Lean Portfolio Management How to Get Started

Lean Portfolio Management (LPM) is a methodology that combines the principles of lean manufacturing and agile development to optimize the management of a portfolio of projects, programs, and initiatives. The primary focus of LPM is to maximize value, reduce time to market, and facilitate quick pivots, in order to meet the ever-changing needs of customers and stakeholders.

What is Lean Portfolio Management?

Lean portfolio management is different from other approaches in that it emphasizes continuous flow and the elimination of waste, rather than sequential steps. This approach is particularly useful for large organizations that need to manage multiple projects and initiatives simultaneously.

Lean Portfolio Management (LPM) is a method for managing a portfolio of projects and programs in a way that maximizes value, reduces time to market, and allows for quick pivots. It is a relatively new approach that has gained popularity in recent years, particularly in the context of the Scaled Agile Framework (SAFe). In this blog post, we will explore what LPM is, its primary focus, the benefits it offers, how it differs from other approaches, and how to implement it in your organization.

Lean Portfolio Management is a method for managing a portfolio of projects and programs that is informed by lean principles and built through a better understanding of customer value. It is an approach that focuses on continuous flow, not sequential steps, and emphasizes the importance of metrics to track progress and make data-driven decisions.

Lean portfolio management definition: Lean portfolio management is a method of managing a portfolio of projects and programs that is designed to maximize value, reduce time to market, and allow for quick pivots. It is an approach that is informed by lean principles and built through a better understanding of customer value.

What Is the Primary Focus of Lean Portfolio Management?

The primary focus of LPM is to deliver value to customers in the most efficient and effective way possible. This is achieved through a combination of lean principles and a deep understanding of customer needs and preferences. LPM also places a strong emphasis on metrics to track progress and make data-driven decisions.

The main objective of lean portfolio management is to synchronize portfolio investments with the strategy and objectives of the organization. This is achieved through a number of different techniques, including value stream mapping, resource management, and risk management.

Value stream mapping is a process that helps organizations identify and eliminate waste in their portfolio management process. This is done by identifying the flow of value in the portfolio and identifying areas where waste can be eliminated.

Resource management is an important aspect of lean portfolio management as it ensures that resources are being used effectively and efficiently in the portfolio management process. This includes managing resources such as time, money, and personnel in order to achieve the best results.

Risk management is also an important aspect of lean portfolio management as it helps organizations identify and mitigate potential risks in their portfolio investments. This includes identifying potential risks and putting in place strategies to mitigate them.

Portfolio backlog

A portfolio backlog is a prioritized list of initiatives that an organization has identified as important to achieving its overall strategy and goals. This list is used to align portfolio investments with the organization’s strategy and goals and is an important tool in lean portfolio management.

Value stream mapping

Value stream mapping is a process that helps organizations identify and eliminate waste in their portfolio management process. This is done by identifying the flow of value in the portfolio and identifying areas where waste can be eliminated. For example, it can help to identify where resources are being wasted or where there are bottlenecks in the process. By eliminating this waste, organizations can achieve better results and improve efficiency.

Resource management

Resource management is an important aspect of lean portfolio management as it ensures that resources are being used effectively and efficiently in the portfolio management process. This includes managing resources such as time, money, and personnel in order to achieve the best results. By managing resources effectively, organizations can achieve cost savings and increase profits.

Risk management

Risk management is an important aspect of lean portfolio management as it helps organizations identify and mitigate potential risks in their portfolio investments. This includes identifying potential risks and putting in place strategies to mitigate them. By managing risks effectively, organizations can protect their investments and achieve better results.

Continuous improvement initiatives

Continuous improvement initiatives are an important aspect of lean portfolio management as they help organizations constantly improve their portfolio management process and achieve better results. This includes implementing new processes and technologies, as well as measuring and analyzing results in order to identify areas for improvement.

Competitive Advantage

Competitive Advantage is an important aspect of lean portfolio management as it helps organizations achieve sustainable growth and increase profits. This can be achieved by identifying and capitalizing on opportunities, as well as by constantly improving the portfolio management process in order to achieve better results.

 Cost reduction

Cost reduction is an important aspect of lean portfolio management as it helps organizations achieve cost savings and increase profits. This can be achieved by eliminating waste, managing resources effectively, and implementing continuous improvement initiatives.

What Are the Benefits of Lean Portfolio Management?

There are several benefits to using LPM, including:

Maximizing value: LPM is designed to deliver the most value to customers in the most efficient and effective way possible.

Time to market: LPM aims to reduce time to market for new products and services, allowing organizations to stay competitive in fast-paced markets.

Quick pivots: LPM allows organizations to quickly pivot when needed, in response to changes in the market or customer needs.

How Is Lean Portfolio Management LPM Different from Other Approaches?

LPM is different from other approaches in several key ways, including:

What changes with LPM: LPM is a more holistic approach that looks at the entire portfolio of projects and programs, rather than just individual projects.

Continuous flow: LPM emphasizes continuous flow, not sequential steps, which allows for faster delivery of value to customers.

Metrics: LPM places a strong emphasis on metrics to track progress and make data-driven decisions.

Implementing Lean Portfolio Management

Implementing LPM in your organization can be challenging, but there are several steps you can take to make the process easier. These include:

Lean Portfolio Management budgeting and funding: LPM requires a different approach to budgeting and funding, as it focuses on delivering value to customers, rather than following a traditional project management approach.

Funding by value stream: LPM emphasizes funding by value stream, which allows for more efficient and effective use of resources.

Continuous flow, not sequential steps: LPM requires a shift in mindset from sequential steps to continuous flow, which can be difficult for some organizations.

Lean Portfolio Management metrics: LPM requires a different approach to metrics, as it focuses on customer value and flow, rather than traditional project management metrics.

Objectives and Key Results: LPM requires organizations to focus on working on the right things, which is achieved through the use of Objectives and Key Results (OKRs).

Flow metrics: LPM requires organizations to track their health and efficiency.

Value Streams

One of the key elements of LPM is the use of a value stream to guide funding decisions. By focusing on the value stream, organizations can prioritize initiatives that will have the greatest impact on customers and stakeholders. This approach also helps to ensure that resources are allocated to the most important initiatives, rather than being spread too thin across a large number of projects.

Metrics

Another key element of LPM is the use of metrics to track progress and measure success. This includes using Objectives and Key Results (OKRs) to ensure that teams are working on the right things, flow metrics to track the health and efficiency of the process, and lean-agile metrics to measure the likelihood of achieving objectives.

Tools

When implementing LPM, it is important to consider the use of tools to support the process. There are a wide variety of tools available, ranging from project management software to agile planning tools. It is important to select tools that will best support the specific needs of the organization.

SAFe

In addition to the core elements of LPM, organizations can also consider incorporating SAFe (Scaled Agile Framework) into their approach. SAFe is a framework for scaling agile development that is specifically designed for large organizations. It includes elements such as strategy and investment funding, lean governance, and agile portfolio operations.

Conclusion

Overall, Lean Portfolio Management is a powerful methodology that can help organizations to optimize the management of their projects and initiatives. By focusing on value, reducing time to market, and facilitating quick pivots, organizations can better meet the needs of their customers and stakeholders. By using tools, metrics, and frameworks such as SAFe, organizations can ensure that LPM is implemented in an effective and efficient manner. In summary, LPM is a methodology that aligns the management of multiple projects and initiatives with the Lean principles and Agile methodologies. It focuses on maximizing value and reducing time to market, and by using flow metrics, Lean-Agile metrics, and Objectives and Key Results, organizations can track progress and measure success. Furthermore, organizations can consider using the Scaled Agile Framework (SAFe) to implement LPM on a large scale, while also considering the use of tools to support the process.