Enabling Strategic Alignment with an Enterprise Strategy Room
Originally published on the Scaled Agile Framework.
It used to be that big companies beat small companies. In the digital age, fast beats slow. Organizations that quickly respond to changing market conditions are winning across every industry. The largest organizations can struggle to align their portfolios to a unified strategy, preventing them from achieving the best possible outcomes. They quite literally do not give themselves the time and space to create the necessary alignment.
Scaled Agile addressed this with the concept of strategy agility: shifting the conversation away from whether organizations need to respond to changing market dynamics, to how best to do so. Strategy agility is driven by good-quality data, customer feedback, and observation of end-user behaviors. The challenge is the sheer volume of information available. How do you separate the least valuable information from the more valuable and actionable information?
One technique enabling large organizations to have strategy agility is to create an Enterprise Strategy Room.
What Is an Enterprise Strategy Room?
An Enterprise Strategy Room (ESR) is a dedicated space for strategy formulation and ongoing strategy agility. Enterprises with multiple SAFe portfolios, or a desire to improve strategy coordination between portfolio leaders, benefit from maintaining one.
The ESR is the nerve center of the enterprise, overseeing portfolio investments and initiative execution. It monitors the performance of programs and key initiatives across all major portfolios. This setup fosters strategy agility, enables cross-portfolio collaboration, and supports sustainable growth in key investment areas.
Physically, the ESR is a single room with walls covered in real-time data per portfolio. It creates a living summary of all portfolios rolled up into one view of the whole enterprise. The value is in the rapid alignment and decision-making that real-time data enables. Frequently, just by co-locating portfolio leaders and executives in the same room, significant barriers to organizational progress are removed.
Common sources of information on the ESR walls include:
Financial data. Portfolio budget allocations, investment trends, cost projections, and revenue forecasts associated with each value stream. This gives executives crucial insight into the financial health of the enterprise and enables informed decisions about resource allocation and investment prioritization.
Performance metrics. Operational and quality metrics, work status, key milestones, resource allocations, and risk factors. These enable the organization to track the progress of key initiatives and identify areas for improvement and intervention.
Market data. Recent market trends and forecasts, competitor analysis, and customer feedback. These create a fuller picture of how the enterprise fits into its strategic markets.
OKRs, value stream KPIs, and outcome metrics. These provide actionable insight into whether the strategy is actually working in the market, not just whether execution is performing against plan.
One important design principle: don’t create too much noise. Expense reports, funding sources, financial ratios, and cash flow are all valuable metrics in their own context, but they’re likely to generate more noise than value in an ESR. The governing question is: what do Enterprise leaders need to know to make cross-portfolio decisions? Everything else stays out.
Enterprise Epics as the Strategic Baseline
For enterprises that want to make the best use of the ESR, well-written Enterprise epics are essential. They capture the enterprise’s current long-term strategic thinking and provide the baseline against which all decisions are evaluated.
In a Fortune 500 Aerospace and Defense organization I was coaching, we used the ESR to recognize that there were significant portfolio-level investments that did not directly align with the long-term enterprise strategy. By asking, “What enterprise epics do these portfolio epics support?” we initiated a conversation that resulted in those epics being deprioritized in favor of initiatives that better aligned to the enterprise. That conversation couldn’t have happened without the ESR making the cross-portfolio picture visible in a single room.
In the same organization, we recognized that one portfolio’s roadmap was not progressing as fast as anticipated. By asking, “Do we need to intervene here to create the right enterprise outcome?” our Enterprise Executive was able to directly close the gap in the internal processes causing the delay.
A note on virtual ESRs: During the early stages of the COVID pandemic, we demonstrated that much of the ESR’s value can be realized virtually. But we were not able to realize the same level of value, because leaders would drop off the call after the planned agenda was over. We lost the opportunity for emergent discovery that comes from being in the same space.
Who Belongs in an Enterprise Strategy Room?
Every ESR has a place for information critical to responding to the market. In short: if Enterprise leaders need to know it, it should be in the ESR.
The participants will vary by organization, but will always include everyone involved in Enterprise Portfolio Management:
Enterprise Executives. The most senior leaders who define and guide the medium- to long-term strategy and direction of the enterprise.
Portfolio Leaders. Those who lead the strategy and investment activities for each SAFe portfolio, including Business Owners and Enterprise Architects.
Enterprise Strategists. Professionals who assist executives and portfolio leaders in identifying long-term strategic goals, ensuring leaders have the right information at the right time for market decisions.
Portfolio Stakeholders. Business unit and departmental executives who can speak to how their areas can operationalize the strategy.
Enterprise Epic Owners. Those responsible for shepherding cross-portfolio initiatives through the enterprise portfolio Kanban system.
Depending on the context, you may also need finance managers, data and cybersecurity specialists, and legal officers in ESR-hosted discussions.
What makes an ESR invaluable is how quickly executives and portfolio leaders are able to respond to new information and opportunities.
Twenty minutes into our very first Enterprise Portfolio Sync at a Fortune 100 Financial Services company, we identified a major effort being duplicated across not two but three different portfolios. By highlighting all the major portfolio initiatives in flight and recognizing the triplication, we saved the company nearly $12 million USD by eliminating unnecessary overlap. By lifting the initiative to the Enterprise level, we saved months in the delivery schedule, reduced cost of delivery and maintenance, and immediately proved the value of the ESR to every senior manager and portfolio leader in the room.
When to Use the ESR
The best way to keep the ESR relevant is to make it the backdrop for all major portfolio and enterprise portfolio events. Two cadenced events that work especially well:
Enterprise Portfolio Sync. Cross-portfolio syncs give portfolio leaders and stakeholders immediate access to the current state of coordinated value delivered across portfolios. The enterprise portfolio kanban is a key element: keeping it current requires input from VMO Leaders, Portfolio Leaders, Epic Owners, and others, and the ESR is the right place to host that kanban.
Enterprise Strategy Review. Hosting individual Strategic Portfolio Reviews and the Enterprise Strategy Review in the ESR ensures that decision-makers benefit from the same information across both individual portfolio and cross-portfolio sessions. For the enterprise to reach its full potential, leaders need to be able to see and discuss potential future cross-portfolio opportunities in a shared context.
Building an ESR
To implement an ESR, start with your strategy. Secure the space and begin centralizing whatever data you already have. Whatever information you have is valuable, and centralizing it is even more so. Once you start, you continue to expand: more data, more insights, more structure. The changes will be incremental. As leaders use the ESR, they’ll determine what information is most valuable and what additional information they need. Each conversation builds more momentum for the ESR to become the nerve center of your organization’s agile operations.
The first time I implemented EPM, we identified the need for a way to visualize the unique needs of each portfolio, but immediately struggled with the executive team’s need to understand how each portfolio supported the overall vision. The ESR was the solution. It gave leadership everything needed to understand how portfolios were supporting strategy, the current state of each, and what actions or interventions were necessary at the Enterprise level.
Two lessons from that first implementation:
Ask “What do we NEED to know?” not “What do we WANT to know?” We initially included a lot of market data we thought would be useful for strategic decisions. For that organization, the market cycles were very long and unlikely to change (multi-year government awards and programs). The market data created noise, not insight. The question that cleared it up was shifting from want to need.
Include all the portfolio leads, not just the ones you think are relevant. We started by including only a subset of portfolio leads we thought were relevant to specific topics. But from an enterprise execution perspective, foundational services were so interconnected across portfolios that we were unintentionally impacting portfolios we hadn’t thought to include. We eventually brought all portfolio leads into every Enterprise Portfolio Sync.
The Compounding Benefits
Enhanced alignment and coordination. By providing a common backdrop of data-driven insights, the ESR gives all portfolio leaders a comprehensive view of the organization’s strategic landscape. Portfolios naturally start driving toward common outcomes and a shared understanding of priorities.
Real-time decision-making. The ESR empowers leaders with the most current information about projects, products, programs, and portfolios. The data must be kept as close to real-time as possible. Organizations using ALM and PPM tools can display live data on large screens; others use paper-on-the-wall approaches managed by the VMO or Agile PMO.
Optimized resource allocation. With current data, the Enterprise Portfolio Management team can recognize underperforming initiatives and reallocate resources toward higher-value priorities, or bolster underperforming ones where the strategic outcome warrants it. The ESR also surfaces the inverse: a well-executing program whose end result is no longer impacting enterprise strategy the way expected. That’s equally important information.
A physical ESR adds something that virtual setups can’t fully replicate: a concrete place where people can gather and feel they can see, feel, and influence the entire enterprise. There is real value in bringing together the people who can influence the organization in a space that empowers them to do so with the right information in front of them.
That combination, the right people, the right information, the right time, and the right goal, is what the Enterprise Strategy Room is designed to create.