“Energy flows where intention goes.”
—Widely attributed to Rhonda Byrne, Australian author, and TV producer
Imagine a state where Lean Portfolio Management (LPM) effortlessly generates a continuous stream of new epics, propelling your enterprise towards its strategic goals. LPM aligns strategy and execution by integrating Lean and systems thinking approaches into every facet of portfolio management. By leveraging LPM, businesses employing the Scaled Agile Framework (SAFe) have seen tremendous improvements in their outcomes. However, as with any system, there is always room for improvement. In this article, we explore how to optimize the flow of customer value through your portfolio.
Note: About the Flow Article Series
SAFe is a flow-based system, and interruptions to flow must be systematically identified and addressed to ensure continuous value delivery. While flow-based guidance is embedded throughout SAFe, this article focuses specifically on impediments to flow within the portfolio. It is part of a series of eight articles that collectively address flow-related challenges, including Value Stream Management, Principle #6 – Make value flow without interruptions, Team Flow, ART Flow, Solution Train Flow, Portfolio Flow, Accelerating Flow with SAFe, and Coaching Flow.
Visualize and Limit WIP
Why it matters
Overloading the system with too much work in process (WIP) undermines performance and value delivery. It hampers the ability to respond to change, reduces productivity and quality, delays return on investment, and leads to burnout and disengagement. It is crucial not to overload the system with more work than it can handle, especially when prioritizing significant strategic initiatives.
What to do about it
- Make all significant Epics visible: Ensure that all projects, including non-SAFe epics and SAFe epics surpassing the threshold, are tracked in the portfolio Kanban. This ensures accurate estimation of the total portfolio WIP.
- Review and adjust the epic threshold: Define clear criteria for significant initiatives and adjust the epic threshold when necessary. Only epics meeting the threshold should enter the portfolio Kanban.
- Review and validate portfolio Kanban WIP limits: Adjust WIP limits based on the number of epics in progress. Consider introducing classes of service to expedite high-priority items while reducing overall WIP.
- Understand the capacity of each value stream and ART: Gather metrics to determine the capacity of each Agile Release Train (ART) and value stream. This prevents teams from being overloaded with more work than they can handle effectively.
- Ignore sunk costs: If a significant initiative no longer aligns with the strategy or fails to deliver the intended value, it is essential to stop and reallocate resources as necessary.
Address Bottlenecks
Why it matters
Portfolio gridlock creates bottlenecks that hinder the review, analysis, approval, and implementation of crucial strategic initiatives. Delayed decision-making directly impacts the performance of downstream Development Value Streams and poses a significant risk to the overall strategy.
What to do about it
- Ensure LPM has decision-making authority: Verify that the LPM team possesses the necessary time and authority to make portfolio decisions without unnecessary escalation.
- Increase the pool of Epic Owners: Expand the number of Epic Owners to avoid bottlenecks caused by a lack of sufficient resources. Leverage subject matter experts, Business Owners, Product Managers, Product Owners, and Enterprise Architects to serve as Epic Owners.
- Understand ART capacity: Assess the capacity of each ART to take on additional portfolio work within a reasonable timeframe.
- Ensure the Lean Business Case is lean: Traditional, time-consuming business case practices can hinder the flow. Adopt leaner approaches and avoid creating unnecessary delays during analysis.
Minimize Handoffs and Dependencies
Why it matters
While portfolio workflow may seem straightforward, managing work through the portfolio Kanban often involves multiple stakeholders with different skills and responsibilities. Handoffs and dependencies are inevitable. Ensuring the right people are involved at the right time facilitates the smooth flow of the portfolio.
What to do about it
- Properly support the Epic Owner: Assist Epic Owners in connecting and collaborating with multiple stakeholders who are often busy with their functional roles.
- Understand when cross-value stream coordination is required: Some epics span multiple value streams, increasing dependencies and handoffs. Involve Epic Owners, Release Train Engineers (RTEs), and Product Management in deciding how to manage such work across value streams.
- Recognize the need to refactor value streams: The portfolio backlog is often the birthplace of innovative work. LPM, with the support of the Value Management Office (VMO) or Lean-Agile Center of Excellence (LACE), can identify when the creation, adjustment, or elimination of value streams is required. This minimizes handoffs and dependencies.
Get Faster Feedback
Why it matters
Rapid feedback, especially in the early stages, is crucial for evaluating new initiatives. It ensures that epic investments do not result in designing and building solutions that customers do not want or require drastic business model changes that the enterprise cannot achieve.
What to do about it
- Test assumptions for business model changes: When epics impact the business model, thoroughly test the assumptions with business owners, executives, and customers to avoid unrealistic expectations and future sunk costs.
- Validate viability by engaging with customers early: LPM stakeholders need fast feedback about new initiatives to support decision-making. Conduct early tests using mockups and low-fidelity prototypes before reaching the minimum viable product (MVP) stage. Capture additional customer insights in the lean business case.
- Focus on leading indicators for MVPs: Ensure that epics incorporate the right leading indicators to measure progress towards the desired business outcomes.
Work in Smaller Batches
Why it matters
Smaller batches move through systems more quickly and with less variability, enabling faster learning. Given that epics are significant initiatives, reviewing, analyzing, and approving them can be time-consuming. If the batch size is too large, stakeholders may struggle to evaluate all the work responsibly, causing delays in decision-making and disrupting value flow.
What to do about it
- Limit the number of epics reviewed during LPM events: Experiment with the number of epics that can realistically be considered during LPM events such as the Portfolio Sync. Adjust the limit based on the context and historical data.
- Reduce the transaction cost of reviewing and analyzing epics: Timebox epic reviews to keep discussions concise and clear. This promotes decentralization and trust.
- Conduct low-fidelity tests during analysis: Perform research spikes, such as explainer videos, landing pages, interviews, and paper prototypes, to better understand customer problems and explore a range of possible solutions.
- Leverage a common cadence: Establish a consistent Program Increment (PI) cadence across all value streams. This reduces batch sizes and provides a regular rhythm for reviewing portfolio work.
- Reduce experiment size: Wherever possible, minimize the effort and scope of work needed to gather early feedback.
Reduce Queue Lengths
Why it matters
Long queues of portfolio work hinder strategy responsiveness and can cause businesses to miss critical market opportunities. This directly impacts overall competitiveness and the ability to deliver value.
What to do about it
- Reroute non-portfolio work immediately: Challenge the inclusion of every item in the portfolio. Limit the portfolio queue to true epics that require portfolio attention due to their investment or impact.
- Understand critical market events and rhythms: Consider the time sensitivity of portfolio epics from the customer’s perspective. Align their prioritization accordingly.
- Eliminate non-strategic and bad ideas quickly: Efficiently assess and prioritize epics to determine which should proceed or be discontinued.
- Replace fixed schedules with flexible roadmaps: Embrace flexible rolling-wave roadmaps that allow for adaptability and limit delays in introducing critical new work.
Optimize Time in ‘The Zone’
Why it matters
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Finding sufficient time for executives to develop and evolve strategic plans while engaging in ongoing LPM activities can be challenging. It requires uninterrupted focus and mental energy, free from daily business distractions, to ensure effective strategy formulation and execution.
What to do about it
- Allocate sufficient time for strategy development: Consider conducting separate strategy workshops dedicated solely to reviewing and refining the portfolio strategy, vision, Lean Budget Guardrails, and business outcome metrics.
- Conduct effective portfolio events: Ensure that Strategic Portfolio Reviews, Portfolio Syncs, and Participatory Budgeting events are productive and held regularly. Present current, insightful data to facilitate decision-making by the appropriate stakeholders.
- Recognize when a Portfolio Epic no longer needs LPM focus: Prioritize epics that genuinely require ongoing LPM oversight and attention. Move epics to the ‘done’ stage promptly when they are rejected or no longer a portfolio concern.
- Eliminate redundant portfolio governance practices: Replace traditional reporting with SAFe’s Lean-Agile practices, which measure progress objectively using leading indicators and key performance indicators (KPIs).
- Invest in meeting facilitation to optimize ‘the zone’: Effective facilitation addresses time constraints, resolves interpersonal dynamics, and ensures alignment among key stakeholders. It creates a sense of urgency and increases engagement.
Remediate Legacy Policies and Practices
Why it matters
Transitioning to LPM represents a significant change for any enterprise. During this transition, existing traditional governance policies may still be applied to manage ongoing initiatives. This results in two parallel oversight methods and people reverting to old processes even for new initiatives. Such practices burden the organization, increase overhead, and impede the flow of value.
What to watch out for
Be mindful of the following common obstacles and address them promptly:
- The portfolio Kanban becoming a central intake for all work, rather than focusing solely on new epics exceeding Lean budget guardrails.
- Funding projects instead of value streams.
- Continued reliance on outdated practices, such as forecasting and reporting based on manual timesheets.
- Disconnection between quarterly strategic planning, PI Planning, and the LPM portfolio review process, involving different stakeholders.
- Committing to significant customer demands without involving the teams responsible for executing the work or considering the impact on ongoing commitments.
- Detailed business cases that create unnecessary upfront investment and limit solution design flexibility.
- Restricting access or visibility to the portfolio Kanban, causing misalignment, uncertainty about downstream priorities, and duplicate work.
- Running traditional program management practices alongside Agile methodologies, such as waterfall phase gates, change control boards, project cost accounting, and outdated status reporting.
- Conflicting policies in finance, HR, and other areas.
- Mindsets that prioritize defending sunk costs or maintaining commitments to legacy products or services rather than seizing new opportunities.
What to do about it
Identify legacy portfolio activities that need to be discontinued or replaced. Take appropriate action based on root cause analysis, ensuring alignment with the SAFe LPM process.
Measure and Improve Flow
SAFe’s Measure and Grow guidance provides portfolios with a framework to assess and enhance their capability to deliver innovative business solutions rapidly. It includes six flow-specific metrics: distribution, velocity, time, load, efficiency, and predictability. Flow time, load, and distribution are particularly relevant to portfolio management.
Flow Time
Flow time measures the duration required for all steps within a defined workflow to be completed. For the portfolio, flow time can be estimated from ideation to production or, for example, from when an epic enters the “review” state until its hypothesis has been evaluated. Figure 1 illustrates an example of portfolio flow time, highlighting the time taken for an epic to transition from the “reviewing” to the “done” state. The scatter plot shows the distribution of flow times, providing insights into the portfolio’s performance.
Flow Load
Flow load indicates the number of items currently in the system. Maintaining a healthy, limited number of active items in portfolio WIP is essential for achieving fast value flow. Figure 2 depicts a Cumulative Flow Diagram (CFD) showcasing the flow load of epics within a specific timeframe, excluding those in the “done” state.
Flow Distribution
Flow distribution measures the distribution of different types of work within the system. Examining the allocation of resources across investment horizons can provide valuable insights into how the portfolio is balanced and progressing over time. Figure 3 presents an example of a value stream’s flow distribution for investment horizons.
While SAFe’s flow metrics offer valuable insights, they should not be considered in isolation. Qualitative analysis is essential to provide context and a holistic understanding of the portfolio’s current state.
Conclusion
Optimizing the flow of customer value through the portfolio is a vital economic driver for enterprises embracing Lean Portfolio Management. By visualizing and limiting work in progress, addressing bottlenecks, minimizing handoffs and dependencies, seeking faster feedback, working in smaller batches, reducing queue lengths, optimizing time in ‘the zone,’ remediating legacy policies and practices, and measuring and improving flow, businesses can unlock the full potential of LPM. Embrace these practices and ensure a continuous and efficient flow of value through your portfolio, propelling your enterprise towards success.
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