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On The Nature Of Portfolios - Purpose Of Lean Portfolio Management

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Purpose Of Lean Portfolio Management

On The Nature Of Portfolios

On The Nature Of Lean Portfolios

“Always show your working out!” was the mantra of my maths teacher in senior school. This series of blog posts “On the Nature of Lean Portfolios” is an exploration of Lean Portfolios. It is the thought processes running through my mind, exploring the possibilities so that I understand why things are happening rather than just doing those things blindly. It is not intended to be a fait-accompli presentation of the solutions within Lean Portfolios but an exploration of the Problems to understand whether the solutions make sense. There are no guarantees that these discussions are correct, but I am hopeful that the journey of exploration itself will prove educational as things are learnt on the way.

What Is A Lean Portfolio?

The Scaled Agile Framework provides a lot of advice and instruction about its Portfolio level but having repeatedly taught the material I am always left thinking that something is missing. It is not that the individual pieces are wrong, the advice around each piece is good, but they are just that, individual pieces. There is no overview, no storyline, that explains what the Portfolio is, or if there is, I have missed some subtle subtext within the training material. That does not sit well with me because I want to take my course attendees on journey rather than provide them with a bag of bits.

What is that journey? How does the Portfolio fit together?

My fellow Fellow, Ian Spence, once produced a sketch of how he thought a Lean Portfolio fitted together. That sketch became the starting point for my rationalisation on how to explain what a Lean Portfolio needs to do. I also needed a visualisation to help me understand the logical sequence of why things are needed in order to explore the topic of budgeting, a topic which we’ll return to later.

It became apparent at a recent (Jan 2021) gathering of SAFe Fellows that SAFe’s definition of a Portfolio is misunderstood; partly because the definition turned out to be buried on a slide in a training deck…

“A SAFe portfolio is a collection of Value Streams that build, support, and maintain Solutions SAFe Lean Portfolio Management funds and coordinates the Value Streams”

Even that definition poses a challenge, SAFe proposes two categories of Value Stream, Operation Value Streams and Development Value Streams. SAFe’s Portfolios are collections of Development Value Streams and work like an Investment Portfolio. This differs from the colloquial use of the phrase Portfolio where people tend to mean “a collection of things” and indeed it is that usage that other management frameworks use as their definition of Portfolio, notably the PMI definition is:

“A portfolio is a collection of projects and programs that are managed as a group to achieve strategic objectives. … According to PMI and its PMBOK Guide, a portfolio includes, “Projects, programs, other portfolios, and operations managed as a group to achieve strategic objectives.”

I am sure that the PMI people would argue that their Projects and Programs are the investment mechanic and therefore their Portfolio is also an Investment Portfolio, but words are dangerous, and the use of the “collection” phrase has caused many people to interpret this as a grouping mechanism rather than an investment mechanism.

Potential topics that I would like to explore in a future Blog post are “What is above the Portfolio?” and “Why Projects aren’t inherently evil just abused!


The Portfolio needs a vision; something that it is trying to achieve. Portfolios should be long lived so this is typically a rolling vision in that, as parts of the vision are achieved, the vision is updated to cover what needs to be achieved next. Often that vision must tie in with the bigger, long-term goals of the wider organisation. SAFe refers to the Inputs guiding the Vision as Strategic Themes.

In another article I want to explore some of the different styles of Portfolios that I have observed and how the style constrains how they are able to operate.


To enact that Vision and validate whether it has been achieved there needs to be measurable outcomes.


The means to achieve that vision is through Value Streams, how Value flows in the Portfolio. In a SAFe Portfolio those Value Streams are explicitly Development Value Streams.


In the SAFe context Value Streams are realised through Agile Release Trains that are working on a regular cadence of Iterations (Sprints) as the smaller timebox which form a larger timebox known as a Program Increment. The timeboxes provide a planning cadence; a plan is built to get through the timebox. The timeboxes allow teams to gather metrics regularly and asses how they are trending over time in order to forecast and improve.


Those development staff are going to want to be paid for their labours, so funding needs to be raised.

Where the money comes from has implications on how it can be spent; that is something that to explore.


That funding needs to be distributed. This is about investing in people to ensure that the right effort is in the right place ready to handle future work.

In another article I want to explore Participatory Budgeting in more detail and how it is used to Manage Investment within the Portfolio. There’s also a quick discussion to be had around why “Moving money is the tool of last resort.”

Note: I started drawing the orange circle in the wrong place; as I mentioned in my preamble this isn’t polished product this is thinking as it happens.


With the people in place, in the Agile Release Trains, and a Vision of what the Portfolio is trying to achieve then work can start flowing, Epics, large changes to business capabilities that require executive attention. Their lifecycle can be tracked through a Kanban Board.

There is a lot to explore here: The Lifecycle of An Epic and the states it passes through in that lifecycle. How Epics are Prioritised, and the details within that. The subtleties of WSJF go deep. Follow the link for a description of the subtleties of the Weighted Shortest Job First mechanic at the Feature level.


The work that the Agile Release Trains are doing should produce Working Solutions, Demonstrable output(s) of some form. The actual form of the Working Solutions is going to be dependent upon what the organisation does, software, hardware, paperwork, its entirely context specific. Even non-physical production such as the production of knowledge still gives us something we can equate to a solution, that gained knowledge can be discussed, measured and distributed.

The Organisation, as a whole should, be working tirelessly to remove impediments to ensure that work is flowing, and that value can be produced through the working solutions. The Portfolio realisation of SAFe Principle #2 : Apply Systems Thinking.


The Working Solutions should be providing the metrics to allow us to assess whether the desired Outcomes of the vision are being met. The separation of Targets, Forecasts and Commitments is taken from Beyond Budgeting1. The vision with its measurable Outcomes provides the targets. The flow of Epics in a Portfolio Roadmap combined with Velocity data coming up from the Agile Release Trains provide the Forecasting. Program Increments provide the Commitments that allow the Agile Release Trains to continually generate information, notably velocity and predictability, to allow Forecasting to happen. Forecasting then allows the Portfolio to rationalise whether the Targets are achievable.

Conclusion

This provides me with the storyline, the reasoning behind why the pieces of Lean Portfolio management are there and how they interact. It is all very high level, but it is enough to provide the vision that allows an understanding of whether the individual process and practices are sensibly contributing to how the portfolio should run.

Footnote

You think you are almost done and then someone says something that sets you on a tangent. I was talking to Luke Hohman (of Participatory Budgeting fame) and he mentioned that a business doesn’t care about Development Value Streams, they care about Working Solutions. They don’t care how they get their Working Solutions; in-house, outsourced, off-the-shelf, it doesn’t matter they just want the solution to work to allow the business to run. I should probably redraw the diagram with Working Solutions in the top line; but that is a task for another day! Perfection is the enemy of good and what is there is good enough to start some conversations and allow us to continue to explore some of the topics highlighted.

Quick Access


#1 Implementing Beyond Budgeting - Bjarte Bogsnes