business agility and innofficiency agile 2012 final
TRANSCRIPT
Innofficiency
Designing Your Business “System” for
Innovation AND Efficiency
Or, how to rationalize that “agile” is a key to success
Good News – intelligent reuse/mashup over invention
“Bad” news © 1995-2012 Mike Russell unless noted otherwise
Leadership
Design Thinking
Lean/agile renaissance
Key leverage/reuse areas
© 1995-2012 Mike Russell unless noted otherwise
A recurring project estimate story
Rapid Development, McConnell
“just give
us a
number”
“that big??!? You must be padding …”
© 1995-2012 Mike Russell unless noted otherwise
They didn’t understand?
Why don’t they “get” it ???
The search:
A key mental pivot point
© 1995-2012 Mike Russell unless noted otherwise
They didn’t understand
Organization designed
to reject (possibilities)
The search:
A key mental pivot point
© 1995-2012 Mike Russell unless noted otherwise
Product (and initial company) life cycle
Product
Development Introduction Growth Maturity Decline
Time
Sales
Profits
$
© 1995-2012 Mike Russell unless noted otherwise
Increase profits longer that
on “right” side of curve
How to extend organizational life …
Revenue –
product 1
P/L –
product 1
P/L –
product 2
Revenue –
product 2 (or v2)
© 1995-2012 Mike Russell unless noted otherwise
Two different worlds …
Projects
• Create own charter,
organization, and
goals
• Catalyst for change
• Unique product or
service
• Heterogeneous teams
• Start and end date
“Operations”
• Semi-permanent
charter, organization,
and goals
• Maintains status quo
• Uniform product or
service
• Homogeneous teams
• Ongoing
Copyright © 1999 Project Management Institute, Inc. All Rights Reserved. © 1995-2012 Mike Russell unless noted otherwise
The (big) problem …
Expectations, thinking,
& efficiency/optimizing
capabilities honed here
Don’t
work
here!
X © 1995-2012 Mike Russell unless noted otherwise
The resulting paradox …
More successful
staying at “top”
Less successful
starting new cycle ≈
© 1995-2012 Mike Russell unless noted otherwise
Some reasons why efficiency emphasized …
© 1995-2012 Mike Russell unless noted otherwise
Inability to innovate – rearview mirror trap
“But these forms of analytical logic
[inductive, deductive] draw on past
experience to predict the future.
It is no accident that the future predicted
through analytical methods closely
resembles the past, differing only in
degree but not in kind.”
Source: Martin, The Design of Business, p. 45 © 1995-2012 Mike Russell unless noted otherwise
Opposing views, approaches, goals …
& need both!
(all) VARIATION
(all) CHANGE
EFFICIENCY/OPTIMIZATION
RELIABILITY
+ VARIATION
+ CHANGE
EFFECTIVENESS
INNOVATION
© 1995-2012 Mike Russell unless noted otherwise
Should be (design using both)
Could be (intuition/empirical)
Will be (deterministic)
© 1995-2012 Mike Russell unless noted otherwise
The “knowledge funnel” (product funnel)
Dkfjozuel;zvjmvoxeiruza;dvmlxdu;rosmfzl;dj.xmvcoseurslmvxlzvms.
MYSTERY INTUITION HEURISTIC ALGORITHM
COMPLEX SIMPLE/REDUCED
© 1995-2012 Mike Russell unless noted otherwise Source: Martin, The Design of Business,
Why bother?
Dkfjozuel;zvjmvoxeiruza;dvmlxdu;rosmfzl;dj.xmvcoseurslmvxlzvms.
MYSTERY INTUITION HEURISTIC ALGORITHM
COMPLEX
MASSIVE
EFFICIENCY
GAIN
PAYS FOR
EXPLORATION $
SIMPLE/REDUCED
Well-known company example
Dkfjozuel;zvjmvoxeiruza;dvmlxdu;rosmfzl;dj.xmvcoseurslmvxlzvms.
MYSTERY INTUITION HEURISTIC ALGORITHM
COMPLEX
Drive 10%
unit cost
out
Every segment must have an annual
breakthrough
SIMPLE/REDUCED
What is your typical tasking?
Dkfjozuel;zvjmvoxeiruza;dvmlxdu;rosmfzl;dj.xmvcoseurslmvxlzvms.
MYSTERY INTUITION HEURISTIC ALGORITHM
COMPLEX SIMPLE
“Give me a ballpark
estimate and let me
know how we are
progressing or what
changes we need to
make”
“Here’s the project;
I want to know the
schedule, cost, and
scope that we will
set and achieve”
I think this is the
right thing to do; just
get started and see
if it gets us in the
right direction © 1995-2012 Mike Russell unless noted otherwise
MYSTERY INTUITION HEURISTIC ALGORITHM
COMPLEX SIMPLE
Many organizations try to take left-side
idea/need and want “right side” guarantee of
project outcomes
A common problem
© 1995-2012 Mike Russell unless noted otherwise
Applied to software
MYSTERY INTUITION HEURISTIC ALGORITHM
COMPLEX SIMPLE
Software
“holy grail”
–
algorithm/
process
that
guarantees
success
Increase
probability of
success and
reduce risk…
Then why do we operate as if we
can do this?
If this is the best we can usually do …
© 1995-2012 Mike Russell unless noted otherwise
Design thinking in terms of our earlier diagram
Got to have
enough margin
here
To pay for
investments
here
operations development
© 1995-2012 Mike Russell unless noted otherwise
Opposing views, approaches, goals …
& need both!
(all) VARIATION
(all) CHANGE
EFFICIENCY/OPTIMIZATION
RELIABILITY
+ VARIATION
+ CHANGE
EFFECTIVENESS
INNOVATION
© 1995-2012 Mike Russell unless noted otherwise
© 1995-2012 Mike Russell unless noted otherwise
Use powerful lean/agile
system and design thinking,
development methods, tools, etc
to work on the system
that produces the system(s)
… work on
the product that produces
the product(s)
“knowledge funnel” revisited
Dkfjozuel;zvjmvoxeiruza;dvmlxdu;rosmfzl;dj.xmvcoseurslmvxlzvms.
MYSTERY INTUITION HEURISTIC ALGORITHM
COMPLEX SIMPLE
Focus on
product &
operations
systemization
& efficiency
Iterative, empirical
Customer value *
Collaboration *
“Just enough” *
Flow/WIP *
Transparency *
Inspect & adapt * etc. © 1995-2012 Mike Russell unless noted otherwise
CAN’T WE JUST
SCALE “AGILE”
TO BE “ENTERPRISE AGILE”
INSTEAD OF “AGILITY”?
© 1995-2012 Mike Russell unless noted otherwise
“Enterprise Agile” ?
VARIATION
CHANGE
EFFICIENCY/OPTIMIZATION
RELIABILITY
+ VARIATION
+ CHANGE
EFFECTIVENESS
INNOVATION
© 1995-2012 Mike Russell unless noted otherwise
Dev Ops
X
NOt necessarily – “Depends on the context”
NPD,
major
variant
EPD Operate Manufacture
© 1995-2012 Mike Russell unless noted otherwise
+ VARIATION
+ CHANGE
EFFECTIVENESS
INNOVATION
(all) VARIATION
(all) CHANGE
EFFICIENCY/
OPTIMIZATION
RELIABILITY
Example: mobile apps externally “hosted”
NPD,
major
variant
EPD Manufacture Operate
© 1995-2012 Mike Russell unless noted otherwise
Example: advertising agency (w/o owned channels)
NPD,
major
variant
EPD Manufacture Operate
© 1995-2012 Mike Russell unless noted otherwise
Example: SaaS
NPD,
major
variant
EPD Manufacture Operate
© 1995-2012 Mike Russell unless noted otherwise
Example: embedded (& “physical” products)
NPD,
major
variant
EPD Operate Manufacture
© 1995-2012 Mike Russell unless noted otherwise
Move toward business agility (not “agile”)
Dkfjozuel;zvjmvoxeiruza;dvmlxdu;rosmfzl;dj.xmvcoseurslmvxlzvms.
MYSTERY INTUITION HEURISTIC ALGORITHM
COMPLEX SIMPLE
Iterative, empirical
Customer value *
Collaboration *
“Just enough” *
Flow/WIP
Transparency *
Inspect & adapt © 1995-2012 Mike Russell unless noted otherwise
… (re) marry the two “leans”
Dkfjozuel;zvjmvoxeiruza;dvmlxdu;rosmfzl;dj.xmvcoseurslmvxlzvms.
MYSTERY INTUITION HEURISTIC ALGORITHM
COMPLEX SIMPLE
Lean
production
& related
“agile” (lean)
development &
related
© 1995-2012 Mike Russell unless noted otherwise
Agile action heroes …
• Comprehend the environment
– Know “their” perceptions
– Know the (organizational) models at work
• Apply lean/agile principles
– Work on system that produces the systems
– Translate “up” until find common ground
– Etc.
© 1995-2012 Mike Russell unless noted otherwise
Both/and – don’t allow “us versus them”
VARIATION
CHANGE
EFFICIENCY/OPTIMIZATION
RELIABILITY
+ VARIATION
+ CHANGE
EFFECTIVENESS
INNOVATION
© 1995-2012 Mike Russell unless noted otherwise
Dev Ops
Agile action heroes …
• Comprehend the environment
• Apply lean/agile principles to “system”
• Take communication responsibility (“we”)
and fight for feedback
© 1995-2012 Mike Russell unless noted otherwise
Conway’s Law
Any organization that designs a system
(defined more broadly here than just information systems)
will inevitably produce a design
whose structure
is a copy
of the organization's
communication structure
Melvin E. Conway, How Do Committees Invent? ,1968; http://www.melconway.com/research/committees.html
Conway … less familiar
Because the design that occurs first
is almost never the best possible,
the prevailing system concept
may need to change.
Therefore, flexibility of organization
is important to effective design.
Melvin E. Conway, How Do Committees Invent? ,1968; http://www.melconway.com/research/committees.html
Thinking questions:
Why do we view “reorgs” as
negative, to be postponed until
absolutely needed, and
the bane of humanity?
Who should be involved in design?
How do we apply continuous
improvement to design of business? © 1995-2012 Mike Russell unless noted otherwise
“The quickest way to increase dignity,
meaning, and community in a workplace
is to involve people in redesigning
their work.
That is also the shortest route – in the
long run – to lower cost, higher quality,
and more satisfied customers”
Marvin Weisbord
Maybe we don’t like “reorgs” because
someone else did the design …
Team/individual level “inspect and adapt” to the rescue!
Agile action heroes …
• Comprehend the environment
• Apply lean/agile principles to “system”
• Take communication responsibility (“we”)
and fight for feedback
• Continuously improve the “org chart” & work
© 1995-2012 Mike Russell unless noted otherwise
“I came to see, in my time at IBM,
that culture isn’t just one aspect
of the game –
it IS the game”
Lou Gerstner, IBM CEO
Who Says Elephants Can’t Dance
“The cultural changes are
the hardest”
Deitsch/Hughes
GE 2010 Agile Conference
“GE Healthcare – Taking the Agile Plunge”
Scaling Excellence
critical factor: mindset
= shared beliefs
about how to think & act
Bob Sutton
Agile 2012
Manifesto … visually
Collaborate Create
Control Compete
Collaborate Create
Control Compete
Over …
= a dramatic difference and barrier
© 1995-2012 Mike Russell unless noted otherwise
Agile action heroes …
• Comprehend the environment
• Apply lean/agile principles to “system”
• Take communication responsibility (“we”)
and fight for feedback
• Continuously improve the “org chart” & work
• Recognize the central issue of culture and
address directly
© 1995-2012 Mike Russell unless noted otherwise
© 1995-2012 Mike Russell unless noted otherwise
“Mindset is the steering wheel,
incentives are the juice.”
Bob Sutton
Agile 2012
© 1995-2012 Mike Russell unless noted otherwise
If we want “team” behavior
and focus on team results …
why do we plan, evaluate,
and reward predominantly
on an individual basis???
Performance management – a key issue
Each silo
usually has a
project lead(er)
Most projects
involve ≥ 2
“silos” or
specialty areas
Each silo manages
(including performance
management) and
improves from a
vertical/local focus
COMMON PATTERN - SUBOPTIMIZATION
Performance management – a way out
Establish an
overall project
leader
Manage and improve the project (including metrics,
performance management) from horizontal/customer flow
focus, visible to all; specialty (silo) focus is secondary.
Manage work results efficiency first, not people utilization.
CUSTOMER
Establish customer value, including delay costs; easier to hear
“voice of customer” if overall leader and team accountable
Performance management – commitment
© 1995-2012 Mike Russell unless noted otherwise
Horizontal/upward
team(s) goals,
objectives
≥ 51%
Horizontal/upward
team(s) results
(evaluation same for
all team members)
≥ 51%
Performance planning
(if used) Evaluation and rewards
Individual goals,
objectives
≤ 49%
Individual results
≤ 49%
Agile action heroes …
• Comprehend the environment
• Apply lean/agile principles to “system”
• Take communication responsibility (“we”)
and fight for feedback
• Continuously improve the “org chart” & work
• Recognize the central issue of culture and
address directly
• Address performance management
© 1995-2012 Mike Russell unless noted otherwise
“Most of what we call
management consists of
making it difficult for people to
get their jobs done.” Peter Drucker
© 1995-2012 Mike Russell unless noted otherwise
“Many leaders like to believe they keep
things in balance, but in reality most put
much more energy into preserving what
they have than creating that which they
don’t have. …
Thus, most organizational
transformation agendas
are more about improving the present
than they are about creating the future.”
Forward to Blanchard and Waghorn, Mission Possible – Becoming a World-Class Organization While There’s Still Time, 1997, p. ix-x. Emphasis added.
Design from a leader’s perspective –
the organizational leverage areas
STRATEGYCULTURE
25%
PROCESSES
(& Systems)PEOPLE
Focus:
Global/longer-range Specific/shorter-term
© 1995-2012 Mike Russell unless noted otherwise Dr. Michael O’Connor
Deterministic
view
I can predict
outcomes
If change(s)
needed,
I have failed
Avoid
change, risk,
ideas
from others
Two examples of why can’t just “bolt on”
an “innovation program” or goals
and have much chance of succeeding …
the design/thinking of the organization will pull back
to “normal” and defeat the intended changes
Efficiency is
“king”
Maximize
utilization
Remove
“non
revenue”
activities
No time for
ideas or
innovation
“possiblities”
© 1995-2012 Mike Russell unless noted otherwise
Leaders must address all aspects - examples
INNOVATION ORIENTATION EFFICIENCY ORIENTATION
• Project structure - fluid
• System to make
investments for future
products/services where
outcomes can’t be
proved/predicted
• Safe/rewarding to bring
forward & execute non-
provable ideas
• More permanent
• Improve current
product/service efficiencies
• Reward cost-effectiveness
and feedback to innovation
loop
CEO/leader as balancing force,
Personally & organizationally – disciplined “inspect & adapt”
Peop
le
Proc
esse
s Or
g
© 1995-2012 Mike Russell unless noted otherwise
“Many leaders like to believe they keep things in
balance, but in reality most put much more
energy into preserving what they have than
creating that which they don’t have. … Thus,
most organizational transformation agendas
are more about improving the present that
they are about creating the future. ... Trying
to keep everyone [different stakeholder groups]
happy at all times is impossible. It’s a matter of
sustaining a healthy tension between the
different constituencies, taking care to never let
things get skewed too far in any one direction.
Forward to Blanchard and Waghorn, Mission Possible – Becoming a World-Class Organization While There’s Still Time, 1997, p. ix-x. Emphasis added.
Take leadership one step farther …
Needed:
New servant leaders
who manage according
to C.E.O.S.
© 1995-2012 Mike Russell unless noted otherwise
Stakeholders – what’s valued
• Customers: quality of service, product
• Employees: quality of work life
• Owners: quality of financial return
• Significant others: quality of relationship
© 1995-2012 Mike Russell unless noted otherwise Dr. Michael O’Connor
Sustainability – “Fortunate 500”
organizational goals
Customers Employees Owners
Significant
Other
Stakeholders
Fortune
500
“Classic”
(USA Bias)
- - Maximized
value -
“Fortunate
500”
Legendary
service
Fulfilling
work
environment
Enhanced
value
Spirit of
shared
responsibility
Dr. Michael O’Connor
The new job for the CEO (& you!)
• Organizational leader’s main internal responsibility
is people + environment work in … even in agile
• Focus working ON the business primarily and
secondarily IN the business
• Align to C.E.O.S. and be a servant leader
• Use lean/agile principles to elaborate how to
balance innovation & efficiency/stability (& share!)
– (Iteratively) redesign the business accordingly,
and when needed
© 1995-2012 Mike Russell unless noted otherwise
“If we could change ourselves,
the tendencies in the world
would also change.
As a man changes his own nature,
so does the attitude of the world
change towards him. …
We need not wait to see what others do.”
— Mahatma Gandhi
Agile action heroes …
• Comprehend the environment
• Apply lean/agile principles to “system”
• Take communication responsibility (“we”)
and fight for feedback
• Continuously improve the “org chart” & work
• Recognize the central issue of culture and
address directly
• Address performance management
• Model balancing, service to C.E.O.S., and
disciplined inspect & adapt © 1995-2012 Mike Russell unless noted otherwise
Opposing views, approaches, goals …
& need both!
(all) VARIATION
(all) CHANGE
EFFICIENCY/OPTIMIZATION
RELIABILITY
+ VARIATION
+ CHANGE
EFFECTIVENESS
INNOVATION
© 1995-2012 Mike Russell unless noted otherwise
Leadership
Design Thinking
Lean/agile renaissance
Key leverage/reuse areas
© 1995-2012 Mike Russell unless noted otherwise
Agile action heroes …
• Comprehend the environment
• Apply lean/agile principles to “system”
• Take communication responsibility (“we”)
and fight for feedback
• Continuously improve the “org chart”
• Recognize the central issue of culture and
address directly
• Address performance management
• Model balancing, service to C.E.O.S., and
disciplined inspect & adapt
© 1995-2012 Mike Russell unless noted otherwise
“We have seen the enemy,
and he is us” Pogo
We have seen the hero,
and he is us
Mike
© 1995-2012 Mike Russell unless noted otherwise