Agile portfolio management

Content management & capacity budgeting

Now the team level is maturing on agility, agile transitions are looking at the enterprise level. In the past years I’ve seen many teams feeling the impediments the not so agile matured organizational levels are causing. Good agile enterprise portfolio management addresses many of these impediments, and it’s not easy.

Connecting the business is often heard as part of the plan, where agility in most organizations started as a direction for IT, being an integral part of any innovation nowadays. Doing that, the aimed at areas also shift from development (of IT) only. All disciplines, from exploration of ideas to exploitation of the current products and services, will be involved. So, it’s more than only connecting the business to development. It’s also about entering new domains in the product lifecycle.

Agile exploration of ideas, as in design thinking, and agile exploitation, as in digitization, are part of an agile enterprise portfolio. Continuous change askes for continuity in innovation, both in new products and services as in evolving existing ones. The demanding high pace of innovation also stresses the need for decommissioning legacy that reduces flexibility and consumes energy.

The biggest challenge I saw organizations encounter, is shaping a true agile portfolio and abandoning the old habits on governance and control. In my MBA dissertation, I’m finishing now, and during my past assignments, these were the core subjects. In this article I would like to share some highlights with you and will get back on more detailed subjects later.

Enterprise agility

Becoming a true agile enterprise, I learned from my dissertation, is about sensing and responding.

Sensing the market on customer satisfaction and future needs, on state-of-the-art techniques and methods. And sensing internally on employee satisfaction, agile maturity and the capability to deliver innovation and, at the same time, keep the current organization in shape. Sensing is about knowing where you are and where to go. It sets directions to shape the future and to build a future proof organization.

Responding, or responsiveness, is about delivering what’s needed to shape the future depicted using all the information available. Staying responsive to sensed needs requires just-in-time availability of delivery capabilities and capacity, steered by changing content and priorities. Agile teams work that way. Responsiveness is about creating innovation capacity, with the ability to adapt to new techniques and methods and to react on changing requirements.

It’s of no use to know where to go and not be able to walk or to be an outstanding walker without knowing where to go. True agility is in the combination of both sensing and responding championship.

The portfolio principle

Agile portfolio management separates the sense and response capabilities, often called capacity funding. This relates to the separation of ideas from budgets. Innovation and change ideas are, on all levels, steered by backlogs providing content. And budgets are used to build a delivery organization to realize whatever turns up on the backlogs.

Innovation backlogs are prioritized by value (estimated outcome) and effort. Budgets are spent on establishing required capabilities in anticipated capacities. Both meet at realization, delivering products and services to generate profit in the future.

The biggest pitfall I have seen is to keep a mix of agile and traditional portfolio management, thus reducing flexibility and increasing complexity. Where ideas are budgeted and funded, as in projects, the money is gone and the ideas are fixed. Where capacity is assigned to projects, bringing the people to the work instead of the bringing the work to the people, flexibility is gone and planning complexity increases.

I don’t wonder why agile teams encounter organizational impediments, I like to work on these impediments in a structural way. Growing enterprise agility by starting the journeys towards agile portfolio management and agile human resource management are for me the logical next steps.

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