Lean PMO: Managing the Innovation Portfolio

In the lead-up to Barry O’Reilly’s sold-out Lean Enterprise workshops in Sydney and Melbourne this December, Barry returns to guest blog here at AgileAus. If you missed out on a place at his workshops this year, you’ll be pleased to hear Barry is coming back to Australia for AgileAus 2017 – and he will be running workshops in Melbourne and Sydney.


Lean PMO: Managing the Innovation Portfolio

Barry O’Reilly

One of the first exercises I run with executive teams is mapping their business portfolio to visualize current work in progress and how it aligns to the overall business strategy. Without exception, every time I run this exercise the gap between current state and desired state is far wider than every executive believed, hoped or even imagined.


Portfolio mapping requires taking an end-to-end view of the lifecycle of initiatives in your organization. Lean Enterprises’ consider four main domains:

  • Explore early stage initiatives that are bets for the future with high degrees of uncertainty
  • Exploit initiatives that have achieved product-market fit and the organization wants to grow and scale
  • Sustain initiatives that have become repeatable and scalable business models, products or services that drive the majority of revenue for the organization
  • Retire initiatives that are long lived, no longer beneficial (even limiting) to the organization’s future success or strategy and should be sunset from the portfolio


Initiatives that do not achieve desired outcomes in any domain should be killed, and their investment transferred to other initiatives.

High performance organizations focus on building capability to continuously move initiatives through the model from Explore to Retire. They understand that using the same strategy, practices and processes across the entire portfolio will result in negative outcomes and results.

Poorly managed organizations tend to use the same standardized approach for all domains. They fail to recognize the need to adapt their analysis, evaluation and control mechanisms to design a system that will provide the correct amount of governance and measurement to enable business leaders to make high-quality decisions based on learning outcomes and data derived from executing the work in each domain.

Typically these companies’ portfolios are orientated solely toward high revenue generating initiatives. Valuable cash cows become prized assets, protected and milked dry. Lean Enterprises, however, know that one day the milk will run dry.


New initiatives are inherently risky. When aiming to explore a new business model or product it is imperative that investment is limited by setting boundaries around time, scope, financial investment and risk. We do this not because we are cheap. We do this to create ‘safe to fail’ experiments and build in quick feedback loops to understand if we are achieving the desired outcomes.


In the Explore domain our goal is to test the business or product hypothesis at speed using a cross-functional team to experiment with the customers the solution is targeted at. By designing fast and frequent feedback loops into the team’s exploration we can limit investment, maximize learning and avoid creating ‘bet the business’ scenarios that are too big to fail.

Limiting investment into smaller bets allows us to make more bets, enabling us to test many ideas to discover what works and what doesn’t. This is the principle of optionality applied to business model innovation and product development.


Most of the ideas that we believe are great aren’t actually that great at all. By creating optionality in how we design our testing process we can create many opportunities to learn, not just one.

Yammer used a concept of 10×2 to design feedback loops and limit investment in early stage ideas. Their approach constrained teams to no more than 10 and no fewer than 2 people when exploring ideas. Also their iterations could be no longer than 10 weeks and no shorter than 2 weeks before teams had to demonstrate their achievements designing feedback loops directly into the development system.

Principles and capabilities of Explore:

  • Cross-functional multidisciplinary teams
  • Make lots of small bets
  • Boundaries of time, scope, financial investment and risk
  • Design experiments are safe to fail (the only true failure is the failure to learn)
  • Create a sense of urgency
  • Demonstrable evidence of value to proceed


For those few initiatives that achieve escape velocity and exit the Explore domain, teams can continue with a sufficient level of confidence that they are building the right thing, now they must embrace building it the right way.

Lean Enterprises understand that the project paradigm is broken, only further propagating organizational silos, conflicting priorities and measures of success. They understand the importance of enabling cross-functional teams to experiment directly with their customers and users. Effort and measures of success are tied to business outcomes not output.

As the team collects data from experimenting with real customers and users it improves its understanding of how the business model, product or service is performing. The team can then develop more targeted and sophisticated hypotheses based on the knowledge created from genuine user feedback.


Amazon designed the concept of Two Pizza teams – independent, long lived customer facing teams that were small enough to be fed by two pizzas. This enables context to be held within the group as the business model, product or service grows, while also allowing the team to become autonomous and learn together at speed. Leadership can then continuously evaluate how the initiative is performing based on frequent feedback loops, and can help to make further investment decisions on how to scale it up, down or to kill it based on the outcomes achieved.

Principles and capabilities of Exploit:

  • Create end-to-end customer facing teams, not project teams
  • Continuous evaluation funding model
  • Target condition is to achieve break-even point
  • Data-driven, fact-based decisions based on accumulated knowledge
  • Maintain a sense of urgency
  • Set a vision, trust the team to get there, clear blockers and support as they proceed
  • Make knowledge sharing and organisational learning easy


The majority of large organizations have built their entire business on a single business model and/or supporting products that achieved product-market fit and continued to grow beyond early expectations. They have extended their market, region, and/or sector to achieve exceptional financial success and achieve wide customer adoption and reach.


The challenge they meet is how to avoid ‘feature fallacy’ – the fallacy that simply adding new features will add more value. This manifests itself as overloaded products with features, tools and customizations that customers often never use or are even aware of.

Think of a product you have used for a number of years. Are you aware of all the new useful additions to it? Adding new features does not equal adding more value to customers and users. The feature fallacy often represents wasted effort and investment that could be spent elsewhere.

Etsy design for continuous experimentation. Teams at Etsy work closely with product, marketing, and engineering to scout, build, instrument and improve Etsy’s product portfolio to make sure that they are improving business outcomes for all their stakeholders – customers and users included.

The goal is to use data-driven decisions based on usage and profitability to enhance what customers desire – not just copy what competitors release or what HIPPOs (HIghest Paid Person’s Opinion) want to have.

By continually adding more and more features to existing products, organizations end up with huge monolith applications that are difficult, slow and costly to change or build upon.

The trick is to break out new ideas,  implement them as an Explore initiative and drive them through the end-to-end lifecycle flow again. This provides all the benefits and rigor of each stage while building the capability to continually create new business opportunities for future ongoing success.

Principles and capabilities of Sustain:

  • Beware of the feature fallacy
  • Focus on what is valuable – where can we win?
  • Don’t get lazy. Success hides suboptimal issues
  • Keep discipline with fact and evidence-based decisions
  • What is being used, improved or removed?
  • How could we disrupt or get disrupted?


All good things must come to an end. The difficulty for most organizations is that many systems in their portfolio are not well understood. Often the people that built the original system long ago on a ‘project’ have left the company. No one knows how to change, adapt or turn off the system or what impact it may have. Fear runs through the organization because the entire company’s business model is dependent on a COBAL program running on a 486. It may sound like a joke, but this is the reality for most organizations.

High performance organizations continuously seek to reduce the complexity of their systems to free up people and investment to Explore new opportunities. By simplifying their systems they are able to innovate faster, cheaper and more frequently.

Ask yourself the question: “When was the last time we sunset a system, product or feature in our team?” If you can’t remember then it is a smell. Over time the weight to legacy systems and technical debt will grind your innovation capability to a halt. Keep it within control. Remember that effort not spent on keeping legacy systems alive frees up opportunity to focus on new initiatives.

Principles and capabilities of Retire:

  • Has it served its purpose? Can we sunset it?
  • It is providing value? Kill it if it is not.
  • Are there better opportunities to invest in?
  • Continually look to reduce product and system complexity
  • Simplifying helps to support further innovation
  • Free up funds and capability


Business models are transient and prone to disruption. If your organization is reliant on a single business model, product or service to guarantee its ongoing survival then safe to say it is in a precarious state. You’re only one technology innovation, customer loyalty switch or economic decision away from irrelevance.


To be successful, a company should have a portfolio of products with different growth rates and different market shares. The portfolio composition is a function of the balance between cash flows. High growth products require cash inputs to grow. Low growth products should generate excess cash. Both kinds are needed simultaneously.

Lean Enterprises know that building the capability to continuously seek out new business models, products and services is the key to ensuring their future business relevance, growth and evolution.

If your executive team is unclear on how your portfolio is performing and what initiatives you are exploring, exploiting, sustaining and retiring, get a cross-functional group together and map out your portfolio to visualize your work in progress. Ask if it is achieving the desired outcomes and aligned to your business strategy and objectives.

Share the results of the exercises with your teams and business leaders. Then start getting deliberate about investment of time, effort and people in becoming the business you want to be.


This was originally published on Barry O’Reilly’s website. 

Find out more about Barry O’Reilly’s 2017 Agile Australia workshops. Barry will also be speaking at AgileAus 17 next 22-23 June in Sydney!

Posted in Agile Australia 2017, Workshop | Tagged , , , , , , , , , | Leave a comment

Understanding and developing growth mindsets to achieve greatness

Earlier this month some of the most highly-rated Agile Australia workshops returned for Agile Encore in Sydney. Today’s guest blogger, Isabel Nyo, participated in How to lead by enabling growth mindsets, a full day workshop led by UNSW Associate Professor Peter Heslin. 


“You are a superstar.” “You are so smart.” “You are brilliant.”

Ever heard of those phrases? I am sure we all have. Some more often than others. And what happens when those words are said to us? We feel awesome, we feel great, and sometimes, we even feel a little special.

I am guilty of using those words often. Especially to my loved ones and to my team members. My reason is pretty simple: I care about them and I want to support them and acknowledge them when they do a good job. However, I didn’t really understand what other side effects those words could have until I participated in “How to lead by enabling growth mindsets”, a workshop led by Associate Professor Peter Heslin.

So what effects do those phrases have? Research has shown that when we are often told that we are brilliant or awesome, we start to think we possess innate abilities and skills in certain areas. We start to think we were born with talents that help us to achieve great results.

One might argue that there is nothing wrong with thinking we were born with talents. But the thing is, if we believe we are amazing, we become so scared to lose our special status that we become risk-averse. We are reluctant to take risks. I can so relate to this personally because I always knew I was afraid of failure. I wanted to get things right the first time. And while it is possible to get things right the first time, it limits possibilities and opportunities. It limits the amount and level of risks I was willing to take. In other words, this is a ‘fixed mindset’ approach, where I consider skills and intelligence to be innate – things that we were born with. If I wasn’t good at a task, I didn’t want to take on the responsibility of doing it because I was afraid of failure.

So now with my new understanding and belief that anything can be learned and that one can become great at most things as long as there are correct strategies and processes in place for learning, I feel quite empowered. I feel less disappointment. I feel energetic. I feel ready to be challenged even if the chance of success is slim.

Having a growth mindset could have a profound impact on anyone’s life, and I would like to share how I plan on applying my learning from the workshop to develop and cultivate growth mindsets.

When I am saying you’re brilliant/amazing to others, I will remember to add “because” and give reasons for these statements. This is very important to me as both a parent and a leader in encouraging growth mindsets. For example, I usually tell my daughter that she is great at gymnastics. But from now on, I will tell her that, “you’re great at gymnastics because you went to every training class without fail and followed instructions from your teacher”.

When I feel frustrated with myself or someone else for not getting things right the first time, I will remember that skills are not necessarily innate, and sometimes there is simply further to go in the learning journey before we master the skill. I will encourage myself and others to learn from failures and think about how we can do things differently to get them right.

When I see that myself or others are scared to take on a challenge, I will remind myself and others to think of something we are good at and reflect on how we become good at it. For example, I’m good at time management and this is because I have actually studied and taken courses on time management and getting things done. I have a clear system that works for me and apply what I have learnt in my day-to-day life.

When I find myself saying “I can’t do X because I’m not good at it”, I will remember that I am probably not good at X because I haven’t learned how to be good at it and I haven’t put in enough time and/or effort. For example, I often say I am not good at networking but the reality is that I have never tried to be good at it. My excuse was that being an introvert, I am just not good at mingling and connecting with others. However, deep down I knew this was not true. The reason why I am not good at networking is because I don’t learn how to network, I don’t expose myself to situations requiring networking. Not only do I not practice this skill, but I deprioritise it as I’d rather spend my time and energy elsewhere. So now, rather than saying I can’t do networking because I’m not good at it, I will say I don’t enjoy networking and I prefer not to do networking.

And last but not least, when I find deficiencies in my capabilities and face setbacks, rather than taking the easy way out and quitting, I will remember that hard work, dedication and strategies are necessary to achieve greatness in any area, and it is the actions we take that will help us to learn and grow and become better versions of ourselves.

This blog was originally posted here.

If you’re feeling inspired and missed out on this year’s AgileAus workshops, you can check out Barry O’Reilly’s Lean Enterprise workshops – running in December 2016 – or get a head-start and sign up for AgileAus 2017’s workshops

Posted in Agile Encore, Guest Blogger, Workshop | Tagged , , , , | Leave a comment

Best books of AgileAus 2016

At this year’s AgileAus Conference, we asked over 1200 attendees for their favourite, most inspiring books on Agile.

And this is what they told us. These are the titles that came up again and again as the most helpful for learning about Agile:

This slideshow requires JavaScript.

Follow the links below for more info on each of these titles.

You can also find out more about the next AgileAus Conference – including some of the recently-announced speakers.

These popular AgileAus books also appeared in the most recent edition of AgileTODAY Magazine.

Posted in Agile, Agile Australia 2016, Agile Australia 2017, AgileTODAY, Education | Tagged , , , , | Leave a comment

Physical vs Digital Kanban Walls: Making the Most of Both

Ben Hogan was one of Agile Australia 2016’s highly-rated speakers and workshop leaders. He reprises both his presentation and his workshop next week at Agile Encore 2016 in Sydney.

Today, Ben discusses how to make the most of physical and digital Kanban walls, in this special sneak peek from the latest editon of AgileTODAY Magazine.


Following my visual management talk at Agile Australia 2016, there were a number of questions from the audience around using digital Kanban walls instead of physical walls. In this article, I will explore the benefits of each and offer some tips for getting the best out of both worlds.

I recommend starting out using a physical wall for the maximum visceral, emotional and cultural impact. Physical walls provide a meeting place for formal and informal conversations, and subtle but continuous opportunities for collaboration. Team members and leaders in the organisation can see the current situation and any problems immediately and continuously, without any effort getting access to a tool.

Physical walls have unlimited flexibility of design and of what can be visualised and thus represent an opportunity for expression of team culture. Physical walls can be funny and creative in a way that no digital tool can currently match. There is also a whole world of visual management beyond what current digital tools can support: achievement posters, dotting, blocker clusters, team policies, schedules, roadmaps and pairing stairs to name a few. In reviewing Jimmy’s book 96 Visualisation Examples,1 I counted 70 examples that I don’t think are possible with current digital tools.

As soon as I point out the advantages of physical walls, the following questions arise: “What about remote workers?”, “Won’t a tool make all the measurement and reporting easier?” and “What about sensitive information?” Teams of engineers in particular, typically express a general sense that using a digital tool might be a better and more comfortable choice for them.

Indeed, digital work management tools have many advantages. In addition to being able to access the tool from any location, digital tools allow attaching and searching related documents and also directly link to code changes in software. Digital tools can also automatically produce reports and charts without manual data entry. In regulated environments the audit trail and change management provided by a digital tool can be essential. So what should we do?

I believe the best approach is to use both physical and electronic tools in parallel, regardless of incremental costs of double handling, in order to get the benefits of both. I believe physical and digital walls provide fundamentally different benefits (see Table 1) and I believe the choice between them is a false dichotomy: we almost never have to choose only one.

At first this idea may seem like it would waste time, effort and accuracy. Many people point out the inefficiency of double handling the work items in both places. Underlying this thought is usually the idea that efficiency is critically important. I suggest that the small extra cost of using both systems is far less than the value of having both approaches available.

So how do we minimise the cost of running both physical and digital walls in parallel? Here are 5 tips for getting the best of both:

  1. For teams of engineers that can’t get past the idea of double handling work, consider an always on touch screen as a potential compromise. At realestate.com.au a number of the teams I worked with used a particularly large touch screen with a digital wall and we found it worked reasonably well for daily meetings. Some limitations we experienced included a lack of flexibility of wall design and a fairly limited amount of information displayed on each ticket. We noticed the lower resolution and much smaller displayable size compared to our physical walls.
  1. If you want the benefits of the physical wall but need to provide access to a few remote team members, try taking a photo each day of the physical wall and uploading it to an intranet or wiki page. This approach can be extended with a webcam pointed at the wall at all times and there are new telepresence robots that are an excellent option to achieve this.
  1. Consider how often you will update each wall. In one team that wanted automated auditing and reporting, they used a tool for all planning and tracking of work items, but only updated the tool at iteration boundaries: during the iteration they used a physical team wall, and updated the tool at the end of the iteration. We can extend this idea to experiment with separate, distinct lifecycles for the physical and electronic systems and this can reduce or eliminate much of the double handling of items.
  1. To reduce confusion, try nominating one system as the “source of truth”. For example, teams can update the physical wall during the day, and sync the electronic tool as needed, perhaps only once per day. To make this even easier, some teams have a laptop or tablet located next to the team wall for just this purpose: quickly updating the electronic system just before or after a daily meeting at the wall.
  1. A highly distributed team may be spread out across many locations. For these kind of teams I suggest each location has a local physical wall to get the day-to-day benefits of visualisation, focus and collaboration, with the electronic tool being the primary system of record. This even works for locations that have only one team member. For example, if one team member works from home, having a personal kanban board2 for the solo team member provides all the focus advantages to that person at minimal overhead. I’ve had solo workers report a reduction in distractions by simply having the current tasks physically visualised near their workstation.

If we are open to experimentation, there are many ways to reduce or eliminate costs associated with having physical and digital kanban walls. Next time you are tempted to choose one over the other, stop and think if you can experiment with having both to truly get the best of both worlds.

Table 1: Benefits of Physical and Digital Kanban Walls

Physical Digital
Meeting place Remote access
Information radiator, visibility Attachments, detail and links
Visceral, emotional and cultural impact Search and Audit
Flexibility, creativity, fun Automated Tracking and Reporting

Works Cited
1. J. Janlén, Toolbox for the Agile Coach, 96 Visualization Examples: how great teams visualize their work, Crisp Publishing, 2015.
2. J. Benson, “Personal Kanban 101,” Modus Cooperandi, [Online]. Available: http://www.personalkanban.com/pk/personal-kanban-101. [Accessed 2016].

To explore these ideas in more depth, you can hear from Ben next week at Agile Encore 2016 on Thursday 10 November in Sydney. There are also limited places still available in Ben’s upcoming Visual Management Masterclass on Wednesday 9 November 2016. Visit the website for more: http://agileencore.com.

Posted in Agile Encore, Workshop | Tagged , , , , | Leave a comment

Manifesto! A poem by Richard Weissel

Agile Encore 2016 speaker – and poet – Richard Weissel has penned a poetic tribute to the Agile Manifesto. 

“Help!” They cried, “We’re drowning. We’re stuck in a waterfall!”

“Do not fear, I’ll save you”, came the saviour’s mighty call.

He donned his cape, he donned his pants, he grabbed his mighty cloak.

“You will not drown today my friends, for I have my post it notes.”


Relief, they felt, for now it seemed, that surely they’d be saved.

They knew that he’d saved thousands, as frantically they waved.

His legend came before him; tales from young and old,

of this coach named Silver Bullet, a wonder to behold.


He jumped upon his trusty steed, his companion of all these years,

“Sprint, it’s time again my friend, to set aside their fears.

We’re called upon to save the day. To this we’re duty bound.

Let’s take with us but one small thing; make sure it’s tightly bound”


Ah yes, the manifesto, there is but only one.

When armed with this, an Agile team, has no need for a gun.

For with the manifesto, as legends surely say,

When it appears, all waterfalls dry up and shrink away.


With head held high, with post it notes, and index cards galore,

They headed towards the danger, then heard its mighty roar.

For waterfall is strong it seems, like the dark side of the force,

but for every Lord Darth Vader, there’s a mighty Luke of course.


“Bullet! You must stop right now. You know it to be true.

We share a bond, you and I. Without me there’d be no you!

Join me my boy! Together we can be the only one,

The one true methodology. It’s true; you are my son.”


“You are not my father!” shouted Bullet as Sprint reared up.

But then they heard, a muffled sound…”will you please hurry up?!”

For the team was surely drowning, amidst a torrent of requirements docs.

If only they’d set out, with just a tiny set of mocks.


But then there was a lengthy pause, a silence in the storm,

For Sprint it seemed, the time had come, for his fortnightly form.

It was time for a small retro, despite how close they were,

For if they didn’t know what happened, future madness may occur.


They made a plan, wrote up some cards, and then they dragged one in,

Right to the heart of waterfall, right to the heart of sin.

An index card, from Sprint’s backlog, is poison to waterfall,

But whether it was truly dead, was much too soon to call.


He dragged them out, one by one, bedraggled yet full of awe,

At this man upon his mighty horse, who’d dragged them to the shore.

“Wow, you look much older, but really you’re quite young.”

“Ah yes, my friends, that’s true; the journey’s just begun!”


“Do not be fooled by Waterfall. It will hold you in its grip.

And in time my friends, like all of us, then you will surely trip.

The world is changing at breakneck speed; you’ll need a mighty horse.

But failing that, you can all feel safe, for we have the Agile Force”.


Richard Weissel will reprise his highly-rated Agile Australia 2016 presentation at Agile Encore 2016 on Thursday 10 November in Sydney. Details here.

Posted in Agile, Agile Encore | Tagged , , , , , | Leave a comment

New edition of AgileTODAY out now!

The latest edition of AgileTODAY Magazine is out now! If you’re a print subscriber, you should now be receiving your glossy magazinagiletoday-vol-13-twitter-cover-1000x1415pxe – and online subscribers can grab the edition here.

This edition focuses on the relationship between the digital and physical realms. Melinda Harrington discusses her visit to Baum Cycle Factory (check out the awesome cover shot from Baum!) as part of Agile Australia 2016’s Social Day. In her piece, Melinda reflects on the relationship between building software and tangible products.

Adrian Fittolani – who’ll be speaking at Agile Encore next month – considers Agile communication, and Ben Hogan (another Agile Encore speaker) considers physical vs digital Kanban boards. You can hear from Adrian and Ben at Agile Encore next month in Sydney on 10 November 2016.

Plus, read on for an insight into the student experience at Agile Australia 2016, and have your say on planning the 2017 Social Day in Sydney! Next year’s Agile Australia 2017 dates have been announced – so add 22-23 June to your diaries!

To subscribe free to AgileTODAY, visit the website.


Posted in Agile Australia 2017, Agile Encore, AgileTODAY | Tagged , , | Leave a comment

Lean PMO: Explore vs Exploit

barryInternational speaker, consultant and author Barry O’Reilly returns to the AgileAus blog today. Barry is heading to Australia in December to host Lean Enterprise workshops, and you can also catch him speaking at Agile Australia 2017 (22-23 June 2017 in Sydney – better save the date now!).

The challenge for organizations today is growing the capability to continually adapt, adjust and innovate. To be successful in an ever accelerating environment, organizations need to make continuous innovation a deliberate practice that is integrated into the fabric of the organization. For Lean Enterprises, this begins and ends at their portfolio.

In the last half century the average lifespan of a company listed in the S&P 500 Index of leading US companies has decreased by more than 50 years, from 67 years to just 15 years today. Professor Richard Foster from Yale University estimates that by 2020, more than three-quarters of the S&P 500 will be companies that we have not heard of yet. Since 2002, Google, Amazon, and Netflix have joined the S&P 500, while Kodak, RadioShack, Palm and Compaq have all been forced off, essentially by changing technology. General Electric is the only company that’s remained on the S&P Index since it started in 1926. Why? Simple. They have managed to constantly evolve.

In the future two types of organizations will remain. Those that continue ‘as is’ once they have found a business model or product fit by optimizing for that specific market. Their strategy will be efficiency and optimization to harvest as much profit as possible for a 5-10 year horizon. The trade-off will be their ability to adapt to change. When the industry business model changes, their business will slowly collapse.


In contrast, Lean Enterprises are companies designed to operate in an environment of continual change and on-going evolution. They develop a capability to adapt and evolve to meet new market opportunities and threats. They will survive for longer because their structure, strategies and processes support the continual search for new business models, products and services. Once identified they rapidly maximise and scale opportunities while embracing the creative destruction of their own portfolio before another competitor does.

Explore and Exploit: two competing organizational dynamics

Almost by definition, an enterprise’s primary business models are based on known and well-understood product or services offerings. Existing business models have been proven, and the domain in which they exist is well-understood. The primary role of business functions is to execute these business models, with the goal of incrementally improving efficiency over time to out-compete. Plans, processes and measures can be put into place to optimize and monitor the performance and health of the products and services offered. Forecasts are regularly created for capacity, revenue, growth and sales. Targets can be based on understood data accumulated and analyzed over time with a reasonable level of confidence.

When operating in the new economy, simply trying to improve existing initiatives and optimize efficiency is not enough to provide long term sustainability. Organizations need to be continually in search of new opportunities to stay relevant. Explore is fundamentally a different operating environment compared to Exploit. Organizations need to to leverage new technologies, customer insights and emerging trends to unearth new business models, products and services their customers and users desire.

Typically, existing organizational structures, strategies and processes for executing initiatives simply do not work in an exploratory context.For example, measuring return on investment during explore phases makes little sense and provides little insight as you are typically investing to reduce the uncertainty of building the wrong thing. Few new business models or products generate large revenue in the beginning hence will also fail to measure up to more mature initiatives that are in an exploit phase or later.


There is a necessary tension between explore and exploit. In particular, as Clayton M. Christensen in The Innovator’s Dilemma brilliantly captures, successful enterprises win or lose on execution and thus tend to squash exploration in favour of harvesting a known working business model, product or service.

Exploring new opportunities and exploiting existing ones are fundamentally different strategies requiring difference structure, competencies, processes, and mindset. It is hard to overemphasize the key point: management practices that are effective in the exploit domain will lead to failure if applied to exploring new opportunities – and vice versa. The differences between the two domains are listed below:



A key goal of successful portfolio management in the enterprise is understanding how to balance exploring new business with exploiting proven existing business models – and how to transition businesses successfully between these domains. Leaders must understand the difference between these domains and be able to design, implement and operationalize the required mindset, strategies and people that govern them. If it’s fallen to the CEO to manage, the organization has not built the capability and will struggle to continually evolve.

You now have two chances to learn from the co-author of Lean Enterprise: How High Performance Organization Innovation At Scale – Barry O’Reilly is visiting Australia this December for a workshop series, and will also return for Agile Australia 2017 as a speaker and workshop leader. Barry’s ‘Lean Enterprise’ workshops will take place in Sydney, Melbourne and Adelaide in December 2016.


Lealean-enterprise-book-covern Portfolio Management is covered in our book, Lean Enterprise:How High Performance Organization Innovation At Scale.




This blog was originally published here

Posted in Agile Australia 2017, Guest Blogger, Workshop | Tagged , , , , | Leave a comment