What is Lean Portfolio Management
Lean Portfolio Management is a model for managing portfolios that are organised around value (products, services) rather than around projects or programmes. These portfolios:
- Are incentivised to maximise the value they deliver to their customers whilst minimising the cost to do so (real value-for-money incentivisation)
- Have a single through-life budget against a longer-term roadmap, with the empowerment to veer and haul people and money within agreed constraints and guardrails, and with future funding based on historical success of delivering value for money
- Achieve scalability by decomposing large portfolios into sub-portfolios, delegating decision making to the appropriate level. Each portfolio only governs and manages change and innovation that is big or significant enough to be of interest it, with the governance and management of all other change and innovation delegated to the relevant sub-portfolio.
- Bring together Innovation, Change and Run, managing portfolios of each, with responsibility for finding the right balance of investment across these, as well as non-functional elements such as security, compliance and controls, and for end-to-end consideration of the impact of change, from initial policy to development to operational implementation that helps drive real value
- Have appropriate rigor within their portfolio governance processes, which enables transparency of impactful strategic decision making. Ensuring the people receiving the value, the people with (technical, security, legal, delivery) expertise to deliver the value, and the people with financial and commercial acumen, are all involved in the prioritisation and investment decisions.
- Are accountable for all the people, tools, resources and suppliers required, minimising external dependencies and improving their agility to simultaneously innovate, change and run and make effective decisions, at the pace of relevance, to maximise value and minimise costs
- Aim to be great places to work where people feel empowered and closer to their customers and the value they receive
Comparison to Traditional Portfolio Management
Although there is overlap - Lean Portfolio Management still aims to align strategy to delivery, allocate funding and staffing, manage demand and prioritise work, and successfully deliver a set of strategic outcomes whilst keeping a close eye on delivery performance – there are significant differences from Traditional Portfolio Management.
In summary:
- Each portfolio now covers innovation, change, and run, i.e. the entire breadth, scope, and lifecycle of the products, systems and solutions the portfolio is responsible for, and therefore requires enduring measures of success in addition to transient objectives. This means as well as the usual portfolio of change, we’re now also managing a portfolio of products or solutions, plus a portfolio of innovation that’s shaping the future.
- We get scale through the decomposition of portfolios into sub-portfolios. Each portfolio only governs and manages change and innovation that is big or significant enough to be of interest it, with the governance and management of all other change and innovation delegated to the relevant sub-portfolio.
- We now fund and staff enduring portfolios rather than temporary, pre-defined, packages of scope (projects or programmes). This allows us to create long-lived high-performing delivery teams and organisations that can grow and shrink over time based on demand, take long-term responsibility for performance and cost, develop people with deep expertise, and create sovereign ownership of capabilities.
- Because of this we can create capacity-based long-term roadmaps with funding and staffing plans that allow us to move to a rolling annual planning and funding cycle (with interim reviews and adjustments) that can use past performance to unlock future funding.
- Portfolios have delegated decision making authority, including a delegated authority to spend, the ability to flex budget and staff across new priorities, and to identify and plan the most valuable work on a quarterly basis. This also applies to sub-portfolios, enabling portfolios to focus on the big strategic decisions that sit with them rather than decisions that are better made in sub-portfolios. But this isn’t unconstrained; we use tools like guardrails to create approval boundaries, meaning approval and governance is only required by exception where these guardrails would be breached.
About This Material
This material is currently in a draft form, and constantly emerging and evolving. We know there are elements that are rough, immature, and need to be reworked. There are also lots of elements we’d like to add that don’t yet exist. We welcome contributions, feedback and questions, and expect this material to continuously grow and expand.
This is a model rather than a framework or set of practices. As a model it won’t be right for you and your context, but we hope it will be both useful as well as practical.
We are terminology agnostic - we have some standard terminology we use, but you can and should use whatever is right for you. If the intent is right, it doesn’t matter what the solution or practice is called.
This aims to be compatible with the latest thinking on organising around value, product organisations, servicing thinking etc. We’re not aiming to replace or challenge any of this thinking, but to add to and complement it.
This material is open source - there is no licence fee, no certifications, no cost. The only thing we ask is that you let us know how you get on, that you contribute back new ideas, proposals, or suggestions, and that you link back to and attribute content to this site if you re-publish any of the material.