In this meetup talk, Nadine Broghammer and I share our experience coaching a portfolio team on participatory budgeting based on the SAFe framework. We explain the problem with traditional top-down budget allocation and show how participatory budgeting creates transparency, fosters entrepreneurial thinking, and leads to better investment decisions.
The Problem with Traditional Budgeting#
In many organizations, the budget process works the same way every year. Teams submit their project proposals, and a committee without deep domain knowledge reviews them. The budget is never enough to fund everything, so the committee divides the total by some arbitrary number and distributes it with a watering can approach. Some teams get more because someone on the committee knows them personally. Nobody is satisfied with the result.
This was exactly the situation we faced. A “fruit committee” (we anonymized all examples using fruits as stand-ins for real offerings) was responsible for allocating budgets to teams producing “apples,” “bananas,” “lemons,” and other products. The committee lacked the knowledge to evaluate proposals like “molecular apples” or “blue bananas” and simply spread the budget evenly. The result was widespread frustration.
The SAFe Portfolio Level#
To solve this, we turned to the portfolio level of the Scaled Agile Framework (SAFe). A portfolio manages one or more value streams that deliver solutions end to end. Instead of organizing around projects, we organized around value streams, each responsible for delivering a specific type of value to the market.
The key shift is moving from project funding to value stream funding. Instead of approving individual projects, the portfolio allocates budget to value streams. Each value stream then decides autonomously how to invest its budget according to the strategic objectives and OKRs of the organization.
Epics Instead of Projects#
A core element of this approach is replacing projects with epics. An epic is a significant initiative, but unlike a project with fixed deliverables and a fixed budget, an epic is built around a hypothesis statement:
- For whom are we doing this?
- What problem are we solving?
- What business outcome do we want to achieve?
- What leading indicators will tell us whether our hypothesis is validated?
This means we can validate an epic very quickly using leading indicators rather than waiting for lagging indicators that arrive too late. The epic hypothesis statement ensures we know we are delivering the right thing and that customers actually need it.
Preparing for the Event#
The participatory budgeting process has three main steps: preparation, assembling the right participants, and conducting the event itself.
For preparation, we ran an introduction session where we explained the concept and the theory to all participants. The value stream leads then had approximately two weeks to prepare their epics using the SAFe epic template. We split the process into run-the-business (ongoing activities that cannot be interrupted) and grow-the-business (new initiatives).
As coaches, we also prepared extensively. We adapted the SAFe Excel template to fit our specific case and ran a simulation beforehand to make sure everything would work smoothly during the actual event.
The Participatory Budgeting Event#
The event itself took about three hours. We split the participants into two groups, each with a coach (Nadine and I each moderated one table). The process worked in two rounds:
Round 1 (Run-the-Business): Each value stream pitched their ongoing activities to the group. Both groups then independently discussed and allocated the full portfolio budget across all value streams. Importantly, each group allocated budget to all value streams, including those not represented at their table.
Round 2 (Grow-the-Business): The remaining budget after run-the-business was available for new initiatives. Value stream leads pitched their epics. The group discussions were intense, time was scarce, and the decisions were tough. Both groups proposed their budget allocations, and in the final plenary, everyone worked towards a consensus.
We had a Plan B ready in case no agreement could be reached: the fruit committee would make the final decision. Fortunately, we never needed it. The teams reached consensus, and we could communicate the final budget distribution the very next day.
What We Learned#
The feedback from participants highlighted several key themes:
- Transparency: The biggest benefit. Everyone now understood why certain value streams received more or less budget. The old process was opaque; the new process was fully visible.
- Cross-value-stream learning: The discussions were extremely valuable. Value stream leads learned about each other’s plans, the company strategy, and which epics aligned with the strategic objectives.
- Efficient process: Despite the tight schedule, participants found the process fast and effective. For the next round, we would allocate a bit more time, since this first attempt was itself a hypothesis we wanted to validate quickly.
- Entrepreneurial thinking: The most remarkable outcome. Participants voluntarily reduced their own budgets, saying things like “I do not need that much money. It is better to invest in apples because that benefits the whole portfolio.” This cross-silo, company-first thinking was exactly what we hoped to achieve.
- Bottom-up decision making: Participants appreciated that the decision was no longer top-down. They were enabled to make investment decisions themselves, which led to much stronger engagement and ownership.
The overall participant rating was 3.5 out of 5, with no score below 3. For a first attempt, this was a strong result.
Practical Tips#
- Do not underestimate preparation. The epic templates need time, and the coaching of individual value streams is essential.
- Run a simulation first. We tested the entire process with sample numbers before the real event. This gave us confidence that everything would work.
- Moderation matters. You need strong facilitation skills to keep discussions focused and help groups reach decisions within tight timescales.
- Work in pairs. Do not run a participatory budgeting event alone. Having two coaches, one per discussion table, made a significant difference.
- Consider splitting the event. Participants suggested holding the epic pitches in a separate alignment meeting before the budgeting event, giving people more time to absorb the information.
Key Takeaways#
- Participatory budgeting replaces top-down allocation. Instead of a committee distributing budgets without domain knowledge, the people closest to the work make the investment decisions together.
- Value stream funding over project funding. Organizing around value streams and using epic hypotheses ensures money flows to validated ideas rather than fixed project plans.
- Transparency creates trust. When everyone sees why budgets are allocated the way they are, frustration decreases and buy-in increases.
- Entrepreneurial thinking emerges naturally. When people have budget responsibility, they think beyond their silo and invest where the portfolio benefits most.
- Start with a hypothesis. Our first participatory budgeting event was itself a hypothesis. We kept the time investment small, validated the approach, and will invest more in the next iteration.
- Preparation and facilitation are critical. Good templates, a simulation run, strong moderation, and working in pairs are essential for a successful event.