ADAPT Methodology® Blog

Agile Portfolio Management Definition and Principles


It takes more than just managing individual activities to successfully navigate the challenging terrain of moving from a project to a finished result.

Agile Portfolio Management can help in this situation by offering a crucial framework for coordinating project goals with strategic goals and promoting sound decision-making.

For the smooth orchestration of project-to-product transformation, it is not merely a sophisticated method but rather a necessary tool.

We'll learn the concept of Agile Portfolio Management, its guiding principles, and the important part it plays in developing a thorough roadmap as we go deeper into this discipline. This guarantees that every step taken towards a product-centric landscape is exact, significant, and tightly aligned with the more important strategic objectives.

I recently discussed the need for agile portfolio management with several organization leaders. To approach this subject, you should have a plan in place.

ADAPT Methodology® is a unique Digital Product Development framework to change traditional project-centric companies toward product-led companies!

Society changed and leaders need support in the way how they lead and design their digital product organizations, that is the reason why the ADAPT Methodology® was created, but now let’s get a deep dive into the realms of using Agile Portfolio Management.

There are thousands of books written about management techniques and how to successfully manage a business from start to finish. Unfortunately, a lot of products are deemed failures, even if they have been released on time and remained on budget.

More often than not, these products either didn't deliver what the stakeholders wanted or didn't coordinate with the key people. There's also the fact that most clients and companies start a product not really knowing what they want or what they can get for their investment. Agile Portfolio Management aims to change all that.

Agile Portfolio Management Definition

Agile is a process that helps teams provide quick and unpredictable responses to the feedback they receive on their project. It creates opportunities to assess a project’s direction during the development cycle. Teams assess the project in regular meetings called sprints or iterations.

Agile portfolio management deals with how an organization identifies, prioritizes, organizes, and manages different products. This is done in a streamlined way in order to optimize the development of value in a manner that's sustainable in the long run.

For a quick overview, you can watch this short clip to understand more about Agile Portfolio Management.


Principles of Agile Portfolio Management

You need the right mindset in order to use the agile method in the most efficient and effective way. Documents like the Principles of Lean Software Development and Disciplined Age Manifesto can start you on the road to having an agile outlook. Both espouse similar principles that are distinct to successful agile portfolio management, like:

  • Keep Things Simple and Streamlined: Portfolio managers understand that they have to keep their activities simple and streamlined. Remember that the goal is to focus on how to make the right decisions regarding the project and to guide project members. This means that keeping and reviewing extensive documentation is not a priority.
  • Concentrate on Value Instead of Cost: A good portfolio manager asks about the value a project will generate instead of how much it will cost. Focusing on the former will help you think of how to make improvements in the company's IT endeavors. After all, any development in this area can further your group's capability to create value for clients.
  • Minimize Cost of Delay (CoD): One effective strategy for optimizing stakeholder worth is to invest in generating functionality that will give the most value to the company at less time. For instance, if you delay for six months the creation of functionality that can create a $10 million yearly revenue, then you will end up with a Cost of Delay that's worth $5 million. A good agile portfolio manager thinks about how much designing a solution costs, the Cost of Delay (CoD) from putting off developing said solution, and the cost savings or revenue when assessing the total value of a solution.
  • Opt for Stable Teams Instead of Project Teams: Agile portfolio management is more of coordinating and overseeing various teams. Agile recognizes that initiative doesn't end when a project wraps up. Changes will be expected, and when it happens, the team will have to release another solution. Due to this, long-standing stable teams, with members that have grown and evolved over the course of several projects, have numerous advantages over teams that are only together for short-term projects. It's clear that there's a marked improvement in productivity when organizations bring the project to a stable team over just pulling people into a specific project.
  • Allow for Diversity: Companies should understand and accept that every team and team member is unique. Every group meets a distinct situation that changes over time. This means that teams should be permitted to organize themselves and adapt their methods to meet each distinct situation. An agile framework focuses on supplying, as well as comparing and contrasting, numerous process options. This also means that portfolio managers should be flexible in how they approach each team and project. They should know how to adjust because even though each team handles projects differently, managers still have to guide them and monitor the effectiveness of every group.

Factors to Consider in Agile Portfolio Management

There are several crucial factors to consider in the management process of an agile portfolio.

  • Determine Prospective Value: The portfolio manager and his or her team are tasked to determine new products to design and develop as well as search for new ideas. This is done by monitoring the business niche and your competitors, getting feedback from customers, and anticipating clients' future needs.
  • Search Possible Endeavors: The portfolio management team will then search for and invest in understanding possible endeavors. They can either guess at a product's market potential, do a case study, or run a focus group.
  • Prioritize Possible Endeavors: Due to budget limitations, the company will have to prioritize possible endeavors and invest in projects deemed essential. To do this, factors like business value, risk, and due date have to be considered.
  • Commence Endeavors: New products or features have to be developed by the project team. Depending on how novel the product is, the company might have to go with a lean startup (exploratory) approach. This is where the market potential of the product is initially validated through a series of experiments.
  • Fund Projects: Every potential endeavor requires funding. This includes the primary funding for new teams for their inception or development efforts and the budget for ongoing Construction, Transition, and Operations once the product has been launched. This funding will also require constant monitoring to ensure that money is spent wisely.
  • Plan IT Capacities: A portfolio manager has to plan and manage the various department resources, including its budget and people. This means ensuring that you have the right people with the right expertise at the right time.
  • Handle Vendors: Supplier or vendor management is a key aspect of agile portfolio management. This entails procuring or awarding contracts, narrowing down and identifying possible vendors, overseeing ongoing projects, and closing a contract.
  • Manage Portfolio: Someone will have to manage the whole IT portfolio. This includes operational solutions as well as ongoing development projects.


Agile portfolio management ensures that a company provides its clients with the best value for their investment. A good portfolio manager understands and follows agile principles while also considering the various factors needed to successfully manage numerous teams and projects.

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