Rules Of Portfolio

“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.

Rules Of Portfolio

Over the last few years of studying and implementing Lean Portfolios I’ve come to develop a few, completely unofficial rules to act as guides; these complement my rules for Scaling Agility but are different because Portfolio is different to the fractal recursion of teams of agile teams that occurs below.

Four, Completely Unofficial, Rules of Portfolio

Figure 1: Four, Completely Unofficial, Rules Of Portfolio

First Rule Of Portfolio – Size empowers self organization

Unlike the team level where smaller is better, the Portfolio benefits from being big. A large portfolio will have a number of value streams that it can invest in to try and maximise the success of the portfolio. It has sufficient number of people within it that they can self-organise and move around to meet the needs of the organisation. Instigate the Portfolio too small. Size is dictated not by money or people, but by the number of decisions the Portfolio needs to make. There is a U-Curve here. Too large and the Portfolio becomes unmanageable, there is just too much going on. Too small and it can’t self-organise, it always has to request funding or support from outside. It is better to err on the side of too big than too small; a Portfolio that is too big can be made more manageable by decentralizing the details into the Values Streams it contains.

Second Rule Of Portfolio – You need freedom of choice

The Portfolio needs freedom of choice to decide what to do and how to do it. It needs to be able to change, to react to events in the wider world and to position the Portfolio to influence events in the wider world. This is easiest to achieve if the Portfolio is independent, either because it represents the whole organisation, or because it is truly independent part of a multi-national conglomerate. Portfolio’s should never be instigated around work or organisational structure, they want to run as an independent business answerable only to themselves and revenue that they have generated.

Third Rule Of Portfolio – Follow the metrics

The Portfolio needs to be driven by data. True Portfolio metrics will give insight into whether a business is being successful, all businesses need to live within their means, there is no magic money tree, you get what you earn.

Portfolio metrics need to be true business metrics, it has to consider the financial situations because the Portfolio is an investment vehicle, it organises the distribution of the money it has.

Fourth Rule Of Portfolio – Close the accountability loop

Decentralisation is key, the Portfolio should be empowering its constituent pieces to make their own decisions, but it does need to check that they have made sensible decisions. That the work they are doing is moving the Portfolio towards the targets outlines in the metrics of Rule #3.


There’s nothing ground-breaking here, but pithy easy to judge reminders of what a Portfolio should be. Indeed if one wished to look at this from a slightly different perspective, this is just the Plan, Do, Check, Adjust loop for the Portfolio, Self-Organization is Planning where to invest, Freedom of Choice is Doing, Follow the Metrics is Checking and Close the Accountability Loop is Adjust.

Next Steps

The rules will help with an exploration of Multiple, Nested and Combined Portfolios in the next few posts.

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