Disciplined Agile

Strategic Planning and Lean Portfolio Management

“Culture eats strategy for breakfast.” – Peter Drucker.

Strategic planning and Lean Portfolio Management is a multi-step process where a  company defines its strategy and translates that into the work to be accomplished. Strategies are easy to decide on but often difficult to manifest.  The reason often lies on the culture of the organization, as alluded to by Peter Drucker. The separation between business and development is often very hard to overcome.  Agile development provides some clues to part of this but is insufficient in itself.

To close the gap requires creating clarity on the strategy of the business and shifting from a project mentality to a product mentality where business initiatives increase the value of existing products/services while creating new ones. When strategies spawn projects that have short-lived value but long term maintenance costs there becomes an ever increasing competition for capacity and budget.  Connecting these two requires both a business driven focus and well-defined Agile trains (groups of 20 to 120 people) that can implement the initiatives being requested by the business stakeholders.

This is a “project to product” focus where the company’s services and products are viewed as long term offering with semi-stable teams continuously turning out value. If there are more services and products than teams the teams can rotate between their offerings.

Many organizations already do reasonably effective strategic planning. The challenge for them occurs in tying these initiatives to development. There are several aspects to doing this:

  1. Be able to resolve conflicting requirements based on which work items are most important to the organization.
  2. Make clear the relative importance of the work to be done.
  3. Have this information be available to everyone in the organization, in particular to those teams who get requests from multiple programs. These teams are typically Business Intelligence and Ops.


An important intention of portfolio management is to pare down the work that will be done into manageable chunks. If this is not done, teams will be inundated with requests. When managed improperly, stakeholders will take a “get it while the getting is good” attitude (i.e., start projects for what they might need instead of what they actually need). This results in too many, too large items being worked on. Also, budgeting becomes inconsistent with people focusing on keeping their budgets instead of focusing on the most productive way to get the most important work done.

All of the above factors (and there are others) drive the development group’s efficient down by 80-95%. This is an astounding number, but nevertheless true for many organizations, even when Agile is being done well at the team level.  Strategic planning can be readily accomplished by starting with the objectives of the organization and attending to the key results desired.

These can be further refined with OKRs (Objectives and Key Results) to clarify what we want to invest in and how we will know if we’ve met them.


In This Chapter

Strategic planning sets the stage for the development teams’ efforts. This chapter discusses the relationships between Lean Portfolio Management, Lean-Agile Product Management and planning , dependency management and collaboration before going into Lean Portfolio management in greater depth.

All companies have issues with too little capacity. In fact the more successful a company becomes the more opportunities it will have and therefore the greater this issue becomes. The trick is to allocate the capacity available to work on those initiatives that will achieve the greatest value.  But you can only know what’s most important across an organization if you consider what it is you want to invest in.


Creating Clarity of Purpose With Lean Portfolio and Product Management

“A system must be managed. It will not manage itself. Left to themselves, components become selfish, competitive, independent profit centers, and thus destroy the system … The secret is cooperation between components toward the aim of the organization.” —W. Edwards Deming

The key to business agility at any scale is collaboration. This requires alignment of all aspects of discovery,  specification, implementation, deployment and doing what else is necessary for actual realization of value. The larger an organization is the roles and divergent aspects of the organization is involved. This makes it more and more difficult.

There is a distinction between creating alignment and forcing alignment. Let’s consider different ways of achieving alignment, starting when we don’t have it, as shown in figure 2.

No Alignment

Figure 2: No alignment

In this case, teams are not aligned because they are each going after their own targets. This is reminiscent of Deming’s observation above. Old-school management paradigms attempt to have managers ensure that people are focusing on the right thing. But micro-management not only doesn’t work, it destroys the possibility of teams taking responsibility while lowering innovation and effectiveness.

One of the powers of SAFe, and frameworks in general, is providing roles and activities that indicate what people should be doing to achieve alignment can create a significant improvement. This is shown in figure 3.

Alignment to SAFE

Figure 3: Aligning Teams Via a Framework

This can definitely create some improvement in alignment, but there are some challenges, including:

  1. Frameworks in general have us focus on the framework. For example, SAFe uses Solutions, MVPs, Epics and more to attempt to define the scope of  what’s valuable. But none of these represent are an exact match for what we are really trying to do – define that chunk of value that we can deliver to a customer and which they can realize value quickly.
    SAFe’s complicated portfolio and product management approach is hard to align around because of its many roles and overloaded, conflated and redefined terms
  2. No framework I am aware of uses the most important concept we’ve found in portfolio and product management – the Minimum Business Increment.
  3. The bottom line is that while you can use a framework to help clarify the work, the framework itself doesn’t provide much guidance to how to do it as it provides a method if you already know how.

 A way around all of these challenges is to focus directly on the value we are trying to achieve as shown in figure 4.

Alignment via strategy

Figure 4: Aligning around value

In this case teams align directly around value. This requires understanding the organization’s business objectives and strategy. By having teams align directly around our objectives we enable them to make decisions that they are closer to than management. But they stay aligned because executives are setting the overall direction. This allows for pushing decisions down to the teams while creating an aligned organization.

The best way to align is around the purpose of the organization and focusing directly on the goal of achieving business agility – the quick realization of value predictably, sustainably and with high quality. When one thinks about it, that is virtually the only thing on which you can align. People can be at a company for any number of reasons. It may be a short-time gig for experience, they need the money, their significant other is there, who knows. But if they aren’t working in alignment with the purpose of the company they shouldn’t be there. It really is as simple as that.

Aligning around the purpose of the organization is key and can be achieved by:

Strategic Planning and Lean Portfolio Management where we:

  • create strategies for the business
  • get clarity on what represents value for the business and its customers so we can quantify the value of these strategies.
  • define initiatives to implement these strategies and compare them based on objectives and key results (OKRs) to tell us when we’ve achieved them

Lean Product Management where we:

Do Planning, Collaboration and Dependency Management where we take this sequence of work to be done, allocate our available capacity to get it done and make plans for getting the work done


Start With Your Strategies

Defining strategies is beyond the scope of this book. There are countless methods to do this effectively. Most organizations do this well. The challenges are mostly in turning the strategies into initiatives that spawn work that can be sequenced and then providing clarity to the development group to see their connection to the strategies.

Strategies should now be created that are consistent with these investment goals. If a strategy doesn’t manifest value based on our investment goals then it is off purpose. Most strategies will manifest more than 1 investment goal. For example, a new feature for our financial company may be to create a mobile-app to help retain younger investors by improving their customer experience.

Each strategy will have one or more initiatives. Each initiative will spawn a series of business increments.  These can be thought of as epics if you want to use standard Agile and SAFe terminology. Later we will see how epics is an overloaded term creating the need for other terms all of which together cause unneeded complexity. At this point we’re starting to clarify what our portfolio is based on. But it’s still too early to sequence our work yet. We can only effectively sequence MBIs. That part will be done in the next chapter – Lean-Agile Product Management.


Define Your Investment Goals -Using OKRs (Objectives and Key Results)

With our strategies in place, we must come up with a way to turn them into initiatives whose value be compared with each other. In order to be able to make decisions about which ones of these are important, it must also be clear what the business is wanting to invest in. These will often be fairly unique to a business and will help people in the business decide which initiatives to budget. Each of these initiatives will be further decomposed into business increments to be delivered as they become available. A review of this is included here in this section.

For example, a financial company might focus on:

  1. Retaining assets (because they make money based on a percentage of assets)
  2. Improving customer experience
  3. Lowering costs
  4. Compliance
  5. Lowering risk

They might also include one for improving internal processes.

A not-for-profit, such as a place the provides meals and housing for homeless may focus on:

  1. Number of meals served
  2. Number of beds provided
  3. Amount of  monetary donations received
  4. Value of non-monetary donations received

How many do you need? Typically 4-6 basis for measure are good enough. Less than four does not provide enough clarity, while more than six is not necessary (the seventh can provide at most 15% overall value).  These areas of investment are just guides but create focus when decisions need to be made. They become the basis for an organization’s initiatives where we can use them to define our objectives and key results (OKRs) to give some quantification to their potential value.

We continue to refine our initiatives by deciding which aspects of the initiative have more value. We will work to realize value for these with business increments as shown in the following figure.

Artifact Hierarchy

Figure 5: Strategies to Business Increments

This represents the decomposition needed for Lean Portfolio Management. Note that the arrows represent containment. As we decompose and refine work we will learn more about what we are needing to do and that will provide feedback up to the larger artifact.