Participatory Budgeting: democratized financing

Agile has been the buzzword in the tech industry for a while now, and that's why businesses across the world have been trying to scale it up and across organizations. But while putting together a couple of Scrum teams might be relatively quick and easy, transforming companies with tens of thousands of employees can prove daunting.

That's where the Scaled Agile Framework comes in, bringing together multiple agile teams to work towards a common goal. 

However, anyone who's ever laid eyes on SAFe's 'big picture' will tell you it's complicated - understandably so, since this is a framework designed with large organizations in mind. With its numerous layers, its portfolios, agile release trains and values streams, SAFe might take a bit of patience and knowledge to digest.

But what about budgeting in this framework?

Enter participatory budgeting.

This concept puts the power in the hands of the teams themselves, allowing them to have a say in how the budget is allocated. As opposed to top-down decision-making, in this scenario it's all about collaboration and transparency.

Participatory Budgeting (PB) works like this:

The enterprise gives a portion of its total budget to each Portfolio. From here, the Lean Portfolio Management function further distributes this Portfolio Budget to Value Streams which, in turn, will use the Value Stream budget to fund the resources needed to accomplish the Portfolio Vision and Roadmap.

The tricky bit is how to allocate this money in such a way that you ensure the right mix of investments, for the right type of initiatives or Epics, while also putting in place sound guardrails.

The answer to that conundrum is democratized financing: get together some relevant stakeholders (business owners, Epic owners, Solution architects, Product management), give them the right information (like business context and priorities, costs for 'run the business' solutions and 'grow the business' initiatives), then have the Epic owners present and argument their proposed Solution Initiatives.

Once all this is said and done, you will need to run the Forum, involving said relevant stakeholders.

First, you split all your participants into balanced groups (in both numbers of people per group, and type of roles). 

At this stage, everyone receives the same amount of fictitious money, which they will use as voting currency.

Every group will look at the same list of Epics and costs and will decide which ones should be funded. This decision is based on the amount of fictitious money allocated by each participant to each Epic. In other words, the Epic that gets most money within a group, wins.

However, Epics' costs exceed the budget each participant has (no one can give all their budget to an Epic, in order to fully fund it and make it a 'winner'). Which means that, in order to fund an Epic,

individuals in each group must pool their budgets.

After negotiations among group members, and once the time is up, results (Epics funded) coming out of each group will be analyzed and ranked, yielding the democratically elected Epics which will receive funding out of the Portfolio Budget.

Here you can find more detailed instructions on how to run a Participatory Budgeting event.

So why is participatory budgeting important in the Scaled Agile Framework? 

Well, for starters, it fosters a sense of ownership amongst the teams. When they have a say in how the budget is spent, they are more invested in the outcome.

It also encourages creativity and innovation, as teams are able to pitch their ideas and see them come to life.

But it's not all rainbows and butterflies. Participatory budgeting in SAFe can be challenging. It requires open communication, trust, and a willingness to compromise. It also means letting go of some control - something that can be hard for some organizations to do.

But the benefits far outweigh the challenges. By embracing participatory budgeting, organizations are able to tap into the collective intelligence of their teams, leading to better decision-making and ultimately, better results.

Participatory Budgeting (PB) outside of SAFe

The PB existed long before SAFe, as a democratic process in which community members decide how to spend part of a public budget.

The first city to use a PB was the municipality of Porto Alegre, Brazil in 1989. Since then, a lot of major cities have adopted this method of funding their community projects, giving a say to their members into how money is spent.

Nowadays, you can find the PB being employed by large metropoles like New York, Paris, Rome, Reykjavik, Madrid and others.

Here you can find a list of Participatory Budgeting events held by major cities around the world.