A few years ago, a group of researchers asked more than 8,000 managers at global corporations to name the greatest challenge their companies would face in executing strategy over the next few years. Nearly one-third said they were worried about adapting to changing market conditions.
The problem, the researchers wrote in an article in Harvard Business Review, was not that companies fail to adapt. Rather, they either react too slowly to make the most of opportunities or mitigate emerging threats (29%) or react quickly but lose sight of company strategy (24%).
Organizations invest enormous amounts of time and energy into the annual planning process – weeks or months of day-long sessions, in some cases. Often, though, they find themselves in the middle of initiatives months down the road only to discover that a project is no longer aligned with the organization’s strategic goals. In other cases, competing priorities force individual contributors to make difficult decisions about how to invest their time and resources, leading to issues with quality or missed deadlines.
Companies are turning increasingly to Lean Portfolio Management (LPM) techniques to combat these challenges. LPM, according to Scaled Agile, aligns strategy and execution by applying Lean and systems thinking to strategy and investment funding, Agile portfolio operations, and governance. It requires a shift from annual planning and budgeting cycles with fixed scopes to more frequent, iterative planning. In doing so, it enables business agility and innovation. Companies are using LPM techniques to reduce burnout, respond to changing strategic priorities in a timely fashion, and help teams focus on the most important work first.
Here’s how to reap the benefits of LPM in your organization
1. Understand your portfolio
• Catalogue the work that currently exists: You need to understand all of the initiatives in motion – anything that requires a team’s time and effort – regardless of whether the work was planned.
• Document the process this work goes through: Even if it’s a rough process, a process exists. Put it in writing.
• Visualize and merge the two: Align the work with the appropriate stages of your process, using a Kanban-esque visualization. Post the visualization where everyone can see it.
2. Optimize your portfolio
• Define your intake processes: Describe how projects get into the backlog, the stages before development begins, and what “done” means at each stage. This process should curate a light business case that provides just enough information to justify investing in the next stage of analysis.
• Break down the work: Try to divide work into similarly sized bites and focus on the value it delivers to the organization.
• Implement work-in-progress limits: Restrict the maximum amount of work items in each stage to allow your teams to focus, increasing the “flow” in the system and the value they can deliver over time. Limit context switching and multi-threading as appropriate at each stage; remember, you can always revisit these limits.
3. execute in the PORTFOLIO
• Be disciplined: It’s more about what you say “no” to than what you say “yes” to. In an environment with constrained resources – every organization today, really – LPM techniques drive investment in a few of the best projects. Visualizing work allows you to see what’s getting done – and what’s not getting done as a result.
• Measure, measure, measure: Keep track of the business value delivered, how long it takes items of various complexity to flow through, and how long work remains at each stage. Understand where your bottlenecks are and remove impediments to improve your processes.
• Let your people tell you how: Listen to the people who are doing the work; they have the best insight into what’s working and what’s not. Prioritize their feedback and empower them to be successful.
4. Build Your Roadmap
• Plan regularly: Consider the truth behind the saying, “the best laid plans of mice and men often go awry;” in the current business climate, change is a constant. Increase the cadence of your planning sessions (we suggest rolling quarters) in order to “inspect and adapt” the portfolio to ensure continued alignment. You’ll get better at this with practice – and you’ll have a lot of practice given the increased frequency of planning.
• Build a physical visual roadmap: Find a format that works for your team. It doesn’t need to be anything fancy and can be as simple as Post-it Notes placed in quarterly buckets or a now-soon-later framework that is updated every three months. Your work in-progress is being tracked in detail by your teams, so you can focus your efforts on “soon” and know just enough about what’s coming “later.”
•Win it in the swim lane: Look between products to understand dependencies and interactions to deliver greater value and help product owners plan more effectively.
The global economy and digital disruption put pressure on organizations to work differently and under greater uncertainty, and LPM can enable you to deliver innovation at an accelerated pace. Be inclusive and engaged, because transparency and effective adaptation have a direct impact on the bottom line. Bring the right stakeholders to the table periodically to make critical decisions about your portfolio. Build their muscle as a team to frequently check and adjust, leveraging frank, informed discussions about priority, value, cost, and capacity. Challenge leaders to champion the effort actively to reduce risk and remove obstacles.
You’ll soon find that understanding, optimizing, and executing in the portfolio, then building your roadmap, will enable you to prioritize, visualize, and frequently align. You’ll wonder how you ever functioned without LPM.