Every success story is a tale of constant adaption, revision and change.
– Richard Branson

Enabling Strategic Alignment with an Enterprise Strategy Room

By Saahil Panikar, Atlas Revolutions

Note: This article is part of the Community Contributions series, which provides additional points of view and guidance based on the experiences and opinions of the extended SAFe community of experts.

An Enterprise Strategy Room is a dedicated space for strategy formulation, portfolio alignment, and ongoing strategy agility for a single Enterprise.

Why use an Enterprise Strategy Room?

It used to be that big companies beat small companies, but in the Digital Age, we now know that “fast beats slow.” Organizations that quickly respond to changing market conditions are winning across all industries. The largest organizations can struggle to align their portfolios to a unified strategy, preventing them from achieving the best possible outcomes. They quite literally do not give themselves the time and space to create the necessary alignment.

By introducing strategy agility, Scaled Agile shifted the conversation away from whether or not there is a need to respond to changing market dynamics to how best to do so. Strategy agility is driven by good-quality data, customer feedback, and observation of end-user behaviors. The challenge of strategy agility is the sheer volume of information that is available to be taken in and used. In other words, how do we separate the least valuable information from the more valuable and actionable information? One technique enabling large organizations to have strategy agility is to create an Enterprise Strategy Room (ESR).

What is an Enterprise Strategy Room?

ESRs are dedicated spaces for strategy formulation and ongoing strategy agility. They are a critical enabler of strategy agility.

Enterprises with multiple SAFe portfolios or a desire to improve strategy coordination between portfolio leaders benefit from using an ESR. Having a well-maintained ESR provides Enterprise leaders with:

Increased strategy agility
Enhanced cross-portfolio alignment & coordination
Actionable real-time data
Optimized resource allocation
Improved cross-portfolio communication

The ESR is the nerve center of the enterprise, overseeing its portfolio investments and initiative execution. It plays a crucial role in monitoring the performance of programs and key initiatives across all major portfolios. This setup fosters strategy agility, enables cross-portfolio collaboration, and supports sustainable growth in key investment areas.

Figure 1. The right people with the right information at the right time solving the right goal

The ESR is a single physical room that has walls covered with real-time data per portfolio. It creates a living summary of all the portfolios rolled up into one view of the whole enterprise. The ESR’s value is in the rapid alignment and decision-making enabled by real-time or near-real-time data. The importance of bringing your portfolio leadership or executive team together to review the data and make decisions cannot be understated. Frequently, just by co-locating these individuals, significant barriers to organizational progress are removed. Common sources of information include:

Financial data – Enterprise investments are informed by the financial state of each portfolio. By visualizing portfolio budget allocations, investment trends, cost projections, and revenue forecasts associated with each value stream, executives have crucial insights into the financial health of the enterprise. This enables making informed decisions about resource allocation and investment prioritization.
Performance metrics – Enterprise strategy is only as good as the quality with which we can execute it. Performance Metrics, including operational and quality metrics, work status, key milestones, resource allocations, and risk factors, enable the organization to track the progress of key initiatives. This tracking helps identify areas for improvement and opportunities for intervention, supporting successful, on-time, on-budget delivery of these initiatives.
Market data – Enterprises must be able to capitalize on market opportunities and maintain a competitive posture. By including market data such as recent market trends and forecasts, competitor analysis, and customer feedback, we create a fuller picture of how we fit into our strategic markets.
OKRs, value stream KPIs, and other outcome metrics – Outcome metrics can provide actionable insights into whether or not we are asking for the right things. It’s important to know not just whether we are executing well but whether or not our strategy is effective in the market.

Some ESRs only contain portfolio-level data, representing all of the portfolios in the enterprise. At the portfolio level, the financial data may include budget allocations showing how different programs, projects, products, and initiatives are drawing against portfolio funds. Trend-line data may also show how the current allocations differ from the past. This will also enable potential future revenue forecasts and cost projections.

Other ESRs will roll all of that data up into a “single enterprise view,” almost like a summary dashboard, but every ESR will still contain the portfolio-level data that is critical to cross-portfolio coordination.

It’s critically important that we are able to tie that financial data to the performance data of the teams, trains, and programs that make up the portfolio. By looking at KPIs and quality metrics, enterprise leaders have the ability to assess the effectiveness of their major investments.

We also want to ensure that we don’t create too much noise in the ESR. This is one case where it is possible to have too much data if that data does not add value to the conversations that the Enterprise leaders need to have to align the portfolios. Expense reports, funding sources, financial ratios, and cash flow are all valuable financial metrics, but they are likely to create more noise than value in an ESR.

For Enterprises that want to make the best use of the data contained in their ESR, it’s important to have well-written Enterprise epics that capture the enterprise’s current long-term strategic thinking. Enterprise epics help us determine what baseline we are making our decisions against.

In a Fortune 500 Aerospace & Defense organization that I was coaching, we were able to recognize that there were significant portfolio level investments that did not directly align with the long-term enterprise strategy. By asking, “What enterprise epics do these portfolio epics support?” we were able to have a conversation that ultimately resulted in those epics being deprioritized in favor of a different set of epics that better aligned to the enterprise.

In the same organization, we recognized that one portfolio’s roadmap was not progressing as fast as anticipated. By asking, “Do we need to intervene here to create the right Enterprise outcome that we were looking for?” our Enterprise Executive was able to directly close the gap in the internal processes that were causing the delay.

NOTE: During the early stages of the COVID pandemic, we showed that while much of the value of an ESR can be realized virtually, we were not able to realize the same level of value because leaders would drop off the call after the planned agenda was over, and we lost the opportunity for emergent discovery through being in the same space.

Who would benefit from an Enterprise Strategy Room?

Depending on the context of the enterprise, there might be other information that is critical to better respond to the market. Every ESR has a place for that information to be collected and displayed to enable faster decision-making and greater alignment across portfolio leadership. In short, if the Enterprise leaders need to know it, it should be in the ESR.

Depending on the nature of the organization, the people that might have access to the ESR would be different, but will definitely include all those involved in Enterprise Portfolio Management (EPM):

Figure 2. Enterprise Portfolio Management Collaborations

Enterprise Executives – The most senior executives of the organization who define and guide the medium-long term strategy and direction of the enterprise.
Portfolio Leaders – Those who lead the strategy and investment activities for each SAFe portfolio, including Business Owners and Enterprise Architects. Their leadership shapes the direction and success of their respective portfolios, influencing how the enterprise evolves in response to strategic objectives.
Enterprise Strategists – Professionals who assist enterprise executives and SAFe portfolio leaders in identifying long-term strategic goals. By continuously providing the necessary information through analysis and research, they ensure leaders have access to the right information at the right time for market decisions.
Portfolio Stakeholders – Those with critical knowledge and insights needed to ensure the successful delivery of the solutions within each portfolio. The business unit and departmental executives often represent these and are able to better speak to how their business units and departments can operationalize the strategy.
Enterprise Epic Owners – Those responsible for shepherding cross-portfolio initiatives through the enterprise portfolio Kanban system and have the biggest direct insight into the scope and impact of a specific initiative.

In addition to the roles that you might expect when implementing SAFe at this level, you may also find that finance managers, data / cyber security specialists, and legal officers are necessary to include in your ESR-hosted discussions.

What makes an ESR invaluable is how quickly executives and portfolio leaders are able to respond to new information and opportunities.

One of my favorite stories of the impact of an ESR is that in a Fortune 100 Financial Services company, twenty minutes into our very first Enterprise Portfolio Sync (cross-portfolio coordination meeting), we identified a major effort being duplicated in not two but three different portfolios. By highlighting all of the major portfolio initiatives in flight for each portfolio and recognizing the triplication, we were able to save the company almost 12 million USD by eliminating the unnecessary overlap between the portfolio initiatives. By lifting the initiative up to the Enterprise level, we saved months in the delivery schedule, reduced the cost of delivery and maintenance, and increased alignment in the organization. It immediately proved the value of the ESR to all of our senior managers and portfolio leaders.

When would you use an Enterprise Strategy Room?

Changes may occur in both our market context and our internal organizational environment. In order for the ERS to be effective, it has to be relevant, so not only must the data be kept up and accurate, but it must actually be used! The best way to keep the ESR relevant is to make it the backdrop for all of the major portfolio and enterprise portfolio events. Experiences with multiple customers show the following are beneficial cadenced events.:

Enterprise Portfolio Sync: The ESR enables cross-portfolio syncs by giving the portfolio leaders and stakeholders immediate access to the current state of significant and coordinated value that is delivered across portfolios. As a side benefit, it helps keep the ESR up to date if new information is collected during the Portfolio Syncs. The enterprise portfolio kanban is a key element to these updates. Maintaining the enterprise portfolio kanban will take data points from key stakeholders and participants from all across the enterprise, such as VMO Leaders, Portfolio Leaders, Epic Owners, and others. One of the best ways to bring them all together and ensure that the enterprise portfolio kanban is up to date is to keep the enterprise portfolio kanban in the ESR.
Enterprise Strategy Review: The ESR is a great place to host all of your individual Strategic Portfolio Reviews, and it is the best place to host your Enterprise Strategy Review. By doing so, you ensure that decision-makers will benefit from the same information across individual portfolio and cross-portfolio sessions. All portfolios in the organization can make better decisions that support each individual portfolio and the entire enterprise. For the enterprise to reach its full potential, leaders need to be able to see and discuss potential future cross-portfolio opportunities. This helps the enterprise maintain its market leadership and competitive advantage.

Building an ESR

In order to implement an enterprise strategy room, you need to understand your strategy. The first thing you may do is secure the space and start bringing the data. Whatever information you have is valuable, and centralizing it in the ESR is even more so. Once you get started, you continue to expand. You add more data, insights, and structure to the ESR. Eventually, you will have a room that is both valuable to the enterprise and valued by its portfolio leaders. The changes in the ESR will be incremental; as leaders start to use it they will determine what information is most valuable or what additional information they need in order to make the best possible decision. Each conversation builds more momentum for the ESR to become the nerve center of your organization’s agile operations.

The very first time I implemented EPM, we quickly identified the need for a way to visualize the unique needs of each portfolio, but we immediately struggled with the executives’ need to understand how each portfolio supported her vision. Our solution was the enterprise strategy room. It gave her everything she needed to understand how the portfolios were supporting her strategy, the current state of each Portfolio, and what actions or interventions were necessary at the Enterprise level.

When we started building the ESR, we accidentally created too much noise in the room. Because we asked ourselves, “What do we WANT to know?” we ended up including a lot of market data that we thought was going to be useful for making strategic decisions, but the reality was that for this organization, the market data was less impactful to our strategy simply because the market cycles are very long and were unlikely to change. (Multi-year government awards and programs). So we had to shift our thinking to “What do we NEED to know?”

We also found that we didn’t include the right people right away. We started from the assumption that we would only be discussing specific topics and only needed to include a small subset of the portfolio leads that we thought were relevant to those topics. The reality was that from an enterprise execution perspective, portfolios had different customer bases and product lines. Yet the shared foundational services were so connected that we were unintentionally impacting other portfolios. As a result, we eventually started to include all the portfolio leads in every Enterprise Portfolio Sync.

A physical ESR adds extra benefits by being a concrete place where people can gather and feel that they can see, feel, and influence the entire enterprise. There is value in bringing together the people who can influence the organization in a place that empowers them to do so with the right information to make the best decisions for the entire enterprise.

What are the benefits of Enterprise Strategy Rooms?

ESRs Enhance Alignment & Coordination

The ESR creates strategic insights and fosters greater alignment in and among the portfolio leaders of an organization. By providing a common backdrop of data-driven insights, it gives all portfolio leaders a common and comprehensive view of the organization’s strategic landscape. As a result, all of the portfolios in an organization naturally start driving towards common outcomes and a shared understanding of strategic objectives and their short and long-term priorities.

The ESR is a place where executives can communicate shifts in strategic priorities, have insights, and provide updates on key initiatives. It also, quite literally, brings all of the portfolio leaders to the same room and physically enables them to talk to one another.

One additional benefit of the extra alignment that an ESR will create is that you will start to build a more lean-agile enterprise as a byproduct of having the right people in the right place with the right data. The enterprise view in an ESR contains all of the building blocks of enterprise agility. This means that you will find enterprise artifacts like the strategic themes, value stream OKRs, enterprise portfolio kanban board, enterprise epics, KPIs, and flow metrics physically present and available on the walls.

ESRs Drive Real-Time Decision Making

The ESR empowers portfolio leaders by giving them access to the most up-to-date information about projects, products, programs, and portfolios. By keeping this information current, the organization ensures that we can respond as fast as possible by adjusting our goals, strategy, and even our short-term and long-term delivery plans.

In order to successfully use the data for real-time decision-making, the data in the ESR must be kept as close to real-time as possible so that we’re not making decisions with outdated information. In the case of virtual ESRs that are drawing on ALM and PPM tools, as long as the tools are updated, the ESR stays up to date. Because of the ease of managing this data digitally, some organizations put many large screens into their ESRs and have all the information displayed straight out of the tool.

Other organizations prefer the paper-on-the-wall approach because it gives them significantly more space to take over and put on the walls. In those circumstances, it is almost always the responsibility of the Value Management Office or Agile Program Management Office to keep the information as current as possible while they perform their lean governance and LPM coordination activities.

ESRs Optimize Resource Allocation

The ESR is a powerful platform for resource optimization specifically because of the enhanced ability to respond to change and pivot in near real-time. Given the most current data, the enterprise portfolio management team can recognize underperforming projects, programs, products, or initiatives. The EPM team can then reallocate resources away from those initiatives towards higher value, higher priority initiatives, or they can bolster the underperforming ones with an even greater resource investment if needed.

Additionally, the enterprise may also be able to reallocate resources not based on performance but based on the value delivered by the initiatives in the enterprise. It’s possible that we have a well-executing program, and the end result still isn’t impacting our enterprise strategy the way we thought it would. We now have the information to do something different and stop pursuing something that we know isn’t working out.

Summary

To enhance strategic alignment and foster agility in a rapidly changing market, organizations are encouraged to establish an Enterprise Strategy Room (ESR). This dedicated space enables effective strategy formulation and agility by providing real-time data and insights across portfolios, improving cross-portfolio alignment and coordination. Enterprises should populate the ESR with financial, performance, market data, and outcome metrics for thorough analysis. The goal is for enterprise leaders to use this comprehensive view to make informed decisions, optimize resource allocation, and achieve sustainable growth. Leaders are advised to regularly bring together portfolio leadership or executive teams within the ESR to facilitate rapid alignment and decision-making, leveraging the live data to break down organizational barriers and stay competitive.

Last Update: 5 August 2024