agile-portfolio-management

Agile Portfolio Management In A Nutshell

Agile Portfolio Management (AgilePfM) is a high-level change management framework that ensures that business change strategy remains under continuous review. AgilePfM reviews changes in a business environment and then coordinates similar changes within the business itself.

Understanding Agile Portfolio Management

Agile Business Change philosophy states that “best value emerges when business changes are aligned to clear business goals, deliver frequently and are powered by the effective leadership of fully engaged, autonomously collaborative teams”.

To facilitate this alignment, AgilePfM reviews changes in a business environment and then coordinates similar changes within the business itself. It also ensures that change is articulated through the setting of strategic goals. These goals then provide a foundation for approving, prioritizing, and governing subsequent work.

However, organizations may nevertheless struggle with change at the portfolio level. More traditional practices such as annual budgeting and inflexible strategy definition can stifle the effectiveness of agile delivery. In the most severe instances, this rigidity can negate the benefits of agile principles entirely.

To address this conflict, AgilePfM encourages agility at the project and program level while allowing organizations to maximize value from portfolio investments.

The four-step portfolio process of AgilePfM

  1. Confirm portfolio drivers. What is driving high-level outcomes? How do they relate to vision, goals, or objectives? It’s also important to consider the role of culture and leadership.
  2. Confirm portfolio foundations. Here, the business must establish strategic alignment criteria using certain key performance indicators. These KPIs might include profit, volume, or customer satisfaction metrics. 
  3. Deliver change. This may include agile budgeting in combination with continuous idea management and portfolio prioritization. Whatever the change initiative, it must be coordinated and planned for appropriately. In other words, the change must deliver incremental value to the organization as quickly as possible.
  4. Keep it current. AgilePfM encourages the periodic reassessment of strategy and portfolio alignment by measuring ROI for the KPIs established in the previous step. ROI should also be calculated after high-impact events have occurred.

Agile governance and portfolio-specific rules

In managing change at the portfolio level, organizations must adhere to a suite of general and more specific rules.

Agile governance rules

  • Value must drive priority (do the right things).
  • Quality should never be compromised (do the things right).
  • Decide with initiatives. Do not manage them.
  • Give clear and considered direction.
  • Stay informed.

Agile portfolio rules

  • If it is in the portfolio, then it must be in the strategy.
  • If there is no strategy, stop! Do not proceed with AgilePfM without one.
  • Constantly review the portfolio and adjust when required. Do not perform one-off exercises.
  • Concentrate on prioritizing, blending, and balancing with a near-term horizon of no more than a few months ahead.

Key takeaways

  • Agile Portfolio Management is a high-level change management framework that favors continuous change strategy review.
  • Agile Portfolio Management allows businesses to incorporate agile practices at the traditionally rigid portfolio level. Processes that may become less rigid include budgetary planning and strategy definition.
  • Agile Portfolio Management is governed by general agile governance rules and more specific rules that guide agile practices at the portfolio level. In the latter set of rules, business strategies must be holistic and continually reviewed no more than a few months ahead.

Read Next: Business AnalysisCompetitor Analysis, Continuous InnovationAgile MethodologyLean StartupBusiness Model InnovationProject Management.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"