Much as I love hands-on development, I can’t help but bring a manager’s perspective to Kanban. When I see situations suffering with the all-too-common “massive WIP” problem (usually coupled with slow delivery and shared bottlenecks), my attention turns very quickly from team level to the management support systems that are failing to bring high level control to the overall burden of work that teams are expected to deal with.
Hence a growing interest in the field of portfolio management. It’s not that large organisations don’t have the systems (I’ve had to provide data to enough of them!), it just seems that they’re so focussed on accounting for the past that they have little influence on future delivery.
Here are just some of the things that I believe a good portfolio management system should offer, and some pointers to how they might be turned into levers for improvement.
Point-in-time financial measures
1. “Inventory”: Money spent on work that has not yet been released. Accountants might call this “Work in progress” (WIP) instead, but to the Kanban community this refers to the number of items under development.
2. “Required” (my word, perhaps there’s a accepted term): Further money to be spent before work currently in progress will generate value to the business. Inventory + Required make up the total expected cost of building and releasing something.
These are point-in-time measures that can be trended over time and projected into the future.
Central to Lean and Kanban is the belief that managing down inventory (whether measured in items or in money terms) goes hand-in-hand with improving flow, and from improved flow we should expect to see growth in business capability and value.
But money spent stays spent. The only way to reduce inventory in the short term is to make releases, which means spending yet more money! The key to reducing inventory in the longer term is to plan (or replan) to release more incrementally, reflected in reductions in the “Required” measure. Implicitly or explicitly, to achieve this across the board requires changes in policy (e.g. limits, risk appetite) &/or practice (e.g. how work is structured).
Rate-based financial measures
3. “Burn Rate”: How much money spent per month on the project or portfolio in question.
4. “Throughput” (again, there may be a better word for it): Completed work released (out of inventory) per month.
Like the point-in-time measures, these can be trended over time and projected into the future.
A gap between current burn rates and projected burn rates could be a sign of trouble, though the direction of the gap is crucial. If to meet our commitments we must spend at a rate significantly greater than our current capability (i.e. because we can’t ramp up quickly enough), we have an overcommitment problem. If the gap is in the other direction, it means we’ve kept out options open, a good thing so long as the result isn’t needless starvation caused by a lack of preparation.
Assuming that all projects survive until completion, the long term averages of throughput and burn rate will be equal. High month-by-month variability of throughput could however be seen as an indication of the lack of flow. It could even be an impediment in itself if (say) a business function is to be impacted with a short-term rate of change that it is unable or unwilling to sustain.
5. Headcount: Self-explanatory, often tracked alongside financial measures. Ramping headcount up or down can be painful (and I say that from the heart!).
6. Work items: Features etc as managed in Kanban systems. Slightly problematic though – whilst it clearly makes sense to track features at project level, can we be sure at portfolio level that one project’s work items (let alone their states) are comparable with another’s? Although they don’t flow very fast, projects can of course be treated as work items too (and worth limiting in number as well as financially).
7. Lead times: How long projects take, based on actuals from completed projects, planned dates, or estimates based on budgets and burn rates. It hardly needs to be said that shorter is generally better.
8. Initiatives: The “why” behind the work; used as a reporting dimension it shows how effort aligns to strategy. Too many of these may indicate a lack of focus or alignment.
9. Organisation/sponsor/funding source/customer/market segment: Dimensions based on by whom and for whom work is done
10. Classes of service: see some of my previous articles. See that we’re investing sustainably and that our development systems are robust.
I’m considering attending the LESS 2011 conference in Stockholm in late October. What would absolutely make me go is the thought of exploring the boundaries between Kanban and surrounding systems (portfolio management and other existing support systems that might be turned to create “pull” for positive change) with like-minded people active collectively across these diverse areas (quoting the conference website):
- Lean and Agile Product Development
- Complexity and Systems Thinking
- Beyond Budgeting
- Transforming Organizations
But I can’t make this happen on my own. Who else would be up for it?
Or you may have a portfolio problem (perhaps a “massive WIP” problem) of your own. Get in touch!