What Is Lean Portfolio Management? A Quick Guide

Having many projects to manage in a portfolio can be daunting. You need to strategize and plan your resource allocation to ensure that every project has what it needs when it needs it. There are many ways to do this and one of which is lean portfolio management.

Let’s first define lean portfolio management and then delve into how it works. This will give you an idea if it’s the right strategy to execute your portfolio management. We’ll also explain when to use lean portfolio management and how project management software can help you manage your portfolios better.

What Is Lean Portfolio Management?

Lean portfolio management is a process by which strategy is aligned with execution using a lean approach and agile portfolio operations and governance. Lean project management is part of an agile methodology that aims to increase customer value by removing project waste.

The senior leadership team will apply lean principles to manage the portfolio. Portfolio management teams learn about enterprise strategy and how to execute that strategy by allocating the budget. In so doing, the portfolio of investments is managed over its investment life cycle through agile development and business strategy.

Lean portfolio management does this by using the five principles of lean. These principles are defining value, mapping the value stream, creating flow, establishing pull and pursuing perfection. They establish a framework for creating an efficient organization of all projects in a portfolio. Portfolio managers can find inefficiencies and remove them to increase value and decrease cost.

Of course, you have to find those inefficiencies first. ProjectManager is online portfolio management software that delivers real-time data to make better decisions when managing a portfolio. We have lean portfolio management tools such as a live portfolio dashboard that captures six metrics across the portfolio to get a high-level view of performance and progress. No setup is required—we’re ready when you are. Get started with ProjectManager today for free.

ProjectManager's portfolio dashboard — ProjectManager’s portfolio dashboard captures real-time data across all your projects. **Learn more**

What Are the 5 Lean Principles?

We’ve mentioned the five lean principles, but seeing how important they are to lean portfolio management, they deserve a bit of explaining.

1. Value

This is defined by the customer’s needs from the portfolio. Things to think about are the timeline for manufacturing and delivering a product, its price and requirements or expectations to meet.

2. Mapping the Value Stream

Value is the end goal, and now you have to map the value stream which includes all the steps and processes that define success for a portfolio. This means everything from raw materials to delivery of the final product. The point is to identify what isn’t creating value and eliminate that waste.

3. Creating Flow

First, you find and remove the waste in your value stream. Then you have to make sure that the steps flow smoothly. There shouldn’t be any interruptions, delays or bottlenecks. This can be difficult when dealing with cross-functional teams, but it’ll boost productivity if you’re successful.

4. Establishing Pull

The flow will get value to customers faster, which means customers can pull the product in less time than it had been taking. This helps you avoid stockpiling materials and streamlines your equipment inventory. It saves money for both the manufacturer and the customer.

5. Pursuing Perfection

Perfection is a goal that’s impossible to meet, but the pursuit of it reduces waste and offers greater value to customers. That’s why you want to make lean thinking part of your corporate culture. Everyone working for you should be involved in this type of lean portfolio management. Once you get to this step, you’ll be back at the beginning as lean never stops.

When to Use Lean Portfolio Management

Lean portfolio management is used throughout the life cycle of your portfolio. It’s used during the management of the portfolio to make sure all projects are meeting your strategic business outcomes while improving investment decisions.

More important is who uses lean portfolio management and lean portfolio management tools to manage the portfolio. These are high-level people in the organization. For example, executive leaders are crucial to effective implementation. They create the company culture and help lean thrive within that climate. Plus, they lead by example.

Key Players of Lean Portfolio Management

Naturally, managers and supervisors are also involved. They’ll carry the day-to-day impact of lean thinking as they’re responsible for deploying lean techniques and using lean portfolio management tools. Managers and supervisors are also coaching the teams that are executing the tasks in the projects in the portfolio, who should be working in a lean manner.

If you have subject matter experts in your company they, too, are key to making lean portfolio management work. They’re a valuable resource that should be tapped by teams. Even front-line employees, HR, customers, suppliers and procurement staff all need to be on board with lean portfolio management to maximize the reduction of waste and increase value to customers.

Lean Portfolio Management Steps

In order for lean portfolio management to be effective, it must be implemented throughout an organization. It’s designed to holistically improve every department at all levels of strategic value. In order to accomplish that goal, it’s ideal to follow these eight lean portfolio management steps.

Establish Strategic Themes

Begin by coming up with themes that reflect your strategic priorities by defining your strategies, turning them into investments and assigning goals to them. These should align with the vision of the portfolio. Make sure you create clearly defined objectives and metrics to measure their performance. Using a roadmap helps see the portfolio across projects and how they relate to one another. A roadmap also acts as a communication channel for teams and stakeholders.

Fund, Manage and Allocate Value Stream

The value stream is activities that enact your strategies and objectives to deliver value to customers and your business. In other words, aligning investments with returns. Here you’ll plan from the top down your budget, estimating what funding you’ll need with cost-management planning. Be sure to monitor your planned costs against your actual costs to stay on track and reallocate as needed.

Manage Demand

Demand, whether operational or from a customer request, should be prioritized against your strategic priorities and carried out after reviewing the estimated cost and benefits expected. This allows you to prioritize work across your value streams and make adjustments to work according to demand.

Use Continuous, Adaptive Planning with Roadmaps

Plans aren’t chiseled in stone. In lean portfolio management, one must continuously review and adapt to the changing environment to maintain value and eliminate waste. Project roadmaps are valuable tools in this process as they help portfolio managers by giving them an overview in which they can strategically reallocate resources to maintain value while eliminating waste. Try our roadmap template to get started.

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Roadmap Template

Use this free Roadmap Template for Excel to manage your projects better.

Optimize Resource Utilization

Use your existing resource capacity to its full extent and remain flexible so you can reallocate as you adapt plans. This requires accurate estimates of resources. Effective resource management is essential and should be part of the lean portfolio management tools you use to optimize your resource utilization.

Support Continuous Delivery and Reporting

Continuous delivery is an agile development principle often incorporated in lean portfolio management as part of its value stream. In order to do this, portfolio managers need real-time data to make more effective decisions about value realization and costs.

Control Business Outcomes

Track your objectives with defined metrics and key performance indicators (KPIs) to determine variances in your plan and determine your options to address and execute adjustments to reduce disruptions that’ll impact your value stream. This helps to maximize your efficiency and realize your strategic objectives.

Execute Lean Governance

Lean governance is overseeing and making decisions on forecasting and budgeting, measurements of portfolio performance and coordinating continuous compliance. This way, the steps you’ve taken to implement lean portfolio management will be always reviewed and refined to improve the value and remove waste.

ProjectManager and Lean Portfolio Management

The use of a lean portfolio management tool such as ProjectManager is essential for the successful implementation and execution of your lean portfolio management. Our software is cloud-based, meaning you get real-time data to make better decisions. We have multiple project views such as Gantt charts, kanban boards, task lists, calendars and more so every department can use the tools they want. All views update in real time so there’s one source of truth.

Align Execution With Strategic Goals on the Roadmap

Lean portfolio management depends on the ability to see all your projects in one place. You have to note how they relate to one another, which needs what when. Our portfolio roadmap view shows every project in your portfolio in a Gantt chart timeline. You see start and end dates across your portfolio to help you allocate resources more effectively. The roadmap can be customized and filtered to show just what you need to see to make sure you’re meeting objectives.

Keep Your Team’s Workload Balanced

In order to eliminate waste and drive value to customers, you must maximize your workforce without over-allocating and burning them out. Our resource management tools help you see team availability, including global holidays, but also oversee their workload across your portfolio. The color-coded workload chart makes it easy to see who is over-allocated and who is under-allocated, on vacation or assigned to a task. You can re-allocate right from the chart view to balance workload and keep your team productive.

You can also customize reports and get a portfolio status generated with only a few keystrokes. There are other reports, too, such as for timesheets, workload, variance and more. All reports can be filtered to see only the data you want and then easily shared in various formats with your stakeholders so they stay updated.