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Lean Portfolio Management
1. Defining a project backlog is easy, but prioritizing projects is difficult when an organization has multiple initiatives. Managing demand and ensuring the right resources are available is also challenging. 2. The document discusses using Lean planning methodology and tools to define a portfolio strategy, allocate resources to investment categories, and create a portfolio roadmap to prioritize projects. 3. The goal is to make data-driven decisions when prioritizing projects even if stakeholders value different outcomes, and to engage development teams in delivering outcomes, not just software.
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Lean Portfolio Management
- 1. Lean Portfolio Management Getting Started, Getting Going. -Dave Ungar, PfMP, PMP #PMICOC @daveungar225
- 2. We are livingunder the tyranny of the prevailing style of management. Most people imagine that this style of management has always existed and is a fixture. Actually, it is a modern invention, a trap that has led us into decline. Transformation is required. -W. Edwards Deming The New Economics: For Industry, Government, Education
- 3. Systems thinking. Engageyour right brain…
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- 8. Portfolio Strategy “economic”view - common currency for measuring value Unmatchable offer
- 9. Portfolio Strategy whybrand identity is important to mode of operation Michael Treacy and Fred Wiersema The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market
- 10. Portfolio Strategy investmentcategories Geoffrey Moore Escape Velocity
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- 13. Team A TeamB Component A Component B Team C Team D Team E Team F Initiative 1 X X X X Initiative 2 X X X Initiative 3 X X X X Initiative 4 X Initiative 5 X X Initiative 6 X X Initiative 7 X X X Conflicts Value Stream Analysis
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- 15. Value through thesystem first. (MORE value through the system later)
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- 19. What to Measure? • Measure what enables flow and throughput. • Measure value delivered. • Measure how these affect financial results.
- 22. 1.Adopt systems thinking. 2.Understand what Value is. 3.Fix Flow. (use data.) Your Portfolio You
- 25. Contact/ References Slideshare- slideshare.net/dave225 Twitter - twitter.com/daveungar225 Email – dave.ungar@gmail.com Linkedin - linkedin.com/in/daveungar/ PMO LIG - PMI Central Ohio Chapter PMOLIG Group for Portfolio Management - Central Ohio Lean Portfolio Management Reading List: Everything you can find, and also: • Escape Velocity - Moore, G. A. (2011). Escape velocity: Free your company's future from the pull of the past. New York, NY: HarperBusiness. • The Lean Startup - Ries, E. (2011). The lean startup: How today's entrepreneurs use continuous innovation to create radically successful businesses. New York: Crown Business. • Principles of Product Development Flow - Reinertsen, D. G. (2009). The principles of product development flow: Second generation lean product development. Redondo Beach, Calif: Celeritas. • The new economics for industry, government, education - Deming, W. E. (1993). The new economics for industry, government, education. Cambridge, MA: Massachusetts Institute of Technology, Center for Advanced Engineering Study. • Drawing on the Right Side of the Brain – Edwards, B. (1979). Drawing on the right side of the brain: A course in enhancing creativity and artistic confidence. (leave your frame of reference!) • http://ScaledAgileFramework.com • http://www.lean.org/LeanPost/Posting.cfm?LeanPostId=243#.U9EYi5cvnzU.twitter
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- 27. "Efforts guided byinstinct do more harm than good“ "Knowledge management must come from the outside. Never intrinsic." -Deming
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- 30. •Feel Sick •Callto schedule an appointment •Wait on hold •Make appointment •Wait for appointment day to arrive •Check in at office •Wait for nurse to take BP •Wait for doctor •Talk to doctor •Doctor leaves the room •Doctor returns, he’s going to give you a prescription •Wait in lobby to get prescription •Drive to the pharmacy •Fill prescription •Go home •Take pills •Feel better
- 31. Roadmap how toprioritize strategic initiatives
- 32. Roadmap how toprioritize projects http://ppmexecution.com/tag/portfolio-optimization/
- 33. Roadmap how toprioritize projects Value (currency) Do nothing Steady stream (e.g. Revenue)
- 35. Priorities tug fromall directions. Resources are at a premium. Perspectives and agendas differ, and teams are asking for more focus. In this session, learn how Lean planning addresses these issues and what strategies, tools and techniques can help clarify your portfolio strategy and roadmap. Presentation Abstract: Defining a project backlog is the easy part of portfolio management. Prioritizing the backlog is more difficult, especially if your organization is keeping up with multiple initiatives. Demand management can be an even greater challenge – How can you be sure to have the right resources available when the business needs them? This session will take a brief look at Lean planning methodology, followed by strategies, tools, techniques and models for defining a portfolio strategy, allocating resources to investment categories, and creating a portfolio roadmap. Defining a project backlog is the easy part of portfolio management; Anything you can dream of goes into the backlog. Prioritizing the backlog is more difficult, especially if your organization is keeping up with multiple initiatives. Demand management can be an even greater challenge – How can you be sure to have the right resources available when the business needs them? Do you have a solid portfolio strategy and roadmap methodology to make data-based decisions? What if all of the key stakeholders don’t value the same outcomes? How engaged are the development teams when it comes to delivering outcomes and not just software? How often should you replan? This session will take a brief look at Lean planning methodology, followed by strategies, tools, techniques and models for defining a portfolio strategy, allocating resources to investment categories, and creating a portfolio roadmap. Some of the concepts covered: Brand Identity and Operational Mode, Analytical Hierarchy Process, Common Economic Value, Solution Matrix, Outcome Forecasting, Investment Categories.
Editor's Notes
- #3 Today we’re going to talk about Lean Portfolio Management – or, everything BUT Lean as you may know it. You can learn about Lean all over the place these days – I’ll talk about it briefly, but this is lean-portfolio, versus lean-get-a-bunch-of-stuff-done. Lean-get-a-bunch-of-stuff-done isn’t too hard – create a backlog, work it as a kanban system, measure and adjust. You can learn that a lot of places. And please do! (Lean six sigma is about process improvement and eliminating waste – also a worthy goal. You should learn about that too!) There is no “Agile Portfolio Management.” There is only “Portfolio Management.” And you can be good at it and responsive to business opportunities, or You can be lousy at it and view success as compliance to your documented plan. Lean Portfolio management – is about choosing the right things to invest your time and staff skills in, delivering them at the right time, and being flexible enough to adapt to new opportunities or new strategies based on what you’re learning from the market. Taking a cue from Deming – view outcomes as a part of the system. So don’t focus on the outcomes – focus on the system that produces the outcomes. I will give you key concepts and references for further study. You don’t need to write it all down – the slides will be available. Reference: Deming, W. E. (1993). The new economics for industry, government, education. Cambridge, MA: Massachusetts Institute of Technology, Center for Advanced Engineering Study.
- #4 First and foremost – if you think you want to be lean, you have to adopt systems thinking. Put the SYSTEM above objectives, above so-called success. You can’t improve by looking for quick wins and low hanging fruit, or by setting numeric goals. Start to view the enterprise as a system – turning a gear over there creates motion there, there and there.. (Clock from multiple perspectives – doesn’t matter how it’s moving, how you’re moving, what angle your viewing from, what’s obscuring it – it’s still a thing that tells time.) I guarantee that when you think about this or when you present it to others, people will say “But what about …?” Chances are, whatever that question is – is the WRONG question. They are trying to fit new thinking into an old context. Get yourself out of today’s thinking and the structures you’re comfortable with. The question is not “how do we keep <doing whatever>” but “what is the perfect system for delivering the most value in the shortest amount of time?” (And “What do we mean by ‘value’ ?”) And I stress that to be a systems thinker, you have to engage your right brain. Create visual art, write or read fiction, listen to music with intention, think about things you could invent, think of 100 ways to use a rubber band. You don’t have to produce anything – just get into that mode of thinking, often. And don’t phone it in – drinking wine and painting a copy of a tree is not engaging anything but your social life. References: Owens, D. A. (2012). Creative people must be stopped: Six ways we kill innovation (without even trying). San Francisco: Jossey-Bass. Godin, S. (2012). The Icarus deception: How high will you fly?. New York: Portfolio/Penguin. http://blog.bufferapp.com/connections-in-the-brain-understanding-creativity-and-intelligenceconnections?utm_source=WhatCountsEmail&utm_medium=Above%20the%20Fold&utm_campaign=Above%20the%20Fold&_wcsid=F77673E6099BBF92762F3ABB81240E6E0ED6D63E39980AC5E2E9227FD5C941C0
- #5 Exercise: How can you use a barometer to tell the height of a skyscraper? “undoubtedly the best way would be to knock on the janitor's door and say to him ‘I will give you this barometer if you tell me the height of this skyscraper'.” Change your thinking. .. So today I will give you ideas of where to spend some time learning. If you give me a free barometer, I’ll tell you more. >> Now let’s talk a little about Lean and why we’re not all using it already…..
- #6 Who here is old? Do you remember punch cards? Time-sharing on computers? You had to get it right the first time when you ran a program. It was costly and time-consuming to run code.
- #7 So we managed it like we manage building a skyscraper. You have to get it right the first time. There’s no architectural refactoring in a 100 story building. We don’t need that style any more, do we? Processing is cheap. We’re closer to manufacturing now. AND – it’s virtual. The biggest thing we’re wasting is time. Delivery teams have figured out that they can work differently and produce value faster. But at the enterprise level, we still want to plan and control everything – and the only way we can prove that we’re successful is compliance to the plan. REJECT! Lean portfolio management is not about scaling agile – this is about being agile.
- #8 Define what’s valuable – economic view, currency, scoring models Determine how to execute – value stream, resources Establish flow of value through the system – measure cycle time & throughput Limit work-in-progress. Cut waste. Increase capacity by opening bottlenecks. Demand-based, from customer through delivery chain Optimize
- #9 Agilists like to talk about business value. “Do the thing with the highest business value!” But what is business value? Look at Jim Collins/ Hedgehog Concept – it’s not just where the money flows – but where you can create unmatchable power in the marketplace and where you can authentically connect with your customers. That is what sustains your business. The money is what keeps it solvent. (Both in cash flow and in continued investment. No one wants to invest in a business that has no return.) If ROI is what’s really important… why don’t we just sell real estate? (ROI is an incomplete measure) Picture in the middle is an example from Pearson Publishing. Economic decisions are based on whether people (customers) are learning as a result. Think about Southwest Airlines – yes, they make a profit, but they are very focused on delivering the best travel experience (within their market segment.) (So I’m going to spend the rest of this session teaching you how to earn a positive cash flow with no money down.) Reference: Collins, J. C. (2001). Good to great: Why some companies make the leap--and others don't. New York, NY: HarperBusiness.
- #10 Key Point: If you are creating a new system of management, a new methodology – What is its aim? More value through the system, but in what respect? (ie brand) Who are we? When we talk about portfolio strategy, prioritization and project selection, we need a standard for making those decisions. Brand is your customers’ perceptions of you. (Including potential customers.) Uber – is not a product leader just be cause they were innovative. They are not customer-intimate just because they serve their customers well. They are operationally excellent because they can get a car to you when you need one. (See also, maybe, for other reasons – the Lean Canvas) Reference: Treacy, M., & Wiersema, F. D. (1995). The discipline of market leaders: Choose your customers, narrow your focus, dominate your market. Reading, Mass: Addison-Wesley Pub. Co. Ries, E. (2011). The lean startup: How today's entrepreneurs use continuous innovation to create radically successful businesses. New York: Crown Business.
- #11 Q: What if I can’t affect the brand? That’s way above me! A: 1) You can bring this question to your senior leadership. Perhaps they have an answer -or perhaps they’ve never thought about this either – they may need to take 6 months to get back to you. 2) You can make up your own answer. For lack of an answer from anywhere else, talk it over with your peers, your staff, your CUSTOMERS (but not naively – ask “how do you see us?”) .. Use that as a way to be consistent in your approach to prioritization.
- #13 Just look at the three columns. Segment investments. They have different modes of operation. =============================================================== (Opex = operational expense, Capex = capital expense, timex/ time.) Investment categories: Gotta do – to keep the product from dying Doing – current rate of growth (or decline) to maintain steady relevance as a mature/maturing product Disruptive – disrupting the market, differentiation, creating a new market, transformational. Plan these at the highest possible level – combine resources by investment type (category), not by product silo. Roadmap items should indicate VALUE and Effect on the Market (or customers.) Not merely features to be delivered. How will the market/customers’ lives change? Revisit the roadmap often. It’s probably wrong! A roadmap is a chart for how to get to a future vision. You don’t know what you’re going to encounter along the way – it’s an educated guess. You need it, but don’t expect it to be stable. It’s not for managing delivery! And don’t bother assigning dates – they’ll change. (Assign priority. Track cycle time. Infer dates based on those inputs.) Reference: http://www.mindtheproduct.com/2014/07/video-guide-roadmapping/ http://scaledagileframework.com/?s=roadmap Moore, G. A. (2011). Escape velocity: Free your company's future from the pull of the past. New York, NY: HarperBusiness
- #14 Look at an actual map of roads. Do you see dates? Don’t confuse a roadmap with a plan. A roadmap shows you how to get where you intend to go. And if you get off course, it shows you another way to get there. And it tells you how far you’ve gone and how much farther you have to go. So you can estimate when you’ll get to certain points, but that’s the schedule - not the map! Also – roads aren’t straight. Expect turns, detours, obstacles. The map is just a representation of the landscape. It could be wrong – it’s not real. References: http://jonkarpman.blogspot.com/ - 20 mile march – keep a cadence and work toward the goal. http://www.mindtheproduct.com/2014/07/video-guide-roadmapping/ http://scaledagileframework.com/?s=roadmap http://www.mindtheproduct.com/2014/08/video-changing-a-global-product-culture/
- #15 A portfolio roadmap starts to take into account what it takes to deliver the most important work at the earliest time possible – based on resource availability, dependencies, ability to execute and collective value. Us this to look back at the product roadmap and revise it – based on the portfolio plan. (i.e. Envision the product, create PRODUCT roadmaps, incorporate into the portfolio, create a PORTFOLIO roadmap, adjust the PRODUCT roadmaps based on portfolio strategy, goals and capabilities.) See also: Release Train, http://Scaledagileframework.com http://www.mindtheproduct.com/2014/07/product-roadmapping-prioritisation-portfolio/
- #17 First, establish flow. Think back to the coffee beans. Just getting them to flow through at a constant rate is the most productive thing you can do. Don’t try to get more through the funnel than will fit – first get them to flow so you can measure the rate of value through the system. Then, measure. Take that baseline measurement of what flow looks like. Also – don’t focus your staff on a numerical goal – focus them on a means to achieve better results. Try to jam more coffee beans through a funnel.
- #19 I won’t go into this too much today – in short, place value on the things that are closest to the customer. Start at the end of the chain and work backwards on what it takes to give the customers what they need. Spend effort on completing things that are almost ready to move to the next stage – but work right to left, not letting supply outpace demand. (don’t “push” things from one stage to the next – pull them as needed (or just before.)) References: Collins, J. C., & Hansen, M. T. (2011). Great by choice: Uncertainty, chaos, and luck : why some thrive despite them all. New York, NY: HarperCollins Publishers. Reinertsen, D. G. (2009). The principles of product development flow: Second generation lean product development. Redondo Beach, Calif: Celeritas.
- #20 Execution. So now we’ve established what Flow looks like, and have determined what Value is …
- #21 To make this practical – this is nothing new: create some programs, rank them against some value criteria, then: - Value STREAM Analysis. Validate ability to execute. This doesn’t have to be a complicated process using a PPM tool. In fact, a whiteboard works better. --------- How do we turn this into work for teams? How to define programs, estimate and promise delivery? How do we promise stuff to the market? (or users, if internal) when do we promise/ announce? *Using kanban, etc. Still can’t *promise* anything – but we can gain control over more environmental factors - (cycle time data/ estimation, focus) Reference: https://www.bmgi.com/resources/articles/seven-steps-hoshin-planning
- #22 Demand management Estimate on ideal team weeks, not on fte. Use Average Cycle Time to estimate. Project Manager becomes Program manager – manage multiple efforts, not individual projects. (Get a PgMP or PfMP !) A pit crew takes lots of individual skills – but the race is won by the team. Imagine if the car’s owner tried to allocate crew members based on how long their job took in the pit. The pit crew knows that their job is to work together to get the pit time as low as possible – let them figure it out. Read More: http://www.rallydev.com/community/business-agility-0
- #24 (Is there some way we can PULL the patient’s needs?) Who here has ever been to a doctor? Between the time you recognize the need to visit and the time you have a cure, how much time do you waste? (list) Which of these steps actually add value? What is the elapsed time/ cycle time? What if there were a system where you describe your symptoms and get a remedy within minutes? How great would that be? Think of all the waste we could cut out of this system. Now think about your own operations. How much time do you spend waiting for no reason, letting WIP sit idle? Where can you cut waste? This is called Value Chain analysis. *If the doctor only saw one patient at a time, would that mean less waiting? What if the doctor saw two patients at a time? From the previous slide, we know what flow looks like and we can measure the rate of value through the system. So now do we get more value through when we have one patient at a time or two? Let’s test it. Let’s measure. (I should add that you can create mathematical models that can take the place of much testing – although you still need to test once you’ve created a model that appears to increase efficiency.) *If we built a self-diagnosis machine, would that speed up delivery? What about quality? What changes can we make that will do the most to eliminate delays in value delivery? (And does it affect quality?) All good areas of study and important to understanding lean, Kanban, flow. Reference: https://www.coursera.org/course/operations https://www.udemy.com/operations-management
- #25 Fix the biggest problems that 1) cause the most costly delays and/or 2) limit flow/bandwidth/ throughput. Don’t focus on “What you can control” – focus on the biggest, costliest problems with delays & throughput. If it’s out of your control, find an advocate. Don’t make assumptions and don’t manage on intuition. Use experimentation/ testing and data to make decisions. Focus on throughput, not on cost cutting - Fix what limits throughput, not what cuts costs. There is a limit to how much cost-cutting you can do – and eventually, your mode of operation is to contract/shrink. (Cost-cutting may be beneficial if costs are way out of line.) More value through the system, faster. Not the same value through the system, cheaper. Focus on flow before focusing on bottlenecks. Don’t fix “low hanging fruit” problems. These are a distraction. You’re missing 80% of the tree. Fix the biggest problems that 1) cause the most costly delays and/or 2) limit flow/bandwidth. (Yes, I said fix problems with costly. But I mean delays – limits to throughput – fix the delays that cost the most in terms of throughput.) **Cost of Delay is THE single most important thing to fix. (reinertsen) Reference: Reinertsen, D. G. (2009). The principles of product development flow: Second generation lean product development. Redondo Beach, Calif: Celeritas.
- #26 Adding value –vs sucking value AT OCLC – I switched our measurement from “Are we doing the right things at the right time” to simply “How long does it take us to do anything?” WHY? Because getting work completed and putting value into production was the #1 change I wanted to invoke. So we started measuring success as: once we start on something, do we complete it on schedule? Is it adding value or sucking value? (either by being late or needing extra help.) (Can people game this? You bet – but for the better!) Use metrics to change behaviors, make decisions. Every metric should have a threshold that triggers an action. And rather than measure “are we doing the right things?” I just trust that the prioritization process is good. Because for now, it is. Our problem has never been whether we know the best thing to work on, nor has it been that the teams don’t work fast enough. The problem has always been that we bite off more than we can chew. So that’s what we measure. And people respond to that by making sure they can finish what they start before they start it. Tradeoffs: Productivity - vs Responsiveness - Efficient Frontier http://en.wikipedia.org/wiki/Efficient_frontier
- #27 You have a great car, but it’s outdated. It’s not going to run much faster by adding better parts. You need a new design. Take the time – pull off the road – design a new vehicle. You need to put real effort into changing. There is an incredible amount that I have skipped today. So I want to extend the offer to you that if you have more granular questions or are looking for good resources to answer questions specific to your organization, you can contact me and I’ll do my best to help. I have extensive research on the subject, but only selective memory! (Slides & references will be available) Complex System Takes effort, but reduces waste Takes guidance & facilitation, but simplifies plan Requires systems thinking and process learning – or faith. Adopt the Premise First - “Devil in the Details” – stay on the higher plane. Identify Constraints – to adapt, not to criticize. Plan/ Do/ Study/ Act - to implement, execute, learn and adjust the process.
- #28 Understand first, Action plan second While you need to learn big, you can start small. Create an action plan for implementation. Here’s the trick though – you have to understand the big picture. You may not know just how to implement the whole thing, but you have to understand lean as a system so you don’t get caught in the trap of trying to make it jive with an old way of thinking. Lean Action Plan: http://www.lean.org/WhatsLean/GettingStarted.cfm
- #29 A caution on the reading list – like I said at the beginning of this talk – you first need to seek understanding. Create your own philosophy. You can’t find a good cookbook – take ingredients from everywhere, understand how they can work together and cook it yourself. Tomorrow, make something better. This is about learning and changing. (Plan Do Study Act)
- #30 What are YOU taking away from this session? How will you put it into action? What do you need to know more about?
- #31 Taste this choc bar & describe to someone. Now do they know what it tastes like? Are you sure? If I gave you some chocolate , could you ID this (described) choc it in a blind taste test? I can tell you lots of things today. That won’t take the place of context, experience and experimentation. Plus there’s so much that I’m leaving out. Also – you can get a basic understanding from watching Youtube videos or reading LEAN in 30 seconds or some other lightweight “How to” books published by AgilePMPress … But really, you need to knuckle down and read some heavyweight operational management texts – and do some math homework so you can really understand how parts of a process interact and affect each other. This is real math, not armchair, intuitive ‘sounds correct’ management.
- #33 Now – how do you prioritize? … (Analytic Hierarchy Process (AHP), other math-based scoring models) No time today to get into this – AHP may be a good model for you to try if you have difficulty with prioritization across multiple criteria/ multiple stakeholders.
- #34 bubble chart. See why common currency matters?
- #35 outcome chart. See why common currency matters?
- #36 Make your biggest constraints internal, so you can change them at will. Eg *Rate of growth in a market segment * supply (capacity) and demand * Demand – via marketing strategy, don’t create more demand for your product than you can supply. Capacity limits Capacity limits – do not plan utilization at 100% Much easier to control these and adjust them as your throughput rises (or falls.) It would be harder to satisfy demand if you’re always at capacity or always way overstaffed (waste)