HOUSTON, TX, USA | 5 – 8 NOVEMBER 2017

#PMOSym

PMO17BR304

Building Integrated Program Teams: A Key to Agile Success

Dr. Eric Rebentisch, Stephen Townsend

MIT Consortium for Engineering Program Excellence (CEPE), PMI

Agenda

• Learning objectives:

– Understand how to apply the integration framework within the PMO to

drive stronger performance

– Identify the key elements associated with effective integration

– See how the integration framework works in actual application

• Review the integration framework and its relationship to agile

• Discuss case studies that illustrate the core concepts of integration in high-

performing organizations

• Identify the integration elements that PMOs can develop in their own

organizations to improve program performance

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SpaceX: High Performing or Over-Hyped?

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Photo by John Schreiber, http://mynewsla.com/business/2016/04/08

SpaceX CRS-7 (28 June 2015)

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Falcon 9 Flight 20 (22 December 2015)

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SpaceX CRS-8 (8 April 2016)

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How Does SpaceX Do It?

Among other things…

• Focus on simplicity in the design

• Vertical integration across the entire product

• Colocation of teams and value-adding activities

• “Responsible engineer” aligns expertise with mission assurance

• Test-what-you-fly to rapidly introduce new capabilities

• Culture that promotes teamwork, mutual support, coordination and

communication in the spirit of pushing the boundaries

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SpaceX Has Evolved an Agile and Integrated

Development Process Comprising Multiple Elements

• Tools, processes and methods that bring teams together and bridge

boundaries to develop solutions

• Culture of collaboration, sharing and transparency

• Reliance on capable, motivated and empowered people

• Development approach and mindset that emphasizes rapid solution

generation and validation

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Leaders’ mindset of integration, collaboration and velocity informs the values and principles, and eventually practices, models and frameworks

for how SpaceX operates

A Framework for Integrating Key Disciplines in Development

Source: Rebentisch et al (2017)

A four-year research effort identified how successful organizations integrate their disciplines

Integration Reflects Characteristics and Capabilities

Developed Within the Organization

Integration is a reflection of the organization’s

ability to combine practices, tools and

techniques, experience and knowledge in a

collaborative and systematic approach in the

face of different challenges in order to be more

effective in achieving a common goal/objective

in complex development environments.

Adapted from Rebentisch et al (2017)

Processes, Practices and Tools

Processes, practices and tools help to enable integration by:

• Enabling communication and common understanding

• Defining specific work activities

• Establishing expectations of each person’s contribution

• Documenting approaches for coordinating and tracking

work efforts

• Identifying critical points where individual and group

work efforts must come together

• Facilitating problem identification and resolution

• Applying and updating best practices

• Supporting and improving specific work activities Source: Rebentisch et al (2017)

Integration Processes, Practices and Tools in UTC

Sources: Slideshare.net, UTC.com

• 201,600 Employees

• US$57.4 billion Adjusted net sales

• US$3.7 billion Total R&D investment

Organizational Environment

• Organizational structures, behaviors and norms

shape how team members work and interact with

each other, and determine the nature of relationships

• An integrated environment should:

– Narrow the cultural divide between disciplines, roles or

functions

– Foster team building

– Develop respect for each others’ views and opinions

– Build trust between executive management and teams

Source: Rebentisch et al (2017)

The Integrated Organizational Environment at Pixar

Source: http://trailers.apple.com/trailers/disney/toystory3/

Developing Integration Competencies in People

Organizations develop integration

competencies in people by:

• Defining integration competencies using

standards, role definitions and assessments

• Using education and training to develop

integration competencies and teaming behaviors

• Managing integration competencies in the

workforce at the individual and organizational

levels

Source: Rebentisch et al (2017)

Developing Integration Competencies in People at Toyota

Sources: Toyota-Global.com, slideshare.com

Contextual Factors

Source: Rebentisch et al (2017)

• Program and organizational characteristics influence

management approaches

– Product and program design choices that reduce scope

and complexity

– Organizational relationships that foster and enable

integration behaviors

– Stakeholder alignment requires significant management

engagement

• One view of the program

• Transparency

• Engagement/community

Program Performance

• Integration influences key program

performance elements

– Cost and time show better performance

with higher integration

– Outcomes are more predictive with

higher integration

– Programs with schedule pressure are

more resilient with higher integration

Source: Rebentisch et al (2017)

Integration in Practice: F/A-18E/F Super Hornet Program

• The F/A-18E/F program delivered

ahead of schedule, within cost and

under weight (critical for fighter aircraft)

• Dual-purpose carrier aircraft (air-to-air,

air-to-ground combat)

• Evolutionary design derived from the

F-18C/D model

– Increased range, survivability,

carriage capability, growth

capability and bring backSource: US Navy

F/A-18E/F Program Employed a Variety of Integration

Practices ThroughoutIntegration Practices

Integration Processes, Practices and

Tools

• WBS based on the product architecture

• Common central database with weekly

reporting

• WBS linked to EVMS

• Flow-down budgets to the IPTs

Organizational Environment

• Leadership at all levels modeled

integrated behavior

• IPTs bridged functional groups

• Emphasized effective communication

across functional boundaries

• Culture of shared responsibility for

outcomes

People Competencies

• Develop integration competencies

• Leaders selected on experience and

ability to foster relationships

• Decisions made by capable people

where work is performed

Contextual Factors

• Urgent replacement needed

• Program budget was fixed

• Complexity reduced using derivative

product strategy and existing

relationships

• Mature technologies limited overall

program scope

Source: Rebentisch et al (2017)

Rapid and Effective Decision Making Enabled via

Organizational Structure

Product-based work breakdown structure (WBS) was mirrored by the IPT structure

Rapid and Effective Decision Making Enabled via

Organizational Structure

• Decisions were made at the lowest level consistent with scope of

responsibilities (Level 5 team leaders controlled their own budgets)

• WBS and corresponding organizational structure

– Used to track cost, schedule, technical performance measures

(TPMs) such as weight and power at the lowest level of the

WBS (with roll up)

– Same structure used on government side promoted joint

government-contractor problem solving

“Team leaders have to balance cost, quality and schedule. They have to be good business folks as well as engineers. As a Level 5 team leader, I am running my own business.”

Collaboration Across Disciplines Achieved via Active

Management of IPTs

• Moved away from functional stovepipes to Integrated Product Teams (IPTs)

– Each team was responsible for a part of the overall product

– Teams were multi-disciplinary

“We focused our IPTs on product and then asked, ‘What does it

take to deliver the product?’ These are the disciplines that have

to come into every IPT.”

-- Vice Admiral Joe Dyer, former Navy Program Manager

• IPTs were used on the government and contractor sides

– Corresponding structures facilitated joint problem solving and

communication

Collaboration Required a Cultural Change Led by Program

Leadership

“Leadership matters and personalities matter. The vice president for F/A-18 at McDonnell Douglas and I had an openness with one another that we knew we could build on. We knew that we could flow it down to others and that we would both insist on it. There really is a cultural change required. We’re not taught to be team players.”

-- Vice Admiral Joe Dyer, former Navy Program Manager

Effective Information Sharing Enabled via Several

Mechanisms

• A high value was placed on open communications and

quantitative data

• Common central database used by government and

contractor with weekly reporting

– Cost, schedule and technical measures down to Level

5 of the WBS

– Problems in any of these areas were immediately

apparent with clear accountability for who owned the

problem

• A variety of program-wide tools and databases

Integration in Practice: The Failed Engine Stator

• During flight test, a stationary air foil in one of the two GE

engines fractured, causing significant damage to the engine

• An examination of the remaining test aircraft showed

fracturing in other engines as well

“Under the old way of doing things, GE wouldn’t communicate issues until they had a plan to go forward. Now, if there’s an issue we’re [the Navy] the first to know. This actually works to GE’s advantage because we have talented people here who can help.”

“In just six weeks, we went full cycle from having the problem surface to diagnosing it and to installing new parts. All of us—the Propulsion IPT, the Flight Test Team, McDonnell Douglas, and GE—had a real sense of working as a team. Under the old way of doing things, this would have taken five or six months.”

-- Level 2 Propulsion IPT Leader

Agile Transformation at Nationwide Mutual Insurance

Company

• Information technology (IT) plays a vital role in the company’s strategy and in

delivering its On Your Side customer service and protection

– Nationwide spends more than US$1 billion on IT per year (a significant portion spent

on software projects) and employs thousands of IT employees

– Software projects range from small (<US$50,000) to very large (>US$50 million)

– Traditional “waterfall” development finished the majority of projects, but often late

and with quality issues

– Teams using the agile development approach had tremendous success delivering

on-time solutions with high quality levels

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• More widespread agile implementation across IT was needed for significant impact

• But uneven performance was seen across the teams using the agile approach

The Diagnosis: Traditional Project Management

Approach and Mindset Was in Conflict with Agile

• Successful teams had:

– A very disciplined system of rules

– A high degree of collaboration between program managers and software engineers

– An interested and supporting management system

• Unsuccessful teams had:

– A lack of process discipline and an attitude of exclusion

– Contentious relationships with program and project management, which was relegated to the

periphery of the development life cycle

• Conclusion: To transform the software development system, managers had to change

not only their perspective of the development teams’ work, but also their own way of

working

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Key Elements of Nationwide’s Agile Transformation

• Created a formal change program leveraging existing change agents and infrastructure

• Root cause analysis of inconsistent agile execution: a lack of process discipline and an

attitude of exclusion in some teams

• Aligning the program management orientation with the agile development approach

• Creating the Application Development Center (ADC) with a focus on technical

excellence and process discipline

• Creating standard work for managers, including reporting and priorities

• Developing a new set of performance metrics for program managers to track

development progress

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Outcomes of Nationwide’s Agile Transformation (2009–2015)

• Critical defects released into production decreased by 50% per year, every year,

on average

• Employee engagement increased every year

• Productivity levels increased with >75% of releases above industry benchmarks

• Changed mindsets:

– All members of the teams aligned toward a common purpose in delivering great

solutions for customers

– Program management and technical staff no longer adversarial, instead work together to

solve problems

– Culture of collaboration and integration between program management and software

engineering staff

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Ref: Rebentisch et al., 2017

Strategy to Implementation: The BMW Engineering

Division Challenge

• BMW group strategy: continue to grow and remain a strong and

independent auto manufacturer despite being smaller than

competitors

• Engineering (E-) Division requirement: increase efficiency by 1/3:

– Increase the number of development projects by 1/3

– Reduce the development lead time by 1/3

– Improve product quality by 1/3

– Stay within the same budget and staffing levels

– All within five years

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The BMW Change Management Model

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Source: BMW

BMW Leadership Approached Change on Multiple Fronts

• E3 Program was established to

transform the E-Division:

– E3: Exhilarating products; Efficient

processes and structures; Emotions and

team spirit

• System approach to change:

– Senior leaders provided the vision and

resources, were personally involved in

deploying the change

– Project management organization (PMO)

managed the change program, provided

resources, change tools and expert coachesSource: Rebentisch et al (2017)

Top-Down E³ Initiatives Addressed Strategic Objectives

• 25 top-down, strategy-driven change projects (E³ projects) were launched in

May 2007

• E³ project managers enjoyed several important enablers for rapid and effective

action:

– Direct access to the top management level

– Supported by a network of strategy and process development groups associated

with different departments within the Engineering Division

– Access to the necessary funding and the right people

– Removing road blocks in the organization when they arose

– Fast decision times

Bottom-Up Initiatives Engaged the Entire Workforce

• “Value orientation” (WO) E³ project developed as “the implementation of E³ at the local

level” or “E³ for everyone”

• The specification of the project was open—from simple ideas affecting office work with no

measurable savings to hardware improvements with millions in savings

• Initially all level 2 and level 3 managers were required to complete a minimum of one WO

project

– ~150 WO projects completed in 2008

– Expanding to level 4 managers, more than 1200 WO projects completed in 2009

– A few managers personally conducted multiple WO projects per year, and required

the managers under their supervision to do the same

Top-Down and Bottom-Up Initiatives Were Complementary

• Bottom-up (WO) initiatives started

slowly but eventually equaled top-

down projects in savings

• Long-term objective was to change

the entire workforce

• E Change LIFE initiative addressed

culture change and was concurrent

with and complementary to WO

initiative

– By June 2012, all 8,000 people in the

E-Division had participated in the E

Change LIFE workshops

Source: Rebentisch et al (2017)

Impact of the E³ Change Program in the BMW Engineering Division

• Total revenue grew by 40%

• 21% more vehicles were delivered

• Vehicle quality increased by 32%

• The model range expanded by 30%

• The number of car models and derivatives in the pipeline increased by 53%

• The engineering workload increased by 35%

• The engineering cost per derivative and workload decreased by 38% and 31%, respectively

• The overall lead time decreased by 14% (despite greater complexity in the models offered)

• Partway through the changes, the global economic downturn punished the auto industry;

because of the improvements, BMW managed to remain profitable, did not cut its workforce and

emerged from the downturn stronger and more competitive than many rivals

Conclusion

• Organizations with higher levels of integration between their management and

technical disciplines showed higher value delivery, more predictability and more

resilience

• Agile change is an essential component of integrated organizations

• Change examples demonstrate the strong role that a centralized organization like a

PMO plays in:

– Developing tools, processes and methods for integration

– Helping leaders create the right climate for collaboration and integration

– Training and developing integration competencies in people

– Providing support for local improvement initiatives

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Next Steps

Based on the integration framework and examples, these next steps may be helpful to you:

• Next week:

– Review the content of this presentation, view the archived PM/SE integration virtual conference

and/or read the Integrating Program Management and Systems Engineering book

• Does your organization integrate different disciplines effectively? What are the current

challenges? What is going well currently?

• Next 90 days: Discuss with representatives from various disciplines their perspective on your current

state of integration to identify problems, their root causes and possible opportunities for improvement.

Enroll senior leaders in the definition of a path forward to more highly integrated programs.

• Next 12 months: Implement pilot projects aimed at improving various elements from the integration

framework; develop the infrastructure to propagate best practices and concepts throughout your

organization and to assess the desired behaviors and extent to their impact.

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Book(s) Captures the Detailed Insights to Help Improve

Engineering Program Performance Outcomes

• Integrating Program Management and Systems

Engineering (Rebentisch et al., 2017)

– Tighter integration between program managers and

systems engineers leads to high-performing programs

– A system approach to combining methods, tools and

organizational systems provides the key to success

• Related resource: The Guide to Lean Enablers for

Managing Engineering Programs (Oehmen, 2012)

– How to apply lean principles to program management

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Contact Information

Eric Rebentisch, PhD

Research Associate, Lecturer

Massachusetts Institute of Technology

77 Massachusetts Avenue (E17-355)

Cambridge, MA 02139-4307 USA

+1 617 258 7773

email: erebenti@mit.edu

http://rebentisch.mit.edu/

http://cepe.mit.edu

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Stephen Townsend

Director, Network Programs

Project Management Institute

14 Campus Blvd.

Newtown Square, PA 19073 USA

PMI: +1 610 356 4600, extension 7083

Email: Stephen.Townsend@pmi.org