Lean Portfolio Management

    It’s Not Just About Speeding Up Your Agile Teams

    If you do a quick search for "Lean Portfolio Management," you’ll find that nearly every software vendor or consultant has a different definition. These days, it seems like companies are working to commoditize Lean Portfolio Management (LPM) just like they commoditized the term Agile back in the early aughts.

    What these LPM trends all boil down to is actually pretty simple. It’s all about using the best method for your company to gain the most efficiencies across the entire organization. Said differently, Lean principles are about removing waste and bottlenecks across the enterprise in order to deliver value as quickly as possible to customers. LPM focuses in on every aspect of portfolio management and helps us apply Lean principles and practices to them.

    The truth is, the Lean-Agile mindset has been around as early as 2004. In fact, we used to show the image below to help engineering teams understand how they needed to change their mindset around the way they work. As it turns out, it’s now one of the fundamentals of LPM.


    So what happens as organizations apply these Lean principles only to IT? Oftentimes, their good intentions have unexpected consequences.

    Thermodynamics and Agile Teams

    What happens to your cup of hot tea or coffee when you stop heating it? It gets cold. More specifically, the molecules begin to bump up against the side of the mug, where they begin to slow down and cool as a result.

    Hot cup of coffee. Fast moving molecules mimic agile teams. When molecules bump up against the side of the mug, they start to slow." alt="Hot cup of coffee. Fast moving molecules mimic agile teams. When molecules bump up against the side of the mug, they start to slow.

    In this example, your agile teams are the molecules. They’re the ones bumping up against the non-agile processes in your organization (that is, the mug, or enterprise guardrails). As soon as your organization stops applying “heat” in the form of Lean-Agile principles, training, and coaching, the teams will eventually encounter organizational friction that slows them down, causing them to “cool” as a result.

    Without the heat of enterprise agility, your organization will slow down. Put another way—you’re only as agile as the least-agile piece of your organization. At the end of the day, your teams will only stay as agile and fast-paced as the rest of the company allows them to be. While many companies continue to apply “heat” in the form of Agile coaching, courseware, and certifications, the result is the same—the teams become less agile when they bump up against that same friction caused by the slower parts of your organization. So how do we keep our teams from cooling? Look at the whole system—or value stream mapping.

    Value Stream Mapping

    The sample value stream below illustrates all the people and processes involved in taking something from an idea to a happy customer.


    Unfortunately, most companies only apply “heat” to their engineering teams. This is where thermodynamics plays its part. The difficulty with this tactic is that it only focuses on a single stage of the entire value stream. In this example, engineering is represented by the Create stage, which only accounts for a small percentage of the value stream as a whole. Many people think that the solution to any productivity problem is to throw more developers into the mix. What they fail to realize is that they’re ignoring ~95% of the remaining value stream that should be optimized as well.


    When we ask executives about this, they generally state the issue as “our teams aren’t getting enough done” or “how can I speed up my teams?” Studies are showing that the engineering portion of this value stream is only 2-4% of your entire process. As long as these teams are using good agile practices and principles, they are sped up. It’s the remainder of the organization, or the 96-98% of the work done before and after the development teams that is “cooling” the organization and causing the delays.

    Lean Portfolio Management involves looking at every stage in the value stream to determine how to apply Lean-Agile principles and practices throughout the flow. And it focuses on ensuring you are working on products your market will value, not just in completing work faster. The goal is to create the most valuable items as quickly as possible to obtain the best possible outcomes for your organization.

    Getting Started with Lean Portfolio Management

    So what’s the best way to get started with Lean Portfolio Management? Determine your value streams. And from there, make sure you’re not focusing 100% of your efforts on engineering. Take a holistic look at the enterprise, and begin to optimize the stages that make sense for your organization (Lean budgeting and Agile capitalization are two fundamentals that come to mind). Be sure you are able to visualize the entire process, from start to finish, to see where the bottlenecks lie. You need to be able to see the work of the entire value stream together and be able to drill into every level to see where there are issues that might threaten your outcomes.


    Figure 1: Roll up the entire value stream to know what is on track and where issues might be brewing.


    Figure 2: Tracking spend to gain outcomes is also important.

    rally-software-lpm-7Figure 3: Clearly being able to see demand vs. supply is vital to keep pace.

    rally-software-lpm-8Figure 4. See issues early and determine when to pivot and when to persevere based on real data.

    Every level and area, from C-Suite to teams, Business to IT, must have the data they need to ensure efficient and effective flow of value through your organization. Being able to identify issues early so you can create a predictable and productive organization is what it takes to stay competitive. More on that in future blog posts. In the meantime, Rally On.