Innovation distinguishes between a leader and a follower.
Strategic Themes are differentiating business objectives that connect a portfolio to the strategy of the Enterprise. They influence portfolio strategy and provide business context for portfolio decision-making.
Strategic themes provide a mechanism for aligning the business strategy of the Enterprise (or Government Agency) to a SAFe solution portfolio, as Figure 1 illustrates.
Strategic themes are the key differentiators that drive the future state of a portfolio. As such, they need not restate the obvious, as most elements of a portfolio vision are well understood by portfolio stakeholders. Strategic themes tend to be fairly stable over a one year or two timeline. As a reflection of enterprise strategy, they don’t change that often; annual updates seem to work for most enterprises.
Here are a few examples::
- Appeal to a younger demographic (an online retailer)
- Cloud and mobile first
- Implement product and operational support for trading foreign exchange securities (securities company)
- Standardize on three software platforms (large IT shop)
- Lower warehouse costs (online retailer)
- Implement single sign-on across suite applications (independent software vendor)
Formulating Strategic Themes
Strategic themes are formulated via a collaborative process in which the Enterprise executives and fiduciaries work with Lean Portfolio Management and other portfolio stakeholders to analyze a set of inputs before arriving at conclusions, as illustrated in Figure 2.
Strategic themes are a vital tool for communicating strategy to the entire portfolio, providing a simple, memorable messaging protocol that influences everyone involved in solution delivery.
The Influence of Strategic Themes
Given that they represent the highest level of strategic enterprise concerns, strategic themes affect most everything, as illustrated in Figure 3. Specifically, they affect:
- Portfolio Canvas and Vision
- Portfolio Backlog and Portfolio Kanban
- Value stream Budgets and Guardrails
- Economic Framework
- Vision and Backlogs for Large Solution, Program, and Team
The sections below describe each of these influences.
Portfolio Canvas and Vision
Strategic themes are direct inputs to the portfolio canvas, as they may affect partners, key activities, customer segments, and revenue streams, and other portfolio business model elements. In turn, this influences the portfolio vision, which is the difference between the current state—and the more desirable—future state.
Portfolio Backlog and Portfolio Kanban
Strategic themes provide insight into the portfolio backlog Epics that are necessary to achieve the vision. Further, they serve as inputs to decision-making criteria in the Portfolio Kanban system, where they:
- Impact the identification, success criteria, and prioritization of epics in the funnel and backlog states
- Warrant reference and consideration in the Lean business case
- Impact splitting and implementing of epics into Minimum Viable Products (MVP)
Value Stream Budgets and Guardrails
Strategic themes profoundly influence value stream budgets, which provide the investment and allocation of people needed to accomplish the strategic intent. They trigger the following kinds of questions:
- Do the current investments in value streams reflect the changes to the business context?
- Are the current value streams the right one? Should we start a new value stream, or end an existing one?
- Do the guardrails provide the proper guidance on investment horizons and types of investment? Are we investing the appropriate amounts in existing and new products and services? Are operations, infrastructure, maintenance, and support activities sufficiently funded?
Strategic themes may directly affect the development cycle time, product cost, product value, development expense, and risk of solution development. As such, they may have a significant impact on various elements of the economic framework.
Vision and Backlog for Large Solution, Program, and Team
Strategic themes have an influence on the vision and backlogs for development at every portfolio level. They help determine the attributes of Weighted Shortest Job First (WSJF) prioritization for items in the program and solution backlogs. Solution and program epics that flow from the portfolio, or arise locally, are also influenced by the current themes. Due to their importance, strategic themes will often be presented (and repeated!) by the Business Owners during Program Increment (PI) Planning. Moreover, strategic themes provide vital conceptual alignment across the trains in a large solution, and across the teams on an Agile Release Train.
Measuring Progress against Strategic Themes
Identifying desired business outcomes for strategic themes can establish a context for assessing progress toward the strategic intent. However, many desirable measures of intent are trailing indicators. Success factors, such as Return on Investment (ROI) and new markets penetrated, can take a long time to achieve.
Instead, the organization needs fast feedback from early indicators, many of which are not financial metrics. Lean organizations apply Innovation Accounting to address this challenge . Innovation accounting identifies early indicators that are likely to produce the desired long-term results. It includes implementing the tooling, functionality, testing, or other mechanisms to collect that data.
Also, certain early measurement criteria can be based on investment or specific activities. For example, an online retail store might want to reach a younger demographic. In this case, the success criteria could be a mix of new epics, investment, and activities on the mobile platform. Many of these would be reflected in the portfolio canvas. A first learning Milestone might be to test the hypothesis of whether extending online capabilities to mobile platforms would appeal to that target audience. This could be measured with feedback from focus groups or analysis of mobile traffic data. From there a second step might be to increase the budget for the mobile teams. To start trending the data, an epic MVP could also be employed to capture the age of users across all purchasing points.
These early measures provide indicators that allow the portfolio to understand the solutions involved, validate technical and business hypotheses, and, where necessary, pivot toward a better solution. The PI cadence offers an excellent timebox for experimenting with new approaches and gathering the feedback needed to show that investments in new strategic themes are likely to produce the desired long-term results.
Last update: 15 October 2018