Moving Your PMO Away from Legacy Strategic Portfolio Management to Lean

    This post examines how to move your PMO away from legacy strategic portfolio management to following lean principles. However, before we get into the nitty-gritty of how to make the move, let's talk about why. In the current climate of aggressive start-ups and market disruptors, the advantage goes to organizations that can pivot quickly, adapt to changing market conditions, and provide immediate value to their customers. At its core, lean is about maximizing value and minimizing waste. It's also concerned with agility, enabling those who follow its basic tenets to adapt to changing market conditions quickly and efficiently.

    A Change in Strategic Portfolio Management Philosophy and Focus

    When we talk about moving the PMO from legacy to lean, we're talking about a change from project and portfolio management to product portfolio management. Those terms may sound similar, but there are distinct differences in how and where we focus our attention and effort.

    In project and portfolio management, we're focused on things within our organization that we can control. We start with a project and develop a plan with a fixed budget, a list of the required skill sets, estimates of the number of contributors, and a timeline for completion. We might have the best possible design, map out all dependencies, allocate resources, and arrive at a point where we're 95% certain about on-time, full-featured delivery. However, that 5% margin of doubt generally ends up growing as the project progresses, and we finish the project late—typically in a state of panic and exhaustion.

    When we overlay that approach onto the current environment, it raises some additional concerns that can impact the effectiveness and the return on investment (ROI) for our project:

    • What if someone else beats you to market with a better product?
    • What if product adoption doesn't go as you planned?
    • What if factors outside of your organization change, like the economy?

    With product portfolio management, we turn our focus to factors outside of our organization. We're most concerned with the consumer—and how we bring value quickly and efficiently to the consumer. We do this with an iterative approach and leverage the power of established agile engineering teams. We implement practices such as incremental budgeting and continuous steering, and we go from tracking to a plan, then planning to replan.

    As the PMO, your goal is to ensure that the organization's investments deliver a profitable return, which is best accomplished by driving and supporting a process that can effectively deliver value to your customers. Let's begin by looking at how you can provide value to your customers, and then we’ll see what shifts you would need to make within the PMO to support and accelerate this process.

    Your Value Delivery Pipeline

    I've spent the past decade working within engineering teams operating under an agile philosophy. During that time, I've learned a great deal about effectively driving ideas through design, development, and quality assurance, and delivering value to the customer. An established team (or collection of established teams) is critical in the quest to provide customer value. The following are some of the lessons I've learned.

    Teams need time to develop cohesive work capabilities. Not all engineers are the same, but when you combine them into a team and allow them to work together, they will learn how to play to each other's strengths and bring out the best in each member of the team. They accomplish this by making mistakes and continually evaluating how they're performing as well as how they can improve. Established teams will continue to be more and more productive over time.

    The most effective way to deliver value is in small increments. When we identify a specific customer need, then the project managers, product owners, and the team meet to design an effective solution to meet those needs. The team works to break that solution into chunks to complete, test, and deliver it to the customer quickly.

    When we have an established value delivery pipeline made up of skilled and cohesive teams, we can transition from managing a program as a group of projects to managing a program as a group of teams. In effect, we can go from trying to steer a massive ship to managing a fleet of speedboats—we're able to change course quickly, and we get to our destination faster.

    Now let’s look at the changes we need to make within the PMO to support this change.

    Moving the PMO from a Legacy Mindset to a Lean Mindset

    In addition to ensuring a favorable ROI for the organization, the PMO needs to defend against market disruptions. If the organization identifies unique ideas that can disrupt the market, we need to pivot and become the disrupters. Here are a few ways to achieve this:

    Budgeting

    The PMO needs to change focus from an annual budget to incremental budgeting. We need to continually evaluate our allocation of resources and the ways in which our teams can meet customer needs. We'll be ready to adapt if the market shifts or the economy changes mid-year.

    Planning

    Long-term goals are essential, but we don't want to lock ourselves into a rigid plan and continually have to track our progress against it. We learn more about projects as we work on them, and that allows us to improve our decisions and approach over time. We're constantly evaluating the marketplace, consumer needs, and making course adjustments to deliver the most value to the customer at each step. We plan to replan, and our task is to ensure that we're steering the work in the right direction. We evolve from plan-based to becoming highly adaptive and proactive.

    Resources

    We change from an elastic resource pool to an established and fixed capacity. This capacity is the value delivery pipeline we described above. Your teams are the secret sauce that takes the customers' needs and transforms them into value.

    Data-Based Decision Making

    Lean advocates that we deliver increased value and reduce waste. The PMO should be constantly aware of how the organization is performing. Fortunately, we have access to data that can inform decisions and identify areas for improvement. We can monitor metrics such as cycle time, defect counts, the time it takes to identify and resolve defects, and customer engagement. Data-based decisions empower us to make and measure improvement in our processes.

    A Quick Note about Quality

    If you or your organization have a long legacy of managing waterfall-style projects, this new and agile approach may raise quality concerns. However, the beauty of this approach is that when defects happen—as they inevitably will—we're able to identify the source and address them quickly. Modern engineering teams employ automated processes to test, continuously validate, and monitor their applications to improve customer value.

    Implementation and Learning More

    It's easy to read an article like this and agree with the fundamental principles. Like many good ideas in life, we can only realize the real power of these principles when we can integrate them into our practices. The process of transitioning your PMO from legacy strategic portfolio management to a lean approach is not something that can be covered in a single article; but armed with the knowledge that I’ve shared with you here, you can continue to learn and investigate how to transform your organization. If you’d like to learn more about lean, including its origins, processes, and purpose, I would highly recommend the Lean Enterprise Institute. I would also recommend Elements of a Lean PMO and Lean and Mighty.

    Ultimately, the best part about lean is that it focuses on finding the right set of processes and tools for your organization and marketplace. It's about delivering value to the customer quickly and ensuring that your organization quickly and efficiently realizes returns on its investments in development.