Agile Business Ownership and the premise of Portfolio Management

One of the major causes of companies failing to execute their strategy is the lack of an effective process for managing the portfolio of strategic initiatives. Without a clear structure and a defined process for organizing and prioritizing these initiatives, many companies end up fragmenting their efforts into projects that are disconnected or poorly aligned with the company's overall objectives, wasting resources and time. The lack of a well-managed portfolio leads to dispersed focus and prevents leaders from having a holistic view of progress towards the desired strategic results. As a result, projects tend to be evaluated based on deliverables (outputs) and not on the value generated for the business (outcomes), compromising the effectiveness of the strategy and the ability to adapt to changes in the organizational environment.

The 8th premise of the evolutionary practices of Agile Business Ownership offers a solution to this challenge, stating that:

Portfolio management must structure the strategy into programs and monitor execution to ensure the value generated for stakeholders.

The first concept, structuring strategy into programs, is crucial to ensure that strategic drivers are deployed in an integrated way, through initiatives that generate new organizational capabilities that leverage growth and innovation. Strategic programs, unlike isolated projects or departmental actions, allow for the orchestration of cross-functional efforts, where different areas of the company collaborate to achieve higher impact business objectives. By structuring the strategy in this way, the organization doesn't just focus on one-off actions, but on a systemic development that promotes global results, such as competitiveness and long-term sustainability.

The second concept, monitoring execution to ensure value generation, reinforces the importance of not only monitoring the progress of activities, but also ensuring that these activities are effectively generating value for the business and its stakeholders. This implies continuous and adaptive monitoring, where the focus is on assessing actual results (outcomes) rather than simply measuring deliverables (outputs). This monitoring process allows for quick adjustments, realignments and the elimination of waste, ensuring that strategic programs remain relevant and generate a positive impact on the defined success metrics. Thus, the combination of structuring the strategy into programs and monitoring execution dynamically ensures that the company is always in tune with its strategic objectives, delivering real and sustainable value.

All of the above is directly related to the concept of Lean Portfolio Management (LPM) because this approach focuses on optimizing the company's strategic resources and efforts, eliminating waste and ensuring that each program is aligned with the organization's larger objectives. LPM applies lean principles to portfolio management (strategic programs), ensuring that each strategic initiative is geared towards generating value for the business and its stakeholders. By structuring the strategy into programs and monitoring execution to focus on outcomes and not just outputs, LPM allows for an efficient and coordinated flow of activities, where the delivery of value is the main driver. This approach is crucial to achieving the 8th premise of Agile Business Ownership, as it promotes an integrated and lean vision of management, avoiding the dispersion of efforts in disconnected projects and ensuring that each program contributes effectively to the organization's strategic and transformative results.

At Agile Business Ownership, we recommend that the LPM focus on the cause-effect relationships outlined by the PuRe CaRe Model (Value Generation) as it offers a clear and structured vision of how strategic actions connect to the desired results. By focusing on actions that enable resources (deliverables) that enable the necessary organizational capabilities (potential value), the LPM guides leaders to think beyond the simple execution of operational action plans. Instead of focusing only on isolated activities and deliverables, this approach encourages a strategic mindset, where the development or acquisition of enabling resources becomes the real engine for creating organizational capabilities that will sustain and leverage business results (real value). This understanding is crucial for leaders and managers to understand that the effective execution of a strategy is not just about “doing”, but about enabling the organization to grow, innovate and transform, maximizing long-term strategic impact.

Finally, it is important to understand that a strategic-level organizational capability (which generates a competitive edge and leverages business growth in a sustainable way) cannot be developed through a departmental action at the tactical-operational level. It needs to be orchestrated at the strategic level, through programs that integrate the different competence centers (areas and departments) through the leadership of their managers.

In short, strategic program portfolio management is a fundamental practice within Agile Business Ownership, ensuring that the organization's strategy is transformed into tangible and sustainable value. The ability to structure, monitor and adjust strategic programs ensures that organizations not only execute their strategy, but also continuously evolve towards their higher purposes.