Lesson 5: Exploring Lean Portfolio Management

Question 1

What are the three dimensions associated with Lean Portfolio Management? (Hint 3 triangles)

Answer 1

Strategy and Investment Funding
Agile Portfolio Operations
Lean Governance

Question 2

What is a SAFe Portfolio?

Answer 2

A SAFe portfolio is a collection of Development Value Streams (DVS).
► Each DVS builds, supports, and maintains solutions for the Operational Value Stream (OVS)
► These solutions are delivered by the OVS to the Customer, whether internal or external to the Enterprise.

A SAFe portfolio aligns strategy to execution via a collection of DVS.

Question 3

< blank > < blank > is a template for identifying a specific SAFe portfolio

Answer 3

The Portfolio Canvas is a template for identifying a specific SAFE portfolio. It defines the domain of the portfolio and other key elements.

The portfolio canvas defines the:
- Value proposition
<> the set of DVS in the portfolio
<> the solutions they deliver,
<> customers they serve
<> budgets allocated to each value stream
- other vital activities and events required to achieve the portfolio vision.

Question 4

Strategic themes are aligned with enterprise vision and strategy through the process of portfolio strategy formulation.

What are the six inputs for Enterprize Strategy fomulation?

Answer 4

Enterprise Vision – This is the north star that ensures all parts of the organization are aligned. It answers, “Why do we exist?
Enterprise Strategy – Outlines how the company will achieve its mission through its products and services, customers, financial position, people, business model, and partnerships. The enterprise strategy answers, “What will we do to win the market?”
Portfolio Context – Describes the current state of the portfolio’s solutions and its performance as measured by value stream KPIs. This is the baseline for developing new epics and features. Portfolio leaders are the experts able to answer, “What is our starting point?”
Competitive environment– Strategies for evolving products and services cannot be formulated in a vacuum. Portfolio leaders answer the question, “What competition do we face?” by drawing on competitive analysis that identifies the most significant threats to the business and opportunities to grow existing market share.
Distinctive competence – Effective strategies naturally leverage the unique advantages that differentiate the organization’s solutions from other solutions in the market. The enterprise’s competitive edge is clarified by answering, “What are we better at than anyone else?”
Financial goals – Whether measured in revenue, profitability, market share, or other metrics, financial goals used to evaluate portfolio solutions are an explicit input to portfolio strategy formulation. Every enterprise is guided by a defined set of financial targets that answer, “How do we measure company performance?”

Question 5

What are two tools/techniques used to help understand the opportunities for the future portfolio state?

Answer 5

SWOT and TOWS

SWOT - establishes an understanding of the potfolio strength and weaknesses related to the current buisness situation.
internal origin: Strengths || Weaknesses
external origin: Opportunities || Threats

TOWS - used with SWOT used primarly to id strategic options for a future state.

Question 6

< blank > is used primarily for identifying strategic options to create a better future state.
a) TOWS
b) SWOT

Answer 6

TOWS

Question 7

< blank > analysis is a great way to uncover the current situation of your value streams, product or portfolio.
a) SWOT
b) TOWS

Answer 7

SWOT

Question 8

What are the states (steps) to envision a future portfolio state?

Answer 8

Use the ‘Portfolio Canvas’ captures the current state
Use SWOT and TOWS to brainstore potential future states.
Explore possibilies and evaluate your options (diverge/converge). Select a future state (and create a future state portfolio canvas).
Build out the gap between current and future state by identify the Epics that will get you to this future state.

Question 9

< Blank > < Blank > are a vital tool for communicating the critical business objectives to Agile Teams and ARTs, aligning their purpose with the purpose of the broader enterprise.

They provide much of the organizational clarity that fuels effective decentralized decision-making and ensure that Value Streams are driven by measurable business outcomes.

Answer 9

Strategic Themes

Strategic themes connect the enterprise strategy to a portfolio.

Strategic themes are best stated in Objective and Key Result (OKR) format. These OKRs say what the portfolio will pursue, providing decision-makers and contributors at all levels the clarity needed for decentralized decision-making.

Enterprise Strategy/vison -> Strategic Themes -> Portfolio Vision

https://scaledagileframework.com/strategic-themes/

Question 10

Of the six key inputs that provide the strategic, commercial, and technical insight needed to formulate a portfolio strategy. Which input addresses the question “What will we do to win the market?”
a) Enterprize Vision
b) Enterpise Strategy
c) Portfolio Context
d) Distinctive Competence
e) Financial Goals
f) Competitive Enviornment

Answer 10

b) Enterpise Strategy

Outlines how the company will achive its mission through its product and services. The enterprize strategy answers, what will we do to win the market?

Question 11

Of the six key inputs that provide the strategic, commercial, and technical insight needed to formulate a portfolio strategy. Which input addresses the question “Why do we exist?”
a) Enterprize Vision
b) Enterpise Strategy
c) Portfolio Context
d) Distinctive Competence
e) Financial Goals
f) Competitive Enviornment

Answer 11

a) Enterpize Vision

This is the north star that ensures all parts of the organization are aligned and answers “Why do we exist”.

The enterprize vision establishes a strong ‘why’ for the company.

Question 12

Of the six key inputs that provide the strategic, commercial, and technical insight needed to formulate a portfolio strategy. Which input addresses the question “What is our starting point?”
a) Enterprize Vision
b) Enterpise Strategy
c) Portfolio Context
d) Distinctive Competence
e) Financial Goals
f) Competitive Environment

Answer 12

c) Portfolio Context

Describes the current state of the portfolio’s solutions and its preformance (measured in KPIs). This is the baseline for developing new epics and features.

Question 13

Of the six key inputs that provide the strategic, commercial, and technical insight needed to formulate a portfolio strategy. Which input addresses the question “What are we better at than anyone else?”
a) Enterprize Vision
b) Enterpise Strategy
c) Portfolio Context
d) Distinctive Competence
e) Financial Goals
f) Competitive Enviornment

Answer 13

d) Distinctive Competence

Question 14

When are strategic themes measured and evaluated? Under what portfolio event does this? Pick letter/number
a) monthly 1) Portfolio Sync
b) quartely 2) ART Sync
c) bi-anual 3) Strategic Portfolio Review
d) annually 4) Participatory budgeting

Answer 14

Stategic themes are evaluated quaterly at the Strategic Portfolio Review.

Question 15

What are the two types of portfolio Epics?

Answer 15

Business Epics - deliver business value
Enabler Epics - support artchitectural runway

Portfolio epics are typically cross-cutting, typically spanning multiple Value Streams and PIs.

Epics need:
– a lean buisness case,
– the defiintion of MVP
– an Epic owner and
– approval by LPM (if exceed a defined threshold).

Question 16

What are the four parts of a portfolio Epic Hypothesis statement?

Answer 16

1) Epic Hypothesis Statement “For-who-the…”
2) Buisness Outcomes – quanatative or qualatative benifits the business can anticipate if hypothesis is proven correct
3) Leading indicators – Early measures that can help predict the outcome
4) NFR

Question 17

SAFe provides a Lean budget approach, which reduces the overhead and costs associated with traditional cost accounting and empowers people through Principle #9, Decentralized decision-making.

What are the 3 main steps to achieve Lean Budgets?

Answer 17

Fund Value Streams, not projects – The portfolio budget funds a set of Development Value Streams. Each delivers one or more business solutions and is given a budget for its value stream
Guide Investments by Horizon – 4 horizons:
* horizon 3 (Evaluating) : 3-5 years profiiability
* horizion 2 (Emerging): 1-2 years profitiable
* horizion 1 (Investing/Extracting) : current year
* horizion 0 - Retiring
Applying Participatory Budgeting

Question 18

What are “Lean budget Guardrails”?

Answer 18

Lean Budget Guardrails describe the policies and practices for budgeting, spending, and governance for a specific portfolio.

Establishing guardrails helps ensure that the mix of investments addresses both near-term opportunities and long-term strategy

Question 19

What are the four lean budget guardrails?

Answer 19

< Blank >< Blank > is a method to visualize and manage the flow of portfolio Epics, from ideation through analysis, implementation, and completion.

Question 20

What state is the Epic MVP defined in?
a) Funnel
b) Reviewing
c) Analyzing
d) Ready
e) Implementing (MVP/Preserve)
f) Done

Answer 20

c) Analyzing

Question 21

What state is the Epic Hypothesis defined in?
a) Funnel
b) Reviewing
c) Analyzing
d) Ready
e) Implementing (MVP/Preserve)
f) Done

Answer 21

b) Reviewing

The Epic hypothese is defined by the epic owner and other stakeholders. Preliminary size and cost estimates and a first WSJF estimate relative to other items in the reviewing state is also established.

Question 22

< Blank >< Blank > is a method to visualize and manage the flow of portfolio Epics, from ideation through analysis, implementation, and completion.

Answer 22

Portfolio Kanban

The portfolio Kanban is operated under the auspices of Lean Portfolio Management who use the strategic portfolio review and portfolio sync events to manage and monitor the flow of work.

Question 23

What state is the creation of the Lean Business Case
defined in?
a) Funnel
b) Reviewing
c) Analyzing
d) Ready
e) Implementing (MVP/Preserve)
f) Done

Answer 23

c) Analyzing

During the portfolio sync, LPM uses the lean business case to make a ‘go/no-go’ decision. ‘Go’ confirms the epic is approved for implementation and sequenced using WSJF. ‘No-go’ moves the epic to done.

Question 24

The role of the Strategy and Investment Funding is < what >?

Answer 24

Strategy and Investment funding ensures the entire portfolio is aligned and funded to create and maintain the solutions to meet business targets.

The portfolio needs to understand its role in achieving the enterprise strategy.

Strategy and investment funding ensures the ‘right work’ happens at the ‘right time’.

Question 25

Card 25 of 44

Who are typically involved in defining the Strategy and Investment Funding aspects of the LPM?

Answer 25

The strategy and investment funding require collaboration amongst:
- Enterprise Executives
- Enterprise Architect
- Buisness Owners
- Portfolio stakeholds and other technologist.

Question 26

What are the responsibilities associated with the LPM’s Strategy and Investiment Funding dimention?

Answer 26

Connect the portfolio to the enterprise strategy
Maintain a portfolio vision
Realize the portfolio vision through Epics
Establish Lean budget and guardrails
Establish Portfolio flow

Question 27

The portfolio connects to the enterprise buisness strategy through what?

Answer 27

The portfolio connects to the enterprise buisness strategy through strategic themes and portfolio budget

Question 28

What is a portfolio vision and how is it formed?

Answer 28

The portfolio vision describes the future state of its value streams and solutions.

The current and future state difference represents the gap that LPM translates into the vision.

The gap is capture in Epics and Capabilities.

Question 29

What is the purpose of Lean Budget and Guardrails?

Answer 29

Lean budgets provide the funding of value stream aligned with the business strategy and current strategic themes.

Guardrails support budgets by providing governance and spending and policy practices.

Question 30

For the LPM the Agile Portfolio Operations require active engagement from what people/organizations?

Answer 30

Agile Portfolio Operations requires participation from:
- VMO & LACE
- RTE & SM/TC Cop

Question 31

The responsibilities of the Agile Portfolio Operations include?

Answer 31

Coordinate Value Streams (Manage dependencies and exploit opportunities that exist only in the interconnections between value streams).
Support ART execution
Foster operation excellence

Question 32

What are the responsibilities of the LPM’s Lean Governance dimension?

Answer 32

Lean governance provides oversight of spending, audit, security, compliance, expenditures, measurements and reporting. Their duties include:
- Forecast and budget dynamically
- Measure portfolio performance
- Coordinate continuous compliance.

Question 33

For the LPM the Lean Governance require active engagement from what people/organizations?

Answer 33

Enterprise Architect
Buisness Owners
VMO & LACE

Question 34

The LPM adjusts budgets on a cadence, typically when??
a) monthly
b) weekly
c) quartely
d) every six months
e) yearly

Answer 34

Every six months or when significant events warrant (as part of the strategic portfolio review or Participatory Budgeting event.

Question 35

A portfolio primary measures buisness outcomes by defining: (pick two)
a) OKRs
b) KPIs
c) Portfolio PI Objectives
d) Business Agility Assessment
e) KPRs

Answer 35

A portfolio primary measures buisness outcomes by defining:
- OKRs for strategic theams
- KPIs for value streams

Question 36

What flow metrics are particulary relevant to LPM?

Answer 36

Flow Time
Flow Load
Flow Distribution

Question 37

What are the Portfolio events associated with LPM. Describe their purpose and how often are they held?

Answer 37

Strategic Portfolio Review- provides ongoing strategy, implementation and budget alignment for the purpose of advancing the portfolio’s vision and updating strategic themes. Done quarterly.
Portfolio Sync - provides visibility into how well the portfolio is progressing towards meeting its objectives. Done monthly
Participatory Budgeting - a LPM event in which a group of stakeholders decide how to invest the portfolio budget across solutions and epics.

Question 38

What is a strategic theme and how are they used?

Answer 38

Strategic themes are portfolio-level business objectives that provide the business context for:
- defining the portfolio strategy
- decison making

Strategic themes represent aspects of the enterprise’s strategic intent. They connect the enterprise strategy to the portfolio and are stated in OKR format (state what the portfolio wil pursue).

Leaders gather key inputs, synthesize a portfolio strategy that enables the enterprise strategy and craft Strategic themes to guide the ARTs in the portfolio.

Question 39

What is the purpose of strategic themes? (two)

Answer 39

Strategic Themes:
- influence portfolio strategy (from the enterprise)
- provide business context for portfolio decision making

Question 40

< blank > is the foundation of Value Stream Management.
a) Flow metrics
b) Lean thinking
c) LACE/CoPs
d) Participator budgeting

Answer 40

Lean Thinking

Question 41

Epics are described with four major fields. What are the four fields

Answer 41

► Epic Hypothesis Statement - Describes the Epic in
detailed terms, including the “for-who-the…” portion
► Business Outcomes - States the quantitative or
qualitative benefits that the business can anticipate if
the hypothesis is proven to be correct
► Leading Indicators - Describe the early measures
that will help predict the business outcomes
► Nonfunctional Requirements (NFRs) - Identify any
NFRs associated with the Ep

Question 42

One of the Lean Budget Guadrails is to ‘Guide investments by horizon’
According to SAFe what are the horizons and how are they used?

Answer 42

Horzion 3—–Horizon 2———Horizon 1——-Horizon 0
Evaluating—-Emerging—–Investing/Exacting—-Retiring
ROI 3+———-1-2———————current year————

Question 43

Lean Budgetary Guardrails describe portfolio-level budgeting, spending, and governance policies for the portfolio.

What are the four guardrails that SAFe promotes?

Answer 43

Ensure the mix of investments; balance near-term opportunities with long-term strategy and growth
Balance the backlog of new Features with the need to continuously invest in the Architectural Runway
Ensure that large, significant investments (Epics) are
approved appropreately.
Actively engage Business Owners to ensure the
alignment of ART and portfolio priorities

Question 44

What is a portfolio?

Answer 44

A SAFe Portfolio is a set of value streams that delivers a continuous flow of valuable solutions to customers within a common funding and governance model.

A SAFe portfolio aligns strategy to execution via a collection of DVS. Each DVS develops one or more Solutions necessary for the portfolio to accomplish its business mission and vision.