More Related Content Similar to Portfolio management and agile: a look at risk and value (20) More from John Goodpasture (20) Portfolio management and agile: a look at risk and value1. Portfolio Management and Agile:
A look at portfolio risk and value
with the agile paradigm
A presentation to
PMI Central Florida Chapter
John Goodpasture, PMP
and
Alex Walton, PMP
© Copyright 2011 John Goodpasture and Alex Walton
2. The Question
Are portfolio value-risk trade-offs compatible with
agile management practices such as:
Dynamic backlogs
Evolutionary scope
Persistent teams
Incremental plans
© Copyright 2011 John Goodpasture and Alex Walton
3. The Answer…
Perhaps
These are among the issues we’ll address in this
presentation.
© Copyright 2011 John Goodpasture and Alex Walton
4. The Tension
Portfolio value is planned Agile effects emerge
Plans - Actions & behavior Emergence - Unplanned
are systematically patterns of interaction,
sequenced and related actions, and behavior
Planning Horizon - A few Planning horizon - A few
months to a year or more weeks to several months
© Copyright 2011 John Goodpasture and Alex Walton
5. Portfolio: The Idea
Projects of common affinity are grouped
Project Office
Portfolio 1 Portfolio 2 Portfolio N
© Copyright 2010 John Goodpasture and Alex Walton
6. Portfolio Management
Leadership Management
Business Value Resource Management
Risk Management Cross-project Coordination
Strategic Alignment Project Governance
© Copyright 2011 John Goodpasture and Alex Walton
7. Value and Risk
Value Risk
The business gets more in return than Portfolios diversify business assets
the stake put at risk among projects
Constituents are more satisfied and Boundaries between teams and
better off than before projects isolate unfavorable effects
A system of projects is more effective Redundancy and backup among
than a collection of individual projects protects business
projects
© Copyright 2011 John Goodpasture and Alex Walton
8. Systems and Networks
A SYSTEM is a specific set of structures
interconnected in such a way so as to produce
specific patterns of desired behavior.
A system NETWORK contains nodes (where the work
occurs) and relationships (that carry the value
between the nodes).
© Copyright 2011 John Goodpasture and Alex Walton
9. Portfolio as a Network
Strategic plans couple
relationships between projects
Governance manages project-to-
project behavior, mitigating
conflicts and priorities
Project office protocols assure
information exchange among
projects
Redundancy mitigates failure to
produce business value from one
project or another
© Copyright 2011 John Goodpasture and Alex Walton
10. Portfolio as a System
Three C’s and a D
Portfolio Value Risk
• Triggers, drivers, data, and
• Loose coupling
control interconnected
Coupling dissipates or blocks bad
• Teamwork effects and behaviors
effects
interconnected
• Disparate effects harmonized for
Less energy goes into
Coherence the greater good
disharmony
• “Noise becomes song”
• Teams stick together
Cohesion All for one; one for all
• Systems bend but don’t break
• Value more predictable
Risk spread among many
Diversification • Value depends less on any one
project outcomes
project success
© Copyright 2011 John Goodpasture and Alex Walton
11. Three C’s and a D
from a Portfolio View
Portfolio Management
• Co-located teams are tightly coupled
• Virtual teams are loosely coupled
Coupling
• Tight coupling fosters accurate and timely communication
• Loose coupling fosters innovation
• Goal alignment promotes the greater good
Coherence • Strategy aligns allocation of resources
• Sequencing logic phases deliverables and adoption
• Team coupling drives teams cohesion
Cohesion
• Interconnections promote cohesion
• Risk events impacts are diluted
Diversification
• Process and practices are situationally adapted
© Copyright 2011 John Goodpasture and Alex Walton
12. Portfolio Management –
Plan, Allocate, Measure
Plan Allocate Measure
•Envision •Apportion •Analyze
•Strategize •Sequence •Act
•Risk adjust •Reserve •Adjust
© Copyright 2011 John Goodpasture and Alex Walton
13. Portfolio Management –
Plan, Allocate, Measure
Measure Plan
• Analyze • Envision
• Act • Strategize
• Adjust • Risk adjust
Allocate
• Apportion
• Sequence
• Reserve
© Copyright 2011 John Goodpasture and Alex Walton
14. Does Agile fit into portfolios?
© Copyright 2011 John Goodpasture and Alex Walton
15. Agile does fit, but …
Almost any methodology can be
made to work on some project.
Any methodology can manage to fail
on some project.
Alistair Cockburn
16. The dynamics of Agile pose special challenges,
but also present unique opportunities
© Copyright 2011 John Goodpasture and Alex Walton
17. Agile in a Larger Context
Multi-year
Agile Horizon cycles strategic plan
Agile
Iterations
Annual
business
portfolio
© Copyright 2011 John Goodpasture and Alex Walton
1-3
18. Agile - Plan, Do, Measure
Plan Do Measure
• Envision • Slice •Reflect
• Sequence • Develop •Adjust
• Prioritize • Deliver •Act
© Copyright 2011 John Goodpasture and Alex Walton
19. Tensions of Accountability
Project centric Business centric
Earned value—the project Value earned—the business
metric metric
Measures of effective use of Measures of business success
assigned resources Measures of customer
Measures for benchmarking satisfaction
and historical reference
© Copyright 2011 John Goodpasture and Alex Walton
20. It’s about Requirements!
The Requirements Paradox
•Requirements must be stable for
successful development; but…
user requirements are never stable
•We don’t want requirements to change,
but…
because changing requirements are a Niels Malotaux
known risk, we should provoke change
now.
21. Dynamic Backlog Cycles
Must Do
Should
Do
Deliverables
Backlog cycle
Reflect
Replan
Copyright 2011 John Goodpasture, All Rights Reserved 21
22. Portfolio Elasticity
Portfolio plan and value Agile emergent pattern
proposition and Value Proposition
Portfolio 1
© Copyright 2011 John Goodpasture and Alex Walton
24. Throughput is Value
Customers Throughput is what customers buy and use
Stakeholders Throughput improves the business scorecard
Each agile iteration produces throughput
Project Each iteration consumes resources, and …
Depletes the business balance sheet
Business Throughput restores balance sheet over time
© Copyright 2011 John Goodpasture and Alex Walton
25. Throughput Builds Value
Business value $
Value Value
Resource Earned Earned
consumption Resource
consumption Time
Project Project
© Copyright 2011 John Goodpasture and Alex Walton
26. Agile: Three C’s and a D
Agile Management
• Co-location tightens coupling
• War rooms tighten coupling
Coupling • Stand-up meetings tighten coupling
• Iterations or sprints loosen coupling
• Object practices loosen coupling
• Embedding product managers challenges coherence
• Sprint sequencing enables coherence
Coherence
• Re-useable objects reinforce consistency
• Emergence weakens coherence
© Copyright 2011 John Goodpasture and Alex Walton
27. Agile: Three C’s and a D
Agile Management
• Humanity of teamwork emphasized
• Loyalty, trust, and sharing creates strong team cohesion
Cohesion
• Effective conflict resolution holds things together
• Personal accountability and commitment fosters cohesion
• Dynamic backlog diversifies risk
• Frequent deliveries diversifies early-late adoption risk
Diversification • Process and practices situationally adapted
• Collaboration in co-located settings enables reduces learning
curve effects
© Copyright 2011 John Goodpasture and Alex Walton
28. The ultimate test
“If the customer is not
satisfied, he may not want to
pay for our efforts.
If he is not successful, he
cannot pay.
If he is not more successful
than he already was, why
should he [pay]?”
Niels Malotaux
© Copyright 2011 John Goodpasture and Alex Walton
29. Summing up!
Portfolios constantly attend Agile focuses on business
to the value-risk trade value [throughput]
Tension exists between The many iterations of agile
emergent value and diversify risk
portfolio plans
At each iteration, cohesion, The ultimate test is
coupling, and coherence are customer satisfaction …
evaluated anew Business Value & Risk
© Copyright 2011 John Goodpasture and Alex Walton
30. More in the books
Square Peg Consulting, LLC
PUBLISHED BY J. ROSS PUBLISHING
31. Thanks for the opportunity to speak to
the Central Florida Chapter
John Goodpasture Alex Walton
32. Contact us
Square Peg Consulting, LLC 3PM, LLC
info@sqpegconsulting.com alex@3pmllc.com
john.g@sqpegconsulting.com alexanderwalton@gmail.com
© Copyright 2011 John Goodpasture and Alex Walton
33. How would you explain
emergent outcomes to
stakeholders with specific
expectations?
Should portfolio managers be
in the business of allocating
by top down planning?
© Copyright 2011 John Goodpasture and Alex Walton