Aligning Portfolio Strategy with a Common Enterprise Lean Portfolio Management

Feb 4, 2022 | Agile Delivery, Apptio TargetProcess, Conference, Training & Workshops

Seeking guidance in digital transformation?

How a common, enterprise-wide Lean Portfolio Management (LPM) foundation is the stepping stone to Business Agility.

In today’s quickly changing world many organizations fail to get satisfying outcomes in the environment of abundant opportunities. Despite the fact that most people think that the Covid-19 crisis brings the need for businesses to practice conservation and consolidation – why not capitalize on opportunities? The current business climate is actually brimming with new and exciting pockets of chances – you just need to know how to spot them, and what to do with them. If you feel that your digital strategies are failing to connect to your delivery capabilities – it might be high time you changed your approach to portfolio management which is bound to be stuck in a traditional process in this case. The failure to capture valuable opportunities and adapt to new needs quickly – these are the main indicators that one falls behind agility and transformation.

For a considerable period of time, up until the digital age, large companies, enterprises and organizations have made leaps and bounds in the way they operate. Successful businesses tapped into professionals who were the proponents of traditional project management approaches. As a result, many other enterprises followed suit – structuring themselves in a siloed approach. However, as the digital space expanded, with companies like Google and Amazon at the forefront of using automation and cloud technologies, many enterprises understood the value of benefitting from these digital capabilities. As agile grabbed hold in the software sector and expanded, enterprises began adopting it to projects and initiatives. However, with the onset of the digital age, these enterprises have found themselves in a rut; the motions of agility were present (events, teams, etc.) but its true essence was lacking. Businesses just haven’t achieved the full might of agile – business agility which is fully implemented when organized around value, value streams, or digital platforms. Transformation efforts have been successful in enabling “big A” Agile in an organization (doing the ceremonies) but fail to achieve “lower case a” agile – business agility. Digital transformations are largely information technology (IT) centric – they begin due to the speed at which the IT landscape changes and an increasing need to change how work is done and prioritized to accommodate those changes. As such, other departments are afterthought, left to catch up as IT propels to the future. It is easy to claim that disparity in the transformation has adverse effects on the entire organization – now focused on change management efforts to bridge the gap between IT and other departments instead of executing strategy and focusing on its business.

The solution out of this bottleneck is an interim step – a common Lean Portfolio Management (LPM), the foundation on which the enterprise can grow, scale, and learn in order to become one step closer to revealing true business agility. A common and dedicated foundation should be flexible to allow for different flows that make an organization unique. The flexibility enables learning to occur on a small scale before the enterprise commits to a total restructuring around value streams or digital platforms – breaking the traditional siloed approach and unlocking portfolio management at scale. Nevertheless, it is important to note that this is just an interim step – the true transformation neither stops after the common foundation is implemented, nor when business agility is achieved. It is a guide of elements that brings the enterprise out of the rut and on its way to unlocking business agility. As complex as portfolio management can get, the common foundation and interim step can merely be described in 3 dimensions (Demand, Supply, and Time), broken down into 5 elements (Common taxonomy, common teaming structure, common prioritization mechanism, common work intake, and common cadence and synchronization) that are tightly intertwined. We will explore the three dimensions and five elements more precisely, defining and understanding the value of each. As with most transformations, the whole is greater than the sum of the parts, and we will explore how successful implementation of the interim parts will bring even more value to the enterprise, as well as this interim step will take the enterprise from the drudgery and take it one step closer to implementing business agility.

In order to fully understand all five elements, we must first define the three dimensions and explore what they are: Demand, Supply and Time. Demand refers to the customer’s demand – the work required to be done by the enterprise in order to provide value to the customers and ultimately make money. To complete the work, a Supply must be given into the demand; a group of people, or employees that work to progress through the customer’s demand and the organization’s initiatives. The third dimension is Time – referring to the cadence and frequency of a decision making process, time to complete the work at hand, time to learn, shift and adapt on all levels – individuals and teams, to organizations and enterprises.

Consequently, aligning on the three dimensions has brought us to the first element: common work taxonomy. Just as we have defined and given examples to introduce the reader to our ideas, likewise an enterprise must build and use common work taxonomy as well. Employees must speak the same language when referring to everything: small items like a piece of work, a feature, or product; all the way to larger ideas such as initiatives, strategy and vision. In addition, common work taxonomy enables consistent sizing of the demand and, therefore, equivalent comparison for each item at any given level of the hierarchy – comparing apples to apples. This element spans across all three dimensions – demand, supply, and time. Common taxonomy must exist in the work that needs to be accomplished, the teams and supply, and the meetings, ceremonies, events, and increments of time. When someone refers to a feature, the audience must understand that a feature is different in nature than an epic, or a user story, and in terms of its application to the business, product, or service that is being produced. Similarly, an Agile Release Train (ART) must imply the same concepts from department to department. Otherwise, unfortunately, supply analysis breaks down at the enterprise level. Finally, the same might be applied to increments of time. The definition of a program increment in one department must have the same meaning in another. This is especially true on the higher levels of an enterprise, where the larger decisions (like pivot, kill, or persevere) take place. Without a common taxonomy, confusion begins to take hold, as well as unwelcome competitions among the departments, including IT, PMO, and business; therefore, increasing the change management effort is required to make the transformation successful.

Common work taxonomy unlocks a critical dimension that has long been a bane of large-scale digital transformations – Demand. Having everyone speaking the same language influences how each department describes the concept of work. An enterprise-standard way of describing work allows for each piece to be sized appropriately and identify the value it will bring once implemented. This is true across all departments; it is definitely not limited just to one. It is safe to claim that size and value are the two key factors in our next element (and first out of two under Demand): common prioritization mechanism. Since the enterprise is now comparing apples to apples, systems thinking can be engaged to optimize the whole instead of each small piece. Understanding how a particular piece of work in one department stacks up against another in different one, enterprises can focus energy, manpower, and money towards those items that cut corners for both the customer and the business. There are many forms of prioritization mechanisms: simple ones like return on investment (ROI), cost, duration; or more complex ones such as weighted shortest job first (WSJF) or customer-driven prioritization (KANO Model). The best and right one varies from enterprise to enterprise; what matters most is that one common prioritization mechanism is implemented. Regardless, prioritization of the demand must be common and consistent across the enterprise, otherwise the value becomes obscured. Since comparisons no longer have weight to them, different and distinct prioritization mechanisms in each department break down economies of scale.

It is worth mentioning that a common prioritization mechanism means nothing if each department in an organization has its own particular work intake. The second element under Demand is a common work intake system, tied at the hip with prioritization mechanism, where neither can live without the other. A common work intake system intertwines innovation, ideas, and work into a single list that can then be prioritized. Without it, competition arises (“that’s not what I was told to do”), inter-departmental friction begins to fester, and the enterprise can no longer focus on what is most important or best for it (and ultimately the customers). Instead, departments will focus on the things that are priority only for them. A common work intake system also allows for a targeted view of incoming work that leadership can use to gauge which work to prioritize. Furthermore, guiding investments by horizon and applying capacity allocation becomes much easier. A single flow of work is easier to maintain and qualify than multiple streams (where some might be hidden). With the work intake system and prioritization mechanism in place, the dimension of Demand has been achieved – quantifying and qualifying all work that is coming into the enterprise and prioritizing it to bring the utmost value to the enterprise and its customers.

However, in order to achieve that value, work must be burned down. The flip side of Demand is Supply – a supply of people to unlock the value that comes along with ideas. The element that resides in supply – and our fourth one – is a common teaming structure. In order to complete work, there needs to be a group of people, or a team, or even a team of teams. A common teaming structure is vital to understand the supply, the amount of work that can be completed, progress of investments, and, more importantly – the gaps in supply where there is not enough to keep up with demand. Matching supply to the demand reveals critical information about how much work can get completed, and which part of it will not get done. A wholistic teaming approach standardizes the gaps in the available workforce, allowing the organization to accommodate its strategic goals by shifting the workforce to the areas that are higher priority.

Finally, the third dimension to portfolio management is time. The frequency and cadence in which meetings and events occur must be common within the organization – whether that is reviewing strategic investments every quarter, or products every month. The fifth and final element is a common cadence and synchronization. These high-level meetings and events grant even more flexibility to change and pivot holistically. Once in place, every month or quarter (or whatever cadence the enterprise sets) the outcomes can be digested in an enterprise-wide way to see what has been done, how it aligns to the forecasted plan or the hypotheses, and pivot and make decisions more frequently than the traditional year-long cycles. Without a common cadence, the supply and common teaming structures begin to break down. Frequent evaluation of the plan, or high-level strategies enables a check of the health of the portfolio. It answers questions like “are we going in the right direction? Are we achieving the results we hypothesized? Should we continue with this strategy or pivot to a new one?”

By capturing such elements as data in the system, enterprises can start building their own databases and treat data as an enterprise asset, which can help departments other than IT (such as finance, human resources, or marketing to name a few) with important topics such as total cost of ownership, strategic planning, and 1/12th billing. Furthermore, these data also contain massive amounts of metrics – both vanity metrics (like number of features completed) and performance, or actionable, metrics (net promoter score, e.g.) – which are critical pieces of information required for any enterprise to make important decisions in the digital age.

o sum up, all five elements have distinct properties that come up with some positive outcome towards helping an enterprise adopt agile in a more scaled fashion. Each component will bring improvement in specific ways, but enterprises will not see true value and progress toward business agility unless all the pieces fall into place. The collection serves almost as a roadmap – milestones to focus while taking the interim step. Instead of dedicating time and people (read: money) to change management efforts, the setup of the five elements as the common foundation is the change management effort itself. It will involve bringing in stakeholders that traditionally are not present in transformations – those outside of IT. Departments, especially those outside of IT, have their own flow of decision-making, their own process of how generated ideas become reality – some of them are so intelligent that they have become trade secrets. The interim step described above is flexible enough to allow each department to continue these flows and processes, with a greater outcome and a greater enterprise-wide view. With this flexibility, the work can be done the way it needs to, based on the varying capabilities each department has – allowing each of them to generate its own knowledge, absorb the benefits of the “new way” of working, and begin to identify how to collapse the business into value streams or digital platforms. As simple as it sounds, it is essential that the departments themselves do this work. Transformation is not about consultants coming in and telling the business how to organize, how to do the job, or even hand out playbooks; transformations cannot be implemented – they are not done TO or FOR an enterprise, they come from within the enterprise. This is the key as to why the common foundation is just an interim step; it will not show how the enterprises need to structure themselves to unlock business agility overnight. It will, however, enable enterprises to get out of the rut and allow them to identify how to properly break down the traditional silos, organize around value streams, and decide what needs to be done to facilitate business agility.

In today’s highly competitive business landscape, one needs to cut across multiple business processes, re-assessing the way to respond to change and customer demands as a business. Leaders are those that can transform shortfalls into captivating innovations and competitive advantages that leave customers wanting more.

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