When it comes to Agile, "governance" is the last word that anyone wants to hear. Governance in many organizations feels heavy, with a lot of legacy baggage. Central decision-making, yearly funding, or following process for process's sake can weigh down the speed at which agile teams can move. Complexities lie deep within the organization's core operating models, such as planning, portfolios, finance, and HR. Traditional Agile models need to dig into the depths of these challenges and help transformations explore how to navigate them effectively. Organizations are tired of complex scaling models and trying to play it "SAFe" (see how I did that?). They are looking for ways to have direct conversations around funding, prioritizing the portfolio, and focusing on what will move the company forward. Here is a model that is quite simple and is a great tool to navigate these conversations.
Credit: Thoughtworks: Lean Value Tree
The Lean Value Tree Unveiled
Several years ago, I had the opportunity to work with Linda Luu, who at the time was working for Thoughtworks. She wrote a book with Jim Highsmith and Dave Robinson around value-driven transformation. They wrote a book called Edge – Value-Driven Transformation. She was the first person who introduced the idea of the Lean Value Tree model to me and has forever changed my view of what an Agile organization looks like.
At the heart of the Lean Value Tree are four critical layers: Vision, Goal, Bet, and Initiative. Let's break down each layer to understand its role in this innovative model:
Vision: The foundation of the Lean Value Tree begins with a vision or an ambitious mission. It's a high-level objective or aspiration that the organization believes will lead to value creation. The vision provides a sense of direction and purpose for all bets and initiatives within the tree.
Goal: Goals are the high-level objectives that an organization strives to achieve. The vision informs these goals and provides a clear direction for the organization. They act as beacons, guiding teams towards value creation.
Bet: Think of a "bet" where you'd place your chips on a roulette board. Each bet represents an investment decision made by the organization. Pursuing a particular course of action is a commitment to achieve the stated goal.
Initiative or "Promise of Value": Initiatives are tangible actions, projects, or endeavors to realize a bet. They're the nuts and bolts of execution—the projects, tasks, and activities that transform an organization's aspirations into concrete results.
The Lean Value Tree - The Roulette of Portfolio Management
The metaphor of a portfolio as a roulette board is evocative and changes the mindset. Traditional portfolio management often feels like the HIPPO or the "Highest-paid person's Opinion" wins, and it's unclear how the organization will measure those investments. Organizations often have a "spatter" approach to allocate resources to various initiatives, hoping they'll yield the desired outcomes. However, the outcomes are sometimes vague, and occasionally, investments result in losses rather than gains due to too few resources on essential priorities, unclear priorities, or too many projects.
The Lean Value Tree turns this gamble into an informed bet. It empowers organizations to make strategic investments based on a hypothesis, providing a structured and transparent approach to portfolio management. It's akin to carefully placing your chips on the roulette board, understanding the odds, and making deliberate choices.
Why Shift to the Lean Value Tree?
Now, let's explore why the Lean Value Tree is a game-changer for organizations aspiring to be more agile:
Transparency: The Lean Value Tree makes your organization's strategic intentions transparent and visible. Everyone—from leadership to individual contributors—can see how initiatives align with goals, creating a shared understanding of what's being pursued.
Alignment: It fosters alignment at all levels. The Lean Value Tree ensures that every initiative is directly tied to a goal and a hypothesis. This alignment eliminates the risk of pursuing initiatives that don't contribute to the organization's strategic objectives.
Informed Decision-Making: Organizations are compelled to make well-informed decisions by framing investments as bets. Each bet is a conscious choice backed by a hypothesis and a clear understanding of the potential risks and rewards.
Adaptability and Autonomy: Agile organizations thrive on adaptability. The Lean Value Tree encourages the quick adjustment of bets and initiatives based on changing circumstances, market dynamics, or new information. Instead of "portfolio managers," there are "goal owners" and "bet owners" who can double down on specific investments or pull out of lower-yield investments. Since funding happens at the goal and bet level, change can happen in real-time vs. waiting for projects to get funded.
Value Focus: The Lean Value Tree is laser-focused on delivering value. It shifts the conversation from completing tasks to achieving outcomes. It compels organizations to ask, "Are we delivering value, and if not, what adjustments do we need to make?"
Embrace Agile Governance with the Lean Value Tree
The Lean Value Tree is a powerful tool for organizations aspiring to be more agile. It offers a lightweight governance model that aligns strategies, goals, and initiatives, transforming portfolio management into a strategic and transparent endeavor. By shifting to this model, organizations can make informed bets, increase adaptability, and, most importantly, stay committed to delivering value to their customers and stakeholders. Register NOW to learn more about how to use this and other models at our Strategic Agility Lab!