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Real Options & SAFe: What I Learned from Joe Vallone

Updated: Oct 31, 2023

My friend Joe Vallone has shared insights on real options within the Scaled Agile Framework (SAFe). Let's dissect.

Overview In a rapidly evolving landscape, financial decision-making is paramount. Vallone bridges the divide between finance and SAFe. So, what are these real financial options about?

The Essence of a Real Option Imagine possessing a unique permit within finance, giving you the freedom to act on assets without obligation. In financial parlance, this is an option. Translated to project management decisions, it becomes a "real option." With SAFe, when everything's streamlined and transparent, these options are a potent tool in economic decision-making.

Understanding Real Financial Options Real options help manage unforeseen events in investments. They provide:

  • Flexibility: Adapting to sudden changes.

  • Risk Management: Avoiding premature decisions that lead to regrets.

  • Optimized Returns: Sometimes, patience can yield the best outcomes.

Integrating Real Options within SAFe

On Epics: In SAFe, epics represent significant investments. By viewing them as real options, we can strategically decide their fate.

Lean Portfolio Management (LPM): LPM is pivotal in incorporating real options into SAFe. By vigilantly monitoring the portfolio backlog and responding to market fluctuations and organizational goals, LPM becomes our decision compass.

Deciding at the 'Last Responsible Moment': This is about making decisions when you've gathered sufficient information but without unnecessary delay.

Advantages of Real Options in SAFe

Enhanced Decision-Making: SAFe's structured method combined with the perspective of real options allows teams to re-evaluate decisions.

Minimized Waste: Treating tasks as options instead of rigid obligations makes adaptability straightforward.

Exemplary Portfolio Oversight: With LPM steering the course and real options as our toolkit, portfolio management becomes seamless.

Challenges to Consider Every approach has its trials. With real options, be wary of:

  • Over-analysis: Excessive waiting can miss opportunities.

  • Cultural Resistance: Traditionalists in finance and project management might be skeptical initially.

  • Valuation Complexities: Assigning tangible value to these options, especially with abstract projects, is a challenge.

In Conclusion Melding real financial options with SAFe is akin to unlocking a strategic compass for decision-making in investments. Equipped with real options, the tumultuous journey of product development becomes an expedition we're prepared to undertake and conquer.

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