One of the biggest challenges of a large enterprise is to choose the set of projects that will realize the greatest return on investment (ROI) possible. To achieve this, organizations use some form of product-portfolio management.

Lean Portfolio Management

In smaller organizations, there are normally one or two projects going on at any given time. In this case, it makes sense to focus most improvement resources on bettering the product-development process.

By the time an organization is large-scale, however, a bigger payoff comes from selecting a mix of products and release scenarios that creates the most value for the enterprise. This is called “portfolio management.” Portfolio management applies to both product-development organizations and IT organizations.

Virtually all large organizations have a portfolio of projects that they must manage. The mix of these projects is designed to maximize the return on their software-development investment. Ideally, the most important projects would be selected and then given to the development teams; but the larger the portfolio, the harder it is to administer.

Think of project ideas as a type of “work-in-process” (WIP). As long as an idea is in process, the business does not realize value from it. The quicker you can turn it into a real product, the sooner it has value. Delays cause excess WIP.

Organizations use several approaches to avoiding these delays, such as trying to batching-up project analysis or increasing releases. These lead to ideas that are stale.

Lean Thinking Offers a Better Way

Lean thinking offers a way out of the vicious cycle that can come with managing a large product portfolio. Lean directs us to select smaller projects to work on whenever possible. This does not mean picking small projects from the batch that has already been identified; rather, it means that, early in the planning, projects are defined as small as they can possibly be. This ensures that essential projects are being worked on all the time. Projects that are too large run the risk of bundling together features that are less important to the organization overall.

This approach

• delivers value to customers more quickly by prioritizing which business features to work on based on business value and then managing the project in a visible portfolio. We call this Lean portfolio management.
• allows stakeholders and clients to identify and prioritize features that create the highest ROI for the business.
• focuses status reviews on validation of technical results rather than on  tasks completed.

The benefits of Lean Portfolio management include:

• improved speed and quality
• maintaining line-of-sight to Business needs
• minimizing WIP
• minimizing interruptions
• shorter planning cycles