Today, organizations face challenges managing portfolios of projects and initiatives as the business landscape rapidly evolves. To address these complexities, many forward-thinking businesses are turning to Lean portfolio management (LPM) to close the gap between strategic thinking and execution.
LPM is a strategic approach that aims to optimize the flow of value through effective portfolio management, aligning investments with strategic objectives and ensuring efficient execution.
Differentiating between traditional and Lean portfolio management (LPM) is crucial in understanding the benefits and advantages of adopting a Lean approach towards achieving organizational agility.
Traditional portfolio management typically relies on a hierarchical decision-making structure, extensive documentation, and a focus on detailed planning upfront. It tends to be more rigid and sequential, making adapting to changing market dynamics challenging. On the other hand, LPM embraces agility and continuous improvement thinking. It fosters a culture of empowerment, collaboration, and decentralized decision-making.
By distinguishing between the two approaches, organizations can recognize the limitations of traditional portfolio management and leverage LPM to enhance flexibility and overall portfolio performance.
|Traditional Approach to Portfolio Management||Lean/Agile Approach to Portfolio Management|
|Hierarchical and centralized decision-making||Promotes ownership and a decentralized decision-making|
|Tendency for project overload due to large backlogs of multiple priorities||Limiting project work on a portfolio level|
|Top-down approach to planning driven by projects||Roller-wave planning – continuous planning based on the continuous flow of value; constantly realigned to the business goals|
|Project-based funding||Value-stream funding|
|Performance driven by the amount of output delivery||Outcome-focused value delivery|
|Business cases based on speculative project details (ROI, costs, risks, etc.)||Business cases with MVP|
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