Great products are becoming a commodity. It’s the combination between great products and a great business model that is going to keep you ahead of the competition in the coming decade.
—Alexander Osterwalder, author, creator of the business model canvas
The Portfolio Canvas is a type of Business Model Canvas that has been adapted to charter and describe the structure and purpose of a SAFe portfolio.
The portfolio canvas describes how a portfolio of solutions creates, delivers and captures value for an organization. It also helps define and align the portfolio’s Value Streams and Solutions to the goals of the enterprise.
The SAFe portfolio canvas is based on the Business Model Canvas developed by Alexander Osterwalder . The portfolio canvas defines the value streams that are included in a SAFe portfolio, the value propositions and the solutions they deliver, the customers they serve, the people who play the primary roles in Lean Portfolio Management (LPM), the budgets allocated to each value stream, and other key activities and events that occur at the Portfolio Level of SAFe. In other words, the canvas identifies the specific domain of concern for a SAFe portfolio. It helps streamline planning, development, and execution across the portfolio, aligning everyone’s objectives and facilitates team communication and the exchange of new ideas.
Why Use a Business Model Canvas for a SAFe Portfolio?
The Business Model Canvas (BMC), and its derivatives, such as the Lean Canvas,  are used by large companies and startups around the world. It is taught at many top-tier business and engineering schools. Hundreds, if not thousands of example canvases are available online and it’s championed by many books, training classes, blogs, and other literature. The BMC allows the business and the technology groups to share a common language on what the problems they are solving now, and how they can accelerate innovation by leveraging new technology, markets, and business models.
The BMC is made up of nine building blocks (Figure 1). These building blocks are explicitly designed to be ‘small’ to emphasize clarity of thought and focus in describing a business model.
Applying the Business Model Canvas for a SAFe Portfolio
The SAFe Portfolio Canvas (Figure 2) is an adaptation of the BMC that highlights the ‘development value streams’ and other aspects specific to a SAFe portfolio. This canvas can be easily updated as the business changes, and new learning occurs. The nine original blocks of the BMC appear in a bold font with an icon. New blocks, which appear in a standard font, enable alignment of the portfolio canvas to specific SAFe constructs.Download Portfolio Canvas 4.6
Figure 3 illustrates the three main sections of the portfolio canvas:
- Value Propositions
- Resources and Activities
- Cost Structure and Revenue Streams
Each section and its blocks are described next.
1. Value Propositions
The value propositions describe the customers and the value delivered by the solutions of each value stream, as well as the customer segments and relationships, budget and KPIs /revenue. Use a separate row of stickies for each development value stream as illustrated in Figure 4.
Value Streams: This section describes the development value streams that are used to build the systems and capabilities that enable the operational value streams, or provide end customer value.
Solutions: Each value stream produces one or more solutions, which are the products, services, or systems delivered to the Customer, whether internal or external to the Enterprise
Customer Segments: Customer segments describe the internal or external customers for each value stream.
Channels: This section describes the chain of businesses that are used to reach each customer segment. If serving external customers, this may include marketing and sales mechanisms used to reach customers (e.g., web, direct sales, brick and mortar store, distribution network). If serving internal customers, it captures the interfaces with internal stakeholders and end-users (e.g., internal websites or custom IT applications).
Customer Relationships: This section describes the connections and communications with each customer segment. These relationships influence the design of solutions and the allocation of resources within the portfolio.
Budget: Each value stream is assigned a Lean Budget, which includes operating, overhead and capital expenses.
KPIs / Revenue: Key Performance Indicators (KPIs) define the measures that will be used to evaluate the results of the value stream investment. Lean-Agile portfolio Metrics provide an even broader set of performance measures, which may also be useful.
2. Resources and Activities
The resources and activities describe the key partners, activities and other resources needed to achieve the value propositions.
Key Partners: Describes the business partners needed to deliver value to a customer segment. These intermediaries help leverage economies of scale and centralize certain services outside the portfolio, such as external Suppliers.
Key Activities: Describes the high-level activities used to create value for customer segments. Many of these will be standard SAFe events, such as PI Planning, Inspect and Adapt, etc. Others, such as trade shows, customer advisory meetings, etc., are unique to the specific business context.
Key Resources: Describes the resources needed to develop, market and maintain the value propositions (e.g., What are the most important physical, financial, intellectual, or human assets necessary to deliver value to your customer segments?). This includes the resources within your portfolio, such as Shared Services.
3. Cost Structure and Revenue Streams
The cost structure and revenue streams describe how the portfolio’s costs are structured and define how revenue or value is achieved.
Cost Structure: Identifies the most significant costs inherent in the portfolio’s business model, including the structural aspects, such as license costs, development labs, and any operational costs of external services. Building cyber-physical systems also have other costs (e.g., hardware and firmware) which must be considered here.
Revenue Streams: If the development value streams monetize directly, list the types and sources of revenue from customers. Note the major sources of revenue and how the customer is charged (fixed price, usage-based, etc.). For internal customers, describe the impact on the stakeholders or the value the solutions create.
A BMC is intended to describe a business model at a level of fidelity that provides understanding and invites innovation. Imagine multiple canvases printed out in large format paper, hanging next to each other on a wall, with lots of sticky notes promoting discussion within the leadership team. While we advocate this approach to help enterprises innovate, we find that the most value comes from the shared understanding of the solutions in a SAFe portfolio, as well as their interconnections.
Capturing the Current State
One of the primary uses of the portfolio canvas is to record the current state. The current state canvas represents the as-is state for the portfolio, enabling alignment of the organization on its structure, purpose, and status. One way to capture the current state is to assemble one or more teams to create a shared understanding. The team should include the Agile Release Train (ART) and value stream Business Owners, Lean Portfolio Management (LPM) fiduciaries, Epic Owners, Architects. RTEs, Product and Solution Managers, Product Owners and other portfolio stakeholders
A straightforward approach is to iterate through each of the canvas’ building blocks, summarizing the key aspects. Teams typically use sticky notes with a few keywords to fill out each building block (Figure 4). The real power of the canvas is to represent the entire portfolio on one page and to gain insights.
As part of filling out the current state portfolio canvas, it can be useful to reason further about each value proposition. One way to do this is to create separate value stream canvases, which are then rolled up to the portfolio (Figure 5). The appropriate stakeholders in each value stream should develop their Value Stream Canvas.
Envisioning the Future State
The next step is to envision the future state, which helps define the vision for the portfolio. The difference between the current and future state represents the gap, which is translated into the vision to attain the future state.
Understanding Opportunities and Threats
There are many tools and techniques to help understand opportunities for the future state. One of these techniques is a SWOT analysis (Figure 6), which can be used to identify the strengths, weaknesses, opportunities, and threats related to business competition or a business plan. The SWOT analysis helps uncover opportunities for success that were previously unarticulated or to highlight threats before they become overly burdensome.
Evaluating Alternatives to Determine a Future State
The portfolio’s Strategic Themes are one essential input. The LPM team uses the current state portfolio canvas as a starting point to explore the different ways in which the portfolio could evolve in alignment with the strategic themes. Start by selecting a specific block in the portfolio canvas, identifying a potential change or opportunity, and then explore how it impacts the other parts of the canvas (Figure 7).
For example, consider a portfolio for a printing company that has invested heavily in the on-demand printing of books. The value stream may explore a different customer segment as the foundation of the future state (such as customized books for schools) or may explore a change in customer relationships (such as moving to a self-service model). Each of these changes may impact other blocks on the canvas.
Some of the changes to achieve the future state will require implementing large initiatives, and the team will need to create business and enabler Epics that feed directly into the Portfolio Kanban.
Expressing the Portfolio Vision
The portfolio vision sets a longer-term context for near-term decisions in a way that is both practical and inspirational. Understanding the longer-term view helps the Agile teams make more informed choices about the development of functionality throughout the life cycle.
Business Owners (or C-level executives) typically present this longer-term view and business context during rolling wave briefings—and perhaps inspirational videos—before and during the Program Increment (PI) planning event.
Establishing the Lean Budgets and Guardrails
Every SAFe portfolio operates within an approved budget. As described in the Enterprise article, the budget results from a strategic planning process.
The strategic themes and portfolio canvas are critical inputs to allocating a portion of the total portfolio budget to a specific value stream. Each value stream must work within an approved budget. Any change to a value stream budget requires appropriate approvals. Further, Lean budgets are governed by a set of Guardrails, which describe the budgetary controls and spending policies for the portfolio.
Maintain the Portfolio Canvas
The creation of the current and future state Portfolio Canvas is not a once-and-done exercise. As new information is learned about the evolving set of portfolio solutions, portfolio stakeholders periodically review and update the canvas. Other triggers include the introduction of new solutions, mergers and acquisitions, the market rhythms of the portfolio defined in the portfolio Roadmap, and other strategic changes that may affect the portfolio’s value streams or solutions.
Learn More Osterwalder, Alexander; Pigneur, Yves. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers Wiley. Kindle Edition  https://strategyzer.com/canvas/value-proposition-canvas  https://searchcio.techtarget.com/definition/SWOT-analysis-strengths-weaknesses-opportunities-and-threats-analysis  https://steveblank.com/2016/02/23/the-mission-model-canvas-an-adapted-business-model-canvas-for-mission-driven-organizations/
Last update: 19 September 2018