APM Post Webinar Q&A

In our webinar “Agile Portfolio Management: Steps to Increasing Organizational Adaptability,” we discussed several ways that businesses can do this regardless where they are in their business agility journey. As a result of the client stories from Jackson National and Gogo Entertainment and share out from own Accenture | SolutionsIQ business development leads, we received many questions that we didn’t have a chance to answer. 

In this video, we get the gang back together to tackle these questions and provide more insight that can get businesses started down the right track, including: 

  1. Where do I start with agile portfolio management and how do I help my organization engage in the changes needed? 
  2. What kind of governance structures do you recommend for an organization transitioning from traditional to agile portfolio management? 
  3. What does it mean for an organization bringing agile portfolio management to “cease funding” initiatives already in flight? 
  4. What are examples of agile funding models and the implications to how we fund today? 
  5. Getting rid of traditional budgeting seems like a big thing. How do you get finance interested and where does an organization start with the process? 

Learn More: solutionsiq.com/apm

Read the full transcript


Kat Conner: Hi, I’m Kat Connor from Accenture | SolutionsIQ, and we’ve gathered our team back together again today after the last of Agile Portfolio Management webinar, because we had a ton of questions that we just didn’t have time to answer. So we wanted to create some space today to go through those questions and see what we can offer back to this audience. So I’m going to kick us off with one set of questions that we can chat about. There are a number of things, a number of questions on here around “How do I support change management? What is a change strategy for my organization?” So specifically: “My organization has just started the journey to change from a traditional program office to a lean portfolio management. So what strategies can you share to help us on this journey, and what are the tough areas to transform as we go on this journey?” So kind of a multi-part question. So I’m going to open it up to our panel and offer from our perspective of ideas that we’ve seen and supported within our clients.

Kat Conner: And I will kick it off just to offer up. Let’s see. What is some of the best strategies to support from a traditional program office to a lean portfolio management? I would say that key to lean portfolio management is the ability to make very quick, iterative, data-driven decisions. And in order to do that, you have to have the delivery engine running well enough in order to have information coming back, data coming back to be able to have those kinds of conversations at a portfolio. If that doesn’t happen, then it does tend to be more status conversations. And it does feel more like a traditional PMO. So if there’s a desire, and I would say there should be a desire, to switch from more traditional PMO to our lean portfolio management, you have to empower the people that are sitting on that portfolio with the right kind of information quickly enough to be able to make those kinds of decisions. So that’s to me, step one.

Evan Campbell: Well, we said it again and again in the series that we really don’t recommend organizations jump deeply into altering the demand side of the capacity-demand portfolio equation until there really is evidence that the capacity or delivery side of the organization is in control. And that means that they’re measurable, we’re starting to look at outcomes of value as opposed to the kind of tertiary output metrics that we’re used to tracking and that they have a good enough basis of statistics with a low enough standard deviation in those that they’re predictable, that we can forecast future outcomes based on a projection on a backlog so that we can actually force good tradeoff decisions on the demand side.

Aimee Palmer: Yeah. And I think, Evan, key to that is one of the other things we talked about was the funding of persistent teams, both at the individual team level and teams of teams when you get into talking about value streams or product teams. So I think that’s a key component as well.

Kat Conner: So what I’m hearing is there are building blocks that have to be present at least at some level of maturity before it makes sense to actually stand up an actual true portfolio. Otherwise, we’re looking at more PMO-like activities to be able to support the initiatives or projects that are happening in the organization. I would say one of the other big, big things in order to shift behaviors and shift the paradigm over to a portfolio is a willingness to make small bets and to fund incrementally those small bets and to use the data to make decisions. Because if you don’t have a cadence that you’re actually getting stuff out, pieces of value, smaller things that you can make those tradeoff decisions against, again, all we’re doing is a PMO-level status kind of conversation.

Evan Campbell: We got a lot of questions about assigning value, including one where someone asked us that said they don’t want to just use the business, the original business value of an unstarted epic but that they want to have a burndown of the value of the epic as it’s being delivered. And, to your point, we have to shift to a value-based, value-centric, outcome-centric view. We’re kind of forcing the conversation of now that we’re delivering stuff really well, are we delivering the right stuff and push back on the line of business and say, “As the content authority assigning value in prioritizing, are you doing a good job?”

Evan Campbell: But we don’t want them to come back and say, “You don’t deliver anything, so there’s no point in that conversation.” So what we’re then trying to get to is, “Okay, it’s fine if we only deliver three quarters of an epic if that is 95% of the value of that epic.” We want to be able to abandon that uncompleted work as our opportunities and priorities shift over time and ultimately, being able to decompose that epic into features that may have value or just project the rate of value decay across the stories that make up an epic – often, that’s a good enough heuristic. I’m not a huge fan, for example, of putting value points on ready user stories. That’s a lot of overhead.

Tiffany Willis: I agree with that, Evan. I do think there’s a challenge, right? One of the big changes for organizations as they start to move towards agile portfolio management is actually ascribing value. We’re used to estimating in hours and we’ve used that as an indicator of value. And now what we’re saying is we’re moving towards lean-agile portfolio management is what is the outcome of this thing? The value is what is its impact to our business metrics? And we’re not asking the PMO to run around and grab those values.

Tiffany Willis: Instead, we’re asking the business partners to look at this as a true partnership and say, “What are the things that we can do to move the needle in our organization?” That’s really the value, how that needle moves. And it’s a significant change for a number of organizations to start to think and behave in that way. One of the things that I would suggest is to be kind and be patient. You’re trying to bring your business partners into this conversation. This is not something they are used to doing, and your PMO has traditionally used these other metrics. So as you make this shift, it’s important to do it together in your transformation and not, “Hey business guys, you now need to assign value and we’re not going to do this anymore.”

Josh Fruit: Yeah, I really agree with that. I’m curious if you guys have encountered something I have tended to encounter in this space quite a lot, which is “What’s the one formula, the one algorithm that we can plug the numbers into to tell us what our prioritization should be or what our decisions should be?” And in my experience, I haven’t found that one formula to rule them all. It’s almost like there’s a desire for something to tell you what you should do. But really we still need smart people to make hard decisions using their years of experience, their understanding of the market, relationships with customers and yes, a lot of good data that we can bring to the table. So how have you guys helped conversations in this space?

Kat Conner: So, I think you’re pointing to something that is near and dear to my heart is how do we inject really good product management activities and understanding, and our understanding of value and our ability to influence investment decisions in the portfolio. So going back to your point, Josh, having one algorithm doesn’t work for every product-service solution set out there in the world. As a product manager, we look at how you attribute value against different levers. Like whether it’s you’re looking for innovation, whether you’re looking to extend a new marketplace, whether you’re looking to develop a brand new capability – and all of these ways of looking at products and services or solutions along their lifecycle has a different value attribution set that’s important at that stage of the lifecycle and different ways to frame them in different quad charts or whatever you want to call it, to be able to support prioritization decisions.

Kat Conner: So I think it’s really important for me to start leaning on the people that have those product management skills, bringing them into these portfolio conversations, if they aren’t already, and supporting those folks to understand what’s most important in the context of their product and service.

Evan Campbell: Historically, we had a lot of challenges with wrapping back business cases where something would get prioritized. We’d run an ROI or time value of money or whatever heuristics we’re using to inform an intelligent decision, to your point – we’re not trying to create a fly by wire prioritization system that eliminates human intuition and intelligence here. But when you have so many intermediaries, be it the PMO, or some liaison group that’s trying to interface between business units and delivery, you inevitably end up with poor accountability, a poor sense of ownership, and an inability to come back around and make sure that the outcomes that were promised in the business case are actually fulfilled.

Evan Campbell: And so what we’re really trying to do is move that control and accountability really into the people who need it for the success of their business initiatives. And it’s also hard to assign value when you’re disconnected from the business initiatives and the larger strategic context of what they’re trying to accomplish. And this is where alignment through OKRs, having strategy that moves down from the enterprise to the business unit, to the P&L, then it’s much easier to put into context. Why would we work on this epic? Why would we abandon this one halfway through? So, that context is essential.

Kat Conner: Yeah, I think you’re right, Evan. Having those quantifiable OKRs – or whatever framework a client chooses, OKRs just happened to be wonderful for agile – is really critical. And who we have on the portfolio making decisions, the structure people enrolls becomes equally critical. So getting back to the PMO versus lean portfolio management question: sure, there’s going to be folks that enable the data, enable and facilitate the conversations. But what we’re really looking on these portfolios are folks that are accountable, responsible, have direct P&L ownership or product ownership. Those are the folks that need to be sitting on the portfolio team to be able to make these decisions. Otherwise, it’s just, I’m not sure if, Tiff, you said it or Josh, we’re just getting folks to run around and gather and great information, but there’s no accountability in the investment decisions.

Josh Fruit: So along the lines of making these decisions, we received a question called, about governance structures: “So what kind of governance structures do we recommend for an organization transitioning from traditional to agile portfolio management?”

Kat Conner: That’s a loaded question, man. That depends on how big your organization is. Yeah.

Evan Campbell: Yeah, whatever kind of answer we give is going to inevitably we’ll forget to… Yeah, there’s technical governance, there’s architectural governance, there’s various forms of quality governance. Now, if we’re constraining the conversation to governance around asset allocation decision-making, that’s a narrower topic.

Kat Conner: Let’s keep it narrow for this webinar. Yeah.

Evan Campbell: Yeah. So why don’t you guys jump in on that one then specifically?

Kat Conner: Yeah. So asset allocation, I mean, this is the classic one that I say all the time. You don’t need a portfolio unless you’re having to make hard tradeoff decisions around scarce resources. That’s the only reason you need to have a portfolio. So using that as a guide and using the mental model of, we want to be able to structure the delivery of work so that a portfolio has direct funding, has persistent teams and can be able to make its own decisions, minimizing dependencies as much as possible. I know that’s a whole lot in what I just said, but these are constructs that we need to start thinking about. The kind of governance that you need for portfolio management is directly related to the complexity of your organization, in my perspective.

The bigger, the more complex, the more dependent, unfortunately the higher governance needs are needed at a portfolio. And you start to have layers of portfolios, from enterprise to line of business or to product. The ultimate – and that may be unfortunately necessary in the beginning as we’re starting to shift the organization over to greater degrees of agility. I would say that whatever structure governance is put into place, I would have an eye towards dismantling that and pushing decision-making down, simplifying dependencies so that the decision-making, including portfolio decision-making, can be made as closest to the delivery teams as possible.

Evan Campbell: The governance associated with optimizing enterprise outcomes from investments is going to occur at different levels. Within a business unit, you’ve… So everything we’ve been saying about “teams stay together forever, so the team is funded.” Who gets to use the team’s capacity might change. And so if we’ve got two or three different products in a P&L, and we’re noticing that one of these products is really on a poor growth trajectory, it’s really moving towards a sunset product, but we’ve got a very high growth potential product over here, we might move some teams through a quarterly or a semi-annual review process over to the higher growth opportunities within that P&L. Similarly, probably at a slower cadence, we may even evaluate whole P&Ls against each other and say, “This one’s got six delivery groups. This one’s got three. Is this really the way that we are going to get the highest results from the investment we’re making in these delivery capabilities?”

Aimee Palmer: Yeah. And I think a key component to this too, is there’s not one size fits all as we’ve already said, and it can change over time. So you may choose to align your portfolios in one way in a given set of quarters or annual cycle. And as the needs change that you were just talking about, Evan, then maybe you shift. So there could be a large strategic initiative that comes along, that you actually organize a set of delivery groups and create a portfolio for that in and of itself, because it’s such a key thing to deliver quickly. So I think there’s, everyone needs to realize that this is changing over time, depending on what your business needs are and what the market demands too.

Kat Conner: I also want to introduce the idea of there are different flavors of portfolio governance. So, we’re starting to work with a lot of very large organizations that are wanting to bring portfolio to scale within their organization. So that means enterprise portfolio management versus product team portfolio management, and the questions and the decisions that matter most at those different levels are kind of unique. So I think we need to take a look at what questions or what decisions do we need for this kind of portfolio. For example, an enterprise portfolio, you’re going to be bringing in the strategic view and helping to understand what are the set of capabilities or initiatives that are needed across the entire organization to meet the top line metrics. You’ll have an entirely different view down at the product portfolio. Sure, they’ll still care about the strategy of their product, but they are going to be much more delivery execution oriented in their portfolio management than you would be at the enterprise level. So understanding the decisions that are needed and matter most will drive some of those, what flavor of governance is needed it. Tiffany Willis:

And one of the keys is those things always have to be aligned. And so when we talk about governance structures for portfolio management, it really does include how are we linking that strategic side of it to the product portfolio delivery aspect of it. And that is, I think one of the areas, whether you’re talking about enterprise or even just the product portfolio and how that rolls up into more traditional views, that’s a really key piece for organizations to keep in sync.

Kat Conner: And it goes back to, Evan, kind of using OKRs as that glue or that thread that pulls it all the way through. So value management gets really important in creating these capabilities that are aligned to each other.

I was looking at the questions and seeing what else is here. This feels like maybe an opportunity to roll over to some of the lean finance area, because I tend to get asked lots of questions like, “we got a governance, we got a value stream, we’ve got stable persistent teams. Then what?” What do you do with funding? What do you do with this annual budgeting thing? How do you get finance interested in being active partners in portfolio management because they’re key now, if we’re going to be bringing in value and forecasting models. So those are a number of the questions that I’m seeing here. Maybe we can shift our attention to that.

Evan Campbell: Well, clearly, I don’t know how many times we’ve said it, lots of times, first of all, stop funding projects. Projects are just incredibly destructive of the productivity and the value delivery capability of the organization. You couldn’t have designed a funding mechanism that destroyed value more effectively, if that was your intent. So what we’re doing is we’re creating these persistent teams aligned around value, and the definition of value is something that someone’s willing to pay for. And those are usually products or some sort of measurable value that’s coming out of a value stream. And that’s what we’re funding. We’re funding them in perpetuity in the sense that all of these teams and delivery groups are funded. Who they pull work from potentially changes based on optimizing the asset allocation process.

Kat Conner: I think I’m going to broaden that a little bit because what you just said is true. If the majority of your cost, I’m going to switch between funding something and the cost of something, if the majority of your cost is labor, and we’re looking at these stable persistent teams as the majority of our costs, we’re just trading and bringing the right backlog items to those teams, which is the majority of our costs. Now, if we open up our book of business into the broader enterprise, we’re starting to bring in operations in a number of other areas that have more capital-intensive costs that are not labor focused. So we’re going to need to, in addition to understanding the cost and capacity of a team, we also need to understand the cost model of the thing that we’re making a decision against, whether that thing is a strategic priority, initiative, an epic, or whatever it is. So there are different models that we’d have to bring in to play with those conversations to make sure that we are funding the entire cost of that particular initiative, more than just labor. Would you agree with that?

Evan Campbell: Absolutely. Yeah. That’s a good point. And there are so many permutations of this. Obviously capital assets are less fungible in terms of being able to turn over a bank branch to a different division of a finance company. That may not be as useful as handing them a hundred development teams. So every situation is different at the enterprise level, but your point is well taken.

Tiffany Willis: That cost piece. When I think about agile in portfolio management and the cost and finance, I think about organizations, I generally hear two things. What did you build me? And how much did it cost me? And so we’ve talked a bit about the value side. We’ve talked a little bit about we’re funding the value, but having those two views in sync, so one of the first steps I feel like I’m always bringing the finance team into is for your organization, let’s create a run rate for a team. We have to figure out how much – you know, that cost equation. And now and then, we talked earlier about creating a value framework or how you attribute value. I mean, those are two really critical pieces that the finance team has to be involved with in order to, “Hey, are we going to universally within this portfolio use this value framework? And here’s what we’re going to consider as the cost,” whether that includes fully loaded cost or not, or capitalized or, how do we attribute for the tools? There’s a lot that organizations have to think about when they start to put this together.

Evan Campbell: And then one of the things that we found time and again, as we get into funding and move up even higher into finance is that once you start to move from project to product and you’re smarter about allocating assets, then you start to get into trouble with the whole budgeting process. That ends up in a theory constraints. What’s the next bottleneck? Well, that’s pretty predictable and so the friction and the overhead associated with making these asset allocation decisions prematurely, making them so that they’re very rigid and hard to change, hard to incorporate new information – I mean, it’s antithetical to agile. So, we get a lot of questions about how do you get finance interested in moving towards more adaptable budgeting, funding, planning models than traditional budgeting and what I think all of us have found is that, well, first of all, you just have to get a dialogue going with the CIO or his lieutenant, his or her lieutenants.


And most of the time, I’m working in several environments right now where the CFO is just absolutely excited to have this conversation. In one case, it’s a large bank in Africa. She just hates annual budgeting. She knows it doesn’t work. She knows how wasteful it is. She hates nagging everybody in the organization to produce a bunch of numbers that are going to get thrown out 60 days after the year starts. And she’s like, “Really, there’s a better way to do this?” She’s really embracing it and excited. So where do we start? Well, once we’ve got that enthusiasm and not every CIO, or CFO is going to react that way, then the next conversation is, “Well, how do we pull apart budgeting?”


As we’ve said before in the series and elsewhere that the major goals or functions of annual budgeting or asset allocation decision making, goal setting for the organization – both for performance management and setting goals for OKR and things like that for overall performance – and then forecasting, both to make sure that we’ve got cash availability for investment and operations, but also indicating to the public investment markets, what to anticipate in terms of earnings and things like that. And we all know how dicey that can get. Well, the first one that we usually tackle is forecasting. There’s a couple reasons for that. It’s the easiest one to pull out, it is the quickest one to show immediate improvements in terms of the performance of doing it a better way that isn’t tied to an annual cycle, and the third one is it’s hard to do really good goal-setting and asset allocation decision-making if you can’t see the trend of where you’re headed. Part of making better flexible decisions about investments is “Are we over-performing, are we ever underperforming? Do we need to dial up or down our cash spend?” So the forecasting helps us do that more effectively.

Kat Conner: Yeah, I would say that agile portfolio management is a key enabler to shifting this whole annual budgeting paradigm, because one of the biggest things about portfolio management is iterative or continuous planning, whatever continuous means for your organization, whether that’s monthly or quarterly. If we really start to get into a cadence as an organization of making stop, start, continue investment decisions based on incoming data from the marketplace, based on input from strategy, then we’re going to be able, there is no need for an annual budgeting process. You’ve got your teams running and you’re constantly making those changes that are critical in the moment. So that need for a longer-term view, other than large strategic bets becomes consumed or subsumed in the agile portfolio management process.

So getting finance to be part of key partner in agile portfolio management is important as Evan said, because forecasting and looking at forecasting in different way, understanding different value, financial models that are appropriate for the kind of product and service that you’re looking at. That really comes from the business, but it’s also a huge supporting role or primary role in some organizations by finance.

Aimee Palmer: Yeah, at the end of the day, you need to ensure that all three of the major components are represented, the demand side, the supply side and the matching side. And you really need people that are involved in the governance from all of those.

Kat Conner: Yeah.

Aimee Palmer: It’s a participatory conversation.

Kat Conner: Yeah.

Evan Campbell: One of the things we didn’t mention in governance, but it happens a lot, even if you have the good fortune in your organization to have relatively discreet portfolios that can operate fairly autonomously with a lot of self-control and a lot of decision-making that doesn’t have to be coordinated outside of that line of business sponsor’s control, there always will be some kind of initiative that will come down like a bolt of lightning out of the blue that will impact many lines of business or many product lines, many operating divisions. And the governance process has to have a means by which it can essentially assert a prioritization and steal some capacity for this huge cross-cutting initiative that impacts everybody in a way that can be coordinated, sequence the timing so it gets done, and basically just debit some of the working capacity of each of the portfolios that are impacted.

Kat Conner: Yeah. So debiting the capacity of the portfolios is one way to look at it. What we’re also finding with recent experiences, for those priorities or initiatives that are really important to one of the top one, two, three or five of the organization, actually looking at lifting capacity and systems and creating a separate enterprise value stream that has its own portfolio management structure and direct funding to be able to enable speed, to be able to go through the organization has been a pretty critical, I would say success story in a number of areas that we’ve been looking at. So you’ve got two choices to either take the initiative down and debit capacity away from teams, but then you’re dealing with a number of different portfolio processes, everybody’s prioritization model and roadmap model, or if it’s really critical, just lift the people in teams out and create your own independent value stream to be able to realize value much sooner.


That gets into the other questions I’m seeing here is how to structure teams, and there’s a number of questions around how to go from projects to products, feature teams, component teams, value streams. This is getting into how to use structure the supply side. What in there do you think that is really important for folks to consider when it comes to how you think about structuring the flow of work within your organization?

Josh Fruit: One of the things that just immediately comes to mind is you’re always going to be optimizing for something. The question is what are you optimizing for? So each and every one of those structural options that you just listed, and there are more as we all know, is making some sort of trade off. They’re optimizing for flow of value for a particular product line, or they’re optimizing for balancing dependency management across multiple different programs or portfolios. So not as much speed, but more fairness in the culture. And I would say I’ve seen just about everything at this point. And what I most often run into is organizations that don’t realize what it is that they’re optimizing for with one structure or another. And that’s typically where we can be very helpful and facilitate those kind of aha moments and then fall on discussions and analysis to determine really what is the right structure for you based on your business goals and what you’re really trying to achieve?

Tiffany Willis: Yeah. And then how to get there. So for example, I’ve seen clients who were actually going to a value stream based optimization. They really need, it’s too hard, it’s too much, it’s too big of a first step. And so they start with capability. Let’s just start it a little bit smaller, let’s get our feet under us and optimized for building or pursuing this capability and then we can start to expand out how that plugs into a value steam, but I often find organizations that are, it’s just, how do we get started? It hurts to get started, so start them small and get them taking just, I always say three steps. Let’s take three actions or three steps in the right direction.

Evan Campbell: One of the things that’s a really, an awful anti-pattern that I see a lot and it’s tied in with this paralysis. People think this is a huge bet. We’re going to do a big reorg, so we have to have a perfect organizational design because God forbid we should reorg twice this year. So, we’re just going to spiral endlessly about what the value streams are, how to identify them, what the primary organizational alignment mechanism in a matrix is? Well, the reality is pretty much any organization this day and age that’s trying to flatten and de-bureaucratize and empower people and decentralize, and be more effective is probably dealing with multiple overlapping types of teams. These are organizations that are becoming networks rather than hierarchies. And the tendency from big design upfront, op model consultants is we’ll give you a PowerPoint deck with a completely new org design and good luck implementing it.

Evan Campbell: Well, that’s not the right answer. The actual reorg should be the last thing you do. You experiment with a bunch of virtual organizational structures. In most cases, you’re going to have to take an incremental step to something that is not ideal, even though, so for example, you’ve got a big service bureau that takes tickets and is totally specialized, locally optimized, has an SLA, it’s the center of the spider web of every dependency matrix you design. Well, blow it up, but we’re going to create component teams temporarily because that’s an easier step to evolve through to get to feature teams, but you’re not going to keep component teams. But do you change all the reporting relationships? No, let it settle out. Try some experiments, run it different ways in different parts of the organization, see what works and let the organization follow the necessity that’s dictated by the reality on the ground.

Josh Fruit: Evan, I think that’s such a great example of one of the things that we mean when we say become a learning organization. There’s no one answer to “What are my value streams?” There’s an answer for today and it won’t be perfect, but if we’re paying attention to the various feedback loops from the investments that we’re making, the results that we’re getting, how we’re working together or not within the organization, different cultural indicators, we’re going to learn what’s working and not, and we should evolve those value streams over time as we learn.

Kat Conner: Go ahead, Tiffany. I’ll give you the final say here.

Tiffany Willis: No, it’s Aimee, I think.

Kat Conner: Aimee, yeah?

Aimee Palmer: Yeah. I was just going to say I think one of the things that’s happening in the industry is these buzz words of moving from project to product. Everyone gets wrapped around the axle of, “Oh, I got to figure out what all my products are,” but really it’s about what do you want to optimize around – to what you were saying, Josh – and how do we organize around that delivery of value? It may be an actual external product or it may be an initiative, or it may be whatever makes sense for your organization to improve the speed to which you can deliver.

Kat Conner: Oh, right on, Aimee. And this has been a really great conversation. And I want to thank everyone for joining us as we answer some of the questions we gathered during our recent Agile Portfolio Management webinar. Thanks to everyone here for bringing their experience and insights. And if you would like to know more information about agile portfolio management, check out solutionsiq.com/apm. Thanks and have a great day.

Evan Campbell: Thanks. Great seeing all of you.