What is Agile Portfolio Management? Agility everywhere

What is Agile Portfolio Management? The word Agility resonates in all forums as the panacea that solves all management challenges faced by organizations. And it is scalable. More and more companies are applying it at the portfolio level, but aspire to implement this agility at the business level. What about you? Have you embraced Agility?

TABLE OF CONTENTS

Agility: definition and background.
What is Portfolio Management?
1. Portfolio Management as a system.
2. Portfolio Management as a way to operate the company strategy.
Strategy as the starting point.
Agility in Portfolio Management.
What are the main challenges of Agile Portfolio Management?
1. Agile Portfolio Management: facts to consider.
2. Scaled Agile Framework.
Ready to move to Agile Portfolio Management?

Agility: definition and background

By now we are all used to the greenwashing concept where “green marketing is deceptively used to promote the perception that an organization’s products are “environmentally friendly”, according to the definition by Wikipedia. Could a similar neologism apply to agility? Agilewashing?

Agility is everywhere. I just found an “Agile washing machine” ad on the web and read somewhere about “agile bank services”. I’m still struggling to figure out what an agile washing machine might look like. Agile bank services show a rather radical change of mindset in the banking industry (I’m referring to my personal experience here). Put “agile” somewhere in your product or service name and it becomes lightweight, efficient and much cheaper.

Put Agile somewhere and your product becomes lightweight, efficient and cheaper

I have the feeling we don’t even remember the agility background. This concept was brought in almost 20 years ago but has never been so ‘out there’ ever before. The Agile Manifesto reminds us of the key principles of agility in the context of software development, though most of them can be considered in other areas of business.

There’s no point in defining again what agility is and I’d rather share some experience in working the agile way. I’ve been involved in the PPM industry for 20 years as the manager of the PMM solution development team as well as senior consultant in implementing PPM solutions. I considered the Agile approach during 2000 and the software development organization moved from a standard hierarchical structure following long-term release plans to an agile organization. Change management was quite hard but the company eventually benefited from the changes after several iterations. The lessons learned were not really expected but there are several key points that keep driving my work today.

The power of self-managed teams.
Efficient and frequent collaboration between all stakeholders mitigates the risk of not delivering the expected added value at the expected time.
Consider changes of minds by the business as an asset, not an issue.
Agility is a mindset, as consequence solid efforts are required on change management.

Agility is now common in companies of all sizes and in any type of industry. Though it mostly starts with IT or R&D teams, it logically spreads to other departments that are equally involved in business projects: agile teams are across the company organization by essence.

Agility is now common in companies of all sizes and in any type of industry

As a result, agile teams blossom in companies. They deliver products or services at faster a pace with a better focus on the expectations of the business. The frequent contribution to creating value in the company emphasizes the next big challenge: alignment with company strategy.

What is Portfolio Management?

I usually summarize Portfolio Management to my customers as a system that operates the changes required to meet the changes driven by the company strategy.

Portfolio Management as a system

A definition of a system from the Miriam Webster website is “a group of devices or artificial objects or an organization forming a network with the aim to serve a common purpose”. Portfolio Management serves the purpose of enabling the company strategy. The “group of devices” consists in collecting, prioritizing, funding, launching and monitoring project progress. As a system, Portfolio Management could be self-contained, though interactions with other systems are quite obvious.

Portfolio Management as a way to operate the company strategy

I’ve been dealing with dozens of companies setting up and tooling PPM organizations. The purpose of Portfolio Management is seldom well apprehended by people at stake in the company. As a result, companies face situations that may lead to failure. Some are summarized below.

Portfolio as a collection of projects: Project Management is put in place first and Portfolio Management caps a sometimes large list of projects; at best it provides an overview of the projects a department is dealing with or of projects with specific characteristics.
Initiatives are collected but not prioritized according to the strategy: the company understands the benefits of having initiatives raised by a large audience; great numbers of ideas are collected and projects are launched; the added value doesn’t meet the expectations of the management due to faulty prioritization and latency between decision and execution.
Strategy is unclear to people involved in initiatives and projects: it remains a concern of the top management; this is usually caused by a lack of communication to all people at stake. As a result, teams are not empowered.

Project Management is usually put in place first, and Portfolio Management caps a list of projects

Strategy as the starting point

Executives express their vision of how the company addresses the market by defining the company strategy. It used to be middle or long-term plans but markets now require frequent and short-term adjustments. Changes in the strategy may even happen in short-term plans. Alignment with teams in charge of executing the strategy thus becomes a pressing challenge.

The formulation of strategies must be consistent with the size and diversity of the audience. Strategy then requires proper communication to people at stake in terms of content and frequency. This will ensure the buy-in of the teams and their commitments. Formulation and communication are critical success factors to align teams in charge of executing the strategy.

Formulation and communication of strategies are critical success factors

Agility in Portfolio Management

How can agility improve portfolio management? Similarity to the challenges faced by Software Development Teams when agility arose is obvious at first sight.

Frequent changes of priority in the strategy are required to improve the company’s competitive advantages.
Priority is specified in terms of contribution to the strategy. Priority is relative; the absolute value is not relevant.
As fast “time to market” is a must, solutions are delivered frequently.
The delivered solutions create measurable value.
Operations and executives work closely together. Non-stop collaboration allows them to make decisions on a timely fashion. This is the concept of empowered teams.

The parallel can be drawn even further. This was already highlighted a decade ago, in a publication of Joseph C. Thomas and Steven W. Baker with DTE Energy. The authors addressed a portfolio management key process: how IT investments can fit into the scope to Agile Portfolio Management.

Nevertheless, Portfolio Management relies on deep-rooted legacy processes like Budget Management. One can expect the transformation to operate not so smoothly, as quoted by the authors: “As our IT teams successfully applied agile methods at the project level, we began to address our approach for managing portfolios of projects to increase the amount of value we deliver with our business partners. As we did this, we ran headlong into inherent conflicts between agile and legacy corporate processes and mindsets”.

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Agile Portfolio Management challenges

“ […] be patient in rolling out an agile approach to funding, change management, and governance across a corporate enterprise. Rather than change everything all at once, select and collaborate with one or two business units first, reflect on the results, and then solidify those gains while branching out to another set of business units.”

The move to Agile Portfolio Management challenges key processes in the company with several of them being related to finance, e.g. funding and controlling of portfolios. Any modification of a process in a company requires an ad hoc change management process. With regard to Portfolio Management, change management is getting critical when we consider that:

Portfolio Management usually involves most of the departments of a company, not only the business or the IT.
Managers and operations are involved and the message must be adapted to the various people involved.
This is a radical change of mindsets for resources at stake; the change requires a step-by-step process and the strategy will likely need adjustments all along the process, as emphasized by the DTE Energy paper.
There’s an impact on several processes anchored in the organization and in people’s mind.

Agile Portfolio Management: facts to consider

Such challenges are nevertheless balanced by important facts.

A company willing to move to Agile Portfolio Management eventually benefits the “Agilewashing” I started this post with: bringing agility to processes is now considered by people at stake as well-funded and reasonable. This is a critical asset as changes of mindsets proved to be the most challenging impediment when implementing changes in an organization.
Best practices and cases where it was used are available on the web or in other publications.
Frameworks have been devised in the past year. Versions keep coming on a timely fashion. It shows those frameworks are successful and become mature.

Bringing agility to processes is now considered well-funded and reasonable

Scaled Agile Framework

The extensive Scaled Agile Framework proposes an agile approach for 3 systems and their interactions:

Portfolio Management.
Program Management.
Team Management.

The website has a large list of case studies with various industries. They are great sources of information for every company willing to consider agility as a means to bring value.

Ready to move to Agile Portfolio Management?

Customers I have been working with see the benefits of Agile Portfolio Management, though they understand that there is usually a long path from their “as is” to the “to be”. The value Agile Portfolio Management can bring should be balanced with the maturity of people at stake.

I would advise to focus on the short-term value of aligning projects with the company strategy

For example, referring to the loose connection between strategy and portfolios situation I previously mentioned, I would rather advise a customer to focus on the short-term value of aligning projects with the company strategy. I would likely trade off agility if I consider change management too high a risk and reconsider it in a next step. This is basically agility in the implementation process.