Glossary What is Lean Portfolio Management (LPM)?
By / 2 Jan 2023 / Topics: Agile
Lean Portfolio Management (LPM) is an Agile approach to operations that organizes teams in a way that leads to faster development and deployment of products and services. With LPM, teams are de-siloed and organized into value streams, which in turn receive adequate funding and guidance to continuously deliver value, or capabilities to a product or solution.
These value streams are focused on value delivery and develop solutions and products at an optimal speed. This approach also results in a more robust plan that closely aligns with business goals and leads to better business outcomes due to each value stream’s ability to shift focus and complete work fast.
To effectively implement LPM, it is important to address three key dimensions:
- Strategy and investment funding to align the portfolio with the organization's goals and establish a lean budget and portfolio flow.
- Agile portfolio operations include coordinating value streams, supporting program execution and promoting operational excellence.
- Lean governance entails overseeing spending, measuring performance, implementing dynamic budgeting and forecasting expenses.
Differences between lean portfolio management and traditional portfolio management
Oftentimes, traditional portfolio management is top-down where each stage of project or product development is planned at the outset. A large budget is allocated at the start of the project. Each stage is often completed in a specific order and the product or solution is deployed when all stages are complete.
This can be a laborious process — especially when it comes to developing digital products and solutions. And an organization can be slow to adopt innovative capabilities or effectively compete with the market when it follows a traditional portfolio management process.
However, LPM addresses these concerns by having teams deliver value early and fast and then continuously improve upon the product. This allows the organization to enter the market in a timely manner and more easily adopt and adjust to disruptive innovation.
