Navigating the Path to the Desired Future State 

The Purpose and Importance of the Portfolio Roadmap

The Lean Portfolio Roadmap integrates lower-level roadmaps into a comprehensive view, with initiatives in the roadmap influencing the direction and timing of solution roadmaps. The roadmap may span multiple years to account for longer-term initiatives, requiring Agile estimation methods to maintain flexibility and adaptability. This cohesive plan serves as a guiding force for the organization, enabling it to navigate the path to the desired future state effectively.

Establishing a Vision and Measurable Outcomes for the Portfolio

A successful portfolio requires a clear vision that aligns with the organization’s long-term goals. This vision should be adaptable and evolve as progress is made toward achieving its objectives. In some frameworks, such as SAFe, the inputs guiding the vision are called Strategic Themes. However, regardless of the framework, the vision should be informed by the organization’s strategic goals and priorities.

Establishing measurable outcomes is crucial to implement and validate the vision. These outcomes help track progress and ensure the vision is realized effectively. They can include key performance indicators (KPIs), milestones, or other metrics that provide insight into the portfolio’s performance.

The process of achieving the vision is facilitated through Value Streams, representing the flow of value within the portfolio. Value Streams are the activities and processes that deliver value to the end customer. By focusing on Value Streams, organizations can better understand and optimize the flow of work, ensuring that resources are allocated effectively and that projects are aligned with the portfolio’s vision.

Forecasting and the Portfolio Roadmap

Forecasting is a crucial aspect of portfolio management, as it helps businesses determine whether outcomes can be achieved within specific timelines. By outlining the intended sequence of future work, along with a name and an estimate for each item, the portfolio roadmap provides a basis for forecasting. Combining these estimates with team capacity information and value streams within a set period enables effective forecasting.

Forecasts play a vital role in negotiating portfolio outcomes, as they help assess the feasibility of goals and associated deadlines. This process ensures that teams and trains within the portfolio can maintain their agility by limiting their commitment. Regular forecasting using the roadmap offers organizations the confidence to meet timelines or the early warning required to take corrective action. By focusing on the next timebox, such as a Program Increment, this confidence allows organizations to limit their commitment and remain agile.

The Bi-directional Influence of Roadmaps

The relationship between portfolio and solution roadmaps is bi-directional, meaning each roadmap impacts the other. This mutual influence is crucial in maintaining alignment and overall effectiveness within the organization.

  1. The Portfolio Roadmap sets the strategic direction and priorities for the organization. As a result, it influences the solution roadmaps by providing guidelines and goals that solution teams should strive to achieve. This ensures that individual solutions contribute to the organization’s broader objectives.
  2. Solution Roadmaps inform the portfolio roadmap by providing insights into the progress, challenges, and opportunities that solution teams encounter. This feedback can lead to adjustments in the Portfolio Roadmap, ensuring that the organization’s strategic direction remains relevant and adapts to changing circumstances.
  3. The bi-directional influence of roadmaps fosters a continuous alignment process. As the organization progresses, the portfolio and solution roadmaps are updated to reflect the latest information, ensuring that the strategic direction and individual solutions remain in sync.
  4. The mutual influence of roadmaps promotes collaboration between different teams and stakeholders within the organization. By understanding how their work impacts the broader portfolio and how the portfolio’s direction affects their projects, teams can better coordinate their efforts and work towards common goals.

Realize Portfolio Vision Through Epics: Large Initiatives for Greater Impact 

Understanding Portfolio Epics

Portfolio Epics are significant solution development initiatives that require the creation of a Minimum Viable Product (MVP) and approval from Lean Portfolio Management (LPM). There are two types of Portfolio Epics:

  1. Business Epics are large-scale initiatives to deliver customer value or achieve a strategic business objective.
  2. Enabler Epics: These are initiatives focused on supporting or enhancing the organization’s infrastructure, processes, or capabilities to deliver Business Epics successfully.

Stakeholders need to agree on the intent and definition of Epics, which are developed and managed through the Portfolio Kanban system. Epics require analysis and the creation of a Lean business case for LPM to review and make a go/no-go decision. Defining the MVP is crucial for proving or disproving the Epic hypothesis.

Estimating the costs of an Epic, both for the MVP and the full implementation, is essential for understanding the potential investment required. T-shirt sizing is a simple way to estimate Epics, particularly in the early stages.

Forecasting an Epic’s duration is essential for proper portfolio functioning. To forecast duration, consider an Epic’s estimated size in story points, the historical velocity of impacted Agile Release Trains (ARTs), and the percent capacity allocation dedicated to the Epic.

Implementing Epics with the Lean Startup Cycle

Implementing Epics follows a Lean startup strategy, which includes the build-measure-learn cycle, allowing for incremental investment and risk management. Epics can enter the persevere state or be dropped depending on the results of the hypothesis. ART and Solution Train Epics may also warrant LPM attention, requiring a Lean business case and review through the Portfolio Kanban system.

Portfolio Prioritization and the Weighted Shortest Job First (WSJF) Model

Introduction to WSJF

WSJF is a prioritization model used to determine the sequence of portfolio items based on their value and time-criticality. It helps organizations decide which initiatives to prioritize for maximum benefit. Within SAFe, WSJF is recommended for prioritization to avoid unnecessarily complex Cost-Of-Delay discussions.

How WSJF helps in decision-making

By calculating WSJF scores, organizations can assess the relative value of each initiative compared to the time and effort required to complete it. This enables better decision-making and resource allocation. WSJF works well at the Release Train level due to the existence of Program Increments as timeboxes.

Calculating WSJF scores

WSJF scores are calculated by dividing the Cost of Delay (CoD) by the job size or duration. The CoD considers the value of the initiative, time-criticality, and risk reduction or opportunity enablement.

Using WSJF at the Portfolio Level

WSJF is a valuable tool in LPM. It helps organizations prioritize their initiatives based on their potential value and urgency, ensuring that the most critical and valuable projects are addressed first. Organizations can effectively balance short-term goals with long-term investments by understanding the nuances of WSJF and considering the variations at the Portfolio level.

Challenges of WSJF at the Portfolio Level

At the Portfolio level, where Epics can last long, the “Shortest Job First” aspect of WSJF can make it difficult to balance short-term wins against long-term investment, often causing the latter to lose priority. To address this challenge, organizations can consider the following variations:

  • WSJF using Total Epic Effort
  • WSJF using Predicted Duration
  • WSJF using Experimental Effort
  • WSJF considering Risk factors
  • WSJF within the Investment Horizons

These variations allow for a more nuanced approach to prioritization at the Portfolio level, ensuring that long-term investments are not overlooked.

Establish Lean Budgets and Guardrails: Streamlined Funding and Governance for Improved Efficiency 

Lean Budgets: Aligning Funding with Business Strategy

Lean budgets allocate funding for value streams that align with the business strategy and current strategic themes. This funding model eliminates or reduces the need for traditional project-based funding and cost accounting, further streamlining the organization’s financial processes.

Guardrails: Providing Governance and Spending Policies

Guardrails support lean budgets by offering governance and spending policies and practices. These guardrails ensure that the organization’s financial resources are used effectively and efficiently while maintaining control and oversight.

The Benefits of Lean Budgets and Guardrails

Lean Budgets and Guardrails provide funding and governance practices that improve development throughput while maintaining financial and fitness-for-use governance. This approach reduces friction, delays, and overhead associated with traditional budgeting and project management methods. By eliminating the need for time-consuming cost accounting and project-based funding approvals, Lean Budgets and Guardrails enable organizations to allocate resources more quickly and efficiently, resulting in faster decision-making, increased agility, and better alignment between strategic initiatives and available resources. Moreover, this streamlined funding approach fosters greater team collaboration and trust, improving overall performance and value delivery.

Shorter Funding Cycles and Incremental Funding

Adopting shorter and incremental funding cycles enables organizations to make funding decisions aligned with their learning and delivery cadence. Approaches such as rolling wave planning, metered funding, and value engineering help organizations allocate resources more agilely, allowing them to adapt quickly to changing market conditions or customer needs. By using incremental funding, organizations can better prioritize their projects and initiatives while making better-informed decisions about whether to persevere, pivot, or abandon activities.

Responsible Stewardship and Guardrails for Decision-Making

Transitioning from permission-based funding to empowered decision-making requires implementing new types of guardrails to enable rapid and responsible decision-making. Traditional funding approaches, such as annual budgeting cycles, often undermine business agility and impede the effective adoption of LPM. Using guardrails, organizations can establish clear criteria for prioritizing, allocating resources, and making decisions about their projects and initiatives. These guardrails help ensure accountability, provide the necessary data for informed decision-making, and can be tailored to the specific needs of different organizations, including publicly traded, non-profit, foundations, privately owned, and highly regulated organizations.

Shorter Funding Cycles Enable Faster Adaptation

To match the cadence of learning and delivery, funding and budgeting cycles need to be shortened. Shorter funding cycles allow organizations to adapt more quickly to changing conditions, ensuring that resources are allocated effectively and efficiently. Incremental funding decisions support prioritization at the same pace as learning and delivery, allowing for better alignment and resource allocation.”

Establish Portfolio Flow: Managing Portfolio Epics for Optimal Execution

The Big Picture of the Scaled Agile Framework version 6 showing the Scaled Agile Portfolio level

The Concept of Portfolio Flow

Portfolio flow refers to managing portfolio epics through their lifecycle, including limiting the number of significant, cross-cutting initiatives in progress to match the portfolio’s capacity. Establishing portfolio flow is essential for balancing new development work effectively with ongoing maintenance and support activities.

The Portfolio Kanban System: A Tool for Enhancing Portfolio Flow

The portfolio Kanban system is used to visualize and restrict work-in-process (WIP), reduce batch sizes, and control the length of long-term development queues. Implementing this system allows organizations to optimize their portfolio flow and allocate resources effectively.

Operational Excellence in Portfolio Flow

A crucial aspect of portfolio flow is operational excellence. Organizations can continuously improve their processes and systems by striving for operational excellence, resulting in better alignment, increased efficiency, and overall success.

Lean Portfolio Flow

The LPM competency aligns strategy and execution by applying Lean and systems thinking approaches to strategy and investment funding, Agile Portfolio Operations, and governance. Improving the flow of customer value through the portfolio is a key economic driver for the enterprise.

Agile Portfolio Operations

Agile portfolio operations are the backbone for coordinating and supporting decentralized execution across an organization. By embracing Agile principles and a Lean-Agile mindset, these operations empower Agile Release Trains (ARTs), Solution Trains, and teams to work autonomously while maintaining alignment with the overall strategy.

Effective Agile portfolio operations rely on collaboration and shared responsibilities among various organizational roles and groups.

LPM Agile Portfolio Operations - collaboration and responsibilitiesThe key stakeholders in this process include:

  1. Value Management Office (VMO): This group ensures value delivery and alignment with the organization’s strategic objectives.
  2. Agile Center of Excellence (ACE): The ACE plays a pivotal role in promoting and supporting adopting Agile practices, tools, and culture across the organization.
  3. Release Train Engineer (RTE): The RTE is a servant leader who facilitates and supports the work of ARTs and Solution Trains, ensuring alignment and effective execution of initiatives.
  4. Scrum Master/Team Coach: These individuals provide coaching and support to individual teams, helping them adopt and adhere to Agile principles and practices.

Coordinate Value Streams

Although many value streams operate independently, cooperation among solutions can provide unique, differentiating portfolio-level capabilities and benefits that competitors can’t match. Value Stream coordination defines how to manage dependencies and exploit the opportunities that exist only in the interconnections between value streams.

Value Stream Coordination is essential to managing dependencies between value streams and capitalizing on opportunities arising from their interconnections. When effectively coordinated, value streams can deliver unique and differentiated capabilities that give an organization a competitive advantage.

To exploit the potential of interconnected value streams, organizations need to focus on the following key aspects:

  1. Coordination Roles: Assign specific roles to facilitate value stream coordination, such as Enterprise Architect, Solution Portfolio Management, and Value Management Office (VMO). These roles help provide technical guidance, oversee integrated solutions, and support efficient Agile Release Train (ART) execution.
  2. Apply Cadence and Synchronization: Implementing a shared PI or quarterly planning schedule, integrated demos, and Inspect & Adapt events enables multiple value streams to collaborate and deliver portfolio-level initiatives. This approach ensures that routine tasks happen predictably and lowers the transaction costs associated with change.
  3. Introduce New Portfolio-Level Work: Establish a reliable rhythm for adding new portfolio-level work at planning boundaries. This cadence helps release trains achieve enterprise predictability needs and manages epics through the Portfolio Kanban system.
  4. Ensure Integration Points: Perform partial integration throughout the planning interval when full integration is impossible. These cadence-based integration points are crucial for measuring portfolio velocity and accelerating learning.
  5. Portfolio Roadmap: Derive the portfolio roadmap from solution roadmaps, aggregating relevant aspects and their associated milestones into a comprehensive view. This higher-level perspective communicates the larger picture to enterprise and portfolio stakeholders.
  6. Release on Demand: Effective DevOps and Continuous Delivery Pipeline capabilities are vital for deploying and releasing integrated value. In some cases, additional considerations may require dedicated or shared services and system teams for individual release trains and across value streams to integrate the solution into a portfolio-level release.

Support Release Train Execution

Supporting Agile Release Train Execution from the perspective of the Portfolio level is an essential aspect of Agile Portfolio Operations. This support ensures seamless delivery of value and alignment with strategic objectives.

Here are some key components to consider when supporting ART execution at the Portfolio level:

  1. Strategic Alignment: Ensure ARTs align with the organization’s goals and objectives. Portfolio Management should provide clear guidance on prioritizing initiatives, epics, and features contributing to achieving the desired business outcomes. This alignment helps ARTs focus on delivering value that supports the overall strategy.
  2. Resource Allocation: Portfolio Management should facilitate effective allocation across different ARTs based on priorities and capacity. This involves determining the appropriate budget, staffing levels, and other resources required for each ART to achieve its objectives.
  3. Cross-ART Coordination: Foster collaboration and coordination among multiple ARTs working on interdependent initiatives. Portfolio Management should identify and address dependencies, risks, and other potential obstacles to ensure smooth execution and minimize delays.
  4. Governance and Compliance: Establish clear governance and compliance guidelines that ARTs must adhere to during execution. This includes defining relevant policies, standards, and procedures that help ensure the quality, security, and regulatory compliance of the solutions delivered by the ARTs.
  5. Performance Metrics and Reporting: Define and monitor key performance indicators (KPIs) that assess the progress and performance of ARTs. Portfolio Management should regularly review these metrics and provide feedback to the ARTs, enabling them to adapt and improve their processes for better results.
  6. Continuous Improvement: Encourage a culture of continuous improvement at the Portfolio level by sharing best practices, lessons learned, and success stories across ARTs. This helps create an environment where teams are motivated to refine their processes and achieve greater efficiency and effectiveness.

Foster Operational Excellence

Operational excellence focuses on continually improving efficiency, practices, and results to optimize business performance. LPM plays a leadership role in operational excellence, helping the organization achieve its business goals.

From PMO to VMO

Many enterprises have discovered that centralized decision-making and traditional mindsets can undermine the move to Lean-Agile practices. As a result, some enterprises have abandoned the PMO approach, distributing all the responsibilities to ARTs and Solution Trains. Unfortunately, this choice can inhibit the adoption of successful execution patterns, standard measures, and reporting that can be developed and applied across the portfolio.

One option is redesigning the traditional PMO to become a Value Management Office (VMO). Operating through LPM, the VMO leverages the current PMO’s specialized skills, knowledge, and relationships while transitioning themselves and the portfolio to a new Lean-Agile way of working.

VMO activities often include the following:

  • Facilitates the portfolio events
  • Works with the LACE to develop, harvest, and apply successful ART execution patterns across the portfolio
  • Facilitates Lean budgeting and coordinates portfolio governance
  • Fosters decentralized PI Planning and operational excellence
  • Establishes objective metrics and reports progress toward business agility
  • Focuses the portfolio on measuring and improving value delivery
  • Leads the move to objective metrics, milestones, and Lean-Agile budgeting
  • Establishes and maintains the systems and reporting capabilities
  • Offer guidance for OKRs and KPIs
  • Communicates and amplifies the portfolio’s strategy
  • Fosters more Agile contracts and leaner Supplier and Customer partnerships

Value Stream Management

Value Stream Management (VSM) is a leadership and technical discipline that enables the maximum flow of business value through end-to-end solution delivery.

Lean thinking is the foundation of Value Stream Management. The lean principles provide a shared mindset for everyone involved in solution delivery to improve operational efficiency and eliminate delays. Lean Portfolio Management (LPM) is accountable for establishing the value streams and fostering operational excellence.

The Lean-Agile Center of Excellence (LACE)

Operating under the auspices of LPM, the Agile Center of Excellence also plays a significant role in fostering operational excellence. This typically includes:

  • Facilitating Value Stream identification workshops
  • Communicating the business need for SAFe
  • Integrating Lean & Agile Practices and Fostering Communities of Practice
  • Creating alignment around organizational changes
  • Providing coaching and training to ART stakeholders, Solution Trains, and Agile Teams
  • Establishing objective measures for progress, product, and process

Accelerating Flow

Portfolio Flow represents a state where Lean Portfolio Management continuously delivers new epics to Solution Trains and Agile Release Trains (ARTs) to fulfill the portfolio’s vision and strategic themes. Aligning strategy and execution through Lean and systems, thinking approaches enhances business outcomes for enterprises adopting these principles.

To further optimize flow and drive value, the following eight flow accelerators can be employed:

  1. Visualize and Limit Work in Process (WIP): Overloading the portfolio with WIP can negatively impact performance, value delivery, and employee engagement. Make all significant epics visible, review and adjust the epic threshold, validate portfolio Kanban WIP limits, understand each value stream’s and ART’s capacity, and ignore sunk costs.
  2. Address Bottlenecks: Portfolio gridlock can hinder the progress of essential initiatives. Ensure the Lean Portfolio Management (LPM) team has proper decision-making authority, increase the pool of Epic Owners, understand ART capacity, and streamline the Lean Business Case process.
  3. Minimize Handoffs and Dependencies: Efficiently managing work through the portfolio Kanban requires collaboration and stakeholder engagement. Support Epic Owners, understand cross-value stream coordination requirements, and recognize the need to refactor value streams.
  4. Get Faster Feedback: Rapid customer feedback is crucial for evaluating new initiatives. Test business model assumptions, engage with customers early, and focus on leading indicators for Minimum Viable Products (MVPs).
  5. Work in Smaller Batches: Smaller batches improve system throughput and learning speed. Limit the number of epics reviewed during LPM events, reduce the transaction cost of reviewing and analyzing epics, conduct low-fidelity tests during analysis, leverage a common cadence, and reduce experiment size.
  6. Reduce Queue Lengths: Long queues can negatively impact enterprise competitiveness. Reroute non-portfolio work, attend to critical market events and rhythms, eliminate non-strategic ideas quickly, and replace fixed schedules with flexible roadmaps.
  7. Optimize Time in ‘The Zone’: Executives need dedicated time to develop and evolve strategic plans. Allocate sufficient time for strategy development, hold effective portfolio events, recognize when a Portfolio Epic no longer needs LPM focus, eliminate redundant portfolio governance practices, and invest in meeting facilitation.
  8. Remediate Legacy Policies and Practices: Address historical impediments by identifying legacy portfolio activities that should be stopped or replaced and ensuring reasonable fidelity to the adopted process.

Measure and Improve Flow

Three key flow measures are time, load, and distribution.

  1. Flow time is needed to complete all steps in a defined workflow. Portfolio flow time can be estimated from ideation to production or when an epic enters the “review” state until its hypothesis is evaluated.
  2. Flow load represents the number of items currently in the system. Maintaining a limited number of active items in portfolio WIP is crucial for enabling the fast flow of strategic value. 
  3. Flow distribution measures the volume of each type of work in the system at a given time. An informative view of portfolio flow distribution can reveal the trend of money allocation across investment horizons.

While these flow metrics can pinpoint improvement opportunities for portfolio work, they cannot provide a complete picture independently. Qualitative analysis is necessary to offer context for the flow metrics and better understand the portfolio’s current state.

Risk Management

Agile Portfolio Operations must effectively manage risks to deliver value to customers successfully. Incorporating risk management within the Agile framework enables organizations to proactively identify, assess, and address potential threats and opportunities that may impact their portfolio.

  • Risk management helps organizations prioritize their investments, make informed decisions, and optimize resource allocation. A well-structured risk management process ensures that potential issues are identified and addressed before they escalate, minimizing negative impacts on the portfolio.
  • Agile principles advocate for flexibility, transparency, and collaboration. Aligning risk management with these principles ensures that risk-related information is shared openly, and teams can adapt their risk response strategies based on evolving circumstances and learning.

Lean Governance

LPM Lean Governance - collaboration and responsibilitiesLean Decision-making

Decentralized decision-making and empowering teams enable faster decision-making, reduce bureaucracy, and allow for more adaptability to changing market conditions. Organizations can foster decentralized decision-making by:

  • Establishing clear decision-making criteria and guidelines
  • Providing teams with access to relevant information and resources
  • Encouraging a culture of trust and autonomy

Adaptive Forecasting and Budgeting

Lean governance supports spending, audit, compliance, expenditure, measurement, and reporting oversight. It requires the active engagement of the Value Management Office (VMO), Lean-Agile Center of Excellence (LACE), Business Owners, and Enterprise Architects. A Lean approach to budgeting replaces fixed, long-range budget cycles and financial commitments with a more fluid and agile process. Budgets are adjusted on a cadence, typically every six months or when significant events warrant it. This approach enables organizations to:

  • Respond more effectively to changes in market conditions or business priorities.
  • Allocate resources more efficiently and avoid overcommitment
  • Foster a culture of continuous improvement and learning

Lightweight Reporting

Simplifying reporting processes and focusing on relevant, actionable metrics is essential for effective Lean Governance. This approach minimizes the overhead associated with traditional reporting and allows organizations to focus on key performance indicators that drive value. To implement lightweight reporting:

  • Identify the most relevant metrics that align with strategic objectives
  • Standardize reporting templates and processes to reduce complexity
  • Encourage regular reviews and data-driven discussions among stakeholders

Continuous Improvement

Promoting a culture of learning, experimentation, and improvement across the portfolio is crucial for Lean Governance. Organizations should:

  • Encourage teams to share best practices and lessons learned
  • Provide opportunities for training and skill development
  • Implement regular retrospectives and process improvement initiatives

Feedback Loops

Establishing regular feedback and communication mechanisms between teams, stakeholders, and decision-makers can help organizations:

  • Identify potential issues and bottlenecks early
  • Ensure alignment between teams and business objectives
  • Foster a culture of transparency and collaboration

Compliance and DevOps

By integrating compliance requirements with DevOps practices, Lean governance ensures a smooth and secure value delivery process. This more continuous approach allows organizations to address compliance obligations while minimizing risks and overhead. To achieve this:

  • Embed compliance checks and audits into the development and deployment processes
  • Automate compliance-related tasks and documentation wherever possible
  • Collaborate closely with relevant stakeholders to ensure adherence to regulations

Continuous Compliance Coordination

Lean governance includes coordinating ongoing compliance with relevant standards, such as internal or external financial auditing constraints and industry legal or regulatory guidelines. This approach minimizes overhead while maintaining adherence to necessary requirements. Organizations can achieve continuous compliance coordination by:

  • Establishing clear communication channels between teams, stakeholders, and regulatory authorities
  • Implementing robust monitoring and reporting processes to track compliance status
  • Regularly reviewing and updating compliance policies and procedures to reflect regulations or business practice changes.

Evidence-based Decision Making

Metrics and Key Performance Indicators (KPIs)

In Lean Portfolio Management, using Metrics and Key Performance Indicators (KPIs) is essential for evaluating performance and driving continuous improvement. Identifying the right metrics for LPM is crucial for effective decision-making and alignment with strategic objectives. Regularly monitoring and using KPIs can help organizations identify areas for improvement and drive progress toward their goals.

Each portfolio establishes the minimum metrics needed to measure portfolio performance to ensure:

  • Progress with strategy implementation
  • Alignment of strategy and execution
  • Spending aligns with the agreed boundaries
  • Business outcomes are continually improving without too much oversight of feature implementation
  • LPM competency is improving


Organizations should define Objectives and Key Results (OKRs) for Strategic Themes and Value Stream Key Performance Indicators (KPIs) to measure business outcomes effectively. 

  • OKRs are a goal-setting framework that helps align ambitious goals with reality by providing objective evidence of progress (Key Results) toward achieving business outcomes (Objectives). 
  • Value Stream KPIs are specific, quantifiable measures of business results for the value streams within the portfolio, which are informed by the strategic themes.


Understanding and improving the flow of work is vital for delivering value efficiently. Flow time, load, and distribution are key measures to help organizations assess their portfolio performance. 

  • Flow time measures the interval needed to complete all steps in the portfolio workflow. 
  • Flow load indicates the number of epics currently in the system by process state, while 
  • flow distribution measures the amount of each type of work in the portfolio for a given time. 

Focusing on accelerating flow and providing continuous epics is essential for achieving the portfolio’s vision and enterprise business objectives.

Hypothesis-driven Development

Hypothesis-driven development encourages experimentation and learning through iterative, data-driven development. By evaluating hypotheses and adapting plans based on evidence and emerging information, organizations can make more informed decisions and quickly respond to market or customer needs changes.

Validation and Adaptation

Regularly validating assumptions and adapting plans based on emerging information and evidence is key to effective decision-making. Organizations can measure their competency in achieving business agility using the SAFe Business Agility assessment and the LPM core competency assessment. These assessments help organizations understand their proficiency in Strategy and Investment Funding, Agile Portfolio Operations, and Lean Governance, enabling them to take targeted actions to improve performance.

Lean Portfolio Management Events

Portfolio Events Overview

The Scaled Agile Framework (SAFe) suggests a set of events for operating a portfolio, which include:

  1. Strategic Portfolio Review
  2. Portfolio Sync
  3. Participatory Budgeting

However, it has been observed that these events may not be optimized for effectiveness in all contexts. It’s essential to strike a balance between too few and too many meetings, finding the “sweet spot” that ensures the effectiveness of each event without being overwhelming.

One challenge with the Lean Portfolio in SAFe is that it provides solutions without explicitly discussing the problems these solutions aim to solve. For effective customization, it’s important to understand the problem space first.

Revisiting the Purpose of Portfolio Events

The primary purpose of portfolio events is to make decisions related to moving forward with various aspects of the portfolio and to validate that activities outside the events are progressing correctly. To better understand which aspects need attention, we can examine the key elements or “Alphas” of a portfolio:

  1. Vision: The Portfolio Canvas describes the current and future states of the Portfolio Vision.
  2. Changes: Epics describe the changes that the Portfolio wants to make.
  3. People: Development Value Streams contain teams of people that can make the desired changes in the Portfolio.

The number of elements in a portfolio may vary, with some organizations needing more physical representations to make necessary decisions. However, it’s crucial to consider whether these additional elements contribute to the portfolio’s goal of “Value in the sustainably shortest lead time” or if they are adding complexity.

In conclusion, while SAFe’s portfolio events provide a foundation for portfolio management, customization is often necessary to optimize their effectiveness. By understanding the problem space and the key elements of a portfolio, organizations can better tailor their portfolio events to suit their specific needs and achieve the best results.

Fundamental Elements in Lean Portfolio Management

Overview of the Fundamental Elements

A kernel, or the heart of software development, consists of 7 fundamental elements needed for any software development endeavor. These elements can be mapped to the Lean Portfolio Management framework as follows:

  1. Opportunity: At the macro level, for the organization as a whole, it is represented by the Portfolio Vision. Individual opportunities Epics represent it.
  2. Stakeholder: The Portfolio Vision or Epics should describe who the actual people are that are the stakeholders, they could be internal or external to the organization, and it is working with them that identifies the opportunities.
  3. Requirements: Described within the Solution Intent for a Solution within a Development Value Stream.
  4. Software System: Solutions owned by the Development Value Streams.
  5. Work: Features within the Development Value Streams.
  6. Team: The people within the Development Value Streams.
  7. Way of Working: Mostly, the practices that the Development Value Stream is adhering to.

Mapping the Elements to Lean Portfolio Management

The Development Value Streams own everything in the Solution and the Endeavor spaces. The Vision and Epics are physical representations of the Opportunities element and describe the stakeholders that need to be engaged to identify and progress those opportunities.

All three primary elements (Opportunity, Stakeholder, and Team) have a lifecycle of states that they move through. These states illustrate that these elements must exist and have a lifecycle of states they progress through. For instance, a vision in Lean Portfolio Management goes through various stages of development and refinement.

By understanding these fundamental elements and their lifecycles, you can better customize and adapt Lean Portfolio Management practices to your organization’s unique context and needs.

Vision Lifecycle

The vision for the portfolio is an essential element in Lean Portfolio Management. The vision lifecycle is relatively simple and can be broken down into two main activities:

  1. Understanding the needs.
  2. Gaining a generic, portfolio-level understanding of the solution.

Regardless of whether the vision is a series of visions that replace one another or one that is continually updated, what’s important is that a vision exists to provide intent to the portfolio.

Epics Lifecycle

Epics progress through a lifecycle of states with various activities that need to occur:

  1. Requested: Epics are proposed, and decisions are made regarding the value and priority of the idea. These decisions can be made during a scheduled event or on an as-needed basis.
  2. Forecastable: The Epic Hypothesis Statement, including the elevator pitch and measurements to assess the achievement of intended outcomes, is prepared. Initial cost/effort estimates are also added.
  3. Review: Development of the full Lean Business Case by the Epic Owner. This can be done outside of scheduled events and may require collaboration with different parts of the organization.
  4. Approval: Lean Portfolio Management approves the epic, signaling to Development Value Streams that they should consider drawing features from it. This decision typically occurs during a scheduled event.

Development Value Streams Lifecycle

The Development Value Streams lifecycle includes several key activities:

  1. Seeded, Formed: Deciding the structure of Development Value Streams and who needs to be part of them.
  2. Collaborating, Performing: Regular oversight from the portfolio level to ensure teams are running smoothly, regularly delivering value, and addressing impediments as they arise.

By understanding the lifecycles of these primary elements (Vision, Epics, and Development Value Streams), you can better customize and adapt Lean Portfolio Management practices to your organization’s unique context and needs.

Introduction to Lean Portfolio Management Events

Epics go through a lifecycle that involves the progressive elaboration of a business case and, if approved, further progress through implementation. Understanding the events that perform, schedule, or track the activities affecting the operation of the portfolio is essential for effective Lean Portfolio Management.

To explore the scheduled events for Lean Portfolio Management, it’s essential to consider the following:

  1. What decisions need to be made?
  2. What information is needed?
  3. Where does the information come from?
  4. What is the frequency of the events?

Purpose and significance of LPM events

  • LPM events are a foundation for aligning strategic objectives, portfolio execution, and budget allocation.
  • They facilitate communication, decision-making, and synchronization among stakeholders to optimize the value delivered by the organization.
  • By conducting these events on a regular cadence, organizations can effectively manage their portfolio, adapt to changes in the market, and continuously improve their processes.

Typical cadence for LPM events

  • Strategic Portfolio Review: Quarterly
  • Portfolio Sync: Monthly
  • Participatory Budgeting: Semi-annually

Strategic Portfolio Review

The Strategic Portfolio Review focuses on two main decisions:

  1. Vision: Determine the vision for the portfolio, including measurable outcomes and metrics.
  2. Set of Approved Epics: Decide on the set of approved Epics that provide the Development Value Streams with the intent of what they should be working on.

Information is needed from the Portfolio Vision and the Epics themselves to make these decisions. The Strategic Portfolio Review might be better split into two separate meetings: one focusing on updating the vision and the other on determining the set of Epics for the next timebox.

Strategic Portfolio Review (Vision)

This event focuses on updating or creating the Vision. It needs input from the last set of PI or quarterly reviews and PI or quarterly planning to understand what was completed in the previous PI and what the teams think they can do in the current PI. It should happen within the first Iteration within the Program Increment, and its output is an updated Portfolio Vision.

Strategic Portfolio Review (Epic Cancellation & Approval)

This event focuses on the set of Epics that should be in play for the next Program Increment. It needs input from the Portfolio Vision and the Epics themselves, either in the form of Business Outcomes and Leading Indicators to support the continuation of the Epic and avoid cancellation or a Lean Business Case for those Epics seeking Approval. This event should happen during the Program Increment, and its output is a Prioritized Set of Epics.

Patterns & Anti-Patterns

  • Increasing Number Of Epics: Focus on cancellation before approval to avoid accumulating too much Work-In-Process and spreading the fixed capacity/effort across more work.
  • Everything Is Approved: If every idea proposed passes through the Approval process, question the value of the process. Ideally, only a few ideas should make it through, reflecting a set-based approach.
  • Lack of Participation: Present decision-makers with the economics of the situation to emphasize the importance of their participation in steering the consumption of investment in people and resources.

Understanding and organizing these portfolio events will help you better manage the lifecycle of Epics and the overall Lean Portfolio Management process.

Portfolio Sync


Portfolio Sync is a crucial event in Lean Portfolio Management, serving as the Daily Stand-up or Scrum-of-Scrums equivalent at the portfolio level. The main purpose of this event is to provide visibility into the portfolio’s progress toward achieving its objectives, facilitate coordination across value streams, and address issues that may arise in the epic progress and development of value streams.

Decisions Made in Portfolio Sync

During Portfolio Sync, participants decide on assisting epics needing help and coordinating development value streams requiring assistance.

Portfolio Sync as a Planning Meeting

Portfolio Sync should be a planning meeting, not a reporting meeting. The event aims to produce a localized plan for collaborations between participants over the timebox between the current meeting and the next one. Focusing on planning can keep the meeting short and focused, allowing those not involved in resolving issues to continue their work.

Portfolio Sync Sub-Meetings

Portfolio Sync (Epic Progress)
  • Objectives and focus: The Epic Progress sub-meeting ensures that activities to progress epics through their lifecycle happen efficiently. It provides a forum for Epic Owners to raise impediments and the group to start planning how to resolve them.
  • Facilitating as a planning meeting: The meeting should be facilitated as a planning event, with the group scheduling the work needed to resolve impediments and identify the necessary participants.
  • Recommended cadence: To provide sufficient feedback to the portfolio, holding these meetings at least once per iteration is recommended. They should be short, aiming for an hour at most.
Portfolio Sync (Development Value Stream Coordination)
  • Objectives and focus: The Development Value Stream Coordination sub-meeting addresses issues arising from development value streams.
  • Aligning with the organization’s cadence: To ensure issues are addressed in a timely manner, it is essential to align the meeting cadence with the organization’s agile practices.
  • Recommended cadence: Daily meetings are ideal, but aligning with the Scrum-of-Scrums cadence is also a sensible option. If held daily, meetings should be short, lasting no more than 30 minutes.

Operational Focus of Portfolio Sync

Unlike the Strategic Portfolio Review, which focuses on strategy and vision, the Portfolio Sync has a more operational focus. Topics covered during Portfolio Sync meetings typically include the implementation of epics, the status of KPIs, addressing dependencies, and removing impediments. The meeting provides an opportunity to identify and address any dependencies or impediments that may hinder the execution of initiatives or the flow of value across the organization.

Relationship with the Strategic Portfolio Review

The Portfolio Sync is a frequent touchpoint for stakeholders to discuss portfolio progress and operational challenges. In some cases, the Strategic Portfolio Review may replace the Portfolio Sync, which offers a broader portfolio alignment and strategy perspective.

Setup & Frequency

  • Synchronizing Scaled Daily Scrum events for different levels allows rapid impediments to escalate within the organization.
  • Aligning with Scrum-of-Scrums cadence: Another option is aligning with the Scrum-of-Scrums cadence within the Agile Release Train, ensuring efficient team communication.

Patterns & Anti-Patterns

Reporting instead of planning: This classic stand-up anti-pattern occurs when participants focus on reporting their work instead of planning collaborations. Fostering cooperation and shared investment in the portfolio is essential to fix this.

Participatory Budgeting

Objectives, setup, and Frequency of Participatory Budgeting Events

  • Participatory Budgeting is an LPM event that aims to involve stakeholders in the decision-making process for allocating the portfolio budget across solutions and initiatives.
  • It is typically conducted semi-annually to balance agility and commitment while avoiding unnecessary disruptions to ongoing work.
  • Participatory Budgeting events need to occur far enough in advance of the investments changing so that those changes can be enacted. It is suggested to run it every six months, involving between 50 and 100 people.

Involving stakeholders in budget investment decisions and inputs to the process

  • Participatory Budgeting promotes transparency and collective decision-making by including stakeholders from various parts of the organization in the budget allocation process.
  • Inputs to the decision-making process are vision, baseline solution investments, proposed solution initiatives, and total available funds.
  • This collaborative approach ensures that stakeholders’ diverse perspectives and expertise are considered when determining how to invest the portfolio budget most effectively.

Adjusting value stream budgets and balancing agility and commitment

  • Following the Participatory Budgeting event, adjustments are made to value stream budgets based on the collective decisions made by stakeholders.
  • These adjustments help to align value stream funding with the organization’s strategic objectives and ensure that resources are allocated optimally to deliver the greatest value.
  • Participatory Budgeting balances the need for agility and the ability to commit to a specific course of action, allowing organizations to respond to market or strategic direction changes while maintaining stability and predictability for teams and value streams.

Patterns & Anti-Patterns

Institutional Inertia: A challenge with Participatory Budgeting is the tendency for organizations to maintain the status quo rather than pursuing value relentlessly. A Development Value Stream should be dropped if it is no longer valuable or viable. Avoid inventing work to keep a Development Value Stream busy, as it wastes money that could be used for more valuable purposes.


Recap of key LPM events and their role in value stream coordination:

  • Lean Portfolio Management events, including Strategic Portfolio Review, Portfolio Sync, Participatory Budgeting, and Value Stream Mapping & ART Identification, are critical in aligning and synchronizing value streams with the organization’s strategy, vision, and objectives.
  • These events provide a structured framework for communication, decision-making, and adaptation, enabling organizations to effectively manage their portfolio and deliver value in a dynamic environment.

The impact of effective LPM events on Lean Portfolio Management

  • Effective LPM events foster a culture of collaboration, transparency, and continuous improvement, leading to improved portfolio performance and value delivery.
  • By conducting these events regularly, organizations can maintain alignment, adapt to change, and optimize their investment in strategic initiatives.
  • Periodically re-evaluating Development Value Stream setups ensures they remain fit for purpose, align with the organization’s objectives, and respond to market or strategic direction changes.

Future Trends and Challenges in LPM Events

As organizations evolve and adopt new practices, LPM events must also adapt to maintain effectiveness and relevance.

Challenges may include incorporating new metrics or KPIs, integrating new tools and technologies, and fostering collaboration in distributed or remote teams.

By staying current with industry trends and best practices, organizations can continue to refine their LPM events and maximize their impact on value stream coordination and Lean Portfolio Management.

Implementing Lean Portfolio Management


This section will discuss implementing Lean Portfolio Management (LPM) in an organization, highlighting the benefits, challenges, and best practices for a successful LPM implementation.

Benefits of Implementing LPM Early in the Transformation Roadmap

  • Aligns strategy and execution: Implementing LPM early helps organizations align their strategy with execution, ensuring that all efforts are focused on achieving the desired outcomes.
  • Promotes transparency and visibility: Early implementation of LPM fosters a culture of transparency and visibility, enabling stakeholders to track progress and make informed decisions.
  • Supports continuous improvement: LPM encourages organizations to embrace continuous improvement, refining processes and practices for better results.
  • Enables faster delivery: By streamlining processes and focusing on value, early LPM implementation accelerates the delivery of valuable solutions to customers.

A brief overview of implementing LPM and its challenges

Implementing LPM requires a shift in mindset, organizational structure, and processes. Organizations may face challenges such as resistance to change, lack of understanding of Lean principles, and the need for stakeholder alignment. However, these challenges can be overcome with the right approach, resulting in improved efficiency, decision-making, and adaptability.

Assemble Your Leadership and Establish the LPM Function

  1. Introduction to Implementing the LPM Function: Establishing the LPM function involves defining roles and responsibilities, assembling a team of leaders, and setting up an operating structure.
  2. Roles and Responsibilities: Key roles in the LPM function include portfolio managers, product managers, and agile coaches, among others. These individuals are responsible for guiding the organization’s strategic direction, prioritizing work, and ensuring the successful delivery of value.
  3. Assemble your leaders: Identify individuals with the skills, knowledge, and experience needed to lead the LPM function and create a high-performing team.
  4. Define the Lean Portfolio Management function: Establish the scope, objectives, and responsibilities of the LPM function within the organization.

Funding and Operating Structure

  1. Find funding: Identify and secure funding sources for the LPM function, including reallocating existing resources and identifying new funding opportunities.
  2. Shift to stable yet iterative funding by value stream: Move away from traditional project-based funding and adopt a value stream-centric funding model that supports iterative planning and delivery.
  3. Build an operating structure: Establish a governance and operating structure for the LPM function, including decision-making processes, communication channels, and performance metrics.

Implement a Lean Workflow

  1. Establish a Portfolio Kanban: Implement a Portfolio Kanban to visualize and manage work at the portfolio level, enabling better prioritization and resource allocation.
  2. Set up regular LPM events: Schedule regular events, such as strategy and investment reviews, to ensure ongoing alignment and communication within the organization.
  3. Implement a lean workflow: Adopt Lean principles and practices to streamline processes, eliminate waste, and improve the flow of value through the organization.

Shifts to Consider in Implementing LPM

  1. Shift to outcome-focused measurement: Focus on measuring outcomes rather than outputs to track progress and ensure alignment with strategic objectives.
  2. Shift to continuous flow and improvement: Embrace a continuous flow and improvement culture, regularly reviewing and refining processes for better results.
  3. Shift to less governance and more autonomy: Reduce bureaucratic governance and empower teams to make decisions and drive innovation.
  4. Shift to focus on customer value first: Prioritize initiatives and projects that deliver the most value, ensuring a customer-centric approach.

Overcoming Resistance to Adopting LPM

  • The Resistance of Leadership: Address any resistance from leadership by demonstrating the benefits of LPM, providing education on Lean principles, and highlighting successful LPM implementations in other organizations.
  • The Resistance of Middle Management: Overcome resistance from middle management by involving them in the LPM implementation process, providing training, and addressing their concerns about changes to roles and responsibilities.

Prerequisites for Successful LPM Implementation

  • Understanding of Lean principles: Ensure the organization’s leaders and teams have a solid understanding of Lean principles and practices.
  • Clear strategic vision: Develop and communicate a vision to guide the LPM implementation and align efforts across the organization.
  • Stakeholder alignment: Engage and align stakeholders at all levels of the organization to support the LPM implementation and ensure its success.
  • Data-driven decision-making: Adopt a data-driven approach to decision-making, using metrics and analytics to inform LPM processes and decisions.
  • Cross-functional collaboration: Foster a culture of cross-functional collaboration, breaking down silos and enabling teams to work together effectively.
  • Process standardization: Standardize processes and practices across the organization to ensure consistency, efficiency, and scalability.

LPM and Organizational Change

Introduction to LPM and Organizational Change

Implementing Lean Portfolio Management (LPM) often requires significant organizational change, as it entails shifts in mindset, structure, and processes. These changes may include adopting new ways of thinking, reorganizing teams around value streams, and embracing Lean and Agile principles. It is essential to understand the impact of these changes and plan effectively for their successful implementation.

Change Agents and Transformation Stages

Change agents are crucial in leading the LPM implementation and guiding the organization through various stages of transformation. These individuals may include senior leaders, middle managers, or other influential figures who deeply understand LPM and its benefits. They are responsible for the following:

  1. Communicating the vision and benefits of LPM to stakeholders at all levels
  2. Engaging and motivating teams to embrace Lean and Agile practices
  3. Facilitating collaboration and cross-functional teamwork
  4. Monitoring progress and providing ongoing support throughout the transformation journey.

The transformation process typically unfolds in stages, including:

  1. Awareness and alignment: Stakeholders become aware of the need for change and align around a shared vision for LPM.
  2. Preparation and planning: The organization develops a detailed plan for implementing LPM, including identifying change agents, defining roles and responsibilities, and establishing success criteria.
  3. Execution and adaptation: Teams begin to adopt LPM practices, iterating and adapting as they learn and gain experience.
  4. Consolidation and optimization: LPM processes and practices are refined and optimized to ensure long-term success and continuous improvement.

Change Portfolio and Measuring Success

A change portfolio is a valuable tool for outlining the initiatives and projects required to implement LPM within the organization. It provides a clear roadmap for change and helps to prioritize activities based on their impact and feasibility. Key components of a change portfolio include:

  1. A list of initiatives and projects aimed at implementing LPM
  2. A timeline for executing these initiatives and projects
  3. Resource requirements, including personnel, tools, and training iv. Dependencies and risks associated with each initiative or project

Establishing metrics to measure success and track progress is also essential for ensuring the effectiveness of LPM implementation. These metrics may include:

  1. Time-to-market for new products or features
  2. Percentage of projects aligned with strategic objectives
  3. Resource utilization and efficiency
  4. Customer satisfaction and feedback

By regularly monitoring these metrics, organizations can gauge the impact of LPM adoption, make data-driven decisions, and continuously improve their LPM processes and practices.

Continuous Improvement and Celebrating Success

  • Add upgrades and clarity: Continuously improve LPM processes and practices by incorporating feedback, refining strategies, and enhancing communication.
  • Celebrate improvements: Recognize and celebrate the successes achieved through LPM implementation, fostering a positive culture and reinforcing the benefits of LPM adoption.

Lean Thinking and Principles

Introduction to Lean Thinking

Origins and History of Lean Thinking

Lean Thinking is a management philosophy from the Toyota Production System (TPS) in the mid-20th century. Developed by Taiichi Ohno, the primary objective of Lean Thinking is to eliminate waste while maximizing customer value. Over the years, Lean Thinking has evolved and has been adopted by various industries beyond manufacturing, including software development and service delivery.

Core ideas and concepts

The core ideas and concepts of Lean Thinking include the following:

  • Customer value: Focus on delivering what the customer values most
  • Elimination of waste: Identify and eliminate activities that do not add value to the customer
  • Continuous improvement: Constantly seek ways to improve processes and practices

Lean Principles

Value focus

A value-focused organization aims to identify and deliver what customers truly value. This involves understanding customer needs, prioritizing initiatives that provide the most value, and continuously delivering high-quality products and services that meet or exceed customer expectations.

Waste elimination

Waste elimination is a key principle of Lean Thinking. It involves identifying and eliminating activities or processes that do not add value to the customer. This can include reducing wait times, minimizing rework, and avoiding unnecessary bureaucracy or approvals.

Continuous improvement

Continuous improvement is the ongoing effort to refine and enhance processes, practices, and products. It involves regularly assessing performance, identifying opportunities for improvement, and implementing changes to optimize value delivery and eliminate waste.

Value Streams and Mapping

Definition of value streams

A value stream is an organization’s activities and processes to deliver value to its customers. It includes all the steps required to transform an idea or customer request into a tangible product or service.

How to do value stream mapping

Value stream mapping is a visual representation of the flow of value through an organization. It is a critical tool in Lean Thinking, as it helps organizations identify bottlenecks, waste, and opportunities for improvement in their processes. By understanding the flow of value, organizations can better align their activities and resources to deliver maximum customer value with minimal waste.

A high-level overview of the process

The process of value stream mapping involves the following:

  1. Identifying the product or service being analyzed
  2. Defining the start and end points of the value stream
  3. Mapping the flow of materials, information, and work through the value stream
  4. Identifying opportunities for improvement, such as waste elimination or process optimization

The Principles of Lean Portfolio Management

Shift to customer-centricity within a larger context

Organizations must focus on customer-centricity and understand how their actions impact the larger social and environmental context. This requires a clear line of sight to the customer, the organization’s vision, and the broader context.

Communicate an adaptive strategy with transparency

An adaptive strategy allows organizations to respond effectively to changing environments. This requires feedback, learning, and adaptation to be core competencies for success. A transparent communication process is essential for an effective adaptive strategy.

Align around common goals and adapt as needed

Clearly defined and measurable business outcomes should guide organizational strategy. Feedback loops ensure that goals adapt to the organization’s evolving needs and that any changes are communicated transparently.

Define, prioritize, and deliver business value frequently

Business value should be articulated in clear language using agreed-upon metrics. Work should be delivered in small increments and as frequently as possible to enable rapid feedback, learning, and adaptation.

Structure in value streams

Organizational structures should be rethought to focus on identifying and delivering value. Cross-functional, collaborative, stable teams are responsible for achieving business outcomes and sharing their skills and knowledge.

Take accountability for outcomes over outputs

Teams should take ownership and accountability for delivering value to their customers and supporting organizational outcomes. Outcomes should be the primary focus, with outputs measured as steps towards achieving them.

Optimize flow and reduce waste across the whole system

Applying systems thinking to Lean Portfolio Management allows a comprehensive understanding of how value streams converge to achieve organizational goals. Waste should be reduced or eliminated anywhere in the system, and adaptivity to changing needs should be a priority.

Shorten planning and funding cycles

Shorter funding and planning cycles are essential for effective Lean Portfolio Management. This allows for responsive funding for new opportunities and goals as they emerge. Fund value streams rather than projects and empower decision-making with frequent feedback and value-delivered reporting.

Balance capacity and demand

Limit work in progress (WIP) at every level in the portfolio. Ruthless prioritization ensures that the highest-value work is done first. Adopt a pull-based flow where teams pull from a prioritized funnel of work, maximizing value while managing costs.


Lean Portfolio Management is a powerful approach that helps organizations navigate today’s rapidly changing business landscape. By adopting LPM, businesses can streamline their processes, make data-driven decisions, improve strategic alignment, and deliver value to customers more quickly. Implementing LPM may require significant organizational change, but its benefits in increased efficiency, agility, and resilience make it a worthwhile investment for any organization looking to thrive in the digital era.