Governance - Friend or Foe?

An Energized Work Production Agile Business Conference / 11 Oct 2012

GOVERNANCE FRIEND OR FOE?

#abcfriendorfoe

Simon Baker / @energizr

Gus Power / @guspower

{first name}@energizedwork.com

#abcfriendorfoe

LICENSED UNDER CREATIVE COMMONS BY ENERGIZED WORK LIMITED | HMS PRESIDENT, VICTORIA EMBANKMENT, LONDON, EC4 0HJ | WWW.ENERGIZEDWORK.COM 2

✪ GOVERNANCE – FRIEND OR FOE?

Let’s try to reimagine governance. Get past “if only…” Explore the “what if’s…” Ask “why the hell not?” Think of it as an experiment.


✪ AT THE END

/ Connect our experiences. / Explore our own situations with others. / Discover the right questions to ask about governance. / Learn new insights we can take back to our workplaces. / Establish links with people that last beyond this afternoon.


✪ WORLD CAFÉ


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✪ THE POWER OF CONVERSATION

This is a workshop, so please talk to those around you. The plan is to have 4 conversations on different topics. If you think you know everything, or you just want to disagree then it's not going to be beneficial to you. It’s not about winning or losing.


✪ SCHEDULE

14:55 – Introduction. 15:00 – Gambling. 15:20 – Value (discussion). 15:35 – Coffee. 15:50 – Value (rotation). 15:55 – People. 16:15 – Questions / Open discussion.


✪ 1. SET THE CONTEXT

/ 5 minutes. / We'll share our thinking on the topic, maybe pose some questions. / See the handout for a reminder.


✪ 2. BEGIN THE CONVERSATION

/ 10 minutes. / Doodle and discuss. / Build up a picture. / Focus on what matters.


✪ 3. MOVE TO ANOTHER TABLE

/ 5 minutes. / 1 or 2 hosts stay with the table. / The rest move to other tables. / Hosts present what was discussed.



✪ GAMBLING

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✪ PURPOSE OF GOVERNANCE

The accepted purpose of governance is largely to monitor, report on, and ensure that the specified requirements will be delivered in the agreed timeframe and within the agreed budget to realize the benefits stipulated in the business case.


✪ PURPOSE OF GOVERNANCE

And in so doing, to ensure processes are followed correctly, standards are adhered to, and the software is produced to an acceptable level of quality.


Gating and approving / Ensuring compliance to processes and standards / Controlling budgets and headcount / Auditing and quality assurance reviews / Monitoring progress / Reporting status / Managing issues and risks / Managing stakeholders

✪ UNDERSTAND THE GAMBLE

Capital investments are made in IT projects on the merits of business cases built on assumptions. When we build a feature and delay validating it with customers we’re making a bet that it’s “right”. What if we’re wrong? Every feature done this way ups the ante until we’re betting the budget on a big-bang release.


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Increasing inventory Increasing investment Bigger and bigger bet

✪ MORE CONTROL DOESN’T REDUCE THE BET

Optimizing productivity so that projects aren’t late or over budget doesn’t address the big risks in the following assumptions: / The requirements define the right solution. / All requirements must be delivered before any value can be realized (all or nothing). / If all requirements are delivered, the value will be realized.


Can we deliver less without delivering too little? Why not make smaller bets and find out? Bet what we can afford to lose and get faster feedback to prove earlier what’s valuable and what’s not valuable. Let’s be a bit more scientific.

✪ SMALL BETS


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Less inventory; regular releases Series of small investments Small bets

✪ INCREMENTAL INVESTMENTS


Why not make smaller incremental capital and operational investments based on business measurements? / Business service cash flows. / Portfolio performance. / Risk exposure. / Impending obsolescence. / Cost of delay. Use fast actuals, flash forecasts and moving averages in a rolling review to inform continuous re-evaluation and prioritization.

t

£

Break-even

Self-funding

Profitable

✪ MORE BENEFICIAL GOVERNANCE

The compelling opportunity for governance is to help business investors make investments that maximize business performance. The portfolio is of business services and not IT projects.


✪ BLOWING YOURSELF UP

1. No edge. 2. No planning. 3. Wrong bet size. 4. No risk management. 5. Mistiming exits. 6. Out of control. 7. Not in tune with the market. 8. Running before walking. 9. Emotionally unstable. 10. Not taking responsibility.


Source: The Financial Spread Betting Handbook by Malcolm Pryor.


✪ VALUE

✪ TIME, COST, SCOPE, QUALITY. VALUE?

The word ‘value’ is used extensively. And ambiguously. Value needs to be defined, quantified and measured. When it’s not we’re left in a subjective argument about scope and cost – “delivery should be quicker, cheaper; more features should be delivered in the same time-frame for the same cost.” Backlogs have become the new functional specification. LICENSED UNDER CREATIVE COMMONS BY ENERGIZED WORK LIMITED | HMS PRESIDENT, VICTORIA EMBANKMENT, LONDON, EC4 0HJ | WWW.ENERGIZEDWORK.COM 21

Scope

Compromise Quality

Cost Time

Quality

Vary Scope

✪ FIT FOR PURPOSE AND FIT FOR USE


The focus is on functionality but how well are the functions performed?

FUNCTION

Design (Architecture)

Source: Competitive Engineering, Tom Gilb

Con

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Resource

Con

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Performance

✪ QUALITY CAN ONLY TAKE SO MUCH ABUSE

To meet unrealistic time and cost constraints corners are cut, especially on those qualities not being measured or easily determined.


Availability

Workload Capacity Resilience

Flexibility

Interoperability

Upgradeability

Usability

Resource Saving

Expected Actual

✪ KNOWLEDGE WORKER PRODUCTIVITY

A commonly held assumption is that to get the most out of your investment utilization needs to be at or as near to 100% as possible. Idle resources, equipment or people are wasted investment. Effort is often confused with progress. Progress is often confused with value. Knowledge workers are described as people who “think for a living”. How do you measure thinking?


✪ KEEP THE PORTFOLIO RELEVANT

Governance must ensure the portfolio stays relevant. We have to innovate to stay relevant – to continue to solve problems that people will pay to have solved. If the medium and long terms are 18 months and 5 years we face a problem when the typical employee tenure is less than this. Not only does our knowledge become obsolete as markets and technologies change, but knowledge literally walks out the door.



✪ PEOPLE

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✪ CREATING REALITY MISMATCHES

Governance attempts to manage the portfolio day-to-day and balance business investors’ perceptions and situations in the delivery teams. With the best will in the world, trying to protect both sides, we can end up creating a mismatch. When we do so we become over-responsible.


✪ RESPONSIBLE FOR WHAT?

/ Responsible for the successful delivery of the projects in the portfolio? / Answerable to business investors and stakeholders for the actual value realized? / Accountable to delivery teams for providing sufficient resources to enable them to be successful? / Responsible for risk management and mitigation? Can we design ways to equitably share the risk and responsibility between governance, stakeholders and delivery teams?


✪ COMPLEXITY IS NOISY


Plans

Stakeholders

Requirements

Designs

Dependencies

Time to market

Objectives Production incidents

Defects

Budget / burn rate

Stakeholder perception

Technology

Team

Legacy integrations

Adherence to plan Morale

Operating cost

Getting a clear view and tangible measures of what’s happening across a portfolio is hard. Just getting the mechanics done, like forecasting, budgeting and staffing, is a full-time job. And the amount of data generated with varying quality can get overwhelming. Can governance help reduce the noise?

✪ CLASH OR GAPS?

/ Trust people to get the job done. / Working software is the primary measure of progress. / The best means of communication is via face-to-face conversations. / The best architectures and designs emerge from self-organizing teams. Are agile principles practical, even applicable for governance? How practical is it to value “individuals and interactions over processes and tools” when the portfolio ‘employs’ 10,000 people?


✪ OPERATING AT SCALE

An individual can only handle so many interactions. In a portfolio that ‘employs’ 10,000 people, we have to limit the number of people we work with day-to-day. We end up relying on activity reports and assurances from individuals representing groups of people, like project managers representing delivery teams. Scale pushes governance further away from the work.


✪ CONTINUOUSLY IMPROVING GOVERNANCE

How can we measure the value and effectiveness of governance? How do we improve it? This is expected of operational and delivery teams. Why are the same standards not applied to governance?



✪ DISCUSSION Questions? Share your thoughts.

Thank you for participating.

If you’d be interested in a second café workshop looking at the financial and risk elements of governance

please leave your business card or name and email address.

#abcfriendorfoe

@energizr / @guspower


Governance – Friend or Foe by Energized Work Limited is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License.

| HMS PRESIDENT, VICTORIA EMBANKMENT, LONDON, EC4 0HJ | WWW.ENERGIZEDWORK.COM 35 LICENSED UNDER CREATIVE COMMONS BY ENERGIZED WORK LIMITED

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Energized Work Limited Creative Commons Attribution-ShareAlike 3.0 Unported License

✪ WELCOME TO THE WORLD CAFE

/ 5 minutes. / Speakers share their thinking on a topic and ask questions. / See handout for a reminder.


SET THE CONTEXT 1

/ 10 minutes. / Doodle and discuss. / Build up a picture. / Focus on what matters.

BEGIN THE CONVERSATION 2

/ 5 minutes. / 1 or 2 hosts stay with the table. / The rest move to other tables. / Hosts present what was discussed.

MOVE TO ANOTHER TABLE 3

✪ GAMBLING PURPOSE OF GOVERNANCE The accepted purpose of governance is largely to monitor, report on, and ensure that the specified requirements will be d e l i v e r e d i n t h e a g re e d timeframe and within the agreed budget to realize the benefits stipulated in the business case. And in so doing, to ensure processes are followed correctly, standards are adhered to, and the software is produced to an acceptable level of quality. MORE BENEFICIAL GOVERANCE The compelling opportunity for governance is to help business investors make investments that m a x i m i z e b u s i n e s s performance. This requires the portfolio to be of business services and not IT projects.


CONTROL DOESN’T GUARANTEE VALUE Optimizing productivity so that projects aren’t late or over budget doesn’t address the big risks in these assumptions: / The requirements define the right solution. / All requirements must be delivered before any value can be realized (all or nothing). / If all requirements are delivered, the value will be realized.

UNDERSTAND THE GAMBLE Capital investments are made in IT projects on the merits of b u s i n e s s c a s e s b u i l t o n assumptions. When we build a feature and delay validating it with customers we’re making a bet that the feature is “right”. What if we’re wrong? Every feature done this way ups the ante until we’re betting the b u d g e t o n a b i g - b a n g release.

SMALL BETS Betting the budget on a big-bang release is like betting all our money on hitting a hole-in-one. Can we do less without doing too little? Make small bets based on what we can afford to lose to prove earlier what’s valuable and what’s not valuable.

INCREMENTAL INVESTMENTS / Business service cash flows. / Portfolio performance. / Risk exposure. / Impending obsolescence. / Cost of delay. Use fast actuals, flash forecasts and moving averages in a rolling review to inform continuous re-evaluation and prioritization.

t

£

Break-even

Self-funding

Profitable

COMMON SPREAD BETTING ERRORS 1. No edge. 2. No planning. 3. Wrong bet size. 4. No risk management. 5. Mistiming exits.

6. Out of control. 7. Not in tune with the market. 8. Running before walking. 9. Emotionally unstable. 10. Not taking responsibility.

t

£

Increasing inventory Increasing investment Bigger and bigger bet

t

£

Less inventory; regular releases Series of small investments Small bets

✪ VALUE


TIME, COST, SCOPE, QUALITY. VALUE? T h e w o rd ‘ v a l u e ’ i s u s e d extensively. And ambiguously. Value needs to be defined, quantified and measured. When it’s not we’re left in a subjective argument about scope and cost – “del ivery should be quicker, cheaper; more features should be delivered in the same time-frame for the same cost.” Backlogs have become the new functional specification. Scope

Compromise Quality

Cost Time

Quality

Vary Scope

FUNCTION

Design (Architecture)

Source: Competitive Engineering, Tom Gilb C

ondi

tion

Resource

Con

ditio

n

Performance

FIT FOR PURPOSE. FIT FOR USE The focus is on functionality but how well are the functions performed?

QUALITY CAN ONLY TAKE SO MUCH ABUSE To meet unrealistic time and cost constraints corners are cut, especially on those qualities not being measured or easily determined.

Availability

Workload Capacity Resilience

Flexibility

Interoperability

Upgradeability

Usability

Resource Saving

Expected Actual

KNOWLEDGE WORKER PRODUCTIVITY A commonly held assumption is that to get the most out of your investment utilization needs to be at or as near to 100% as possible. Idle resources, equipment or people are wasted investment. Effort is often confused with progress. Progress is of ten confused with value. Knowledge workers are described as people who “think for a living”. How can you tell if someone is thinking? How do you measure it?

KEEP THE PORTFOLIO RELEVANT Governance must ensure the portfolio stays relevant. We have to innovate to stay relevant – to continue to solve problems that people will pay to have solved. If the medium and long terms are 18 months and 5 years we face a problem when the typical employee tenure is less than this. Not only does our knowledge become o b s o l e t e a s m a r k e t s a n d t e c h n o l o g i e s c h a n g e , b u t knowledge literally walks out the door.

✪ PEOPLE CREATING REALITY MISMATCHES G o v e r n a n c e a t t e m p t s t o manage the portfolio day-to-day and balance business investors’ perceptions and situations in the delivery teams. With the best will in the world, trying to protect both sides, we can end up creating a mismatch. When we do so we become over-responsible.


RESPONSIBLE FOR WHAT? / Responsible for the successful delivery of the projects in the portfolio? / Answerable to business investors and stakeholders for the actual value realized? / Accountable to delivery teams for providing sufficient resources t o e n a b l e t h e m t o b e successful? / R e s p o n s i b l e f o r r i s k management and mitigation? Can we des i gn ways t o equitably share the risk and r e s p o n s i b i l i t y b e t w e e n governance, stakeholders and delivery teams?

COMPLEXITY IS NOISY Getting a clear view and tangible measures of what’s happening across a portfolio is hard. Just getting the mechanics done, like forecasting, budgeting and staffing, is a full-time job. And the amount of data generated with varying quality can get overwhelming. Can governance help reduce the noise?

Plans

Stakeholders

Requirements

Designs

Dependencies

Time to market

Objectives Production incidents

Defects

Budget / burn rate

Stakeholder perception

Technology

Team

Legacy integrations

Adherence to plan Morale

Operating cost

CLASH OR GAPS? / Trust people to get the job done. / Working software is the primary measure of progress. / T h e b e s t m e a n s o f communication is via face-to-face conversations. / The best architectures and designs emerge from self-organizing teams. Are agile principles practical, even applicable for governance? How practical is it to value “individuals and interactions over processes and tools” when the portfol io ‘employs’ 10,000 people?

OPERATING AT SCALE An individual can only handle so many interactions. In a portfolio that ‘employs’ 10,000 people, we have to limit the number of people we work with day-to-day. We end up relying on activity reports and assurances from individuals representing groups of people, like project managers representing delivery teams. Scale pushes governance further away from the work. CONTINUOUSLY IMPROVING GOVERNANCE How can we measure the value and effectiveness of governance? How do we improve it? This is expected of operational and delivery teams. Why are the same standards not applied to governance?

| HMS PRESIDENT, VICTORIA EMBANKMENT, LONDON, EC4 0HJ | WWW.ENERGIZEDWORK.COM 40 LICENSED UNDER CREATIVE COMMONS BY ENERGIZED WORK LIMITED

Energized Work Ltd

HMS President Victoria Embankment London EC4Y 0HJ

www.energizedwork.com

Governance - Friend or Foe?

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