Większość dialogów dotyczących strategii kończy się rozmowami dyrektorów o

sprzecznych celach, ponieważ… nikt nie wie dokładnie, co oznaczają wizja i

strategia, i nigdy nie ma dwóch osób, które do końca zgadzają się co do tego, które
tematy należą do których. Dlatego też, gdy prosisz członków zespołu kierowniczego
o opisanie i wyjaśnienie strategii korporacyjnej, często otrzymujesz skrajnie różne
odpowiedzi. Po prostu nie mamy dobrej dyscypliny biznesowej do konwergencji w
kwestiach w tym streszczeniu.

—Geoffrey Moore, Escape Velocity

Lean Portfolio Management

LPM provides an alignment and governance model for a specific portfolio, which
contains a set of Development Value Streams (DVS) for a business domain in an Enterprise.
Each DVS builds, supports, and maintains Solutions for Operational Value Streams (OVS).
These solutions are delivered by the OVS to the enterprise’s external or internal
Customers. Examples include developing an e-commerce website, medical device, or
satellite and developing and deploying a software application within an enterprise for
internal customers.

LPM is one of the seven core competencies essential to achieving Business Agility. Each
core competency is supported by a self-assessment, enabling the enterprise to assess
its proficiency. The Measure and Grow article provides a competency assessment and
recommends improvement opportunities for implementing LPM.

Why Lean Portfolio Management?

Traditional approaches to portfolio management were not designed to compete in the
‘age of software and digital.’ Enterprises face a higher degree of uncertainty and must
deliver innovative solutions faster. Many legacy portfolio practices remain despite
massive market changes and how businesses operate in the digital era.

Modernizing portfolio management is critical to supporting the Lean-Agile way of working

and competing in this new reality. Fortunately, many enterprises have already traveled
this path, and the change patterns are shown in Figure 1.

Figure 1. Critical shifts in portfolio mindset and practice

LPM has the highest decision-making and financial accountability for a portfolio’s
solutions and development value streams. The people who fulfill the LPM function have
various roles and titles and often reside in different parts of the organization’s hierarchy.
Because LPM is vital to the enterprise, executives and business owners who understand
the financial, technical, and business contexts hold strategy and investment funding
responsibilities. They are accountable for the overall business outcomes and addressing
the challenge of defining, communicating, and aligning strategy with execution.

Figure 2 illustrates the three dimensions of LPM, followed by a brief description and a
set of roles needed for its responsibilities.

Figure 2. The three dimensions of LPM

1. Strategy & Investment Funding ensures the entire portfolio is aligned and funded to
create and maintain the solutions needed to meet business targets.
2. Agile Portfolio Operations coordinates and supports decentralized ART execution and
fosters operational excellence.
3. Lean Governance supports oversight of spending, audit, compliance, expenditure,
measurement, and reporting.

The following sections describe these dimensions.

Strategy and Investment Funding

Strategy and investment funding ensures the entire portfolio is aligned and funded to
create and maintain the solutions to meet business targets. An enterprise can only
accomplish its ultimate business objectives by allocating the right investments to building
the right things.

However, portfolio strategy is more than prioritization and selecting the best investments.
The portfolio needs to understand its role in achieving the enterprise strategy. Therefore,
the LPM function should understand the portfolio’s current state, develop a plan to
evolve to a better, differentiated future state, and continuously adjust the vision and plan
to address the changing business context.

The strategy and investment funding responsibilities (Figure 3) require collaborations

among enterprise executives, Business Owners, and Enterprise Architects, including
portfolio stakeholders and other technologists. Each responsibility is described in the
sections that follow.
Figure 3. The strategy and investment funding collaboration and responsibilities
Connect the Portfolio to the Enterprise Strategy
The portfolio strategy should support the enterprise’s broader business objectives.
That’s why connecting the portfolio to the enterprise strategy is the primary responsibility
of the strategy and investment funding collaboration.

Moreover, linking the portfolio to the organization’s strategy is bi-directional. The portfolio
connects to the enterprise business strategy through Strategic Themes and the portfolio
budget. It provides feedback to the enterprise via the portfolio context (described in the
Enterprise article).

Maintain a Portfolio Vision

The Portfolio Vision describes the future state of its value streams and solutions. The
current and future state difference represents the gap that LPM translates into the vision.

Effective collaboration across the portfolio requires the continuous communication of the
portfolio vision, goals, ideas, and expectations openly and transparently. Business
Owners should frequently communicate the vision and the strategic themes, for
example, during PI planning, all-hands company meetings, and throughout the PI.

Gaining portfolio alignment requires people to work toward a shared goal and purpose
beyond any individual, team, ART, or value stream. This ‘one portfolio’ mindset is critical
to achieving success toward the strategic themes and having the agility to make mid-
course corrections fluently. The quote below reminds us that alignment is not about
centralized control.

“The more alignment you have, the more autonomy you can grant”

—Stephen Bungay, author and strategy consultant

Instead, alignment provides a powerful way to turn the portfolio vision into an executable
strategy. It unleashes all portfolio members’ creative and productive energy toward
achieving its goals and unlocks people’s intrinsic motivation. Developing the vision and
strategy can be difficult and time-consuming. However, this work is not a once-and-done
exercise. As new information is learned about the portfolio’s solutions, including
customer feedback and Key Performance Indicators (KPIs), the LPM function periodically
reviews the portfolio canvas, for example, quarterly. They explore scenarios where the
portfolio could evolve to a better differentiated future state aligned with the strategic
themes.

Enterprise Architecture

The road to a better future state should be paved with architectural principles and
practices that enable the ongoing evolution of the portfolio’s solutions. This makes
enterprise architecture a critical component of strategy and investment funding.
Enterprise Architects help translate the business vision and strategy into effective
technology plans. They promote adaptive design and engineering practices to drive the
portfolio’s architectural initiatives. Enterprise Architects also facilitate the reuse of
hardware and software components and proven design patterns to help value streams
develop and enhance solutions faster and with higher quality.

Organizations must respond simultaneously to new business challenges and implement

larger-scale architectural initiatives requiring intentionality and planning. Enterprise
Architects help improve results by offering architectural governance and fostering the
right balance between intentional and emergent design. Achieving this balance is
essential to maintaining a healthy Architectural Runway across the portfolio and
developing large-scale systems effectively.

Portfolio Roadmap

The best way to predict the portfolio’s future state is to create it through a purposeful and
flexible portfolio roadmap (Figure 4). Because some portfolio initiatives may take years
to develop and are safety critical (for example, aerospace, autonomous vehicles, and
cyber-physical systems), a larger planning horizon beyond a few PIs may be required.
The portfolio and solution roadmaps are bi-directional; each roadmap influences the
other.

The portfolio roadmap integrates lower-level roadmaps into a more comprehensive view.
The initiatives in this roadmap may influence the direction and timing of the solution
roadmaps, as Figure 4 illustrates.
Figure 4. The portfolio roadmap communicates the longer-term picture

Since the portfolio roadmap may span multiple years, estimating longer-term initiatives
requires Agile methods. However, every enterprise should be cautious about such
forecasts. While long-term predictability is a worthy goal, use flexible rolling-wave
roadmaps to replace fixed plans. Lean-Agile Leaders should know that every long-term
commitment decreases the organization’s agility.

Realize Portfolio Vision Through Epics

Many vision changes will require large portfolio initiatives to achieve the future state.
Business epics directly deliver business value, while Enabler epics advance the
architectural runway to support upcoming business or technical needs. Since epics often
have lots of uncertainty, it’s good practice to use the SAFe Lean Startup Cycle
(described in Epics) for their implementation.

Understanding the epics’ forecasted costs and gaining a high-level view of when the
potential new value can be delivered is essential for comparing investments. This
forecast includes the MVP, proving or disproving the epic’s hypothesis and
implementation if a persevere decision is made. Sometimes overlooked, contractors and
Suppliers should be part of the cost equation.

Establish Lean Budgets and Guardrails

Lean Budgets and Guardrails offer funding and governance practices that improve
development throughput while maintaining financial and fitness-for-use governance. This
new funding model allows the enterprise to eliminate or reduce the need for traditional
project-based funding and cost accounting, reducing friction, delays, and overhead.
Lean budgets provide funding for value streams aligned with the business strategy and
current strategic themes. Guardrails support these budgets by providing governance and
spending policies and practices.

Establish Portfolio Flow

Portfolio flow describes how portfolio epics move through their lifecycle, including limiting
the number of significant and typically cross-cutting initiatives in progress to match the
portfolio’s capacity. LPM uses the portfolio Kanban system to visualize and limit work-in-
process (WIP), work in smaller batch sizes, and reduce the length of development
queues. Successfully establishing flow requires knowing the total capacity for new
development work versus ongoing maintenance and support activities. The enterprise
can objectively evaluate and originate epics only when this balance is understood.

Agile Portfolio Operations

Agile portfolio operations coordinate and support decentralized ART execution and
enable operational excellence. SAFe principles and the Lean-Agile mindset foster the
decentralization of strategy execution to empower Agile Release Trains (ARTs) and
Solution Trains.

The Agile portfolio operations collaboration and responsibilities (Figure 5) require the
active engagement of the Value Management Office (VMO), Lean-Agile Center of
Excellence (LACE), Release Train Engineer (RTE), and Scrum Master/Team Coach CoP.
Figure 5. illustrates each of these responsibilities, followed by a description of each.

Figure 5. Agile portfolio operations collaboration and responsibilities

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. To this
end, Lean-Agile leaders understand their value streams’ challenges and opportunities.
They make them as independent as possible while simultaneously interconnecting and
coordinating them with the enterprise’s larger purpose.

Support ART Execution

The LPM function can help cultivate and apply successful ART execution patterns
across the portfolio with the assistance of the Lean-Agile Center of Excellence (LACE). The
LACE is often responsible for leading operational excellence with the help of an RTE
and Scrum Master/Team Coach CoP. Together, they can optimize, address, and debug
issues from Agile Teams, ARTs, and value streams. The LACE and CoPs provide a
forum for sharing effective Agile ART execution, flow practices, and other knowledge.
They become a continuous energy source to power the enterprise through the
necessary organizational changes.

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.

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. Although everyone in a SAFe portfolio plays a role in
VSM, the LPM function 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 LACE also plays a significant role in fostering
operational excellence. This typically includes:

● Facilitating Value Stream identification workshops

● Communicating the business need for SAFe
● Integrating SAFe 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 (see PI milestones in
the Roadmap article)

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 specialized skills, knowledge,
and relationships of the current PMO 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
Accelerating Flow

While flow-based guidance is embedded throughout SAFe, a five-article series directly

addresses impediments to flow: 1. Principle #6- Make value flow without interruptions, 2.
Portfolio Flow, 3. Solution Train Flow, 4. ART Flow, and 5. Team Flow. These articles define
flow with a set of ‘eight flow accelerators that foster operational excellence. The LACE
can coach RTEs, and Scrum Masters/Team Coaches to address, optimize, and debug
issues with achieving continuous flow. The VMO has a primary responsibility in
improving portfolio flow.

Lean Governance

Lean governance provides oversight of spending, audit, security, compliance,

expenditure, measurement, and reporting. The Lean governance collaboration and
responsibilities (Figure 6) require the active engagement of the VMO, LACE, Business
Owners, and Enterprise Architects. The following sections describe their duties.
Figure 6. Lean governance collaboration and responsibilities
Forecast and Budget Dynamically
As described earlier, SAFe provides a Lean approach to budgeting. This lightweight,
more fluid, Agile process replaces traditional planning, fixed long-range budget cycles,
financial commitments, and scope. This new model includes understanding each
solution’s historical and forecasted future costs and epics. LPM adjusts budgets on a
cadence, typically every six months or when significant events warrant, as part of the
strategic portfolio review or Participatory Budgeting events (see below).

Measure Portfolio Performance

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 excessive oversight of feature
implementation

Measure and Grow is how portfolios evaluate their progress toward business agility and
determine their next improvement steps. It consists of the following three measurement
domains:

1. Outcomes: How well do the portfolio’s solutions meet customers’ needs and provide the
expected results for the business?
2. Flow: How efficient is the portfolio at delivering a continuous flow of value to its
customers and the desired outcomes for the business?
3. Competency: The LPM competency self-assessment enables organizations to evaluate
their proficiency against the three dimensions of Strategy & Investment Funding, Agile
Portfolio Operations, and Lean Governance.

The following sections describe these three domains.

Outcomes

A portfolio primarily measures business outcomes by defining Objectives and Key Results
for Strategic Themes and Value Stream Key Performance Indicators (KPIs).

● OKRs are a goal-setting framework that provides objective evidence of progress (key
results) toward achieving a set of business objectives. They help anchor ambitious goals
with reality. OKRs facilitate breaking status quo thinking and enable the portfolio to
explore new, often unknown, territory. If the portfolio has a big dream—and inspiring
strategic theme—OKRs will help measure progress toward achieving it.
● KPIs are specific and quantifiable measures of business results for the value streams
within that portfolio. Outcome metrics are typically context-specific and depend heavily on
the organization, business model, and the nature of solutions delivered to the customer.
Some indicators, however, may be successfully applied across contexts, such as the net
 promoter score. The Value Stream KPIs article defines appropriate key performance
indicators informed by the portfolio’s strategic themes.

Flow

As noted earlier, SAFe’s Measure and Grow guidance offers portfolios a way to assess
and improve their ability to deliver innovative business solutions quickly. It includes six
measures specific to flow: distribution, velocity, time, load, efficiency, and predictability.
Flow time, load, and distribution are particularly relevant to the portfolio and are briefly
described below.

● Flow time measures the interval needed for all the steps in the portfolio workflow to be
completed. It can also be helpful to measure specific parts of this flow. For example, from
the time the epic is pulled into the ‘review’ state until its hypothesis has been evaluated.
● Flow load indicates how many epics are currently in the system by process state.
Keeping a healthy, limited portfolio WIP is critical to enabling the fast flow of strategic
value.
● Flow distribution measures the amount of each type of work in the portfolio for a given
time. A helpful view of portfolio flow distribution illustrates the trend of money allocation
across investment horizons.

The Portfolio Flow article guides LPM on accelerating flow and providing continuous epics
to achieve the portfolio’s vision and enterprise business objectives.

Competency

Measuring the level of organizational competency for a SAFe portfolio is accomplished

with the following assessments:

● SAFe Business Agility assessment is designed for business and portfolio stakeholders
to assess their overall progress in achieving true business agility.
● LPM core competency assessment helps the LPM team and its stakeholders measure
their proficiency against the three domains of Strategy and Investment Funding, Agile
Portfolio Operations, and Lean Governance.

Each of these assessments follows a standard process pattern of running the self-
assessment, analyzing the results, taking action, and celebrating the successes. See the
‘Measuring Competency’ section of the Measure and Grow article to download these
assessments.

Coordinate Continuous Compliance

Many enterprises are significantly challenged to manage their risk and compliance
exposure in the face of ever-increasing challenges. The volume of regulations can be
massive, the risks are significant, the data sources and tools are numerous, and the
relationships between these entities are complex. It’s too much for traditional processes
and infrastructure to handle effectively. Moreover, conventional compliance processes
tend to defer these activities to the end, subjecting the enterprise to late discovery of
issues, subsequent rework, and even compromising compliance. Therefore, a more
continuous approach is recommended to coordinate ongoing compliance with relevant
standards.

Moreover, as organizations adopt DevOps, the delivery rate for digital products races
forward, making it extremely challenging for compliance to keep pace without getting in
the way. Compliance workarounds and exceptions abound, which may result in
regulatory or legal exposure and, worse, organizations being shut down or taken over by
the government for non-compliance.

Automating Compliance

“Organizations need an automated way to track governance throughout the entire

software delivery process so they can attest to the integrity of all assets and the security
of all running applications.”

—Investments Unlimited [1].

So, how can you ensure that all aspects of your deployment pipeline are protected as
delivery velocity dramatically increases? Companies that automate governance, risk,
and compliance can achieve organizational goals better and faster while improving flow,
reducing rework, and meeting regulations.
The DevOps Automated Governance Reference Architecture paper in [2] offers
organizations guidance to help them design and implement automated governance
throughout the Continuous Delivery Pipeline. This seminal whitepaper illustrates new
strategies for automating significant elements of compliance and governance. The white
paper inspired the book Investments Unlimited, which advances these innovative ideas
and tells a story in novel form. This work and others give organizations a starting plan to
automate compliance and shift compliance risk left.

The Compliance and Complying with Regulatory and Industry Standards articles provide more
information on this important compliance topic.

Assuring Big Data Security

Every enterprise uses data to improve its products, optimize operations, and better
understand its customers and markets. Big data concerns are addressed at the portfolio
level as it requires vision, investment, and governance within and across the value
streams within the portfolio. Big data governance manages the availability, usability,
integrity, and security of the data in enterprise systems based on internal data standards
and policies controlling data usage. Effective data governance ensures that data is
consistent and trustworthy and doesn’t get misused. [3]

Lean Portfolio Management

Events

The effective operation of the LPM function relies on three significant events:

1. Strategic Portfolio Review

2. Portfolio Sync
3. Participatory Budgeting

Typically, these events are held on a cadence, as illustrated in Figure 7.

Figure 7. Typical rhythm for the three LPM events
Strategic Portfolio Review
The strategic portfolio review event provides ongoing strategy, implementation, and
budget alignment. This event focuses on achieving and advancing the portfolio vision.
It’s typically held on a quarterly cadence, at least one month before the next PI Planning
event, to enable value streams to prepare and respond to any changes,

Portfolio Sync
The portfolio sync provides visibility into how well the portfolio is progressing toward
meeting its objectives. This event has a more operational focus than the strategic
portfolio review. Topics typically include reviewing epic implementation, the status of
KPIs, addressing dependencies, and removing impediments. The portfolio sync is
generally held monthly and may be replaced with the strategic portfolio review on a
given month.

Figure 8 compares the strategic portfolio review and portfolio sync events.

Figure 8. LPM events purpose and topics

Participatory Budgeting
SAFe Participatory Budgeting (PB) is an LPM event in which a group of stakeholders
decides how to invest the portfolio budget across solutions and epics. The resulting data
is used to finalize adjustments to the value stream budgets. These budgets are typically
adjusted twice annually using PB. If adjusted less frequently, spending is fixed for too
long, limiting agility. Also, although more frequent budget changes may seem to support
increased agility, they may create too much uncertainty and an inability to commit to any
near-term course of action. (See Lean Budgets for more information).

Summary

Successfully defining and executing a strategy in a world of increasing uncertainty is

challenging. It requires modernizing portfolio management, applying Lean-Agile thinking,
and organizing Agile teams and ARTs around value streams that deliver a continuous
flow of value to customers.

Strategy and investment funding ensures the ‘right work’ happens at the ‘right time.’
Continuous and early feedback on current initiatives, coupled with a Lean approach to
funding, allows the portfolio to make the necessary adjustments to meet its business
targets. Agile portfolio operations facilitate coordination across the portfolio’s value
streams, maintaining alignment between strategy and execution and fostering continued
operational excellence. Lean governance closes the loop by forecasting and budgeting
dynamically, measuring portfolio performance, and coordinating continuous compliance.
Collectively, these three dimensions work together to create superior economic
outcomes.

Learn More

[1] Beal, Helen, Bill Bensing, Jason Cox, Michael Edenzon, Caleb Queern, John
Rzeszotarski, Andres Vega, John Willis, and Dr. Tapabrata “Topo” Pal. Investments
Unlimited: A Novel about DevOps, Security, Audit Compliance, and Thriving in the
Digital Age.

[2] Nygard, Michael, Stephen Magill, Sam Guckenheimer, and John Willis. DevOps
Automated Governance Reference Architecture: Attestation of the Integrity of Assets in
the Delivery Pipeline. IT Revolution Press. 2018.
https://myresources.itrevolution.com/id006657043/DevOps-Automated-Governance-Reference-
Architecture

[3] https://www.techtarget.com/searchdatamanagement/definition/data-governance

[4] Lucas, Clarissa. Beyond Agile Auditing: Three Core Components to Revolutionize
Your Internal Audit Practices. IT Revolution Press. 2023