How You Can Step Up from Lean Principles to Lean Portfolio Management

The principles of Lean Manufacturing can be applied to the world of Portfolio Management. Lean Manufacturing traces its origins back to the 1980s when James Womack and Daniel Jones researched modern manufacturing processes, seeking to identify the basis for efficiency, quality, and cost reduction in the production methods used. Later they helped co-author the book The Machine That Changed the World.

Our understanding of “Lean” today can be traced back to their findings: the most effective production methods focus on reducing time on “all parts” by eliminating anything that doesn’t bring value to the customer. This is easier said than done, though, as the philosophy can take years to implement within an organization and requires focusing on these principles:

• Value Orientation
• Value Stream
• Pull
• Flow
• Perfection

Lean Manufacturing organizations are likely to say not only that they’ve implemented Lean, but that the philosophy is their ‘way of life,’ their be-all and end-all, their raison d’être, part of their very DNA. Even if they have implemented Lean into their manufacturing processes, it is no guarantee they have brought this same mindset to their Portfolio and Project Management (PPM). There is value in applying Lean to PPM, though, as it can increase team efficiency and ultimately release projects to market sooner.

So here’s the challenge: How can you incorporate Lean Management Principles into Portfolio & Project Management (PPM)? 

Read on to see which areas should be evaluated and practical tips on how to address each one.

Value Orientation

This is value that the customer is willing to pay for. Portfolio Management is about successfully delivering projects — especially projects that are of value to the customers. However, without seeing the whole list of projects, how can you make decisions on where precious resources should spend their time?

Lean Portfolio Management should look at the whole list of projects and understand why completing those projects is important.

Value Stream

Value Stream represents all the activities required to transform a customer request into a good or service. There are many types of projects that support a value stream or support the organization internally. Every single one is important to somebody! Yet resources (team or budget) are usually a constraint and not everything can be done right away.

Lean Portfolio Management should include clear guidance on how projects will be prioritized and have a regular process for assigning priorities. The criteria may include factors such as which value streams are more important to the company’s strategy, ROI thresholds, or how much risk a project poses.

Now you may be asking, who makes these tough decisions? Host a monthly or quarterly meeting with a regular group of leaders representing each value stream. Their responsibility is to review new initiatives, apply the prioritization criteria, use their judgement, and hash out their priorities.

In your SINGLE project lists, include the value streams they support, the factors that went into prioritizing them, and their priorities as they relate to the others on the list.

Pull

In the context of PPM, Pull refers to the desire to avoid overloading resources where bottlenecks can occur, thereby avoiding project delays. Having visibility on longer range bottlenecks is critical in PPM as it provides enough time to find options that would reduce delays.

While you can start with Excel and select a few key roles that are typical bottlenecks, effective resource capacity planning requires a more robust solution like Meisterplan.

Flow

“Flow” is, first and foremost, about the constant value delivery of projects and meeting customer demands at the right time. As it relates to PPM, the focus here is to make sure team members are ready to work together and are effectively utilized.

This means avoiding resource underload as well as the ability to review and level out team members’ work across all projects. Resource Managers need visibility to priorities as conflict arises as well as a view across their team. Team effectiveness comes when they are not overutilized or underutilized.

Perfection

Eliminating waste is the key to efficiency and cost reductions, and this is no different in the context of Portfolio Management. Having a ‘continuous improvement mindset’ is part of the long journey to perfection (and it is truly a journey, not a destination!)

Eliminating unnecessary processes or steps allows your Portfolio Project Management to be as Lean as possible.

7 Areas of Waste and How They Relate to Portfolio Management

Transportation

Task switching or too many projects being worked on at one time. Research has shown that task switching slows people down, hurts quality, and has downstream effects of delaying future projects. A Lean Portfolio Management practice should make this waste transparent for easy identification.

Inventory

Excess team members not able to be assigned to high priority work, while at the same time waiting for those with high-demand skills to become available.

A Lean Portfolio Management solution & practice should incorporate:

• Being able to see longer range demands to remove bottlenecks before they affect projects.
• Visibility into team demands which help influence where skills should be developed or when it’s ‘just the right time’ to bring on new hires.
• The ability to ‘find people with the right skills’ or ‘develop skills’ so more people do not need to be hired.

Motion

Too many meetings to get the ball rolling.  Whether this be on making decisions on your new Portfolio plans, ineffective team meetings, or ineffective meetings to resolve project conflicts.

Meisterplan has a Lean PPM Framework that can jump start a meeting and decision making framework. 

Waiting

Often project delays occur when waiting for someone’s availability to take on the work or to answer questions. A Lean Portfolio Management practice should allow easy identification of what teams are needed and when they are ready to start that work together.

Over-Production

In PPM, the “Flow” is also about managing when projects are delivered. Having too many releases in one quarter, affecting the same user group, is over-production. Over-production may overwhelm the customer and prevent them from adopting all the great things released. Therefore, a Portfolio Management solution needs to be able to manage delivering projects ‘at the right time’ as well as ensure ‘not too many at the same time.’

Eliminate these impacts by having a clear view of key milestones, such as go-live dates by month or quarter and manage the flow. 

Over-Processing

Too many projects can over-process resources and ultimately delay downstream projects. Research shows multi-tasking doesn’t make the tasks get done faster rather can add up to 20% more time on complex tasks.  Portfolio Management is focused on visibility to all resources, independent of any single project, so that you can manage resources across projects more effectively. Having a guideline on how many projects are reasonable at one time and balance each person’s workload.

Another common challenge in Portfolio & Project Management is establishing the right level of governance for each project. Having too much governance on smaller projects doesn’t add any value, and having too little governance on high-risk projects is a recipe for disaster. 

Lean Portfolio Management considers project types and designs a governance process to be like baby bear’s porridge — just right.

Defects

Defects in PPM relate to team members and stakeholders having in-congruent information about the project. Examples are priorities, forecasts, and timelines. This leads to sponsor dissatisfaction when there is a mismatch in understanding, team inefficiencies, and increased costs.

Lean Portfolio Management ensures data is easy to access and encourages collaboration using a single source of truth.

In Summary

The principles of Lean manufacturing can be carried into the Portfolio and Project Management space. This way, you can get the ‘right projects’ done first with quicker time to market and effective utilization of resources.

Part of Lean is being agile, which means starting small, achieving value quickly, and increasing value over time. Remember, you can’t tackle everything at once! So evaluate where the biggest opportunities lie and start with those.

Meisterplan promotes a Lean PPM Framework and has experienced professional consultants to help you bring Lean Management principles into your PPM process.
Access our free handbook for Meisterplan’s Lean PPM Methodology: Introducing Lean PPM™ to Your Company – Meisterplan Help Center.