portfolio management and agile
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Portfolio Management and Agile:A look at portfolio risk and value
with the agile paradigmA presentation to
PMI Central Florida ChapterJohn Goodpasture, PMP
andAlex Walton, PMP
Copyright 2011 John Goodpasture and Alex Walton
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Are portfolio value-risk trade-offs compatible with
agile management practices such as: Dynamic backlogs
Evolutionary scope
Persistent teams
Incremental plans
Copyright 2011 John Goodpasture and Alex Walton
The Question
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PerhapsThese are among the issues well address in this
presentation.
Copyright 2011 John Goodpasture and Alex Walton
The Answer
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The Tension
Copyright 2011 John Goodpasture and Alex Walton
Portfolio value is planned
Plans- Actions & behaviorare systematically
sequenced and related
Planning Horizon - A fewmonths to a year or more
Agile effects emerge
Emergence - Unplannedpatterns of interaction,
actions, and behavior
Planning horizon - A fewweeks to several months
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Portfolio: The Idea
Copyright 2010 John Goodpasture and Alex Walton
Project Office
Portfolio 1 Portfolio 2 Portfolio N
Projects of common affinity are grouped
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Portfolio Management
Copyright 2011 John Goodpasture and Alex Walton
Leadership
Business Value
Risk Management
Strategic Alignment
Management
Resource Management
Cross-project Coordination
Project Governance
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Value and Risk
Copyright 2011 John Goodpasture and Alex Walton
Value
The business gets more in return thanthe stake put at risk
Constituents are more satisfied andbetter off than before
A system of projects is more effective
than a collection of individualprojects
Risk
Portfolios diversify business assetsamong projects
Boundaries between teams andprojects isolate unfavorable effects
Redundancy and backup among
projects protects business
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A SYSTEM is a specific set of structures
interconnected in such a way so as to producespecific patterns of desired behavior.
A system NETWORK contains nodes (where the workoccurs) and relationships (that carry the value
between the nodes).
Copyright 2011 John Goodpasture and Alex Walton
Systems and Networks
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Strategic plans couple
relationships between projects Governance manages project-to-
project behavior, mitigatingconflicts and priorities
Project office protocols assureinformation exchange among
projects Redundancy mitigates failure to
produce business value from oneproject or another
Copyright 2011 John Goodpasture and Alex Walton
Portfolio as a Network
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Portfolio Value Risk
Coupling
Triggers, drivers, data, andcontrol interconnected
Teamwork effects and behaviorsinterconnected
Loose coupling
dissipates or blocks badeffects
Coherence
Disparate effects harmonized forthe greater good
Noise becomes song
Less energy goes intodisharmony
Cohesion
Teams stick together Systems bend but dont break
All for one; one for all
Diversification
Value more predictable Value depends less on any one
project success
Risk spread among manyproject outcomes
Copyright 2011 John Goodpasture and Alex Walton
Portfolio as a SystemThree Cs and a D
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Portfolio Management
Coupling
Co-located teams are tightly coupled Virtual teams are loosely coupled
Tight coupling fosters accurate and timely communication Loose coupling fosters innovation
Coherence
Goal alignment promotes the greater good Strategy aligns allocation of resources Sequencing logic phases deliverables and adoption
Cohesion Team coupling drives teams cohesion Interconnections promote cohesion
Diversification Risk events impacts are diluted Process and practices are situationally adapted
Copyright 2011 John Goodpasture and Alex Walton
Three Cs and a Dfrom a Portfolio View
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Plan
Envision
Strategize
Risk adjust
Allocate
Apportion
Sequence
Reserve
Measure
Analyze
Act
Adjust
Copyright 2011 John Goodpasture and Alex Walton
Portfolio Management
Plan, Allocate, Measure
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Plan Envision
Strategize
Risk adjust
Allocate
Apportion
Sequence
Reserve
Measure Analyze
Act
Adjust
Copyright 2011 John Goodpasture and Alex Walton
Portfolio Management
Plan, Allocate, Measure
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Does Agile fit into portfolios?
Copyright 2011 John Goodpasture and Alex Walton
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Almost any methodology can bemade to work on some project.
Any methodology can manage to failon some project.
Agile does fit, but
Alistair Cockburn
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Copyright 2011 John Goodpasture and Alex Walton
The dynamics of Agile pose special challenges,but also present unique opportunities
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Copyright 2011 John Goodpasture and Alex Walton
Agile in a Larger Context
Multi-year
strategic plan
1-3
Agile Horizon cycles
Annual
businessportfolio
AgileIterations
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Plan
Envision
Sequence
Prioritize
Do
Slice
Develop
Deliver
Measure
Reflect
Adjust
Act
Copyright 2011 John Goodpasture and Alex Walton
Agile - Plan, Do, Measure
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Tensions of Accountability
Project centric
Earned valuethe projectmetric
Measures of effective use ofassigned resources
Measures for benchmarkingand historical reference
Business centric
Value earnedthe businessmetric
Measures of business success
Measures of customersatisfaction
Copyright 2011 John Goodpasture and Alex Walton
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The Requirements Paradox
Requirements must be stable for
successful development; butuser requirements are never stable
We dont want requirements to change,but
because changing requirements are aknown risk, we should provokechangenow.
Its about Requirements!
Niels Malotaux
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21Copyright 2011 John Goodpasture, All Rights Reserved
Backlog cycle
Deliverables
Must Do
Should
Do
Reflect
Replan
Dynamic Backlog Cycles
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Portfolio 1
Copyright 2011 John Goodpasture and Alex Walton
Portfolio Elasticity
Portfolio plan and valueproposition
Agile emergent patternand Value Proposition
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The Portfolio HorizonPatterns emerge, and value is in the eye.
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Customers Throughput is what customers buy and use
Stakeholders Throughput improves the business scorecard
Project
Each agile iteration produces throughput
Each iteration consumes resources, and Depletes the business balance sheet
Business Throughput restores balance sheet over time
Copyright 2011 John Goodpasture and Alex Walton
Throughput is Value
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Copyright 2011 John Goodpasture and Alex Walton
Throughput Builds Value
Business value $
Time
Resourceconsumption
ValueEarned
Resourceconsumption
ValueEarned
Project Project
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Agile Management
Coupling
Co-location tightens coupling War rooms tighten coupling
Stand-up meetings tighten coupling Iterations or sprints loosen coupling Object practices loosen coupling
Coherence
Embedding product managers challenges coherence Sprint sequencing enables coherence
Re-useable objects reinforce consistency Emergence weakens coherence
Copyright 2011 John Goodpasture and Alex Walton
Agile: Three Cs and a D
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Agile Management
Cohesion
Humanity of teamwork emphasized Loyalty, trust, and sharing creates strong team cohesion
Effective conflict resolution holds things together Personal accountability and commitment fosters cohesion
Diversification
Dynamic backlog diversifies risk Frequent deliveries diversifies early-late adoption risk Process and practices situationally adapted
Collaboration in co-located settings enables reduces learningcurve effects
Copyright 2011 John Goodpasture and Alex Walton
Agile: Three Cs and a D
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Copyright 2011 John Goodpasture and Alex Walton
If the customer is not
satisfied, he may not want topay for our efforts.
If he is not successful, hecannot pay.
If he is not more successfulthan he already was, whyshould he [pay]?
Niels Malotaux
The ultimate test
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Summing up!
Copyright 2011 John Goodpasture and Alex Walton
Portfolios constantly attend
to the value-risk trade Tension exists between
emergent value andportfolio plans
At each iteration, cohesion,coupling, and coherence areevaluated anew
Agile focuses on business
value [throughput] The many iterations of agile
diversify risk
The ultimate test iscustomer satisfaction Business Value & Risk
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More in the books
PUBLISHED BY J. ROSS PUBLISHING
Square Peg Consulting, LLC
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Thanks for the opportunity to speak tothe Central Florida Chapter
John Goodpasture Alex Walton
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Contact us
Square Peg Consulting, LLC
info@sqpegconsulting.com
john.g@sqpegconsulting.com
3PM, LLC
alex@3pmllc.com
alexanderwalton@gmail.com
Copyright 2011 John Goodpasture and Alex Walton
mailto:info@sqpegconsulting.commailto:alex@3pmllc.commailto:alex@3pmllc.commailto:info@sqpegconsulting.com -
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Copyright 2011 John Goodpasture and Alex Walton
How would you explainemergent outcomes tostakeholders with specificexpectations?
Should portfolio managers bein the business of allocating
by top down planning?
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