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Adaptive Portfolio Management

28 June 2016

Mohammed Haji
Sabre Corporation

In today's volatile IT world, a portfolio provides the basic structure for product development. Any product that is developed around a portfolio should be built on value or the outcome, rather than on only benefits or profits. An adaptive portfolio, which is value driven, helps an organization meet its strategic objectives and satisfy customer demands. No matter how strong your scaling framework, if the portfolio is not adapting to the changing needs of the business, you cannot deliver value.

As the Agile Manifesto states, we are uncovering better ways of developing software by doing it and helping others do it. I truly believe that the best way to deliver a product is to build it in small batches or iterations through an adaptive portfolio.

VUCA drives the need for adaptive portfolio management:
  • Volatility: Things are changing at a faster rate than ever before.
  • Uncertainty: The future is unclear, with no clarity on the outcome.
  • Complexity: Many loosely related factors impact the outcome.
  • Ambiguity: There is lack of clarity about meaning and direction.

Key characteristics of an adaptive portfolio

Below are key characteristics of an adaptive portfolio:
  • Value driven. Delivering core business value should be the main intent, be it to produce a product or provide a service. We must understand both value and cost at the portfolio level to make necessary business decisions.
  • Prioritized and ordered features. The portfolio backlog must have features prioritized by their importance, relative to each other, to optimize value or return on investment (ROI).
  • Flow vs. batch. Scrum teams work on the Agile flow based on the delivery model that promotes sustainable development.
  • Iterative flow. Depending on the complexity of the initiative and how research oriented it is, planning cycles should span from a few day to a few weeks, with the incremental deliveries of the product.
  • Reduced cost of delay. One of the essential characteristics of an effective and adaptive portfolio is the need to prioritize the backlog by cost.
  • Governance feedback and checkpoints. "Doing the right work" at the portfolio level is important. At the portfolio level, you can start, switch, or stop any initiative. Plan initiatives for no more than three months, with a governance checkpoint at every six weeks. Good feedback mechanisms must be in place so that ROI is visible to all the teams and reaches up to the portfolio level.
  • Build–measure–learn at all levels. Constant feedback loops and an empirical process must be in place to have a thriving adaptive portfolio.
The success of any product in an organization thus truly depends on how adaptive the portfolio is.

Opinions represent those of the author and not of Scrum Alliance. The sharing of member-contributed content on this site does not imply endorsement of specific Scrum methods or practices beyond those taught by Scrum Alliance Certified Trainers and Coaches.

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