beyond agile
Post on 07-Nov-2014
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Beyond Agile!
Maarit Laanti!
Outline!
• Scaling Agile!• Beyond Budgeting!• Why this is important – where does
agile and lean fit into?!• Accepting uncertainty!• More flexible F&C!
What is your idea of agile methods?!
• What does ”agile in large scale” mean?!
1. Suitable for SW teams?
2. Suitable for SW projects?
3. Suitable for R&D?
4. Ideas generally applicable?
• What does ”agile in large scale” mean?!
How we should see Lean Thinking?!
• Question: Is SW Kanban same as Kanban in manufacturing or is it something new?!
• My claim is we are creating something new based on the old and proven ideas!
Problem!
If R&D is changing, should the rest of the organization change?!
• Is there friction between R&D and the rest of the organizations?!• What new could other organizations learn?!• Is agile teaches how to approach the UNCERTAINTY - Isn’t the
changing world present also elsewhere than in software development?!
CEO
MarkeHng Finance HR
R&D
Changing mind sets!‘Command and Control’
Model
• Organizations are obedient machines • Organizations are a collection of
replaceable parts (parts determine performance of the whole)
• Organizations comprise of ‘cause and effect’ relationships that are predictable
• Organizations need central planning, coordination & control
• Change is reactive and project driven
‘Beyond Budgeting’ or ‘Empower & Adapt’ Model Senior
executives set purpose, direction &
goals (“what” & “where”)
Self-managed teams figure out
“how” and continuously innovate and
respond
Shared services units support self-managed teams
Each team exists in a supplier-customer
relationship
• Organizations are adaptive systems • Organizations are holistic systems (whole
system determines performance) • Organizations are webs of relationships that
are unpredictable • Organizations are self-organizing and self-
regulating • Change is integrative and adaptive
• Most of the companies spend their eforts on Neutralizing Innovation, doing increments of the existing products or a catchup !
• Only few companies are able to nurture the radical innovations (differentiating innovation)!
Why this important?!
Escape Velocity?
8
• The pull of ”home markets”, i.e. Western European and Japanese markets has gone, and the growth comes from developing countries
• Globalization is a whole new ball-game!• The biggest mistake companies make in their annual planning is to set the next year
targets into Q4 figures and mulHply by four • This model is OK for growing and mature, established markets but
does not work at times of secular market change!• Secular market change means in this context ”not to be repeated“ and
occurs when market expands to new categories or new class of customers!
• It means a massive growth opportunity which you are about to miss if you are too internally focused!
• Escape velocity is required to engineer a genuine change in course • POINT is to replace the annual planning with vision, strategy and
execution that gives company the escape velocity!
• When talking to execuHves, Moore realized that they were trapped to short-‐term performance-‐based compensaHon schemes
• OverweighHng legacy commitments • Low success rate in new-‐product launches • Widespread failure to sustain any kind of next-‐generaHon
business at scale
Typical Portfolio Pattern!
• Growth of 15 – 30% (or more) is high and single-digit growth is low, the 10-15 % range being kind of a ”tweeter” zone!
• A category is material to your business if it should generate 5-10 percent of either your total revenue or your total profit or should be expected shortly!
High-‐Growth Categories Low-‐Growth Categories
Material to Current Financials
Not Material
1 4
2 3
Growth
Emerging Declining
Mature
Material and non-material business!
• The more material the business is the ore power it has in resource-allocation negotiations during the annual budget process!
• There is no real competition between Mature and Emerging businesses: Emerging initiatives are doomed from birth. Mature business is driven by fact-based management teams and needy market requirements in Emerging business get little understanding – a primary symptom of enterprises experiencing Christensen’s innovator’s dilemma!
How to get the company to fly on?!
• Hierarchy of powers (that may drag you down to Earth)!1. Category power!
‒ Look for categories (e.g. Smartphones category) that are of high demands are more powerful than their peers; grow faster and enjoy better profits!
2. Company power!‒ Status and prospects of a company relative to its competitors;
company power can be different for different categories of products!3. Market power!
• Company power within a single market segment!4. Offer power!
• Demand of given product or device compared to reference competitors!
5. Execution power!‒ Ability to outperform your competitors under conditions that favor no
vendor in particular!
More respect for special conditions that distruptive innovatio n needs!
• Create a virtual organization with single manager in charge that reflects the typical startup-conditions:!
• Higher risks and rewards!• It’s not 8 to 4 work!• Quick decision models, quick support!• ”Organization within organization”!
• Respect the people that take the challenge!
Four Modes of Execution!
Execution mode!
Invention! Deployment! Optimization! Transitions!
Type of Leader! Visionary Inventor!
Pragmatic deployer!
Conservative optimizer!
Pragmatic orchestrator!
Core competence!
Creativity! Competitiveness! Control! Collaboration!
Core Attribute! Spontaneous! Tough-minded! Prepared! Empathetic!
Decision style! Intuition! Experimentation! Deliberation! Consensus!
Functions Most in Alignment!
R&D, Creative services!
Sales, Engineering!
Finance, Operations!
HR, marketing, Customer Support!
Agile? Lean?
Beyond Budgeting Ideas!
• Separate concerns: !• Targets & rewards!• Planning & forecasting!• Resource allocations!• Measures and controls!
• The problem is that the budget tries to perform too many tasks that conflict with each other. It acts as a basis for setting targets and rewards, business planning and forecasting, cost and capital allocation, and performance measurement and control. And the more that targets are treated as fixed contracts the greater is the likelihood of dysfunctional behaviour. !
Common Ground in Beyond Budgeting & Agile: Accepting Uncertainty!
• A good plan respects uncertainty !– x-level rolling planning!
• You do not want to place your bets too early!• Learning is important!
• 1997: 2 wins to Deep Blue, one to Garry Kasparov and 3 draws
Can agile planning be adapted to finance and control?!
• Most of the R&D costs come from headcounts!– Where do we need matrix
organization cost center structure?!• Backlogs already contain the information
who did & what!• Respect Beyond Budgeting principles!
– Separation of tracking and forecasting !
BIG CHANGE:From organization-based budgeting to project-based F&C!!
Targets per project RBP per organizaHon
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
New Capability:More Flexible F&C!
• Incremental investments: balance resources as feasible (shorter feedback loops, based on progress)!– Even allow self-organization (allow people dynamically change
between teams), and just monitor where the effort has been spent!
• Delayed decisions: collect feedback from field, then make final investment decisions i.e. adjust the Epic and Feature priorities accordingly!
• Option: Balancing investments asymmetrically towards disruptive innovations!
Thanks!!
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