Strategic portfolio management

From traditional to lean budgeting: how stakeholder management is key

The sensitivity of lean budgeting

“Only few years ago, I was working with a COO to increase the organizational maturity to select its project portfolio. The goal was making more severe choices and increasing the link with strategy. Our customer was an intelligent man who liked sparring on the approach, but who also anticipated the potential resistance amongst his senior managers when it comes to strategic portfolio management. I took along the phrase he used for the moment of real roll-out of the renewed approach “When the rubber hits the road…”

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I am still aware of this organizational sensitivity when customers ask us to guide them towards a lean budgeting approach. In a world that is changing ever faster, trying to forecast every project you will do in the next 1 or 2 years, is madness! So yes, I am absolutely fan of the many lean portfolio management principles I got to learn years ago. But I also remember that the rubber will again need to hit the road, that you can’t change everything at once and that you need to listen to ALL stakeholders.

Don’t focus on the biggest fans of making leap jumps in increasing portfolio agility or strategic portfolio management in general; listen to all key stakeholders, define a clear and ambitious vision but make sure that your roadmap towards that vision allows people to absorb the change because…

  • Finance might not like the portfolio expert telling them there will no longer be a 2022 portfolio budget, with a budget for every project planned.
  • HR might not like the portfolio expert telling them that an agile organization is not focused on visualizing the main competence gaps related to a multi-year project roadmap
  • ‘Silo’ managers might not like the portfolio expert who took their silo portfolio budget and consolidated it with a reduced number of senior managers they now call Value Stream Owners.

I see lean budgeting tracks completely crashing because the people guiding the organization forget to listen to the needs and worries of the departments mentioned. Agile experts get stuck in terminology and principles and forget to apply these principles to the specific character and needs of the organization.

Matching organizational needs with the agile principles

  • Accept that very few finance organizations will be capable of shifting one year to the other from a detailed portfolio budget to large top-down budgets by Value Stream. Take your first step via envelopes at epic or capability level instead of project level. It will already largely increase your agility but might be an acceptable change for Finance.
  • Convince HR that doing too big capacity planning exercises for a full multi-year roadmap does not make sense anymore. But work on their real needs and maybe do a more qualitative analysis on the competence gaps you see when only looking at your Horizon 2 and 3 Investments. You are helping HR (and the organization) in a focused way and might indeed reveal the real bottlenecks for the coming years.
  • Realize that SAFe is a framework and that not all organizations have the size and complexity to really need the whole set-up. Take your time with the leadership of the organization to come to a model that fits their needs and uses terminology they understand. If you keep it simple and involve them, even the former “Silo” managers might go along in their changed but at least clearer role.
Interested to shift towards a leaner portfolio budgeting yourself but not yet fully convinced on how it would work for your organization?

This is what you can do:

  1. Register to participate in our Lean Portfolio Budgeting Survey. This enables you to learn how other organizations similar to yours handle this exercise and to network.
  2. You He*************@th****.com/bookings/">contact us and together, we define how you can successfully improve your portfolio budgeting exercise

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