Portfolio Management with Kanban for High Performing Leadership Teams
August 3, 2018
3 min read
There is no formula for a successful leadership team. By their nature, leaders need to be decisive and confident. Combined in a team, each leader will contribute their unique style and approach. When done right, a leadership team can create world-changing results.
While the characteristics of the team will vary, there are some common attributes. Successful leadership teams build trust among themselves and the organisation. They communicate clearly, create a common set of goals and align around a clear vision. They take accountability, build respect, and foster innovation.
There is no one size fits all strategy to creating a high-performing leadership team, however, there is a method you can use to foster these attributes. It’s called portfolio management with Kanban.
Portfolio management with Kanban has become increasingly popular for organisations undergoing Agile transformations. At its core, it’s a simple way to visualise, communicate and align around your company’s strategic priorities. When done right it can also dramatically enhance performance and results by improving the flow of work in an organisation.
Let’s take a look at what portfolio management with Kanban is, when you should use it and how to get started.
What is Kanban?
The word kanban is a combination of 2 Japanese words. “Kan” which means sign, and “Ban” which means board.
In the 1600s in Japan, the term kanban was used to describe elaborate shop signs designed to attract customers.
The term was repurposed by Taiichi Ōno as part of his management of Toyota in the 1940s. A kanban board held cards to track the movement of inventory through the factory. Kanban was at the heart of Just in Time manufacturing which led to a reduction in cost and increased efficiency. This innovative approach to manufacturing resulted in Toyota becoming the global leading car manufacturer.
In 2004, David J Anderson began using kanban for software development at Microsoft. Since then kanban has evolved into the Kanban Method and moved into the world of knowledge workers both in and outside of software development.
There are 6 general practices of the Kanban Method:
Portfolio management with Kanban is the use of a regular kanban board to visualise what makes up a companies portfolio of work and the Kanban Method to manage this work. A key distinction is that this board visualises products and projects, not tasks.
While ‘portfolio’ is a broad term, one way to think about it is like an investment portfolio. It is a visualisation of the products your organisation invests in and where it gets value from.
This kanban board is used as a tool for senior leaders to connect strategy to execution. It is a way to coordinate work across the organisation’s value streams while reducing limitations and finding opportunities to continuously improve.
Portfolio and team level Kanban goals overlap around improving visibility, continuous improvement, and increasing flow. The difference is that portfolio Kanban management has the additional goal to create alignment around a common vision and business objectives.
What does portfolio management with Kanban look like?
The beauty of a Kanban portfolio is that it shows the relationship of work throughout the company, both as a hierarchy and where there are dependencies. It is possible to see work at a modular incremental level, and aggregate work to see how it rolls up and fits together.
Kanban boards allow you to model your work in a way that makes sense to your organisation. Portfolios show your organisation’s collection of projects or products and how those break down into smaller increments or even work items.
The boards make use of both vertical and horizontal lanes with cards to visualise the breakdown of work. This is where dependencies between work items can be mapped.
Seeing a holistic view of where work sits in your organisation and its status gives the ability to realistically and collectively track the status of your product. Work can be visualised both up and downstream. This shows the pipeline or flow of work, where there may be bottlenecks or where funding is needed.
In addition to visualising work, a kanban board allows you to set Work in Progress (WIP) limits and explicitly communicate policies. The limit of WIP is what made Kanban so successful in Toyota. It proved that limiting WIP created flow, leading to the optimal use of resources. This can be one of the biggest changes for a leadership team that previously focused on resource utilisation. It has been proven that some of the biggest gains to an organisation come from slowing down, rather than speeding up and adding more work or people.
When should you use portfolio management with Kanban?
There is value in using Kanban at any level of an organisation. Let’s return to the 4 of the 6 general practices of Kanban to understand their benefit and when they make the biggest impact at the portfolio level.
One of the most significant benefits of using Kanban to visualise work is that you are seeing the companies performance in real-time. You no longer need PowerPoint presentations (which are almost immediately out of date as they are created). Instead, you have a company-wide view to make decisions. Kanban at a portfolio level keeps this near real-time view constantly available.
The transparency created by visualising work triggers high-quality discussions. With a portfolio view, these discussions cover what the organisation does, the importance of the work, and important investment decisions about prioritisation and resource allocation.
Limit work-in-progress (WIP)
Through the use of the Limit WIP practice, Kanban brings focus. It does this through the reduction of juggling multiple focus areas at once and overburdening employees. The WIP limit creates discipline where employees start finishing high-value work and stop starting unprioritised work.
As Taiichi Ōno found when using kanban in Toyota, optimising the flow of work instead of employees’ utilisation increased efficiency. This same focus on flow with a portfolio Kanban has helped to build internal capability and increased the chances of a company’s survival. Products and projects flow faster and the organisation is more predictable. This results in satisfied and returning customers.
Improve collaboratively, evolve experimentally
This method of visualisation is becoming increasingly popular for executive leadership teams in Agile transformations. Scaling Agile across an organisation presents the challenge of orchestrating work between newly formed, cross-functional teams. Having a visual representation of how work fits together significantly improves the ability of teams to collaborate and identify dependencies. Furthermore, it supports their continuous improvement.
Creating a portfolio level Kanban system serves both the leadership team in their decision making, along with the rest of the organisation by providing clarity of direction and priorities.
How to get started with portfolio management with Kanban?
As the name Kanban translates, the way to start is with a board to visualise the value delivered in your portfolio. Then make use of the additional tools Kanban provides like WIP limits and explicit policies.
There are numerous online tools where you can create a virtual Kanban board such as Kanbanize, Jira, and Azure. If possible, you can create a physical Kanban using a whiteboard and post-it notes. Our recommendation is to start as simply as possible.
While the goal is to create a simple and clear visualisation of work in the organisation, this can prove challenging to design. Many leadership teams begin with a 2-day workshop to create their board and meet at least quarterly to update it.
A recent study by Kanbanize showed a correlation between the success of teams with Kanban and those who had taken Kanban training.
If you’d like help getting started you can join our Kanban training or speak to one of our specialist Kanban portfolio specialists to learn more.
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