Lean Portfolio Management (LPM)
By adopting Lean Portfolio Management practices, organizations can improve their ability to make strategic investment decisions, optimize resource utilization, foster innovation, and align the portfolio with the changing needs of customers and the market. LPM provides a framework for organizations to embrace Lean and Agile principles at the portfolio level and achieve better business outcomes.
Lean Portfolio Management (LPM) is an approach to managing and aligning the portfolio of projects, products, and services within an organization using Lean and Agile principles. It provides a framework for organizations to make strategic investment decisions, optimize resource allocation, and track progress towards their business and financial objectives.
Here are the key aspects of Lean Portfolio Management:
1. Strategic Alignment: LPM aims to ensure that the organization's portfolio is aligned with its strategic goals and objectives. It involves defining the strategic themes, initiatives, and outcomes that the organization seeks to achieve and aligning the portfolio to deliver value in support of those goals.
2. Lean Budgeting and Governance: LPM promotes a lean and flexible approach to budgeting and governance. It emphasizes the use of rolling wave planning, incremental funding, and frequent reassessment of investment decisions based on feedback and outcomes. It replaces traditional annual budgeting cycles with more dynamic and responsive financial practices.
3. Portfolio Vision and Roadmap: LPM encourages the development of a clear and shared vision for the portfolio. This includes defining the desired outcomes, value streams, and key performance indicators (KPIs) that guide decision-making. A portfolio roadmap is created to visualize the sequencing and interdependencies of initiatives and ensure alignment with strategic goals.
4. Value Stream Management: LPM focuses on managing value streams, which represent the end-to-end flow of value from ideation to delivery. Value stream mapping and analysis are used to identify bottlenecks, streamline processes, and optimize resource allocation. Value stream funding enables cross-functional teams to work together towards common outcomes.
5. Agile Portfolio Operations: LPM integrates Agile and Lean practices at the portfolio level. This includes using Agile frameworks like Scrum and Kanban for portfolio-level planning and execution, establishing ARTs (Agile Release Trains) to coordinate and deliver value, and leveraging Agile practices such as PI (Program Increment) planning and continuous delivery.
6. Portfolio Performance and Measurement: LPM emphasizes the use of metrics and data-driven decision-making to monitor and assess portfolio performance. Key metrics, such as business value delivered, cycle time, customer satisfaction, and financial performance, are tracked to evaluate the effectiveness of portfolio investments and guide future decision-making.
