Nested 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.

Nested Portfolios

The previous article explored Multiple Portfolios and the interactions between multiple portfolios existing in a “flat” landscape; this article will look at Nested Portfolios and what happens if one Portfolio tries to contain another.

Can you have nested Portfolios?


The portfolio is a collection of related development value streams that organize Agile Teams and Agile Release Trains around the solutions needed for a particular business area.


If a SAFe Portfolio is comprised purely of Development Value streams then you can’t have a SAFe Portfolio that contains SAFe Portfolios because that would break the definition.

Of course we are not bounded by definitions, we will inspect and adapt, we will press forward in new directions, develop new understandings and just do whatever the hell we feel like doing! At the 2023 SAFe Summit in Prague there were at least two talks that covered Portfolio of Portfolios and whilst the experiences are useful and shouldn’t be dismissed, they were instances of a specific implementation rather than the underlying logic and patterns.

Perhaps some understanding of what is being considered before marching bravely in that direction…

Why do you want to nest portfolios?

Many of the reasons why people want nested Portfolios are essentially anti-patterns; they’re a variant of Conway’s Law where they are using the Portfolios to replicate the historic organisational structure instead of utilizing the Portfolio as a vehicle for managing investments.

The logic for spotting badly formed Portfolio’s has been described in Multiple Portfolios, any Portfolio instigated at too low a level won’t have the ability to balance investments across a number of products or services.

Portfolios should be independent, capable of making changes themselves without recourse to other Portfolios; nesting implies some degree of association, potential dependence, on whatever is above.

Anti-pattern : Adherence to historic definitions

As has been regularly mentioned elsewhere in these blog posts, the PMI definition of a Portfolio is recursive. “A Portfolio can contain other portfolios, programs and projects”, if the historic structures are maintained during the transition to a Lean Portfolio then there will be a natural desire to want to create nested portfolios because that’s what existed before. The historic structures were used for grouping and organising work and following this anti-pattern results in Portfolios being created around the work rather than treating the Portfolio as an investment vehicle and an independent business.

Anti-pattern : Politics, imposition of authority

The Portfolio acts boundaries for someone’s authority, the people in this portfolio are theirs, they get to tell them what to do. Political manoeuvring, executives jostling for power, the Portfolios get constructed to define the area of an organisation that a person holds dominion over. The visible symptom here is that to enact an organisational change multiple portfolios need to collaborate, rather than being able to enact change independently.

The challenges with nesting Portfolios

The challenge is that the changes that the business wants to make require the coordination of significant numbers of people, numerous trains. If each train has it’s own Business Owners then the assembled set is too big for the Portfolio Events to cope with, too much for the Portfolio to process, Portfolio cognitive overload. Conversely, if the set of Business Owners is sized to suit the Portfolio then each Business Owner is going to need to cover multiple trains and they can’t be everywhere at once, individual cognitive overload.

Whether it’s nested or flat, multiple Portfolios are a scaling problem. With nested Portfolio’s it ultimately becomes a question of do you scale up or down.

Nested Portfolios

Figure 1: Scaling Possibilities For Nested Portfolios

If you scale upwards then a tree of Business Owners gets created through nested Portfolios. Scaling up potentially increases the latency in decision making as decisions work their way up the tree and responses come back down. Keeping the larger group of people aligned can be more challenging, each level in the tree introduces opportunities for the distortion of the overall vision as the vision is translated into the local context and local concerns get incorporated.

If you scale downwards then the Business Owners need to be providing sufficient strategy and insight through the Vision to allow the Product Managers within the trains to make sensible delegated decisions. Scaling down requires more trust between individuals within the organisation. A clear vision coming from the Business Owners allows Product Managers to be empowered to make decisions but also allows them to demonstrate that the decisions they make line up with the vision.

When would you nest portfolios?

If each Portfolio is being treated as an independent business then there will be something across all those independent businesses that binds them together, the larger corporate entity. The larger corporate entity is a Portfolio, a true investment Portfolio, investing in a group of independent entities. The Portfolio decisions at this level are “have we got the right balance of corporate entities?” The actions resulting from those decisions are going to create new businesses either from scratch, through acquisitions, or removing businesses from the set through sell-offs or closure. Whilst the ideal would be that the SAFe Portfolios have complete freedom of choice with the money that they create, the overarching portfolio needs the ability to take money from the individual SAFe Portfolios for it’s own use, ideally to re-invest it in other areas.

The deciding factor for whether you need multiple portfolios should be to differentiate pieces of the business that require different corporate strategies due to operating in different markets, never size or money.

Examples: International Engineering Conglomerate: Automotive components, Industrial Electric Motors and Controls, High-Voltage Power Transmission all separate, independent businesses employing thousands of staff that would be Portfolios in their own right and answerable to the over-arching Portfolio that is the conglomerate. Success or failure of one Business, one Portfolio is not dependent upon other portfolios.


It is a scaling challenge but the deciding factor is not size but independence and the most instances are likely to be anti-patterns which should instead have focused on decentralising control out towards the teams rather than building a bigger corporate pyramid.

Next steps

Having explored the topic of Multiple Portfolios existing in both a “flat” landscape and a “nested” hierarchy, the next article will look at Combined Portfolios which contain not just the Development Value Streams but the Operational Value Streams as well.


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