project management

Use agile portfolio management to maximize the business value of products and services

3 June 2021

BizDevOps
Business Agility

Determining which initiatives will lead to the most valuable products and services in the next six months is not possible, or at least not yet. The high degree of complexity and uncertainty makes it difficult to understand the near future. Quickly adjusting priorities and daring to stop projects are key features of agile portfolio management. How does this works?

Focus on end products instead of thinking in terms of projects

A company will often have a large number of projects underway. Having a large number of projects creates some tough challenges, particularly when it comes to efficiency. Your aim is to deploy employees correctly and align resources to current and future activities, gain insight into strategic added value, and proactively manage the project portfolio.

In the classic vision, a project portfolio is the hard facts about what a (development) team will do in the coming period. This can be seen as a kind of one-way communication.

With an agile approach, a portfolio is regarded as a set of possibilities and options around which a constant dialog takes place. The focus remains on the end product, which means the project is never an objective in itself and there is a continuous trade-off process in order to keep an eye on the business value.

Use a portfolio as a guide with options and opportunities

An end-to-end flow starts with discovering (capturing and understanding) and specifying (high-level analysis and synthesis). The start is initiated by triggers: business issues that we want to solve, end-user needs, things that we want to market or expand further. We look at potential risks in the areas of business, technology, skills & knowledge that we need, as well as cost and timing. What can we do, what do we need to do, what budget can we spend, and what skills do we need for this? We generate feasible business ideas in the form of hypotheses. The result is a list of concrete options, from both a business perspective and a technical perspective. This includes testability, releasability, operability, security, etc. The options and associated requirements are worked out in detailed user stories, so that the product team can start working with them immediately. More about this in the next blog in this series.

 

Of course, at some point (the commitment point, as indicated above in the figure), a choice must be made about what the organization wants to opt for, based on importance and available resources. In the traditional approach, this point is very early in the process. Agility first requires a lot of forethought so that you can push for the right thing at the right time, which typically translates into committing as late as possible. It can be helpful to narrow things down and give the green light where there is already consensus.

From then on, the selected project is placed in the backlog of a product team and it visualized on a Kanban board. This makes a portfolio a tool for visualizing all projects that an organization wants to focus on in terms of resources. It’s the turning point, from "loose idea" to "we’re going for it".

Accepting the unknown and constantly adjusting the chosen idea

No matter how careful you are with the list of options, there will always be unknown factors. With a traditional approach, these circumstances lead to the constant shifting of resources (people and budget), and many projects die a quiet death halfway through. You can keep a project realistic and focused on the end goal by continuously filling in the knowledge gaps, which are always there at first, with first-hand feedback. This sort of feedback loop can be achieved by small-scale experiments, feasibility studies, prototypes, etc.

By circulating the input of those carrying out the work (feedback loops), an organization can gain insight into what works and what doesn't work. Based on this, it can adjust its activities at every stage of the flow, so that people always invest in what provides the highest possible value.

Everything about feedback loops

This article is part of a blog series covering all the key components of an agile development process. Also be sure to read the previous article about this.

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