G like Governance: The Critical Role of Governance in LPM

In Lean Portfolio Management, governance is not a simple procedural step—it’s the backbone that ensures alignment, risk management, and value delivery. Strong governance mechanisms guarantee that every initiative aligns with your business objectives while allowing for flexibility and agility, which are essential in today's fast-paced business environment.

What Does Governance Look Like in LPM?

Governance in LPM isn’t just lean—it’s adaptive, focusing on continuous flow instead of rigid oversight. It’s designed to be light but effective, balancing control and flexibility to support innovation.

Key governance practices in LPM include:

1. Strategic Alignment: Regular portfolio reviews ensure the work being done aligns with the organization's broader strategy. Without this, teams can end up working on initiatives that don’t add value.

2. Participatory Budgeting: This dynamic budgeting process empowers teams to allocate funds where they are most needed, avoiding the inflexibility of traditional annual budgets. It’s a crucial step toward maintaining agility while ensuring financial accountability.

3. Performance Metrics: Using flow metrics and lean KPIs, LPM shifts the focus from traditional financial metrics to real-time performance indicators that provide insights into how efficiently the portfolio is delivering value.

Why Governance Fails in LPM

Governance can fail in LPM when it becomes overly focused on control and micromanagement. If leadership is more concerned with top-down decision-making rather than enabling teams to be autonomous and innovate, governance becomes a bottleneck instead of a facilitator. One of the main reasons for failure is that leadership doesn’t fully buy into the lean principles that underpin LPM. If executives cling to traditional governance structures or don’t trust their teams to make decisions, the whole system can collapse. Leadership support is critical for governance to be truly effective in a lean portfolio.

How to Get Governance Right

To get governance right in LPM, it's essential to balance strategic oversight and team autonomy. Here are three key steps to get started or optimize your governance mechanisms:

1. Clarify Roles and Responsibilities: Ensure leadership understands that their role is to set strategic direction and enable teams—not to control every decision. Empower teams with the authority to act within defined guardrails.

2. Implement Regular Strategic Portfolio Reviews: Schedule frequent reviews to ensure portfolio initiatives remain aligned with business goals. These reviews should be collaborative, including leadership, stakeholders, and delivery teams.

3. Adopt Lean Metrics: Shift away from traditional metrics like ROI and financial KPIs. Use flow metrics, lean KPIs, and participatory budgeting to measure the real-time performance and value delivery of your portfolio.

Getting Started with Lean Governance

If you're just starting with LPM, or if you need to optimize your current governance mechanisms, remember that leadership buy-in is crucial. Without full support from the top, efforts to introduce lean governance will struggle. Begin by educating executives on the benefits of lean principles and building transparent communication channels between leadership and teams.

Governance in LPM is about facilitating value delivery, not controlling teams. Keep the process lean, adaptive, and focused on continuous improvement. The goal is to enable teams to deliver value faster while maintaining alignment with organizational goals.