Why scaled agility fails without LPM

by Michael Sender, 29.01.2024

Why scaled agility fails without LPM

by Michael Sender, 29.01.2024

Michael SenderLean-Agile Transformation Coach, Consultant & Trainer

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Why scaled agility fails without LPM

Since its emergence, a bit over two decades ago, scaled agility has gradually begun to emerge as the standard approach to organizing large technology-driven organizations (i.e., almost all organizations that aren’t all about artisan crafts). SAFe is currently the fastest growing scaled agile framework on the market, rapidly winning ground across industries and sectors. Yet, most organizations which have adopted SAFe seem to treat its key component, Lean Portfolio Management (LPM), as an add-on that can be postponed until a later stage in their agile transformation. This, we believe, is one of the primary reasons for SAFe implementation failure and a great risk to the overall standing of scaled agility.

The Antipattern of Scaled Agility

Unjust as it may be, there is a common antipattern in SAFe scaled agile implementations. Whenever agile terminology (Scrum, dailies, sprints, burndown charts etc.) is used in the business world, it tends to skew towards team-level operations. It’s always about the teams and what they do, how they implement the Scrum framework, how they fit into the SAFe environment, how their work is influencing the development of the product or (bless your heart) project – and so on.

When the outcomes from the agile release trains fail to impress top level decision makers, companies tend to search for solutions on the team and ART level operations – by hiring and firing Product Owners and Scrum Masters, reorganizing ARTs, or changing the PI cadences. Needless to say, such changes are very time consuming, pricey – and when they don’t lead to noticeable improvements, it casts a shadow over the agile frameworks themselves. The ghost of traditional project management starts lurking about, whispering self-excusing nonsense like “agile won’t work here” in the ears of the increasingly disillusioned managers.

There are several reasons why agile transformations occasionally fail. But if you ask agile transformation consultants and coaches where the primary citadel of doom resides, most will point to the top of the company.

“Woah, hold on there, Mr. Release train… guy!” your average C-level executive would say. “Is it our fault that your agile thing isn’t working out? We’re not even using it at the C-level! “

Well, exactly.

The Core Issue: Starting at the Bottom

Most organizations conduct their agile transformation through a bottom-up approach, initiating Agile at the grassroots level and expecting to scale it gradually to the top. The fatal problem with this approach is that scaled agile frameworks, like SAFe, are designed to work top-down. Not in a hierarchical sense, but in terms of prioritization and funding.

A scaled agile organization is essentially a funnel through which major strategic initiatives are broken down and prioritized on multiple abstraction levels. Strategic themes guide the prioritization of epics on the portfolio level. The system features in the selected epic are then prioritized on the Agile Release Train level. The increments of work comprising the selected features are then prioritized on the team level. One common characteristic of all funnels (except for some rare voodoo magic models) is that everything that trickles down the funnel begins at the top.

Regardless of how many agile teams and release trains you set up, if your corporate portfolio roadmap looks like a phase-gated Gantt chart, then what you’re actually doing is squeezing a waterfall mindset down a funnel and expecting business agility to come out at the other end. It won’t. Scrum masters and Release train engineers cannot fix that. Increasing the productivity of agile teams won’t fix the problem either. If portfolio prioritization and budget allocation are not aligned with the lean-agile practices and mindset, there is a high risk that whatever happens in the continuous delivery pipeline of a scaled agile organization will never live up to the expectations of the portfolio management.  Especially because waterfall-based plans of complex solutions are never realistic – and neither are their budgets.

Regrettably, this approach is way too common among the agile users in today’s corporate world. Portfolio-level executives, who haven’t embraced the agile mindset and aren’t committed to lean-agile principles, put a lot of pressure on agile teams to meet expectations that contradict the agile workflow order and aren’t aligned with the capacity and capabilities of the agile organization.

The fact that this is so common is not necessarily a consequence of the management’s general lack of understanding of agile values and principles. On the contrary, a common observation among our fellow agile consultants at P3 is that many executives perfectly understand and approve of the agile way of working. The main issue is that most executives do not see themselves as part of the agile workflow. They don’t realize that they are the ones who have to lead by example and apply these practices when leading the portfolio organization. They don’t feel willing to delegate responsibilities to the teams and to accept that certainty (expectations based on long-term planning) is no longer guaranteed. Considering how much of an impact corporate executive have on the success of agile organizations, executive level agile coaching and training is even more important than team-level training.

Shifting the Focus: LPM’s Top-Down Approach

This is where Lean Portfolio Management comes in. LPM provides a top-down implementation of business agility that follows the natural agile prioritization flow, where portfolio strategy is the starting point. It applies the Lean-Agile principles to portfolio management and budgeting, ensuring that every underlying funnel aligns with the portfolio strategy and guardrails.

While teams execute decisions, it’s the higher-level management that formulates them. LPM focuses on this level of decision-making, training them in the Lean mindset and fostering a culture of agility. A true SAFe construct can only be realized when companies fully embrace this mindset at all levels.

LPM addresses this through three major areas of expertise: Strategy & Investment Funding, Agile Portfolio Operations and Lean Governance.

Strategy & Investment Funding aims to align and fund the entire portfolio to meet the enterprise’s targets are met and stay up-to date for the everchanging business requirements and evolving vision.

Agile Portfolio Operations allows companies to develop and maintain an enabling environment that leads to decentralization of strategy execution and empowerment of ARTs and Solution Trains, while maintaining the focus on value streams rather than projects.

 Lean Governance enables a proper measurement of the portfolio’s performance with adequate OKRs and KPIs, while focusing on a continuous flow in throughout the whole system.

These disciplinary areas provide leaders with the tools they need to effectively navigate the agile ship in a genuinely agile way. These tools and methods are fundamentally different from classic project-based budgeting and planning, which is why their understanding is critical to the success of the agile enterprise.

Implementing LPM: Where to begin?

LPM is one of the first steps in the implementation road map of the Scaled Agile Framework (SAFe). If your organization is already on its way to implement SAFe, then your implementation partner should be able to guide you through it. If you have been working with SAFe already, but haven’t yet implemented LPM, then it is high time to do so, because business agility is not fully achievable without LPM. LPM can be implemented without SAFe, but it will require some sort of value stream based organizational structure for it to be useful.

The journey towards true agility isn’t just about teams or specific frameworks but about creating a cohesive, agile mindset from top management downwards. LPM provides the tools to make the agile transition top to bottom and ensures that the agile organization is aligned with the portfolio strategy and that the funding is allocated accordingly. Omitting this step creates a risk of turning the agile organization into a flock of headless chickens. On the other hand, early adoption significantly reduces risk and ensures a continuous flow, as the whole chain of command is fully aligned all the way down to each increment of value released.

So, is scaled agility impossible to achieve without LPM? Not at all! In fact, many simple single-product organizations with few development value streams might do well without a dedicated LPM function. In such organizations, lean budgeting can be applied without a defined portfolio vision and strategy. But if your organization has a portfolio and that SAFe implementation just isn’t working out for you – look up. If you’re implementing SAFe while applying traditional portfolio management and project-based budgeting on the portfolio level, it might be too early to write scaled agility down just yet. Not until you’ve tried LPM.

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