2. Many people in organizations
complain about a lack of clear
goals. The Vision Statement is
there to be your guiding star but
moving from strategic vision to
dedicated tactical execution can
perhaps be one of the most
difficult challenges an
organization faces.
Strategy
Wall
3. To get to a place where people not only
accept but are passionate about what
needs to be done is far from easy. It
requires an environment where people are
part of the strategic planning and where
their thoughts count. Transparency and
engagement from upper management is
one step in the right direction. The
Strategy Wall is a good place to start.
Strategy considerations are not only for C-suites, they are
something everyone, sometimes even for your customers, can be
involved in. To get to the point where the mission and vision
statements of your company actually make sense to people, it
cannot simply be posted on the company website or in an internal
memo. The vision needs to be integrated in the DNA of an
organization and all it employees. Decentralization, autonomy,
self-organization and self-direction require that local ambitions are
strategically aligned. For this to be achieved we need to work
across the layers of hierarchy. Visualization, transparency and
collaboration can help facilitate this.
A former CEO of mine did some amazing things. For example, he
invited almost half of the company to attend strategy days on a
regular basis in an effort to get peoples inputs and thoughts, and
to share his own ideas and thoughts. He joined daily standup
meetings to stay in touch with what was going on in the
organization. He came and presented the more general company
strategy for our development department. Basically he made sure
that everyone counted and were engaged in the company. Truly
immersing himself between the company’s hierarchies.
Even in very decentralized organizations there are hierarchies.
The important message is that we have to work across all the
layers simultaneously, not just one at a time. Remember that the
upper layer of an organization exists to serve the purposes of the
lower layers. Few organizations are built top-down and that makes
understanding what is happening in the front lines most important.
The Strategy Wall creates a place to meet and start working
together with strategy.
[wikipedia.org]
“It seams to me that there is a pressing need to
develop modes of thought in which there is a
tension between immersion in ordinary daily
experience of local interaction and abstraction
from that experience, also understood as
emerging from local interaction, in order to
understand what we are doing.”
Ralph Stacey, “Complexity
and organizational reality”
4. Business Model Canvas
Secret business plans are out, transparent
Business Models are in. The Business Model
Generation technique is collaborative, it
provides the tools and techniques you need to
create, play, explore and communicate your
business strategy.
The Business Model Canvas can be applied to many parts in your
organization. It can be used as an overall business model, a
product line business model, a project description or even your
own personal business model. It creates multiple possibilities to
enhance cross-layer work. It is a great tool for developing the
purpose of your portfolio. Few people in an organization
understand all its’ parts and the Business Model Canvas can help
even small companies understand their overall business model.
When this is not clear to everyone involved, people tend to do
things that are not aligned with each other or with the business as
a whole.
The Business Model Canvas consists of 9 blocks that most
companies need to understand. Customer segments, Value
Proposition, Customer Relation, Channel, Revenue Stream, Key
Resources, Key Activities, Partners, and Cost Structure. Any project
you run is initiated from a development of the business model, it is
an execution of strategy. If it is a quality fix, cost ratio, new product,
it will have an impact on the business model to be. Make sure that
everyone understands how their work fits into the larger picture.
The Business Model Canvas combined with a Portfolio Anatomy is
a powerful tool.
[alexanderosterwalder.com]
“Co-creation is much more work
than writing somewhere hidden
in a corner and then publishing
your content. However, the
benefits outweigh the costs.”
Alexanders Osterwalder,
“Business Model Generation”
[businessmodelgeneration.com]
5. Portfolio Anatomy
Understanding all parts and the relationships
between different projects can be both
overwhelming and complex. The Portfolio
Anatomy creates a visual aid for understanding
these relationships and coming to grips with how
to move forward.
The Portfolio Anatomy starts with a Business Model Canvas “as
is”, i.e. the present day company business model, and displays
tactical moves or projects which need to happen in order to reach
the next milestone on the path to the company's strategic vision.
This visual aid will help you to provide transparency, illustrate
interdependencies and allow clear goal setting for projects. The
Portfolio Anatomy also provides a ‘sandbox’ in which to play and
experiment with different solutions. Far too often projects become
larger and larger over time, making it difficult to align strategic
initiatives and postponing achievement of important milestones.
Visualization of the interdependencies between projects can help
you figure out how to break dependencies and split projects into
smaller and smarter parts. The Portfolio Anatomy is the heart stone
of the Strategy Wall, when developed it sets the direction and
alignment of your overall strategy. It is accessible for everyone to
see, discuss, comment and understand. It gives a clear notion of
how everything should connect in the end.
[ Source: captaintrouble.com/
2013/04/15/the-portfolio-anatomy/ ]
6. The Balanced Portfolio
Balance is key to healthy investments. Investing
short term may increase the quarterly revenue,
while large scale investment in innovation may
not show returns for significant periods but be
critical to long term success. Balance is different
for everyone, just make sure you have the right
balance for you.
[wikipedia.org]
“You don’t learn to walk by
following rules. You learn by
doing, and by falling over.”
Richard Branson, Virgin
Group, Adventurer
There are plenty of different ways to understand the balance of
investments. A common method is the risk/reward bubble
diagram. It is pretty straight forward but I have changed some
names to make it ever easier (for me) to understand. It has four
types of investments: Maintenance, Incremental, Innovative and
Exploratory. Each investment initiative is displayed with a bubble.
The larger the bubble the larger the amount invested. The bubbles
are positioned relative to each investments perceived uncertainty
and predicted value.
The more more uncertain an investment is the more it is positioned
to the right, the greater the expected income from the investment
the higher up it is placed and vice versa. I use different colors to
show to what product line or similar the investment belongs. Using
this diagram you can easily see if you are over-investing in one
area and under investing in another. What is the right balance?
That is for you to figure out, but start measuring so that you know
what you are spending money on. A complement to the bubble
diagram is the pie chart aggregating the investments.
20%
20%
40%
20%
Investment
Maintenance
Incremental
Innovation
Exploration
Maintenance
Innovation
Exploration
Incremental
UncertaintyLow High
ValueLowHigh
7. Financial Impact
Implementing a strategy means investing
money on initiatives like internal IT projects,
new products, new distribution channels, and so
on. Spending money is a good thing if it is on
the right stuff. Knowing the condition of your
finances is essential to knowing how to spend. [suzeorman.com]
“People first, then money, then
things.”
Suze Orman
P&L Income Statement
Sales
COGS
Gross Profit
Expenses
Net Income
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
Last
Iteration1
Iteration2
Iteration3
Iteration4
Iteration5
Iteration6
Iteration7
Iteration8
Iteration9
Iteration10
Iteration11
Iteration12
Iteration13
Iteration14
Iteration15
Target
Month actual
Forecast development
12 month avg
Cash Flow Statement
Cash Flow from
operations
Cash Flow from Finance
Cash Flow from
Investments
Net Cash Flow
Business Case –
One Pager
Return On Investments
Project A
Project B
Project C
Project D
Project E
The key financial components on the Strategy Wall are the P&L
Income Statement, the Cash Flow Statement, possible future
Business Cases and ongoing and past investments.
It is important to understand how the over all business is
performing financially. How are the sales looking? What are we
spending? Are we making any money? These questions should
be answered by the Profit & Loss statement. The Cash Flow
Statement indicates how much operations money we need to
spend and wether we will need to borrow this money or can
reinvest earned money.
While new and existing business cases may not be the sole thing to
focus on when deciding what to invest in, they do help you
understand how to manage future profit and cash flows. A rolling
budget including forecasts and targets serves as a estimate of how
much money you intend to spend, earn and invest in the future.
These 4 financial components cover a lot of ground and definitely
belong on the Strategy Wall. Read more about this in my article
“The Agile Budget”.
8. Decision-Making
Making a decision about the next step is hard
because it means saying no to some things. That
is key. To say no. I guess it’s hard because ‘no’ is
a negative word, and who wants to be the
negative one. Instead of leaving the tough job to
someone “who gets paid for making decisions”,
we can use collaboration to help out.
[en.wikipedia.org]
“You have enemies? Good, that
means you stood up for
something in your life.”
Winston Churchill, (don’t
need to say anything else)
What is common to pretty much anyone who is responsible for
making a decision about a product, investment or similar, is that it
involves a lot of pressure. The more uncertain the outcome is, the
greater the pressure. By using a collaborative scoring model such
as Decision-Making Poker [Decision-Making Poker, Oskarsson
2013] you can strengthen your confidence as well as recognizing
when perhaps you were on the wrong track. Collaborative scoring
provides you with a prioritized list along with their relative
strengths via scoring results.
You can also use a Heat Map to show projects that have received
high, mid or low scores. For example if 10 is the highest score, the
project has a very strong indicator for some factor that you might be
interested in. For example a very strong Time To Market factor. This
might be something you should act on. On the other hand if some
project score is very low, that might be of interest as well.
Collaborative scoring is a powerful method for getting input as well
as ‘buy-in’ from the people involved.
Prioritized Decisions
Project Score
1. Project A 30
2. Project B 27
3. Project C 25
4. Project D 20
5. Project E 18
9. Portfolio Roadmap
At the horizon is the company’s vision, as you
move forward, the horizon is moving too.
Waypoints becomes tactical milestones in the
pursuit of your vision. As vision changes, so
does your bearing, but the horizon is still there.
Your job is to figure out where to put the
waypoints.
[en.wikipedia.org]
“It is always wise to look ahead,
but difficult to look further than
you can see.”
Projects
Milestones
Old Products
IT Systems
Logistics
Suppliers
New Product Line
Face lift
New Product
Iteration A Iteration B Iteration C Iteration D
The Portfolio Roadmap is a visual aid helping your brain to
understand the roadmap for each project, product or initiative, and
to identify common synchronization points where multiple
initiatives can be bundled together in an appropriate way for
market launches. The Portfolio Roadmap can be a large
whiteboard or similar where you can easily write, change, add
sticky notes, magnets etc. Usually each row has a corresponding
cross-functional product team that keeps the board up to date and
coordinates with other product teams.
Sometimes there is a interdependence between rows (remember
the Portfolio Anatomy). The Portfolio Manager,
or similar, has the responsibility to facilitate workshops and planning
sessions with all cross-functional product teams, preferably
everyone that can fit infront of the Wall. It is important that all the
different parts of the organization are represented on the Portfolio
Roadmap to ensure that everything is planned together. The goal is
to optimize the whole, not individual parts.
Winston Churchill, (don’t
need to say anything else)
10. Portfolio Investment Items
Projects in an Agile way of working are called
Epics. They differ from projects in traditional
Portfolio Management in that an Epic would be
much smaller than a normal project. In my
experience perhaps only 10-20 % of a normal
project.
[twitter.com]
“Planning is a quest for value.”
Epics were introduced (the first time I read about them anyway)
by Mike Cohn as very large User Stories. And what are these?
They are simply large requirements that belong to an investment
theme. Same, same but different than a traditional project.
Another big difference is that there is no annual planning of what
Epics to execute, or an annual budget. Instead you have
continuous rolling planning and budgeting. I have seen
adaptations that are a good way to start learning but don’t really
produce the big benefits of Agile and Lean thinking.
When I present small batch thinking I often hear many people
thinking out loud, “if we break our current 250 projects into Epics,
that would be 2500 Epics. How can we handle that?’. This is
where the backlog thinking comes in, and the corresponding
transformation of mindset. It becomes apparent that it is
impossible to plan 2500 backlog items, and I agree. But what was
the difference from before? How can you plan 250 projects if you
can’t plan 2500 Epics?
It was only ever possible by adding abstractions, i.e. projects
regarded as single independent pieces, and that is where we lost
sight of reality. A project is many, many small pieces that only a
few individuals have full knowledge of. With abstractions, decision
makers are left with only project names but are supposed to know
how to manage them all the same.
Agile Portfolio Management is an immersing process where
“planers” and Decision Makers have to dive into details, Epics, and
understand the reality. This leads to being only able to handle fewer
items at the same time, and “voilà” small batches become the only
option.
Once an idea has become a plan, Epics are born. Epics have a
lifecycle of their own which aggregate to the lifecycle of the product.
The activity of working with the lifecycle is sometimes called
“grooming” in Agile buzzword lingo. So that’s what I’ll call it from
now on. The grooming activities are probably different depending
on context.
I’ll suggest some grooming activities for which I use a board, similar
to Kanban or Scrum boards, to manage. See next page.
Mike Cohn, (Agile Estimating
& Planning)
11. Portfolio
Backlog
Define roughly
Epic content
Verify
assumptions, rapid
prototyping, front
loading
System
architecture
draft design
Define how
to measure
success
Estimation
and creation
of business
case
Estimation and
creation of
business case
Build,
Prepare
for launch
Launch Measure
success
Gather
data and
learn
New idea
Depending on what is important to you, you can choose different
styles. A scrum approach would help manage a batch of Epics,
creating anticipation and the ability to communicate larger scope.
Flow might then be the down side. If high flow is the main driver,
then a Kanaban approach might be the solution, focusing on
limiting the number of concurrent Epics in the flow and optimizing
for Time-To-Market.
The lifecycle follows a Lean Startup cycle, where the whole idea is
to learn as fast as possible in order to respond. It is therefore
important to follow up on the Epics and handle any important
learning. The Epic lifecycle board is another great item that
belongs on the Strategy Wall. When your organization is X-large
you might need to add abstraction layers, but don’t forget to put
them at the same place so that the same people can follow the
path between abstractions.
12. The Strategy Wall
Meet the Wall. The Strategy Wall is the heart of
communication and collaboration. It’s
accessible to everyone in the company. Too
often employees are kept from knowing
strategic moves and too often employees
complain about unclear goals. No more. [garyhamel.com]
“Most companies are run by
executives who know everything
about cost and next to nothing
about value.”
Gary Hamel, “What matters
now”
Projects
Milestones
Old Products
IT Systems
Logistics
Suppliers
New Product Line
Face lift
New Product
Iteration A Iteration B Iteration C Iteration D
The Strategy Wall
When creating your strategy wall it’s important to build it one small
step at a time. I’ve heard of other consulting firms who set up a
standard room before introducing people who are then supposed
to develop it further. Building the content of the wall should take
some time. Everyone needs to understand the purpose of all the
content, why should it be used and what problems it solves.
Where you start does not really matter.
Anything that will provide you with new information which you can
use to understand your current situation is wanted. I have shown
some tools that fit together. At first sight it can feel like information
overload. An essential feature of the wall is that practically every
part of your organization should have a hand in creating it. That
process is, in it self, priceless. To develop the wall requires a good
deal of upfront work and ongoing hard work and discipline to keep
the wall fit. Do you think it’s worth it?
13. Daily Operations
Strategic work is not a once-a-year activity, its
daily work. All the money you spend should
have a strategic direction and be spent wisely.
The trick is to get everyone aligned with the
overall strategic vision. This cannot be top-down
goal setting, but a combination of both top-
down and bottom-up at the same time. The
direction and goals, are both extrinsic, intrinsic
and emerging.
Top-down goals are the goals that your C-suites see that need to
be reached, they usually have the most over-all viewpoint on what
needs to be done. They set the extrinsic goals for the company
and these goals need to be managed in some way.
Intrinsic goals are the goals that each employee has, each team,
and department and so on. These goals are super important for
motivation and energy. They should reflect the strategic vision on
a micro level. These goals must also be managed.
The emerging goals are the goals that appear without much
planning. They come from exploration, learning, talking to
customers, new technology etc. These constitute newly
discovered opportunities. They might be your company’s next new
big-bang disruptive innovation. These must be managed as well.
To manage all three different kinds of goals, annual planning will
invariably fail. The no planning do-what-ever approach will also
fail, as will do-what-is-most-urgent-just-now strategy. The only way
to manage all three is to manage them simultaneously.
These three types of goals have different cycles, and that is key.
Big strategic turns or pivots usually have longer cycles than
changes at the product level. For example before a new business
model can be reached, several changes to existing products and
completely new products need to be developed.
The Strategy Wall is a collaboration platform for integrating strategic
work into daily business. Beginning with a strategic direction which
represents the overall business model, it outlines the current
business model, the visionary business model, and the steps
needed to get there. By using a business model canvas to show
how the business model will develop you communicate how
strategy will be implemented to achieve the strategic direction.
The business model must be updated and tracked. Every 3-6
months you should have a business model review (or what makes
sense in your world). Things will have happened, a product delivery
delayed, another project become more urgent, new opportunities
emerged etc. The business model needs to be reviewed.
“Those formulating the abstraction are
making a gesture whose meaning can only
emerge in many, many local interactions.”
[wikipedia.org]
Ralph Stacey, “Complexity
and organizational reality”
14. Once the prioritys are set, it is time for planning activities. Planning
is also a collaborative process. There are usually many different
parts which need to be coordinated. This activity is lead by the
cross-team program’s project leaders, product owners, and scrum
masters. The roles vary depending on company structure and size.
The Portfolio Roadmap and Anatomy are used to explore options
and finally agree on a suitable scope, which can then be
communicated. The scope usually has a list of things which are
highly likely, flexible, and highly unlikely to deliver. It is important to
let the teams decide what to commit to, otherwise they can over
commit and deliver bad quality which can incur high costs later on.
The scope becomes the backlog that the development teams
should work with. They start with the most important Business, and
coordinate with technical architectural Epics that need to be in
place for other epics to proceed. Each team figures out the best
way forward. As soon as they can deliver something that is a MMF
(Minimum Marketable Feature) they integrate and deploy, following
the release cycle.
The iterations of your business model follow the release cycle
cadence and can be used for launches. The release cycle is
simply the pace for when changes to the product are available.
Each release is known as a Potentially Shippable Increment and
you can choose to take it market or not, use it for demo to early
adopters, or for any other use you may find.
Using this approach you can introduce new products early and
safely in order to feel out the market and be able to change the
product, pivot the business model or change investment strategy
totally, if needed, without too much loss. The world is getter more
and more complex and large launches are becoming riskier and
riskier. You need to feel your way forward, it cannot be anticipated
in advance. Let it emerge at the pace you need.
Changes in the business model will have impact on tactical
execution resulting in new projects, products, updates etc.
Exploration of what possible scenarios exist is needed to discover
and list all possible actions. Estimations, scoping and a review of
the finances are activities needed to be prepared for decision-
making.
This means engaging teams to estimate roughly all possible
scenarios. This might seam like a waste of resources, but it is the
opposite. Engaging teams regularly is the perfect process of
immersing upper management with frontline teams and the teams
will continuously get better at estimating.
Regular insight into and updates of finances are healthy and are
needed to facilitate rapid direction change when required. When
the P&L, Cash Flow and Business Case Statements are updated,
make sure to review the balance so that you don’t loose sight of
long term investments.
When scenarios and and finances are updated it’s time to make
decisions about how to prioritize and move forward over the next
strategic iteration. Game day. Prepare presentations of scenarios,
business cases, financials, strategic plans, and have a day of
Decision-Making. Collect the data from the session and make a
decision of how to move forward. Make priority of Epics in a
Portfolio Backlog.
15. Agile Product & Portfolio Management
Framework (A-PMF) v1.03
BUSINESS
STRATEGY
3-6 MONTHS ITERATION
1-5 YEARS HORIZION
PRODUCT
RELEASES
1-3 MONTHS ITERATION
3-6 MONTHS HORIZION
CONTINUOUS
SPRINTS
1-4 WEEKS ITERATION
2-8 WEEKS HORIZION
DAILY
BUILDS
DAILY ITERATION
WEEKLY HORIZION
“Things change, roll with it!
PRICING
ANALYZE
PRODUCT
LIFECYCLE
REVIEW
COMPETITOR
STORIES
INNOVATION
EXPLORATION
BUSINESS
MODEL
GENERATION
PORTFOLIO
ALIGNMENT
PORTFOLIO
DECISION-
MAKING
PORTFOLIO
VISUALIZATION
INVESTMENT
REVIEW
POST LAUNCH
FOLLOWUP
CUSTOMER
STORIES
PRODUCT
ROADMAP
REVIEW
PRODUCT
BACKLOG
GROOMING
PRODUCT
DESIGN
REQUIREMENT
DEFINITION
EPICS
SYSTEM
ARCHITECTURE
ALIGNMENT
KEY
PARTNER
ALIGNMENT
PRODUCT
DOCUMENTATION
PRODUCT
TRAINING
PRODUCT
LUANCH
KEY
CUSTOMER
SALES
SUPPORT
PRODUCT
MARKETING
BUDGET
REVIEW
PRODUCT
SUPPORT
CUSTOMER
RELATION
SPRINT
PLANNING
ACCEPTANCE
TESTING
TEAM
COLLABORATION
SPRINT
REVIEW
PRODUCT
VALIDATION
SPENDINGS
REVIEW
SWOT
ANALYZE
PORTFOLIO
EXPLORATION
WORK FLOW
ANALYZE
REQUIREMENT
REFINEMENT
FEATURES
ASSUMPTION
REDUCTION
16. Johan Oskarsson
@johanoskarsson
Johan.d.oskarsson@gmail.com
www.captaintrouble.com
Inspirational sources
Management 3.0 – Jurgen Appelo
The Product Manager’s desk reference – Steven Haines
Implementing Beyond Budgeting – Bjarte Bogsnes
Beyond Budgeting – Jeremy Hope, Robin Fraser
Complexity and organizational reality – Ralph Stacey
Business Model Generation – Alexander Osterwalder
Portfolio Management for new products – Robert Cooper
Agile Portfolio Management – Jochen Krebs
Agile Estimating & Planning – Mike Cohn
Thanks to David Jackson for editing and theoretical dialogues.
