Business agility and innofficiency agile 2012 final

Mike Russell

Innofficiency

Designing Your Business “System” for

Innovation AND Efficiency

Innofficiency

Designing Your Business “System” for

Innovation AND Efficiency

Or, how to rationalize that “agile” is a key to success

YOU

can be

the hero!

… in an

lean &

agile way



Enterprise

Agile

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


A PREDICAMENT

… AND THE START

OF THE QUEST


A recurring project estimate story

Rapid Development, McConnell

“just give

us a

number”

“that big??!? You must be padding …”


They didn’t understand?

Why don’t they “get” it ???

The search:

A key mental pivot point


They didn’t understand

Organization designed

to reject (possibilities)

The search:

A key mental pivot point


WHAT’S THE PROBLEM?


Sigmoid curve


Sigmoid curve - success


Sigmoid curve – common reality


Product (and initial company) life cycle

Product

Development Introduction Growth Maturity Decline

Time

Sales

Profits

$


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)


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 ≈


Some reasons why efficiency emphasized …


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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


Should be (design using both)

Could be (intuition/empirical)

Will be (deterministic)


Leadership


Design Thinking


The “knowledge funnel” (product funnel)

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MYSTERY INTUITION HEURISTIC ALGORITHM

COMPLEX SIMPLE/REDUCED

© 1995-2012 Mike Russell unless noted otherwise Source: Martin, The Design of Business,

Why bother?



COMPLEX

MASSIVE

EFFICIENCY

GAIN

PAYS FOR

EXPLORATION $

SIMPLE/REDUCED

Well-known company example



COMPLEX

Drive 10%

unit cost

out

Every segment must have an annual

breakthrough

SIMPLE/REDUCED

What is your typical tasking?



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


COMPLEX SIMPLE

Many organizations try to take left-side

idea/need and want “right side” guarantee of

project outcomes

A common problem


Applied to software


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 …


Design thinking in terms of our earlier diagram

Got to have

enough margin

here

To pay for

investments

here

operations development



& need both!

(all) VARIATION

(all) CHANGE


RELIABILITY

+ VARIATION

+ CHANGE

EFFECTIVENESS

INNOVATION


WHAT’S THE SOLUTION?



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)

Leadership

Design Thinking



“knowledge funnel” revisited



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”?



NOt necessarily

“Enterprise Agile” ?

VARIATION

CHANGE


RELIABILITY

+ VARIATION

+ CHANGE

EFFECTIVENESS

INNOVATION


Dev Ops

X

NOt necessarily – “Depends on the context”

NPD,

major

variant

EPD Operate Manufacture


+ VARIATION

+ CHANGE

EFFECTIVENESS

INNOVATION

(all) VARIATION

(all) CHANGE

EFFICIENCY/

OPTIMIZATION

RELIABILITY

Example: mobile apps externally “hosted”

NPD,

major

variant

EPD Manufacture Operate


Example: advertising agency (w/o owned channels)

NPD,

major

variant



Example: SaaS

NPD,

major

variant



Example: embedded (& “physical” products)

NPD,

major

variant

EPD Operate Manufacture


Move toward business agility (not “agile”)



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”



COMPLEX SIMPLE

Lean

production

& related

“agile” (lean)

development &

related


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.


COMMON ISSUES:

PERCEPTIONS


Perception Gap – outside “development”

spend


To make it worse …

Spencer Stuart, 2004

Both/and – don’t allow “us versus them”

VARIATION

CHANGE


RELIABILITY

+ VARIATION

+ CHANGE

EFFECTIVENESS

INNOVATION


Dev Ops



• Apply lean/agile principles to “system”

• Take communication responsibility (“we”)

and fight for feedback


COMMON ISSUES:

“ORG CHART”


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!






• Continuously improve the “org chart” & work


COMMON ISSUES:

“CULTURE”


“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

Should they have the same culture?


Manifesto … visually

Collaborate Create

Control Compete

Collaborate Create

Control Compete

Over …

= a dramatic difference and barrier








• Recognize the central issue of culture and

address directly


COMMON ISSUES:

“PERFORMANCE

MANAGEMENT”



“Mindset is the steering wheel,

incentives are the juice.”

Bob Sutton

Agile 2012


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


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%








address directly

• Address performance management


Design Thinking


Leadership


“Most of what we call

management consists of

making it difficult for people to

get their jobs done.” Peter Drucker


“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”


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


“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.


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


“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

The new job for the CEO (& you!)

Be an example!









address directly


• Model balancing, service to C.E.O.S., and

disciplined inspect & adapt © 1995-2012 Mike Russell unless noted otherwise

Recap and charge

“Agility”



& need both!

(all) VARIATION

(all) CHANGE


RELIABILITY

+ VARIATION

+ CHANGE

EFFECTIVENESS

INNOVATION


Leadership

Design Thinking


Key leverage/reuse areas







• Continuously improve the “org chart”


address directly


• Model balancing, service to C.E.O.S., and

disciplined inspect & adapt


“We have seen the enemy,

and he is us” Pogo

We have seen the hero,

and he is us

Mike


Thank you!

[email protected]

YOU

can be

the hero!


Business agility and innofficiency agile 2012 final

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Transcript of Business agility and innofficiency agile 2012 final