Agile Portfolio Planning

Goal of portfolio management (strategy execution) is to minimize value evaporation and maximize value retention. Strategy creates value but some of it evaporates due to poor execution and other organizational frictions. To understand Value Evaporation, assume that the strategy is right and, therefore, value creating. Thus, if there is any loss in value due to a poor strategy, it is not a part of Value Evaporation.

A good agile strategy cannot prevent the evaporation of value. Think of a tropical village that is perpetually short of water. So, the villagers come up with a strategy. It involves digging a big hole in the ground to create a reservoir of water from natural rain. The strategy works. The reservoir fills up. But the villagers forgot how mercilessly hot the tropical sun can be. The reservoir did not last very long. Evaporation returned its water to the atmosphere. For the villagers, what matters is not just how much water was there in the reservoir initially, but how much is retained after evaporation.

The same is true for any organization. Its goal is to come up with a strategy that maximizes value retention by incremental and mutually reinforcing execution of value chain. Key for value retention is to manage portfolio by inspecting and adapting in small increments to utilize feedback from internal and external customers.

The following diagram depicts agile portfolio management through value chains. These value chains yields spiral effects if portfolio is managed with an effective agile strategy. one V-spiral triggers a new V-spiral through the transformation process.

Portfolio planning is the second layer of Agile Planning Onion. You can review the next planning layer by clicking on the following diagram. I recommend to watch this video to get a better understanding of linkage between all layers.

Agile Planning Onion Layers
  1. Strategy
  2. Portfolio
  3. Release
  4. Iteration
  5. Daily
  6. Continuous

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