We have explored the topic of product portfolio management in previous episodes, but not from an Agile perspective. That is the topic for this episode – Agile portfolio management.
Each week I talk with a savvy insider to help us understand an aspect of product management and innovation. This time my guest is one of the very first Certified Scrum Trainers, who has been implementing Scrum in organizations for more than a decade and has another decade of experience in software technology. He is also a Principle at SolutionsIQ, a firm that helps organizations adopt Agile practices.
In this episode, product managers and innovators will learn:
- the difference between product portfolio management and Agile portfolio management,
- how to create Agile portfolios,
- how to navigate some of the common issues encountered with Agile portfolio management,
- and the importance of keeping high-performing teams intact.
Practices and Ideas for Product Managers and Innovators
Summary of questions discussed:
- What is Agile portfolio management? We need to start by defining business agility, which is leveraging iterative delivery capability and actively managing organization investments. Long term investments often get the focus but we need to be able to more quickly adjust short-term investments. As the business environment is changing more quickly, we need to be able to respond more quickly. We need to recognize that a few mistakes will be made along the way. We need to be able to adjust our shorter term commitments more quickly. That helps us think about Agile portfolio management, where we still have longer-term investments but also the need to adjust more quickly in the shorter term.
- How do you apply an Agile mindset to portfolio management? Agile emphasizes small intact teams. Teams that stay together out-perform teams that are broken apart when a project ends and then rebuilt for another project. This is an important influence of Agile on portfolio management and how project resources are used. Also, technologists need to be involved in portfolio management decisions or you can expect bad decisions to be made. The implication of technology-related decisions need to be incorporated into portfolio decisions. Further, portfolios need to be smaller to move the decision making closer to those best equipped to be involved in the decisions. This suggests that a portfolio of portfolios is needed in organizations so we can move authority and accountability down into the organization.
- How can an Agile portfolio be constructed? Start with considering the right size for a portfolio, which can lead organizations to realize they need a portfolio of portfolios. Portfolios are better managed if they are not too large. At the other extreme, not every organization needs a portfolio and portfolio management should be resisted until it is actually needed. An example would be an organization that only has one product. They should enjoy being able to focus on product management without adding complexities by incorporating portfolio management. A portfolio reflects a supply and demand balance and the supply-side constrains the portfolios, which is the capacity of knowledge workers. These employees cannot be easily exchanged and their availability provides the opportunities and constraints. Portfolios should be constructed around value streams. To determine the right size for portfolios and how Agile portfolios should be constructed, use these 5 simple rules (see related blog post below in the Useful Links section):
- All work is forced ranked.
- Operate on “good enough” data.
- Near-term capacity is fixed.
- Each unique value-based delivery capability has a portfolio
- Each portfolio has one “intake system.”
- How is an Agile portfolio managed? Begin by not breaking up teams. Proper execution is enabled by stable Agile teams as opposed to groups with employees coming and going from projects. Create work estimates at the team level for each project, not at the portfolio level. The teams are in the best position to create estimates and the plans for the next few months. A quarterly planning term is an appropriate pace for most organizations. The Product Owner is the one responsible for determining initiatives to pursue and expected return on each. When estimating the work for the initiatives, it is better to be roughly right than precisely wrong, and this can be accomplished by estimating in team weeks. Progress is determined by creating working products or working elements of products. Agility must remain throughout the process to avoid a “build it and they will come” mentality. Instead, evidence for course corrections is frequently found throughout the portfolio process.
- What are common issues encountered and their solutions? Instead of individual teams doing Agile, dealing with Agile at scale is creating problems for companies. It is creating coordination that may not have been in place before, while also more quickly providing evidence for why a strategy may or may not work. Organizations are not always prepared to change strategy even when evidence indicates it won’t be successful. We also need better change management in organizations to accommodate the needed changes for Agile portfolio management and the changes the use of Agile will necessitate. Further, as noted previously, stable teams are needed that remain intact for projects and from one project to the next.
“No transformative innovation has had a return in the first year.” – Mark Johnson, Innosight
Listen Now to the Interview
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