Transitioning to Lean Portfolio Management: Aligning Revenue to Priorities in an Agile Enterprise Setup
In today’s fast-paced business environment, enterprises must be agile and adaptable to stay competitive. However, businesses often need help aligning their revenue with their priorities and efforts. One effective way to tackle this issue is through Lean Portfolio Management (LPM). This methodology marries Lean and Agile practices with portfolio management, enabling businesses to effectively align their strategies with their execution (Leffingwell, 2018).
LPM applies systems thinking to strategy and investment funding, Agile portfolio operations, and governance. This creates a more adaptable and value-focused enterprise, providing the following advantages:
- Strategy and Investment Funding: LPM empowers organizations to make strategic decisions based on understanding the value, cost, and risk of different initiatives (Poppendieck & Poppendieck, 2003). This approach ensures that the most valuable initiatives are prioritized, leading to a higher return on investment (ROI).
- Agile Portfolio Operations: By encouraging Agile methodologies in project execution, LPM facilitates a flexible approach that enables teams to deliver increments of value rapidly. This ensures revenue is tied directly to the value delivered (Kniberg & Skarin, 2010).
- Lean Governance: LPM promotes poor governance, which involves decentralizing decision-making (Reinertsen, 2009). This accelerates decision-making processes and reduces the overhead associated with governance, freeing up more resources for value-delivering activities.
- Enterprise-wide Agility: LPM fosters enterprise-wide agility, ensuring that every level of the organization — from teams to portfolios — operates in sync. This alignment facilitates better coordination of revenue and effort across the entire organization.
- Value Stream Alignment: By focusing on value streams, LPM helps organizations identify and invest in the most valuable aspects of their work. This alignment ensures that revenue is better connected with the value delivered (Scaled et al.).
- Feedback and Continuous Improvement: LPM encourages an iterative project management and strategy approach, incorporating…