Scaled Agile Framework (SAFe) Lean Portfolio Management Practice Exam

What is a practical example of leading indicators in Lean Portfolio Management (LPM)?

1. Employee Satisfaction Surveys

2. Innovation Accounting

3. Market Share Analysis

4. Annual Revenue Reports

The correct answer is: Innovation Accounting

In Lean Portfolio Management, leading indicators are metrics that provide insight into future performance and the potential success of portfolio initiatives. They are proactive measures that can help organizations identify trends and make necessary adjustments before the final outcomes are realized. Innovation Accounting serves as a practical example of leading indicators because it focuses on measuring progress in areas that are directly tied to innovation and value creation within the portfolio. It involves tracking metrics related to the creation and evaluation of new products or services, such as the rate of new idea submissions, prototype developments, and customer feedback on new offerings. By analyzing these early-stage indicators, organizations can gauge the potential impact of their investment in innovation and make informed decisions about resource allocation and strategic direction. In contrast, while employee satisfaction surveys, market share analysis, and annual revenue reports provide valuable insights, they are typically considered lagging indicators. These metrics reflect past performance rather than predicting future outcomes, making them less effective for anticipating developments in a Lean Portfolio Management context. Thus, Innovation Accounting stands out as a proactive approach to measure and drive the value of portfolios in a dynamic business environment.