In Summary Phase 4. Execute – Focus: Flow and Coordination. Key output: Portfolio Kanban Phase 5. Govern – Focus: Metrics and Compliance. Key output: Continuous Improvement LPM is on Amazon
LPM Maturity grows with iteration – start small, adapt, and scale. Cultural Shifts for Successful Implementation To truly succeed, leadership must embrace: Decentralized control – Trust teams to make decisions Transparency over hierarchy – Visibility drives accountability Continuous learning – Governance as an enabler, not a barrier In Summary Phase 1. Initiate – Focus: Leadership alignment. Key output: LPM vision Phase 2. Design – Focus: Value Streams and Structure. Key output: LPM Team and Portfolio Canvas Phase 3. Fund – Focus: Lean Budgets and Guardrails. Key output: Participatory Budgeting LPM is on Amazon
Step 7: Build Lean Governance Introduce Continuous Compliance (auditing as part of work) Use Lean Metrics – focus on value, predictability, and flow Empower decentralized decisions within boundaries Keep Portfolio Review cycles light and data-driven Step 8: Measure, Learn, and Evolve Establish feedback loops a) Portfolio Sync meetings b) Inspect and Adapt workshops c) Financial and outcome dashboards Use metrics like: a) % budget spent on value vs. waste b) Lead time for epic approval c) Business outcome achievement rate LPM is on Amazon
Step 5: Implement Lean Budget and Guardrails Replace project-based annual funding with Lean Budgets for Value Streams. Allocate budgets by Value Stream Establish Guardrails: spending limits, innovation allocations, and approval thresholds. Introduce Participatory Budgeting – collaborative funding decisions made periodically (e.g., quarterly). Step 6: Align Execution with Agile Portfolio Operations Use Portfolio Kanban to visualize and manage Epics (Strategic Initiatives) Connect Portfolio work to Agile Release Trains (ARTs) and Teams Synchronize with PI (Program Increment) Planning cycles for transparency LPM is on Amazon
Step 3: Map Current vs. Future State Document how funding, prioritization, and decision-making currently work. Visualize Value Streams – how value actually flows from strategy to delivery. Identify bottlenecks (e.g., approval delays, budget rigidity, redundant projects). Step 4: Define Portfolio Vision and Strategy Craft a Portfolio Canvas showing: Vision and Objectives Key Value Streams Business outcomes and metrics Use OKRs (Objectives and Key Results) to link Strategy to Measurable Outcomes. LPM is on Amazon
Step 1: Establish the Need and Vision Identify pain points (e.g., long funding cycles, misaligned initiatives, overloaded team) Define a vision for what LPM success looks like (faster decisions, strategic alignment, transparency). Gain leadership sponsorship and create a Lean Agile Center of Excellence (LACE) Step 2: Form the LPM Team Form a small cross-functional group to lead LPM. Portfolio Manager / Head of Strategy Epic Owners Finance. APMO (Agile PMO / Agile Product Management Office), Compliance Enterprise Architect / Value Stream Leaders Their goal: shift from project governance to Value Stream management. LPM is on Amazon
Implementing LPM is about shifting from project-based control to Value-Driven, adaptive portfolio flow. It’s a transformation that blends strategy, execution, and governance – guided by Lean and Agile principles. The 3 Core Dimensions of LPM 1) Strategy and Investment Funding – Align portfolio vision and find value streams. 2) Agile Portfolio Operations – Coordinate execution and optimize flow. 3) Lean Governance – Ensure compliance, measurement, and oversight. Each must be introduced and matured systematically. LPM is on Amazon
Coach’s Sidebar: Reading Maturity Signals Facilitator Tips: 1) Look for patterns, not perfection – one signal can be high while others lag 2) Use the signals to tailor reflection questions: for example, if flow is strong but learning is low, focus dialogue on experimentation. 3) Capture signals visually (sticky notes or digital board) for a maturity heat map, helping executives quickly see gaps. 4) Reinforce that the goal is evolution, not perfection – small, aligned steps matter most. LPM is on Amazon
Coach’s Sidebar: Reading Maturity Signals Signal Area: Financial / TBM insight Low maturity (0 to 2): Costs tracked only; no Value transparency Mid-maturity (3 to 4): Partial transparency; early investment-to-value mapping High maturity (5 to 6): Predictive cost/value analytics; strategic resource allocation. Signal Area: Governance / Accounting Low maturity (0 to 2): Rigid annual budgets, project-based approval. Mid-maturity (3 to 4): Agile budgeting in pilot areas, governance partially adaptive. High maturity (5 to 6): Adaptive Funding, continuous forecasting, decisions based on data and outcomes. LPM is on Amazon
Coach’s Sidebar: Reading Maturity Signals Purpose: Quickly identify the portfolio’s maturity stage across KMM, LPM, TBM, and Accounting so facilitators can guide discussion effectively. Maturity Signal Checklist: Signal Area: Flow / Delivery Low maturity (0 to 2): Work is chaotic, WIP is unmanaged, and it is hero-driven Mid-maturity (3 to 4): Visible work, partial flow metrics, delivery is predictable and reliable. High maturity (5 to 6): End-to-end flow optimized, continuous delivery, adaptive. Signal Area: Customer / Value focus Low maturity (0 to 2): outputs > outcomes; decisions internally driven Mid-maturity (3 to 4): Some alignment to customer needs, Value…
Portfolio Maturity Reflection Workshop Purpose: To align executives, portfolio leaders, and finance partners around shared understanding of where the enterprise is on the maturity roadmap – and what the next small step should be. Setup (5 minutes) 1) Display the Integrated Maturity Roadmap (KMM, LPM, TBM, Accounting) 2) Briefly explain: “We’ll explore where we are today and what must evolve next” 3) Hand out or share the “Leader’s Reflection Prompts” Dialogue (20 minutes) 1) Ask each prompt in order (Truth, Flow, Learning, Alignment, Purpose) 2) After each, let every leader share one concise observation 3) Capture insights under three…
Prompts for Guiding Portfolio Maturity Conversations 5) Purpose: How does our portfolio’s evolution connected to our organization’s purpose, customers, and social value? Use these prompts in executive retrospectives or quarterly portfolio reviews. They turn the roadmap from diagnostic chart into leadership compass – one that aligns truth, flow, learning, and purpose across the enterprise. LPM is on Amazon
Prompts for Guiding Portfolio Maturity Conversations 1) Truth: What assumptions about our portfolio, funding, or governance need to be re-examined from “First Principles Thinking“ (Are we doing things because they’re true – or because they are familiar?) 2) Flow: Where does work or money get stuck in out system, and what would happen if we visualized that flow end-to-end? 3) Learning: How do we ensure each experiment – strategic, financial, or technical – creates shared learning instead of isolated data? 4) Alignment: Are our KMM, LPM, TBM and Accounting practices maturing at the same pace, or is one…
Roadmap to Enterprise Evolution 1) Identify your current maturity level across all four lenses: KMM (flow maturity), LPM (Strategic Agility), TBM (Value Economics), Accounting (Financial Adaptability) 2) Expose misalignments (e.g., Lean Funding with Traditional Accounting) 3) Co-create the next evolutionary step using shared “First Principles” and measurable outcomes “The goal is not perfection – it is continuous congruence between how we think, fund, and deliver value." LPM is on Amazon
Putting all these together is Key To Successful Portfolio Coaching KMM Level 6: Whole Enterprise LPM is on Stage 6 = Evolutionary enterprise. Living portfolio model – continuous co-creation and ecosystem Value. State: Organization functions as an adaptive system – strategy, governance, and culture unified. TBM view: Enterprise-wide Value networks and ecosystem cost optimization. Accounting view: Value economics fully integrated with strategic flow; sustainability metrics embedded. “We are a learning, value-centered, living system.” LPM is on Amazon
Putting all these together is Key To Successful Portfolio Coaching KMM Level 5: Congruent LPM is on Stage 5 = Evolved portfolio. Portfolios adapt fluidly to strategy; feedback loops across enterprise. State: Purpose-driven improvement; culture aligned with Lean Agile Values. TBM view: Strategic funding transparency across business domains. Accounting view: Continuous forecasting; adaptive capitalization; flow-based performance. “Purpose, learning, and funding flow together.” LPM is on Amazon
Putting all these together is Key To Successful Portfolio Coaching KMM Level 4: Risk-Hedged LPM is on Stage 4 = Adaptive, learning. Decision-making decentralized; guardrails replace approvals. State: Risk-managed delivery systems; governance transparent and data-driven. TBM view: Predictive investment analytics; value realization tracking. Accounting view: Agile capitalization and expense alignment (Value-based). “We balance innovation, risk, and Value, dynamically.” LPM is on Amazon
Putting all these together is Key To Successful Portfolio Coaching KMM Level 3: Fit-for-purpose LPM is on Stage 3 = Adaptive portfolio. Continuous prioritization and portfolio flow optimization. State: End-to-end service design; predictability and governance mature. TBM view: Portfolio-level cost governance; investment-to-value traceability Accounting view: Dynamic funding tied to portfolio performance metrics. “We manage flow, risk, and learning – not just numbers.” LPM is on Amazon
Putting all these together is Key To Successful Portfolio Coaching KMM Level 2: Customer-driven LPM is on Stage 2 = Lean Agile Foundation. Funding begins shifting to Value Streams; teams align to strategy. State: work linked to customer outcome; flow metrics appear TBM view: IT cost transparency improves; early Value Stream cost views Accounting view: Supports Agile budgeting; rolling-wave planning. “We plan around Value, not just cost” LPM is on Amazon
Putting all these together is Key To Successful Portfolio Coaching KMM Level 1: Team Focused LPM is on Stage 1 = Awakening. Pilot Agile teams; leaders start asking: “Why?”; visible work starts. State: Teams visualize work (basic Kanban); early flow awareness. TBM view: Initial mapping of IT costs to services Accounting view: First attempts at flexible budgeting; limited agility. “We’re starting to see where the work goes,” LPM is on Amazon
Putting all these together is Key To Successful Portfolio Coaching This chapter show how David Anderson’s Kanban Maturity Model (KMM) 7 Stages align with Lean Portfolio Management (LPM) + Technology Business Management (TBM) + Accounting vis-a-vis maturity lenses. KMM Level 0: Oblivious LPM is on Stage 0 = Traditional portfolio. State: Reactive, hero-based, no portfolio visibility. Command and control; project funding; unclear value alignment TBM view: Basic cost tracking only. “Keep the lights on” Accounting view: Traditional cost centers; annual budgets; no agility. “We manage money and people. not value or flow.” LPM is on Amazon
In SAFe LPM, the goal isn’t to eliminate accounting rules – it is to apply them Leanly so that compliance coexists with agility and continuous value delivery while staying audit-ready. LPM is on Amazon
Funding Model – Value Stream funding instead of project funding Expense type handling – Work-based classification (CapEx vs. OpEx) Budget Cadence – Annual budgets with dynamic reallocation Compliance – GAAP / IFRS=aligned through incremental capitalization Governance – Lean Budget Guardrails ensure alignment and transparency LPM is on Amazon
LPM uses Lean Budgeting and Participatory Budgeting (PB) to handle yearly expenses: Budgets are planned at the portfolio level, by Value Stream, not project Spending boundaries are managed through guardrails, not fixed project budgets Reallocation happens continuously based on value, learning, and capacity – not calendar cycles This means: The annual plan exists, but funding flows dynamically across initiatives during the year. LPM is on Amazon
Define capitalization policy – Clarify what qualifies as CapEx under GAAP / IFRS Set allocation model – Determine % split between capitalized and expensed work Enable lightweight time tracking – Simplify reporting without reintroducing waterfall bureaucracy Align on audit requirements – Ensure Agile accounting data satisfies compliance needs LPM is on Amazon
Work type: New Product development. Classification: Capitalized. Example: Building new SaaS feature Work type: Enhancement of existing capability. Classification: Capitalized. Example: Extending data analytics module Work type: System maintenance or support. Classification: Expensed. Example: Bug fixes, minor updates Work type: Infrastructure costs. Classification: Expensed. Example: Cloud hosting, DevOps tools Work type: Training or experimentation. Classification: Expensed. Example: Upskilling. POCs LPM is on Amazon
2) Classify Work by Activity Work items are tagged as capitalization or expensed at the team or feature level Capitalization rules are applied in collaboration with accounting (following GAAP / IFRS) Time tracking can be minimal – often based on proportional estimates from completed features 3) Use Lean Budget Guardrails Guardrails ensure spending remains aligned to strategic themes and portfolio epics Budget flexibility allows dynamic reallocation between CapEx and OpEx as priorities shift 4) Incremental Capitalization Costs are capitalized as value is delivered, not when the entire project completes This supports Agile’s incremental delivery model while staying compliant LPM is…
Capitalized Expense (CapEx): Work that creates or enhances a long-term asset – typically software features or systems that provide future economic benefit. Example: Developing a new feature or product capability. Operational Expense (OpEx): Work that runs or supports the business – maintenance. support, minor fixes, routine operations. Example: Bug fixes, system monitoring. training, support tickets. In Lean Agile accounting, both types of work can exist within the same Agile Release Train (ART) or Value Stream. Capitalization SAFe provides Lean Agile guidance for working with finance to ensure compliance while maintaining flow. Key Practices: 1) Fund Value Streams (not projects) LPM…
Traditional Accounting – Projects are funded and tracked individually LPM – Value Streams are funded continuously Traditional Accounting – Capital vs. Expense split determined per project LPM – Split determined by type of work within the Value Stream Traditional Accounting – Recognizes costs after project completion LPM – Accounting evolves incrementally as value is delivered Traditional Accounting – Emphasis on Budget Compliance LPM – Emphasis on value and flow efficiency LPM is on Amazon
