the age of agile - scrum day europe...first law of agile: the law of the customer 1. firms make more...
TRANSCRIPT
1990s
• Noble mission• Brightest people• Unlimited resources
but• Difficult to get things done
2000s
2008
2008
Agile teams in software development
They had solved a fundamental management problem:
how to combine continuous innovation
with disciplined execution.
This will be huge!
Agile ideas have a long history
• Genghis Khan: units of 10 (1200’s)
• Helmut von Moltke (1860s)
• Lockheed Martin skunkworks (1940s)
• Peter Drucker (1954 onward)
• Taiichi Ohno (Toyota 1950’s)
Why did Agile take off in software?
Software development was the first to encounter:
• The shift in power in the marketplace from seller to buyer
• Unimaginable complexity • The accelerating pace of change
They had to find a solution
Billions were being
wasted!!
2010
This will change the
world!
• Examples mainly in software
• Mainly software businesses
2010
Software development
2010
Software development General management
2010
Software development General management
You want us to learn about
management from software
developers?
2011
“Why software is eating the world”
“Software companies are poised to take
over large swathes of the economy.”
—Marc AndreessenWall Street Journal
August 20, 2011
2014
General managers still in denial
“Agile is just for small teams in software development, not for big, serious firms.”
—speakers at the Drucker Forum
What I heard at the Drucker Forum 2014
• “Agile is only for software”
• “Agile doesn’t scale”
• “Agile can’t handle complexity”
• “Agile isn’t reliable”
• “Agile doesn’t last”
:
Members in 2017
http://www.sdlearningconsortium.org/
2015
Findings of the Learning Consortium 2015:
• “Agile is only for software”
• “Agile doesn’t scale”
• “Agile can’t handle complexity”
• “Agile isn’t reliable”
• “Agile doesn’t endure”
Agile is spreading to everything
Agile scales without sclerosis
Agile handles complexity
Agile can be fail-safe
Some examples: 10-15 years
“The biggest, fastest growing firms on the planet are Agile
• Apple• Amazon • Facebook • Google• Microsoft
2016
• instant• frictionless• intimate • incremental• risk-free• value at scale
Why are they the biggest, fastest growing firms?
20th Century management can’t do this!!
Agile has put a lot of emphasis on “how”
• Instant• Frictionless• Intimate• Low-risk• Incremental• Value at scale
Why you do itHow you do it
Surveys by Deloitte and McKinsey
Managers giving high priority to agility ….. > 90%
Managers whose firms are highly agile ….. < 10%
2017
2018: The “Vatican of management”
“Agile organizations are 1.5 times more likely to report
higher financial performance compared to
their competitors”
McKinsey & Company2018
Agile is now spreading to all parts of the firm
• HR• Budgeting• Finance• Procurement • Legal • Strategy
2018
Agile is now spreading to almost every sector
• manufacturing• automobiles• airplanes • health• retail• financial services• public sector
2018
“Agile is eating the world!
2018
https://www.forbes.com/sites/stevedenning/2018/01/02/why-agile-is-eating-the-world%E2%80%8B%E2%80%8B/
2018
Why software is eating the world
Digital won’t save you!
Winners and losers use the same technology
It’s how nimbly you deploy digital
Agile
2018
It’s a paradigm shift in
management!
The Microsoft story
Photo Wikipedia CC "HMS Invincible .
Our image of Microsoft before the site visit
Our image of Microsoft after the site visit
Photo by Tertius Pickard/Getty Images for XCAT)
Example of Microsoft
2008Three-year product cycles, including• one year planning • two-years codingTime between idea and execution: 2-5 years
The Microsoft journey
Post-AgileThree-week sprintsTime between idea and execution: 2-5 days
This is not a little shift!
>30,000%improvement
Our image of Microsoft before the site visit
Photo Wikipedia CC "HMS Invincible .
How did this…Our image of Microsoft after the site visit
Photo by Tertius Pickard/Getty Images for XCAT)
… become this?
2004 2015
The Microsoft story
Example of Horizon 1 innovation: Microsoft
• 2008: one team• 2009: several teams• 2010: Visual Studio group• 2011: Developer Division• 2013: reorganization• 2014: firm-wide interest• 2015: firm-wide mandate• 2017: still working on culture shift
The Microsoft journey
Example of Horizon 1 innovation: Etsy
DevOps approach• Tiny changes executed by individuals• No handoffs between development and execution• Improved staff morale• Rate of idea implementation: >30 innovations per day
A-commerce broker for handmade or vintage items
From change cycles in years…. to days … to hours
The case of Discovery Weekly at Spotify
World-class customer experience
2015: 60 million users → 2017: 140 million users
Agile management• Team of 4• Customer focus• Firm support
Example of a Strategic Agility: Spotify
What is Agile?
What is Agile?
Agile is mindset
What is the Agile mindset?
• The Law of the Customer
• The Law of the Small Team
• The Law of the Network
The Agile mindset is governed by three laws
First Law Of Agile: The Law Of The Customer1. Firms make more money by not focusing on making money 2. Traditional HR and budgeting must be abandoned3. Better products often make no money4. Non-customers are number one
Second Law Of Agile: The Law Of The Small Team5. Forget economies of scale: your market is one person6. Don’t scale up: descale complexity down7. Managers can’t tell people what to do.8. Talent drives strategy, not vice versa.
The Third Law Of Agile: The Law Of The Network9. Control is enhanced by letting go of control. 10. Lead like a gardener, not a commander
Ten Agile axioms that make managers anxious
https://www.forbes.com/sites/stevedenning/2018/06/17/ten-agile-axioms-that-make-managers-anxious/
WARNING!What I am about to tell you may seem to your managers:
• At odds with the way most big firm are run ...
• Contrary to what is taught in business schools …
• Disturbing, because it challenges deep beliefs within the within
large corporations…
If necessary, tell them take a few deep breaths!
The backward bicycle
What is Agile?
Agile is mindset
Agile is mindset
• Agile organizations embrace a common mindset
not a technology
not a process
not a methodology
not a system
not an organizational structure
• They demonstrate strong inspirational leadership
• Big old firms have been able to change.
This isn’t something you can write down and put in an operational manual
Agile is mindset
This is a different way of
understanding and acting in the world
Agile is mindset
With an Agile mindset, benefits flowed,
no matter what the processes.
Without an Agile mindset, no benefits flowed.
What we saw in the Learning Consortium
• Goal of everyone is to delight the customer
• Descale complexity for small autonomous teams
• The organization functions as a network
The mindset is governed by three “laws”:
The mindset forms a coherent, integrated system
The three laws of Agile
• Instant• Frictionless• Intimate• Incremental
• Risk-free• Value at scale
1. The Law of the Customer
The three laws of Agile
21st Century: Power in the marketplace shifted to the customer
1. The Law of the Customer
There is only one valid purpose of a firm: to create
a customer
Peter Drucker1954, 1973, 1985
The three laws of Agile
50
Earth Sun
Earth
The Copernican Revolution in astronomy
Sun
1. The Law of the CustomerThe three laws of Agile
51
Earth Sun
Earth
The Copernican Revolution in astronomy
Sun
1. The Law of the CustomerThe three laws of Agile
If you change the way you look at things, the things you look at change.
- Dr. Wayne Dyer
52
Firm Customer
Firm
The Copernican Revolution in management
Customer
1. The Law of the Customer
The three laws of Agile
This is a different way of understanding how the world works
Degree of commitment to customer value
“We must delight our customers!”
We will delight our customers, to the extent possible within our existing systems
and processes.”
20th Century management
Hypothesis
More than 30% of work done in most big firms is adding
no value to any customer!
Consistency of organizational goals is key
Our top priority is to add value to our
customers!
To customers
Consistency of organizational goals is key
Our top priority is to add value to our
customers!
Our top priority is to increase our profits
for shareholders
To customers To employees/Wall Street
Consistency of organizational goals is key
Our top priority is to add value to our
customers!
Our top priority is to increase our profits for
shareholders!
To customers To employees/Wall Street
2. The Law of the Small Team
The Agile mindset
This is about
• Descaling complex problems into small pieces
• Having work done by cross-functional self-organizing teams
• Working in small cycles, getting work completely done
• Getting direct feedback from customers
• Daily standups, and retrospectives
2. The Law of the Small Team
The three laws of Agile
2. The Law of the Small Team
The three laws of Agile
Managers still exist, but their role changes
• From controlling to enabling • Helping resolve priorities• Removing impediments• Ensuring teams resolve dependencies on other teams
The manager can’t tell the staff what to do!
2. The Law of the Small Team
The three laws of Agile
There is no single Agile model:
• The best organizations learn from others
• Grow their own organic version of Agile
• Their version keeps evolving
Not even Spotify implements “the Spotify model”!
2. The Law of the Small Team
The three laws of Agile
Agile is a journey: you never arrive!
2001-2010: how to manage one or several Agile teams
2010-2015: how to manage large numbers of Agile teams
2016-today: rethinking Agile strategy, HR and budgeting
3. The Law of the Network
The Agile mindset
3. The Law of the NetworkThe three laws of Agile
• The organization functions like a fluid network • Communications flow up, down, sideways• Ideas can come from anywhere
3. The Law of the Network
The three laws of Agile
• The organization functions like a fluid network
This is a huge culture shift that can take years
Command & control
3. The Law of the Network
The three laws of Agile
2. The Law of the Small Team
The three laws of Agile
In a complex, rapidly changing marketplace, what managers lose is the illusion of control
3. The Law of the NetworkThe three laws of Agile
Getting collaboration across units
1 Common physical space 2. Daily briefing session 3. Decisions taken at lowest level4. Exchange of staff between teams5. From commander to gardener
Gen. Stan McChrystal, Team of Teams
U.S. Army
3. The Law of the Network
From fierce commander… … to gardener
Strategic Agility
The conventional wisdom
Operational Agility: making existing
products and services better,
faster, cheaper for existing customers.
The conventional wisdom
$$$
The bad news
$$$
An unstoppable revolution is now under way in our society…
With greater competition, and with the shift in power from seller to buyer, customers can often insist on improvements at no cost, or even lower cost
The dark secret of Agile today
Operational Agility may not make much money!
Why is Strategic Agility important?
An unstoppable revolution is now under way in our society…
The main financial gains come from Strategic Agility: market-creating innovation that brings in new customers
The dark secret of Agile today
Operational Agility: making better products may not make much money!
Why is Strategic Agility mportant?
Operational Agility is about making existing products and services better, faster, cheaper for existing customers.
Strategic Agility is about market-creating innovation, that brings in new customers.
Operational Agility Strategic Agility
Thomas Edison, 1879
Making a better candle Making a different way of generating light
From Operational Agility to Strategic Agility (Horizon 3)
Operational Agility Strategic Agility
Henry Ford, 1908
A faster horse A different kind of transportation
From Operational Agility to Strategic Agility (Horizon 3)
Operational Agility Strategic Agility
Mobile phones
Making a better mobile phone Making a multi-function device
From Operational Agility to Strategic Agility
Operational Agility Strategic Agility
Mobile phones
Making a better mobile phone Making a multi-function device
From Operational Agility to Strategic Agility
Remove:- keyboard- buttons
Add:- Large screen- ‘Cool’ Apps
Why does Strategic Agility need special attention?
1. Teams (and firms) tend to focus on existing customers
• Product owners (almost by definition) focus on existing products and existing customers
2. Teams (and firms) hesitate to eliminate features
3. Teams (and firms) miss what the competition is doing
4. Cannibalizing profitable products is hard: e.g. iPhone vs iPod
5. Strategic Agility may require substantial investment
Operational Agile rarely leads to market-creating innovations
How to implement Strategic Agility?
Non-customersCustomers
Firm
Operational Agility faces competitors
Firm
Firm
Firm
Firm
Customer
Firm
In existing markets, the firm is not alone!
Firm
Firm
Bloody “Red Oceans” of fierce competition
Why is Strategic Agility important?
From Operational to Strategic Agility
Non-customersCustomers
Firm
There are many more non-customers than customers
Blue Oceans of market–creating innovations
There is also less competition in the “blue oceans” of new businesses?
From Operational to Strategic Agility
Non-customersCustomers
Firm
It’s not either-or: you need both!
20th Century“The customer is number one.”
The Law of the Customer
Questions?
Operational Agility:
“Customers are #1!”
Strategic Agility
“Non-customers are #1!”
Questions?
