Managing a Balanced Portfolio Competency

Which roles would benefit from mastering this competency?

This competency is relevant for anyone involved in identifying, defining, analyzing, prioritizing, funding, and implementing strategic initiatives (Epics) across a Portfolio utilizing lean-agile practices. It will benefit Portfolio Leadership, Epic Owners, Business Owners, Release Train Engineers (RTEs), Solution Management, Product Management, and VMO members.

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Learning about Managing a Balanced Portfolio

In his book “Zone to Win [1],” Moore offers valuable insights for managing different types of work—Performance, Incubation, Transformation, and Productivity—necessary for lasting growth. 

Similarly, the McKinsey model of the Three Horizons of Growth [2] helps balance current success with future innovation by categorizing initiatives into Horizon 1 (core business), Horizon 2 (emerging opportunities), and Horizon 3 (future options). 

In SAFe, we incorporate both of these ideas with an additional Horizon 0 phase (retire and decommission), which is critical in large organizations to ensure we do not continue to spend time and people on old systems and products. SAFe’s model, therefore, reflects a complete portfolio management strategy that includes the entire lifecycle of a product or solution, from creation to retirement, as shown in Figure 1.

A balanced portfolio applies this model to ensure an appropriate allocation of investments in both short-term needs and long-term goals. It involves distributing investments across varying time frames and risk levels while optimizing for both immediate impact and future growth. 

Though the creation and management of a balanced portfolio will differ for each organization, its core purpose is to address conflicting needs simultaneously. This ongoing process requires careful resource allocation between technology and business solutions, seamlessly integrating strategies from both team experiences and leadership insights. Ultimately, the goal is to maintain balance across diverse areas while optimizing for current value and future growth across different horizons (H0, H1, H2, H3).

Understanding horizon thinking is essential for achieving balance in strategic planning.

Horizon 0: Retiring/decommissioning solutions and features: This horizon is dedicated to sunsetting obsolete systems, platforms, or technologies. It contains planned and strategic “end-of-life” for solutions that are no longer providing value. The focus is to reduce operating costs and free up money and people to work on more valuable initiatives.

Horizon 1: Optimize and extend core: This is the core business. It involves maintaining and extending existing products and services that generate the majority of the company’s revenue. The focus is on improving performance, increasing profitability, and making incremental improvements.

Horizon 2: Grow emerging value: This horizon is for building new, emerging businesses. It involves exploring new markets, expanding product lines, or innovating to respond to shifts in the market. These investments are intended to generate a reliable return in the medium term.

Horizon 3: Future bets: This horizon aims for future-proofing the organization with research and development. It’s for identifying entirely new businesses or disruptive technologies that may or may not prove successful. These initiatives are high-risk but have the potential for high rewards.

In order to apply this model to create and manage a strategically balanced and economically optimized portfolio, it involves several interconnected practices, which will be explored in further detail below: 

• Visualizing portfolio work
• Strategically prioritizing initiatives 
• Enabling the continuous flow of value
• Making clear, timely decisions 

Visualizing Portfolio Work

Understanding the progress of your strategic work is essential for managing it effectively. When each part of your portfolio can clearly show its workflow using visual tools like a Kanban, it helps you, as a portfolio leader, support all important work, from daily operations to long-term goals. This clarity allows you to spot problems, make wise decisions, improve processes, and achieve better financial results. It’s important to consider different timeframes when taking this strategic view.

The Portfolio Kanban is one of a larger system of connected Kanbans in SAFe. It is the one that portfolio leaders will interact with the most.

Note: If you are not yet familiar with the Portfolio Kanban, read the Portfolio Backlog guidance here before moving forward.

The Portfolio Kanban should be the visual map that shows the journey of major portfolio-level initiatives (epics). Epics are the primary container for large strategic initiatives in SAFe. They are defined by Lean Business Cases and testable Minimum Viable Products (MVPs). The epics in the Portfolio Kanban meet the conditions defined in the portfolio guardrails for requiring portfolio-level oversight from ideation through to being done (or simply no longer being a portfolio concern).

Visualizing strategic portfolio work with the Portfolio Kanban helps:

• See the combined potential of Epics and find ways to improve flow and outcomes. 
• Limit the number of epics being worked on at once (Work-in-Process or WIP). Since portfolio-level epics have the potential to generate lots of downstream work over time in the ARTs, these limits are important for focus across the portfolio.
• Create clear guidance and guardrails so everyone follows the same steps when driving epic delivery. 
• Use measurement to track progress and spot trends. You can also utilize visual cues inside your Portfolio Kanban toolset to quickly spot insights. For example, you can visualize how well the emerging portfolio epics are balanced across different time horizons, are achieving leading indicators, or are beginning to fail at delivering their hypothesis.

However, effectively visualizing a balanced portfolio goes beyond just using the Portfolio Kanban. Portfolio leaders need to understand how value flows across the entire portfolio. While the Portfolio Kanban helps guide major strategic initiatives, important work can also emerge within ART and Large Solution Kanbans. This decentralized approach encourages local decision-making, which is essential for today’s fast pace and need for agility, but it can bring risks. The balance in the strategic portfolio might get disconnected if leaders don’t engage closely. Open communication and clear visualization among portfolio and ART leaders are crucial to align their work with the organization’s goals.

By understanding the work and connections between Kanban systems in the Portfolio, value stream, and ARTs, Portfolio Leaders can identify any misaligned priorities that might affect the overall balance of the portfolio.

Strategically Prioritizing Initiatives

Prioritization is critical to creating a balanced portfolio. Effective prioritization involves allocating an organization’s resources to maximize economic value and enhance competitive advantage. It requires making tough decisions and saying “no” to less impactful work to maintain a strong focus on critical strategic priorities.

A core aspect of effective prioritization is the deliberate balancing of investments across solutions. While tools like Weighted Shortest Job First (WSJF) help prioritize immediate value, strategic leaders must also consider:

• The right time to retire and decommission obsolete products and solutions (Horizon 0) to free up valuable resources.
• The need to optimize and extend the core business (Horizon 1) for immediate profitability.
• The imperative to grow emerging value (Horizon 2) often requires dedicated capacity for new market entry or solution development.
• The foresight to create future options (Horizon 3) through high-risk, high-reward experimentation, ensuring long-term relevance.

Enabling the Continuous Flow of Value

Keeping a steady flow of value at the portfolio level is crucial for getting the best economic results and staying competitive. Portfolio Leaders focus on optimizing the whole system that moves strategic initiatives (epics) from idea and analysis through implementation to business outcomes. This involves finding and removing delays, cutting down on unnecessary steps, and making sure that strategic work moves forward smoothly without wasting time. This focus on flow helps in managing a balanced portfolio, making sure that investments, from decommissioning old systems (H0) to identifying future opportunities (H3), are always providing value.

By actively managing portfolio flow, leaders gain crucial visibility into bottlenecks and impediments that might otherwise derail strategic priorities. This continuous optimization allows for more effective prioritization and capacity allocation, as resources are freed up and directed to the most impactful work. A robust flow system, aligned with the guidance below for achieving portfolio flow, facilitates rapid learning and adaptation, enabling quicker “Go/No-go” decisions and the ability to pivot when new information or market changes emerge. This proactive approach ensures that the portfolio remains Agile and responsive, consistently delivering on its strategic themes and maximizing overall economic value.

Making Clear, Timely Decisions

Portfolio Leaders must make clear and timely decisions to navigate a changing market and effectively manage a well-balanced portfolio. This involves making important “Go/No-go” choices for new ideas, adjusting plans based on what is learned and market changes, and stopping work that no longer aligns with goals or adds value. Taking timely action is crucial for seizing new opportunities, maintaining consistent value, and reducing risks. Ultimately, the ability of Portfolio Leadership to make careful and prompt decisions is essential for achieving business goals and improving the success of strategic initiatives. 

Empowered by data, Portfolio Leaders ensure that all initiatives align with strategic themes and contribute to the organization’s long-term vision. They make informed investment decisions, balancing immediate requirements with future growth opportunities and innovation risks. Continuous feedback and validated learning facilitate rapid adaptation and pivoting when needed.

Additionally, Portfolio Leaders engage stakeholders across the organization to build consensus for successful initiative implementation. They foster agility by encouraging teams to adapt to market changes and experiment, particularly in uncertain Horizons 2 and 3. By utilizing tools like the Portfolio Kanban, leaders can actively shape the portfolio’s direction, maximizing economic value and competitive advantage.

Understanding the key areas of managing a balanced portfolio is essential. The next step is to translate this knowledge into practical actions within your portfolio. The following section presents a structured approach to actively applying these principles and practices.

Applying the Managing a Balanced Portfolio Competency

We will now apply what we’ve learned about the Horizon Model introduced above to a simplified example of a technology portfolio inside a large hospital network. This portfolio manages all of the hospital’s IT initiatives, from new patient technologies to backend administrative systems. After the example, we will go through further application steps.

Healthcare Portfolio Example 

Horizon 3: Create Future Options

This horizon includes speculative, early-stage initiatives that explore new technologies for a competitive advantage. These are typically worked on by a single ART, but have significant enough potential financial future impact to be a Portfolio Kanban concern.

• Example initiative: A Lean Business Case to develop an AI-powered diagnostic tool that analyzes medical images (like X-rays or MRIs) to identify potential issues with greater speed and accuracy than a human. This is clearly Horizon 3 work for this portfolio. This is a high-risk, high-reward idea that could revolutionize how diagnoses are made. If successful, current value streams would change how they operate and deliver value. It may even emerge as a net new value stream. A low-cost MVP to prove out the hypothesis and business case is being created. Portfolio leaders are actively managing this alongside a multitude of other small early-stage MVPs (like pet medications and drone delivery). They will need to identify what similar ideas are the most valuable to continue to invest in and what should not be continued.

Horizon 2: Grow Emerging Value

This horizon includes promising initiatives that are moving from the experimental stage to broader implementation. Many of these items are ART-level concerns, with Portfolio Leaders ensuring the Business Owners and ART leadership maintain the context of the broader portfolio strategy as they scale up this solution. The Portfolio Leaders are also keeping an eye on what decommissioning work is going on elsewhere to enable teams with capacity opening up to learn the new tools and technologies needed to support work like this.

• Example initiative: An ART is developing and scaling a remote patient monitoring solution. The initial pilot was successful, and the team is now adding new features, such as integrating with more types of medical devices and creating a more user-friendly interface for both patients and clinicians.  An Enterprise Architect is helping them identify the patterns and infrastructure that can scale successfully into other solutions.

Horizon 1: Optimize and Extend Core

This horizon is the core business. A mostly autonomous set of ARTs and Agile Teams ensures that the critical solution is continuously improved, maintained, and extended to meet new regulations and user needs. Though they may have epics that occasionally require portfolio oversight, the majority of delivery can be managed locally.

• Example core business solution: The Electronic Health Record (EHR) system. This is one of the core business solutions delivered by multiple ARTs and Teams across the portfolio. It has ongoing features and epics being delivered to continue to win at:
  • Patient Services: Focuses on improving the patient portal, appointment scheduling, and communication features.
  • Clinical Operations: Focuses on optimizing the clinician interface, lab order entry, and internal communication tools.
  • Billing & Administration: Focuses on improving the billing system, insurance claims processing, and compliance reporting. 

Horizon 0: Retire and Decommission

This horizon involves phasing out and shutting down old, inefficient systems.

• Example initiative: A hospital is decommissioning an outdated legacy patient management system and migrating all data and functionality to the new EHR system (the one in Horizon 1). This is essential for reducing maintenance costs and security risks. It will enable the ARTs currently supporting the systems to focus on more valuable work that will keep the portfolio competitive. The portfolio leaders are keeping an eye on the progress. They are encouraging it to be done with high-quality attention and with a focus on saving the data that has been gathered over the years. They are also ensuring the affected ARTs are able to invest time in learning new technical skills around the work that could be coming their way once the system is decommissioned.

The portfolio is actively managing its current business while investing in the future and shedding legacy burdens.  

To further apply this to your portfolio, it’s important to apply Lean-Agile principles in everyday operations and decision-making. The following steps will ensure you have the appropriate principles and practices in place.

1. Establish the Portfolio Kanban: Establishing the Portfolio Kanban is the first step in visualizing the strategic work of the Portfolio. Set up a Portfolio Kanban system, defining its Kanban states, and add all current large initiatives (potential epics). Identify where each existing major portfolio concern should be in the Kanban and which items should not be represented in the Portfolio Kanban, as they can be effectively managed by the ARTs and Solution Trains.

This initial step will most likely showcase a large number of epic-sized items in progress across the portfolio. Some of them may be redundant, and some may not be connected to the strategy. In most use cases, coaching new techniques and behaviors across current epic or initiative owners will be required.

2. Implement robust prioritization and capacity allocation: To effectively visualize your epics, take action by consistently applying prioritization methods to sequence your work. Direct your organization’s energy and talent by funding the capacity for work rather than treating epics as individual projects. Portfolio leaders must continually align priorities with strategic themes and overall economic value. Be prepared to make courageous trade-offs and say no to less impactful initiatives. This ensures that people are focused on a limited number of high-priority epics.

3. Actively enable and optimize Portfolio flow: Portfolio leaders work closely with Epic Owners to eliminate obstacles, resolve dependencies, and tackle any impediments that may slow down the progress of your strategic initiatives. Foster a culture that empowers teams and Epic Owners by ensuring they have access to the necessary information, tools, and support to make timely, data-driven decisions. Your goal should be to help the epics achieve value in the sustainably shortest lead time.
4. Practice decisive, data-driven decision making: As a portfolio leader, it’s essential to regularly review the Portfolio Kanban and make timely Go/No-go decisions based on validated learning and market changes. Use insights from Value Stream KPIs to adapt your strategies as new information comes in. Focus on proactive risk mitigation, removing barriers, and reallocating resources to keep the portfolio Agile and responsive.
5. Cultivate hypotheses and learning: Use MVPs to help frame strategic initiatives as testable hypotheses. It’s important to highlight that these initiatives are experiments aimed at validating our assumptions about market needs, customer behavior, and technical feasibility rather than ensuring guaranteed successes. This perspective encourages a shift from a “build it and they will come” mentality to one that emphasizes learning and adaptation. Support Epic Owners in establishing clear metrics that prioritize validated learning over simply measuring activity.
6. Leverage SAFe Portfolio events: SAFe’s key portfolio events bring this competency to life. The Strategic Portfolio Review evaluates strategic alignment and economic health across all horizons. Portfolio Syncs offer regular inspection of epic progress, discussion of impediments, and data-driven decisions. Participatory Budgeting provides crucial feedback for prioritization, ensuring Lean Budgets are allocated to epics that align with strategic themes and desired horizon balance. These events focus on creating a cadence for intelligent prioritization, flow optimization, and decisive action.

Always monitor how these initiatives contribute to the portfolio’s overall value and economic health. Next, we will walk through what this looks like over time as the competency is mastered.

By proactively recognizing and addressing these pitfalls, Product Owners and Product Managers can significantly smooth their transition and ensure their responsive roadmaps truly drive continuous value.

Mastering the Managing a Balanced Portfolio Competency

Mastering the Managing a Balanced Portfolio Competency signifies a profound ability to steer the organization’s most critical initiatives through a complex and dynamic landscape, ensuring unwavering alignment with strategic themes while fostering continuous innovation and adaptability.

This section will cover some final tactics that will further enhance the visibility and decentralized decision-making in your portfolio. It then provides insights as to how AI can assist.

• Balance short-term value with long-term growth: Actively manage your portfolio to ensure a healthy distribution of initiatives across all horizons (H0, H1, H2, H3), making deliberate trade-offs to fund future exploration and experimentation.
• Embrace risk and uncertainty for breakthrough value: Recognize that H2 and H3 initiatives carry higher risk but offer greater potential for innovation. Adapt your decision-making to emphasize hypothesis-driven development and validated learning, and be prepared to stop or pivot initiatives that don’t demonstrate value.
• Continuously adapt to market changes: Regularly assess how market dynamics affect your portfolio and be ready to adjust your balance and priorities based on new information and emerging opportunities.
• Foster experimentation: Encourage new ideas, especially for long-term initiatives, by creating a safe environment for exploration and adaptation.
• Align incentives: Ensure that incentives promote value creation across all strategic horizons, reinforcing long-term goals.
• Empower Teams: Provide those closest to the work with the necessary understanding, tools, and training to make timely, informed decisions aligned with portfolio objectives.

Managing a balanced portfolio is an ongoing process. An overemphasis on immediate concerns often indicates an unbalanced portfolio, leading to the neglect of future opportunities and hindering growth. Leveraging existing toolsets, advanced analytics, and AI (as described in the section below) can provide deeper insights into interdependencies and collaboration needs, generate economic forecasts, and visualize the impact of portfolio decisions. This method ensures that information is vital for managing the entire portfolio. It helps leaders spot problems early, promotes teamwork, and supports informed decision-making by offering a clear view of how the strategy is being implemented across all ARTs and teams.

Assessment Questions for Managing a Balanced Portfolio

This self-assessment provides a simple method for evaluating your organization’s proficiency in managing a balanced portfolio. It is recommended that you use the questions to identify areas of strength and opportunities for improvement in your application of this competency. It is meant to be taken by Portfolio Leadership, Epic Owners, Business Owners, and other key stakeholders involved in portfolio decisions.

1. Do we utilize the Portfolio Kanban to visualize all significant portfolio work, identify bottlenecks, and make decisive “Go/No-go” decisions based on validated learning?
2. Do we ensure our prioritization methods consistently align with our strategic themes and optimize for overall portfolio economic value, rather than just individual epic success?
3. Do we practice discipline and psychological safety to swiftly pivot or terminate epics when learning shows they aren’t achieving desired outcomes?
4. Do we leverage data and insights, potentially from AI tools, to gain a holistic understanding of our portfolio’s economic health and drive continuous improvement in portfolio kanban decisions?
5. Beyond immediate returns, do we strategically balance investments across Horizon 0, 1, 2, and 3 epics to ensure long-term competitive advantage and sustainable growth?
6. Do we promote a culture of experimentation and learning, treating epics as hypotheses and adapting quickly based on feedback?
7. Do our Portfolio events promote understanding and success in managing strategic initiatives among leaders, Epic Owners, and stakeholders?
8. Are we thoughtfully integrating advanced technologies, particularly AI, to enhance our ability to manage strategic initiatives while maintaining critical human judgment?

Continuing your Journey through the Lean Portfolio Management Discipline

[1] Moore, Geoffrey. Zone to Win: Organizing to Compete in an Age of Disruption. Diversion Books, 2015.
[2] Baghai, Mehrdad, Steve Coley, and David White. The Alchemy of Growth: Practical Insights for Building the Enduring Enterprise. New York: Basic Books, 2000.

Last Update: 12 February 2026