Home Articles How Traditional and Lean Portfolio Management Are Different?

How Traditional and Lean Portfolio Management Are Different?

Lean Portfolio Management is the Key Element of Business Agility. Mastering the ability to align strategic goals and execution can support your journey to business agility.

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 ManagementLean/Agile Approach to Portfolio Management
Hierarchical and centralized decision-makingPromotes ownership and a decentralized decision-making
Tendency for project overload due to large backlogs of multiple prioritiesLimiting project work on a portfolio level
Top-down approach to planning driven by projectsRoller-wave planning – continuous planning based on the continuous flow of value; constantly realigned to the business goals
Project-based fundingValue-stream funding
Performance driven by the amount of output deliveryOutcome-focused value delivery
Business cases based on speculative project details (ROI, costs, risks, etc.)Business cases with MVP

Isabel Leung and Howie Sung are the co-founders of The Agile Eagle, the premiere Scrum, and Agile training and coaching organization.

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