Lean Portfolio Management (LPM) is one of the seven core competencies of the Scaled Agile Framework (SAFe). It serves as the strategic bridge connecting the enterprise's high-level strategy with the execution of Agile teams. Unlike traditional portfolio management, which focuses on funding temporary projects with rigid annual budgets, LPM aligns strategy and execution by applying Lean and systems thinking approaches to three areas: Strategy and Investment Funding, Agile Portfolio Operations, and Lean Governance.
At its core, LPM shifts the focus from funding projects to funding "Value Streams." This involves establishing "Lean Budgets," where funding is allocated to the long-lived teams of people (Agile Release Trains) who deliver value, rather than specific scopes of work. This allows for dynamic resource allocation and empowers decentralized decision-making, enabling the organization to pivot quickly based on market feedback without the administrative burden of re-budgeting.
LPM operates on three dimensions:
1. Strategy and Investment Funding: Ensures the portfolio aligns with business targets by connecting the portfolio to the enterprise strategy and establishing financial guardrails.
2. Agile Portfolio Operations: Coordinates and supports decentralized program execution, fostering operational excellence and cultivating the Agile Program Management Office (PMO) or Value Management Office (VMO).
3. Lean Governance: Manages spending, audit, and compliance through objective metrics and continuous review rather than traditional phase-gate approvals.
For a SAFe Agilist, LPM is vital because it moves the organization away from a "project mindset" toward a "product mindset." It ensures that the work being done by the teams is strictly aligned with the strategic goals of the company, maximizing the flow of value to the customer.Lean Portfolio Management (LPM) is one of the seven core competencies of the Scaled Agile Framework (SAFe). It serves as the strategic bridge connecting the enterprise's high-level strategy with the execution of Agile teams. Unlike traditional portfolio management, which focuses on funding temporar…