Portfolio Leadership

To scale daring leadership and build courage in teams and organizations, we have to cultivate a culture in which brave work, tough conversations, and whole hearts are the expectation, and armor is not necessary or rewarded.

-Brené Brown, Dare to Lead

Definition: Portfolio leadership is the team with the highest level of decision-making and financial accountability for the products and solutions within a SAFe Portfolio.

What is the role of Portfolio Leadership?

Portfolio Leadership plays a crucial role in overseeing Lean Portfolio Management and ensuring that the portfolio’s work aligns with its strategic themes and financial goals and those of the broader organization. Despite their different titles and roles within the company, they all aim to make sure the portfolio’s value streams help the company achieve its goals efficiently and effectively. Their job as a team is to ensure that the company’s efforts in developing products or services lead to success. Portfolio leaders also have a responsibility to modernize portfolio management practices. They adopt Lean-Agile principles and help organize ARTs around the value stream to enable them to deliver the portfolio strategy.

Portfolio leadership is generally a team of people across business, technology, and finance. In smaller organizations with a single portfolio, this team is often the executive team. In larger organizations with multiple portfolios, the team is often made up of the senior leaders accountable for each portfolio.

As shown in Figure 1, Portfolio Leaders collaborate to guide the portfolio to successful outcomes. As described in the LPM Core Competency article, the group of people who participate in and support Lean Portfolio Management is broader than the Portfolio Leadership team.  These collaborations are described in more detail below.

• Strategy and Investment Funding requires Portfolio Leadership to work closely with Enterprise Executives, Business Owners, and Enterprise Architects. This group helps Portfolio Leadership define the portfolio’s strategy, make investment decisions, and focus on improving portfolio flow.
• Agile Portfolio Operations requires Portfolio Leadership to work closely with members of the VMO (Value Management Office), the LACE (Lean-Agile Center of Excellence), and various COPs (Communities of Practice). This group coordinates and supports decentralized ART execution and fosters operational excellence.
• Lean Governance requires Portfolio Leadership to work closely with the VMO, Enterprise Architects, and Business Owners. This group supports oversight of spending, audit, compliance, expenditure, measurement, and reporting.

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Note: This article describes the specific responsibilities of the Portfolio Leadership team, the behaviors the Portfolio Leaders exemplify, and how to form the Portfolio Leadership Team. The related Lean Portfolio Management article provides information on the techniques and practices for operating a Lean Portfolio, including the additional roles mentioned above.

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What are the responsibilities of Portfolio Leadership?

As mentioned above, many elements of LPM require Portfolio Leadership to collaborate with other roles across the organization and within the portfolio. However, some specific responsibilities fall squarely with Portfolio Leadership. These are described below, and some suggested further reading is provided.

Maintaining a portfolio vision and formulating a portfolio strategy

The Portfolio Leadership team creates and maintains a vision for the portfolio, outlining the future state of its value streams and solutions to guide the ARTs and Agile Teams. This vision, along with clear strategic themes, motivates teams, ensures alignment, and focuses efforts on the most important work.

Creating and maintaining the portfolio roadmap and backlog

Portfolio Leaders need to be aware of what is changing in their industry and potential threats or opportunities, such as new markets, products, or services that could help the company grow and diversify. To realize these competitive needs, the Portfolio Leaders evaluate and prioritize epics, working with Epic Owners to develop lean business cases. Portfolio Leaders organize these epics into a portfolio roadmap and backlog that drives the execution of the portfolio strategy.

Establishing and funding value streams

Portfolio Leaders are key in directing an organization’s resources toward achieving strategic goals. This includes optimizing the allocation of workforce capacity, budget, and time being spent on particular initiatives and ensuring a balance between immediate needs and future innovation. Portfolio Leaders also prioritize needed portfolio capabilities, including data, applications, and infrastructure, to support innovation and generate added value.

Mitigating risk and fostering innovation

Portfolio Leaders play a vital role in mitigating risk and guiding their organizations toward future goals by engaging in regular scenario planning. This proactive approach involves integrating risk assessment and mitigation into strategic decisions to prevent potential issues from affecting performance. Portfolio Leaders also foster a culture of innovation and experimentation. This is crucial for developing new digital offerings and testing Minimum Viable Products (MVPs) in real-world scenarios.

Supporting the Value Management Office in portfolio operations

The VMO plays a crucial role in helping the organization move from conventional project management approaches to a focus on continuous value delivery. Portfolio Leaders are responsible for clearly communicating the necessity for this change throughout the portfolio. This clarity is essential for the VMO to effectively promote lean practices and collect metrics from Agile Release Trains (ARTs) for ongoing, informed improvements.

What are the behaviors of effective Portfolio Leadership?

Most organizations have portfolios and Portfolio Leaders. However, Lean Portfolio Management represents a different way of working, built on a foundation of Lean and Agile. Portfolio Leadership, as a senior group of leaders, must model a new set of behaviors as they execute the responsibilities covered above. Figure 2 shows the critical behaviors for Portfolio Leadership, further described below.

Ensuring Strategic Alignment

Portfolio Leaders ensure that all communications and decisions within the portfolio align with the broader organizational strategy and clearly articulate the strategy of their portfolio. Furthermore, their message is always clear and focused, whether they speak directly or indirectly. This approach is vital for guiding decision-making processes and keeping the focus consistent across the portfolio. The following activities exemplify this behavior.

• Align epics with the portfolio vision—Portfolio Leaders ensure that epics and investment decisions align with the portfolio’s vision. They must always evaluate the financial implications and long-term benefits of progressing epics through the Portfolio Kanban.
• Connect decisions to strategy – Portfolio Leaders always link their decisions to the portfolio strategy and consider the long-term implications of these decisions. They also encourage this behavior in others across the Portfolio. This approach keeps the portfolio and empowers the Agile Release Trains (ARTs) and teams to be responsive and effective in decision-making, advancing the portfolio toward its goals.
• Communicate clearly – Portfolio Leaders must articulate decisions and maintain alignment to strategy across the portfolio. Using consistent terminology, speaking with one voice, and communicating frequently enhances understanding and ensures aligned execution.
  
  

Cultivating Decision-Making Agility

Decision-making agility describes the ability to make timely and effective decisions in complex and uncertain environments. Portfolio Leaders must exemplify this ability, which is critical to the speed of decision-making needed as part of Lean Portfolio Management.

• Enhance portfolio responsiveness – Portfolio Leaders stress the importance of speed and agility in decision-making. They create the time and space for decisions, supported by the necessary data and insights. Once decisions have been made, they communicate them clearly and ensure they are adhered to.
• Enabling decentralized decision-making – Decentralized decision-making enhances flow and responsiveness. Portfolio Leaders can create an environment that enables the effective delegation of decisions across the ARTs and Agile Teams. They achieve this by identifying and developing competency levels and providing organizational clarity.
• Strengthen decision-making through data and insights – Portfolio Leaders share insights openly to manage risks and opportunities more effectively and consider the impact of these decisions on the entire portfolio. They utilize the inherent feedback loops in SAFe and additional data sources to improve their understanding of the implications of decisions across the portfolio.

Fostering Collaboration and Open Communication

Creating an environment where people can work together to achieve common goals requires an open and respectful exchange of ideas and information. Portfolio Leaders exemplify this behavior and promote ways to work together and communicate openly.

• Communicate directly, openly, and honestly – Portfolio Leaders embody the phrase that ‘the facts are friendly.’ Problems cannot be solved if they are hidden. Portfolio Leaders create a trust-based environment. They encourage open sharing to quickly and effectively fix problems without blame.
• Promote an open communication culture – Portfolio Leaders communicate transparently, listen to diverse perspectives, and encourage teamwork throughout the portfolio. They foster an environment where openness is valued, enabling the organization to navigate successes and challenges effectively.
• Turn mistakes into learning moments – People tend to learn more from their mistakes than their wins. However, this works best when they can admit to their mistakes without worrying about being punished. Portfolio Leaders see mistakes as chances to learn. They ensure a safe environment where mistakes can be discussed and fixed quickly.
• Provide ready access to needed information – True transparency means making sure everyone who needs information can easily find and access it. Portfolio Leaders assist the ARTs and teams in locating information when it’s not clear where to find it. They work on making the process of getting information as smooth as possible.

Taking an Economic View

Taking an economic view means achieving the shortest sustainable lead time with the best quality and value. As a Portfolio Leadership team, an economic view is pivotal for steering organizations toward sustainability and growth.

• Define a clear economic framework – Every portfolio requires an economic framework. This is a set of decision guidelines that align everyone with the portfolio’s financial objectives and inform the continuous decision-making process. Portfolio Leaders are responsible for defining this framework and modeling it in their interactions. This involves considering how factors such as development cost, risk, value, and lead time impact important decisions and trade-offs.
• Utilize data to make trade-offs—Portfolio Leaders use data to inform trade-offs and apply an economic approach to decision-making. In addition, they identify new data sources required to make these decisions more effectively in the future.  
• Apply investment horizons – Portfolio Leaders allocate resources strategically to balance investments between new initiatives and existing products. They monitor the progress of these investments and are prepared to adjust the balance as needed.

What steps can form an effective Portfolio Leadership team?

 The process of forming an effective Portfolio Leadership team involves several steps. It is important to note that the specific steps may vary depending on the organizational context and the maturity of their Lean portfolios.

Step 1: Identify the right people

Most organizations already have Portfolio Leaders. However, they tend to participate in decision committees with overlapping agendas and involve many more people than those truly accountable for the portfolio’s outcomes. Part of forming the leadership team is to identify the true decision-makers. Understanding the organization’s broader strategy and the goals for the individual portfolio is critical to identifying the right Portfolio Leaders. For this reason, working with the organization’s executive leadership as part of this first step is often very beneficial.

Next, a thorough examination of the organization’s current decision-making structures and processes is necessary. This includes understanding the roles of various committees, their members, and the extent of their decision-making powers. Identifying senior leaders, including individuals with significant fiduciary responsibilities, is critical. These key decision-makers will form the core of the Portfolio Leadership team.

Step 2: Form the Portfolio Leadership team

Once the people are identified, the next step is to bring them together to form a Portfolio Leadership team. This team must collaborate closely and agree on their individual and collective responsibilities and accountability. One of their first activities should be to plan how they want to work together to manage the portfolio’s product and solution offerings cohesively. In addition, they should be clear as to which responsibilities fall outside of this group or require wider collaboration.

Depending on the organization’s size, the Business Owners may also be Portfolio leaders. Business Owners are crucial in guiding Agile Release Trains (ARTs) towards optimal business outcomes. In these cases, ensuring both responsibilities get sufficient time allocated to them is important. They would additionally be responsible for business outcomes in one or more ARTs, participating in ART planning, and coordinating some execution details within the ART, which is a considerable commitment.   

Step 3: Operate the Portfolio Leadership team

Like any group of individual contributors who are becoming a team, they will need the time and space to improve their collaboration. Much of this will come through working together on the responsibilities described above. Regular communication plays a critical role in this process, and the LPM events in SAFe will naturally create some of this interaction time. In some organizations, member(s) of the VMO take on a facilitation role for these LPM events and act as the Team Coach for the Portfolio Leadership team. Additionally, the Portfolio Leaders should hold each other accountable for modeling the desired behaviors mentioned previously and sharing their distinct views as part of the decision-making process.

The final puzzle piece is a commitment to continuous improvement as a team. By regularly reviewing and refining their processes, the Portfolio Leadership team not only stays ahead of potential issues but also fosters an environment where innovation and excellence are the norms. Over time, this holistic approach allows the Portfolio Leadership team to effectively align their efforts and achieve superior outcomes for the portfolio and the wider organization.

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References

[1] Brown, Brené. Dare to Lead: brave work, tough conversations, whole hearts. Random House, 2018.