Agile Portfolio Management: Moving Faster at Scale

What Is an Agile Portfolio Management?

Agile portfolio management is guidance that applies agile principles to managing multiple projects within an organization. It focuses on three core pillars:

• aligning strategy and execution
• enhancing transparency
• fostering collaboration and continuous improvement.

The approach facilitates adaptive planning, quick response to changes, and optimal use of resources, driving better business results.

What Are the 3 Pillars of Agile Portfolio Management?

As we stated above, to sustain agility within their operations, Agile organizations focus on maintaining transparency, continuous improvement, and alignment of strategy with execution.

1. Maintaining Transparency Across the Organization

Transparency becomes increasingly important on the portfolio level. Gartner research shows that organizations will prioritize greater portfolio visibility. Over 47% of frameworks, processes, and tools now focus on enhancing transparency to support informed decision-making, a significant increase from 6% last year.

Traditional detailed status reporting is time-consuming and often inaccurate due to flawed estimations. Furthermore, with projects running across multiple teams visibility easily gets lost. Agile focuses on creating a shared purpose and uses connected visual boards to capture project ideas and provide a clear view of portfolio status. This approach reduces the need for extensive reports and promotes data-driven, flexible estimating to adapt plans based on new information.

Visualizing connected strategic and team boards

2. Continuous Improvement through Experimentation and Agile Portfolio Prioritization

To avoid overloading teams and increasing project failure risk, prioritize the most valuable projects by implementing value management practices. Agile encourages rapid experimentation to validate project ideas quickly, gathering data before making significant commitments.

When prioritizing validated projects, use the concept of cost of delay (CoD) to decide sequencing, focusing on those with higher CoD. If projects have the same CoD, prioritize the shortest one, but consider CoD alongside other factors like market and technical risks.

3. Aligning Strategy and Execution

Aligning strategy and execution is a central pillar of Agile portfolio management, with the portfolio serving as the connection between the two. Effective portfolio management, therefore, aligns top business objectives with project execution, and culture is essential.

Agile culture promotes frequent feedback loops at both the global (company-wide) and local (team) levels. By establishing short planning and learning cycles across organizational levels, you can review strategy, project risks, and delivery capabilities. This enables quick adaptation to high-level changes and allows operations to shift toward the most critical priorities as needed.

Connecting strategic portfolio management with operations using the Portfolio Kanban concept 

Traditional vs. Agile Portfolio Management

A portfolio represents a collection of projects, products, investments, or programs within a business unit. Managing this portfolio involves identifying and prioritizing projects to ensure the right tasks are done at the right time.

Image Credit: https://www.pmi.org/ 

In traditional portfolio management, prioritization relies on detailed project roadmaps and budget allocation, necessitating extensive upfront planning that is risky in today's volatile environment. This approach often results in overburdened teams and low productivity due to simultaneous projects started and suffers from low transparency, causing misalignment between strategy and execution.

Conversely, Agile portfolio management employs "test, learn, and adapt" principles and decentralized control, identifying priorities through rapid feedback loops and collaborative discussions. Agile planning is flexible, occurring on multiple levels with financial resources allocated to experiments and value streams rather than individual projects. This allows for the reallocation of funds based on changing needs or valuable new ideas. However, while 43% of organizations aim for flexibility in agile transformations, only 19% report fully achieving it.

How to Manage an Agile Portfolio in Practice?

To establish Agile portfolio management, use a comprehensive system to visualize, prioritize, and align projects with strategic initiatives. A robust workflow management system incorporates the following best practices.

1. Connect Strategy, Portfolio, and Project Execution

Agile portfolio management emphasizes visibility within the portfolio to maintain a shared understanding of project status and progress, bridging the gap between high-level planning and operations.

Strategic portfolio management involves visualizing initiatives, projects, deliverables, and work items on a single management board. For instance, an R&D department can use a dedicated portfolio board to visualize initiatives and break them down into sub-projects. Using parent-child project relationships and linked workflows in Businessmap, managers can track everything from departmental processes to individual tasks.

Tools like Businessmap integrate Management and Team workspaces to connect project planning with daily operations, providing transparency across multiple projects.

Visualizing a program management portfolio board

2. Manage the Portfolio Flow

After setting up your portfolio board, it's crucial to manage the project flow from concept to completion.

Map the value stream of all processes and implement commitment points to indicate when a project is ready for refinement, execution, or delivery. For instance, using the upstream Kanban process before the "Ready to Start" column on your board can help you validate project requests, allowing time to gather details and decide on engagement.

Run experiments at this stage to make informed decisions. Furthermore, explore limiting projects in progress to prevent team overburden, align demand with capabilities, and focus on critical initiatives, improving overall throughput.

Visualizing commitment points on a portfolio board

3. Review the Portfolio on a Regular Basis

Regularly reviewing your project portfolio is essential in Agile portfolio management. Use feedback cadences to assess the status of ongoing projects, products, or services. Engage in collaborative discussions with middle managers about dependencies, risks, capacity, and resource needs, aggregating input from multiple teams across the organization.

In management meetings, apply regular portfolio cadences and use your portfolio boards to visualize priorities. This helps managers prioritize new projects, ensure alignment with company strategy, and adapt to strategic changes, ensuring the right tasks are completed at the right time.

Kanban feedback ceremonies for planning and improvement

4. Analyze Metrics for Continuous Improvement

Continuous improvement is essential for effective Agile portfolio management. Collect and analyze data to make better decisions. Use Lean/Agile metrics such as lead time, cycle time, throughput, and WIP. Charts like cycle time scatter plots, for instance, can help you monitor project completion times and identify trends or outliers, enabling necessary adjustments.

Visualizing the average cycle time trend of work items using the Cycle Time Scatter Plot

Combine this data with Monte Carlo Simulations for probabilistic forecasting based on historical data, not gut feeling. This approach helps predict outcomes for multiple projects, aligning with your team's actual capabilities.

Example of work forecasting using Monte Carlo: How Many simulation

In Summary

Agile portfolio management is a more flexible way of managing a portfolio of projects, programs, initiatives, etc., by focusing on decentralized control, transparency, continuous experimentation, prioritization, and better alignment between strategy and execution. Building an effective Agile portfolio management process requires you to have a complete management system in place so you can:

• Bridge the gap between strategy, portfolio, and project execution;
• Manage portfolio flow;
• Engage in regular cadences/feedback loops (such as Portfolio Reviews) to adapt to changes;
• Analyze metrics and continuously improve.