Achieving Business Agility through Agile Portfolio Management
Most businesses aspire to or try hard to be agile. However, in today´s VUCA world this isn´t a “nice to have” yet an increasingly important capability. Thus, the Agile Business Consortium has published a guide on Agile Portfolio Management in order to achieve Business Agility.
In essence, Business Agility means to adapt quickly to market changes, respond rapidly and flexibly to customer demands, adapt and lead change in a productive and cost-effective way without compromising quality and continuously be at a competitive advantage… The Agile Business Consortium´s Framework of Business Agility is based on a core of business change, and scales from Agile Project Management and Agile Programme Management all the way to Agile Portfolio Management. It describes the cultural foundations and the style of leadership needed to thrive in a world that is often volatile, uncertain, complex and ambiguous (VUCA).
The Guide highlights six core behaviours for Agile Portfolio Management:
- Focus on the creation of value
- Review the portfolio continuously
- Involve the right people to shape and manage the portfolio
- Clearly and continuously demonstrate that the portfolio is delivering optimum value
- Encourage innovation and creativity
- Encourage collaboration and empowerment
It´s all about people. In a VUCA world the focus is and should be even more on the people. Giving space to the motivation of people engaged, empowering and enabling them to self-organize and collaborate with each other, internally and externally, are the success factors. Creating an atmosphere and a culture of openness, innovation and improvement is what leadership should be concerned with. This is a step change for many organizations, which are still bound in hierarchy, command-and-control mode and top-down leadership.
Portfolio management is one of the key levers for an organization´s leadership, it helps to overcome challenges such as:
- Lack of a defined and agreed approach to prioritisation, resulting in portfolios that are not optimised to deliver maximum strategic value. Often, tactical and operational initiatives are undertaken even though they do not align to strategy, as they are seen as necessary when, in fact, this logic is questionable
- Change initiatives that are not aligned to the corporate strategy and lack sponsorship
- Incomplete understanding of supply and demand – the organization´s capacity to support the change that will deliver the value (supply), compared with the actual demand
- Operational constraints not fully understood and so not factored into enterprise plans
- Inefficient governance and duplicated reporting, resulting in frustration and wasted time
A key concept for Agile Portfolio Management is clarifying the Vision, Mission, (Strategic) Objectives, Strategy, Tactics (VMOST), defined and described in the Guide of the Agile Business Consortium. In a VUCA environment, clarifying VMOST means involving as many people as possible. The approach means to develop strategies out of the trenches, “emerging strategies” as defined in the IPMA Organisational Competence Baseline (IPMA OCB). And, an agile strategy is, by its nature, designed to be flexible, and will be changed through iterations on a regular basis. Key focus is – as already mentioned above – value for the customer. If there are new opportunities of delivering value to the customer, this should have an impact on the strategy and cause changes to it.
The guidance of the Agile Business Consortium for Agile Portfolio Management provides more insights on Agile Portfolio Budgeting, Agile Portfolio People with their responsibilities as well as the Agile Portfolio Process, Idea Generation, Portfolio Prioritisation, Balancing and Blending, Planning an Agile Portfolio, Agile Portfolio Governance and a Glossary.