What is a Lean Value Tree (LVT)?

The Lean Value Tree (LVT) is a tool that helps organizations share and drive their strategy and vision across all levels and teams. It is a lean approach to portfolio management that focuses on value delivery and encourages collaboration. By leveraging visual work properties, the LVT guides decision-making and initiatives that align with the customer value and corporate vision, avoiding wasteful endeavors that waste time and budget.

The LVT enhances Lean Portfolio Management by providing a framework for aligning strategic goals, bets, value streams, and initiatives with customer value and corporate vision. This approach ensures that initiatives are tightly integrated and drive achievement from the bottom up.

The LVT follows a Top-Down framework that starts with the organization's vision and breaks it down into several strategic goals. These goals are then defined into several bets, which serve as the basis for developing value streams and initiatives with specific, targeted outcomes that drive achievement from the bottom up.

Each strategic goal is broken down into a set of strategic bets, representing value hypotheses the organization believes can help achieve the goal. If a bet does not work, it is removed from the tree, ensuring that time and resources are not wasted on something that is not aligned with the corporate vision. 

In summary, the Lean Value Tree is a highly effective tool for portfolio management in business agility and strategic agility. It provides a structured and visual approach that enables companies to align their strategic goals with customer value and corporate vision, manage investments, and encourage collaboration and value delivery. Furthermore, the LVT is well-suited to deal with the complexity and uncertainty that often arise in today's fast-changing markets, as it allows organizations to experiment with different bets and initiatives, gather feedback, and adapt their approach to maximize value and achieve their mission. Ultimately, the LVT supports a culture of continuous improvement and learning, empowering teams to innovate and succeed in today's competitive business landscape.

Why it matters

It makes strategic assumptions visible and helps leaders connect everyday work with the outcomes they want to achieve.

Example

Imagine an organization whose vision includes making its service easier to use. It sets a goal to improve customer retention, identifies a strategic bet that simpler onboarding will help, and connects several small initiatives to that bet. One initiative tests clearer setup guidance; another tests assistance at the point where customers stall. Leaders examine successful first use, later retention, costs, and customer feedback before expanding investment. If onboarding improves but retention does not, they revisit the bet and other explanations. The Lean Value Tree connects daily work to strategic intent while making assumptions and investment choices available for review.

Common misunderstanding

A Lean Value Tree can become a conventional project hierarchy with strategic labels. If bets cannot be challenged and initiatives stay funded regardless of evidence, the tree records commitments without supporting learning or investment choices.

Treat a bet as a hypothesis connecting work to an intended outcome. Identify what would strengthen or weaken it, and revisit the resources committed to it. Stopping one initiative need not mean abandoning the goal; another approach may better serve it. Alignment needs feedback from the work as well as direction from leadership.

Related terms

Strategic Agility · Outcome-Based Planning · Strategic Portfolio Management · OKRs

To put this into practice, explore Connect Strategy to Everyday Decisions on nuAgility's learning platform.