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Large banks and insurers have been experimenting with Agile ways of working for several years. In particular, they have struggled to align business strategy, execution and value delivery across different organizational layers. This is often due to the scale and complexity of such organizations. Additionally, the pace of change in business strategies, customer needs and market disruption have hindered progress.
Often, such organizations continue to manage their portfolio of work using traditional management practices that tend to be administrative thus being unable to keep pace with change. This, inevitably, leads to waste, lesser time to market, lower innovation capacity, lower customer value, and more inefficiencies.
At Capgemini Invent, we work with our partners to overcome several common portfolio management challenges. Each case is unique, with clients encountering specific challenges for specific reasons. However, there is a model that is proving to be an effective solution for all our clients. The Lean Portfolio Management (LPM) model (recommended by SAFe) helps support clients scaling Agile across their enterprise. Its vast toolkit of techniques is versatile and addresses a multitude of common issues for portfolio management. These need to be adapted to an organisation’s context before they are applied.
In order to gain greater benefits of agility, FS organizations need to step away from their traditional ways of working. The solution is to adopt Lean Portfolio Management (LPM) practices. LPM connects their strategy to execution and planning, using a Lean Agile approach for managing and governing work.
Lean Portfolio Management applies Lean and systems-thinking approaches to connect strategy and investment funding, Agile portfolio operations, and Lean governance. Organizations need to develop competencies in all three areas to gain the benefits of LPM.
LPM is enabled by an LPM function that operates across organizational layers. The function typically consists of portfolio managers and analysts who help facilitate, coordinate, and govern LPM activities, and drive consistent LPM standards across organizational layers. The function also ensures that there is continuous collaboration between business and technology stakeholders across all LPM activities.
Here, the function must first achieve translation of strategic themes into business or customer outcomes. These must be tracked using measurable Objectives and Key Results (OKRs), ensuring the objectives and activities are aligned and tracked across organization levels.
All work should be broken down into a standard work item hierarchy (example initiatives, epics, stories) for delivery. This makes it possible to track the benefits and achieve them within short periods of time, as with every Program Increment (PI). These work items should be linked back to OKRs. This helps establish traceability from strategy to delivery. Moreover, it decentralizes delivery governance across different organizational levels.
An annual budget for each value stream should be set up with some funding guardrails, enabling decentralized decision making. However, this annual process should be supplemented with more regular business review cycles (e.g. Quarterly). This results in frequent evaluation of portfolio progress, changes to OKRs, and a strategic reprioritization of work, capacity, and funding. These reviews should be planned in line with the PI planning cycles to ensure that the most valuable work is planned in the PI.
Additionally, detailed business cases should be replaced with light weight lean business cases focused on business hypothesis, scope, plausibility, MVP cost etc. that are reviewed frequently.
To achieve an efficient flow of value across organizational layers, it is necessary to implement consistent demand management processes managed through agile tooling. A standardized Kanban workflow set up in an agile took set is one proven approach that can help achieve this. A Kanban helps to visualise and manage the flow of work at each level of the organisational layer. Each Kanban stage has a predefined set of activities, template, and exitcriteria that should be understood by the relevant stakeholders. The transparency facilitates the visibility of impediments, status of work items, and easier prioritization of work. Demand requesters should also be made aware of the criteria to raise demand to a portfolio Kanban. This makes it easier to manage demand intake and the stakeholders.
The demand is sequenced based on data-driven factors. A lightweight, economic framework, ‘Weighted Shortest Job First (WSJF),’ is used to continuously prioritize work that delivers the highest economic value in the shortest time. WSJF calculates the relative Cost of Delay (CoD) and job size, accounting for relative user and business value, time factors, risk reduction, opportunity enablement, and relative job size. WSJF calculations require a close collaboration between stakeholders to quantify the true value of cost of delay from both tech and business perspectives.
In a fast-paced and continuously changing environment, it is imperative that organizations have decentralized decision making and ensure collaborative governance to minimize delays, impediments, and governance overheads. Hence, governance processes, including metrics and reporting, must be simple.
A regular cadence of governance ceremonies facilitated by the portfolio function can help coordinate and govern work. Such ceremonies should in the least be focused on:
These are to review portfolio progress and provide the direction of the portfolio, ensuring it is aligned to strategy. Make decisions necessary to respond to new and changing portfolio opportunities and context and ensure there is delivery capacity and funding available for the prioritized work
These are to review delivery progress, address and coordinate risks, blockers, and dependencies. Additionally, they help to coordinate and update the portfolio roadmap based on decisions to address impediments
These make it possible to review new demand, progress portfolio items to the backlog, and repriotize the backlog.
These events are effective only if there is attendance from the right quorum of empowered stakeholders and there is a focus on making decisions versus providing updates.
Making delivery and portfolio performance reports and insights available at hand empowers people and enables decentralized governance and decision making. Thus, such reports should be made available through self-serve automated dashboards that also minimize the governance overhead. These days, most Agile tools provide dashboards with the option to build in additional visualizations.
It is important that a set of focused performance metrics are agreed upon and understood with stakeholders. This helps to focus efforts on the optimization of workflow, predictability, and value.
LPM offers many more techniques to help build a connected agile enterprise. Our experience is that that these techniques must be adapted to the organization’s context, tested, and matured incrementally and iteratively. Most importantly, employees must be taken on a journey to becoming agile, empowered with the right skillset, an agile mindset, and a forward-thinking culture.
 SAFe (2021). Lean Portfolio Management.
 SAFe (2021). Profile Kanban
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