What is an Agile Organization, how does one become one

Making an Organization Agile

Click on the above link for the handout PowerPoint slides to a presentation I made to the Project Management Institute Chapter Meeting in March, 2016.

I have been coaching organizations on their Agile development methods for some time. It frequently occurs to me that managers in many firms are under the impression they are Agile Organizations because they have organized their software developers into Scrum teams. In this lecture I explore the questions of what is Agility and discuss various Agile development methods such as Scrum, XP, Kanban, Lean, Lean and discuss how they fit into larger organizational initiatives or frameworks such as Six Sigma, Lean, Design Thinking and Lean Startup. If you like what you see, please send me an invitation to connect with me on LinkedIn. I am available for consulting engagements.

Richard Ellis, PMP PRM CSM SSGB APRM PMI-ACP

Below is a static text version of my talk. The most recently revised version in PPT format will always be available here or at the link above.

What is agility - Transforming to an Organization Agile in the Digital Age

1. 1. Transitioning to be an Agile Organization in the Digital Age Musings by Richard Ellis PMP PRM PMI-ACP CSM SSGB
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3. 2. What is Agility • An Agile Organization is one that can quickly identify and validate customer needs and deliver them to the market quickly. • Agile Development is the ability to discover new products or features for existing products that are valuable to a customer (that they will pay for) and deliver them to the market quickly. • Agile Processes are processes that can quickly adapt to changing customer needs. • Agility applies to Projects, Iterative Development and Processes.
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5. 3. What is a Project and what is a Process • Projects – Have never done this before. • A Project has been defined as a set of interrelated tasks to be executed over a fixed period and within certain cost and other limitations. In other words, a sequence of activities that have a beginning and an end. Projects create change. Projects are where innovation takes place. • Processes – Do the same thing repeatedly. • An Process or Operation creates value by repeating work that a customer(s) wants in a predictable way. • Processes can be experimented, tested, optimized, refined and institutionalized. Properly designed processes are more efficient, predictable and effective than one off project work streams. Processes resist change.
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7. 4. What is Digital • Digital Transformation refers to the application of new technology to create new Digital processes that replicate complex existing processes that may have many discreet process steps. The new streamlined processes focuses on the customer while at the same time dramatically reducing cost. • Digital also enables new entrants to Disrupt mature businesses with innovative delivery models that serve customer need far better and at lower cost than the market’s existing model.
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9. 5. Why is Agility important • Agility allows organizations to quickly respond to changes in the market. • Agility is a key factor for success in any Digital Transformation. The new (last five years) capabilities of Digital open the door to many sales, service and delivery functions to be transformed, delighting the customer at dramatically reduced cost. • Disruption requires Agility. Without the ability to adaptively refine plans, projects will always miss the needs of the customer by the time they hit the market. You are moving into uncharted territory, nobody has the answers, you must find out as you go along. If you wait for the results of your last projects you will miss opportunities by the time you are able to regroup. • All businesses have at least some elements that are ripe for Digital Disruption. If your business does not do it, someone else will. And they will take your most profitable market segments with them. • The best one to Digitally Disrupt your business is YOU. You know more about your clients, market and product than any startup. Take advantage of it or else.
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11. 6. Agile Project Development brings Process efficiency to Projects • Agile iterative and continuous delivery project methodologies bring the efficiencies of repeatable processes to Projects. • By creating a repeatable process for delivering value, project development can benefit from the efficiencies and predictability of production processes. • Teams have the opportunity to increase their velocity (productivity), reduce waste (Lean) and defects (Six Sigma) by improving their development cycle with each iteration.
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13. 7. Definitions of Agility • Business Dictionary 1 - The capability of a company to rapidly change or adapt in response to changes in the market. A high degree of organizational agility can help a company to react successfully to the emergence of new competitors, the development of new industry-changing technologies, or sudden shifts in overall market conditions. • Read more: HR Zone 2 - Business agility refers to distinct qualities that allow organizations to respond rapidly to changes in the internal and external environment without losing momentum vision. Adaptability, flexibility and balance are three qualities essential to long-term business agility. • CIO Magazine 3 – Business agility is the quality that allows an enterprise to embrace market and operational changes as a matter of routine. • Directing the Agile Organisation 4 - (Business Agility is the) “ability of a business system to rapidly respond to change”
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15. 8. The Origin of Agility • The concepts of Agile and Lean come from the Toyota production system initially developed by Taiichi Ohno c. 1948 to 1975 based on Henry Ford’s earlier work starting in 1906. • Over time, the concepts of reducing waste, focus on the customer, reducing variability and continuous improvement have evolved into the management frameworks we see in use today. • Principles of Lean thinking appear in most project management and process design techniques now practiced by companies and Management Consulting firms worldwide.
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17. 9. Agile, Lean, 6Sigma • Agile – increase feedback. The tighter the feedback loops the faster the organization can adapt to changing customer requirements and address poor quality. • Lean – reduce latency. Muda, Mura and Muri • Meetup #LeanNYC - Continuously improving how you deliver correct, high quality products/service to customers when they need them. This is accomplished primarily by eliminating waste. • 6Sigma – reduce variability. Variation increases defects which reduces customer satisfaction. The cost of poor quality is far higher than the cost of controlling processes. While 6Sigma is based on Lean principles, it adds the idea of using a structured data-driven approach using statistical tools to eliminate defects.
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19. 10. Organization frameworks to create and produce goods and services • Those that design processes and manage projects utilize what are called methodologies or frameworks. These are collections of tools and roadmaps that are used to create structure and guide actions of team members. • Elements within methodologies are not mutually exclusive. It is quite common for tools to be borrowed from other methodologies to suit a particular initiative or evolve, over time, into a new methodology. • In project management these include such frameworks as Scrum, XP, Crystal, DSDM, Lean, Lean Startup, Kanban, RUP, RAD, FDD Spiral and long standing or traditional approaches of PMBOK (waterfall) and Prince2. • In process design we have Six Sigma or 6Sigma, Lean, ITIL, DevOps and an assortment of proprietary methodologies such as CMMI and ISO.
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21. 11. Agile development Methodologies • One of the most popular project management methodologies is Scrum. In fact, for many, Scrum is synonymous with Agile. • While Scrum is an Agile methodology, simply transitioning a development team to the Scrum process does not make one Agile. The rules of Scrum are very simple. Real improvements begin to appear when the team is left alone to self organize without outside constraints, or impediments. • To realize the true value of Scrum and Agile there needs to be a shift in culture and management style above the development team level. The organization needs to align its organizational structures and adjust its Key Performance Indicators (KPIs) to promote Agility as a value. Only by measuring Agility and aligning internal incentives will it be able to develop Agile capabilities. With an Agile development team in place, this becomes the capability to quickly identify the changing needs of the customer and communicate that knowledge to the team via a properly prioritized and relevant product backlog.
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23. 12. Scrum facilitates Agility • Scrum facilitates organizational Agility. It does this by shortening the change order cycle to a week or two but, more importantly, it lowers the cost of changes to ZERO. Change orders and revised project plans are not required with Scrum. With this ability, as customer feedback points toward a better solution, the product or service can be improved incrementally quickly and at low cost. • Disruptive delivery modes can be developed and deployed quickly using Scrum. Scrum speeds your ability to deploy change. • Scrum does not inform the organization about what the customer needs, may need or might be persuaded to need. This is the role of those outside of the Scrum team including management, sales, marketing, product development, etc. These needs are communicated to the Scrum team through the Product Owner.
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25. 13. The difference between Agile Project Management and an Agile Organization • There are many firms who proclaim, and in fact, believe, they are Agile because their software development has transitioned to Scrum teams. Scrum is a popular framework because when implemented properly it allows teams to quickly create customer value; but only if requirements that the customer perceives has value are accurately known. An Agile development process dramatically improves development but it does not make an organization Agile. • An organization can only become truly Agile when Agile principles and tools are employed across entire value chains from customer identification to delivery to that customer. The organizational culture must promote, through its values, the ability to react quickly to changes in customer needs and be in a position to deliver those needs to the market.
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27. 14. Scrum - What it is and How it Works • Scrum is based on the principle that people work better when teams are allowed to self organize and do their work as they see fit. The team is left alone to do their work without interruptions. Interruptions create multi tasking. Multi tasking feels productive but it is not. It is very seductive. In reality you are getting a little bit done many different things. However, if you add up totality of what you have accomplished, it is almost always far less than if you had simply stuck to one thing until completion before moving on to the next task. • Development is done by the Scrum Team which generally consists of five to seven members who perform the work. Good teams are constructed so that all of the tasks to complete the work are present on the team. This means refactoring, documentation, QA, usability and performance testing is done by the team. Work is considered complete only when it is deployed to production, integrated to a release or delivered to the customer. • The Scrum Master facilitates the team’s work and has two primary responsibilities. First they manage the meetings (also called ceremonies) and facilitate the production of documents (also called artifacts). Second, and more importantly, the Scrum Master removes impediments that hinder the team from doing their work. These include interruptions of team members (multi-tasking) by management or diversions by other stakeholders such as Dev-Ops or QA. The Scrum Master also works with the Product Owner to insure the team always has work available.
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29. 15. Scrum – How it Works continued • The Product Owner is management’s representative to the Scrum team. The Product Owner provides the development team with a list of products that customers want. This list is called the product backlog. The development team assists the Product Owner in preparing and maintaining the backlog which is called Grooming. Ideally the Product Backlog is maintained as a prioritized list of User Stories that are ready for execution. User Stories are actionable work that has a testable output and can be completed in a time boxed development period called the Sprint. The Product Owner is responsible for ensuring User Stories are relevant, in priority order and truly represent the needs of the customer. • To help the Product Owner create and maintain the Product Backlog, the team breaks down large features, often called Epics or Themes into User Stories. The team then estimates the effort required to execute each User Story using a metric called Story Points.
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31. 16. Scrum – How it Works continued • The Sprint is an iterative production cycle with a fixed duration, typically two weeks. For each sprint the team selects work from the backlog to be executed during the sprint for release to the customer. Only User Stories that have been completed and accepted by the Product Owner count in evaluating the team’s productivity. The team is careful to select how many user stories to take on for a given sprint. • Development teams hone their collaborative work dynamic so over time they dramatically increase their productivity or, in the words of Scrum, their Velocity. Velocity is a measurement of completed Story Points per sprint. While Story Points often sound like Work Hours, there is a difference. Hours always take 60 minutes. Story Points may start out taking one hour but as the team matures they deliver User Stories in less time. Typically teams increase their velocity 2x to 5x within three to five sprints. • The Product Owner uses customer feedback on delivered products to help them select and prioritize user stories for future sprints. This helps deliver greater value to the customer sooner than many other project management methodologies.
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33. 17. Difficulties when implementing Scrum • Scrum is famously simple and elegant in concept but is notoriously difficult to do well. Here are some of the things that happen when companies transition to Scrum from a Waterfall or less formal methodology. • Teams work on two sprints at a time. Sometimes QA is treated as a separate function. Team members fix bugs from the prior sprint while working on the current sprint. Too much work in process along with high team utilization rates are the biggest threats to efficiency. • As teams get larger collaboration decreases. Recently I was asked to be the scrum master for a team at a large financial institution. The team looked like this. There were 19 team members in New York, led by a lead developer who had an assistant developer. There were further members in India. Because of the size, only the two leads in New York and the one in India were allowed to participate in the daily Scrum. • Product owners do not understand what the team is building. The link between identified customer value and products to be delivered gets broken. The value chain is no longer continuous or able to form a correcting / iterative cycle. • Management assigns the PO because they don’t want to “waste” their time being the interface themselves. Like the game of telephone, something is lost with every communication. • Team does not grasp time goals of project.
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35. 18. Scrum difficulties continued • When a team lives one sprint at a time they don’t have the perspective of the entire project and how the major pieces must fit together. • Not enough time to do sufficient sprints to create a truly usable project. Being told Agility will allow teams to do more in less time, Product Owners and Management overestimate the results of work that has yet to be performed. • Development team member turnover. • Institutional memory disappears in a transactional employee organization. Hiring consultants by the hour seems like a great economy but you loose a lot when the project ends and you kick your team members to the curb. • Product owner turnover. • Management places other work demands on team members. • Project Leadership (Scrum Master or Project Manager) turnover. • Management looses interest.
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37. 19. What is DevOps and where does it fit • Companies who implement Scrum development teams as a first step on their path to Agility often find their improved teams turn out way more product than the organization can handle. The organization can feel like its drinking from a fire hose. • DevOps, short for Development-Operations is a movement to strengthen the collaboration and coordination between the Development teams who create software and the Operations teams of IT who deploy software into their environment and manage the organizations production IT systems. • Software developed using Waterfall based development was usually sent to IT Operations in large discreet chunks. IT then had the luxury of time to deploy it and integrate it into their operations.
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39. 20. The origin of Kanban • Kanban means “card you can see” in Japanese. It is a series of visual signals to trigger and regulate (smooth the flow) of actions. • First used in the Toyota production, colored cards are used to move goods from one area of production to another and to indicate which materials were running low, triggering a Just In Time (JIT) replacement order. • The JIT inventory restocking model was the original purpose of Kanban cards. • Kanban also helps regulate flow and fosters gradual improvement. These are Lean principles. • The most recognizable feature of Kanban is the Kanban Board.
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41. 21. Using Kanban Boards to help Scrum iterations flow more smoothly • Kanban boards helps Scrum users by visually displaying work in process making it easier to limit bottle necks an eliminating the problem of starting too many user stories to complete in the current sprint. • Developers take user stories, usually represented by a sticky note, from the product backlog column on the left and move it from column to column to the right as milestones are met. • There are strict limits on how many sticky notes can be in any one column at a time. Backups at any one step, such as QA, are quickly seen and prevented.
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43. 22. Principles of the new Kanban c.2005 • Visualize work – By depicting processes and work flows as columns and rows, a quick glance by anyone will show progress and bottlenecks. Sticky notes for each task move across the board from left to right. Anyone can contribute and easily see backlogs, work in process (WIP) and product about to be released to the customer. • Limit Work in Process – By limiting the amount of work at each step in the process, the time it takes to travel through the process is reduced, primarily by reducing “task switching” which takes the human mind a long time to fully effect. Multi-tasking is a fraud. It feels like you are getting a lot done as you are touching so many things when in actuality you are spending much of your time mentally changing tasks. • Smooth Flow – A steady flow eliminates bottle necks (wasted time and resources) and reduces crunch times when mistakes happen as people and processes are stretched beyond capacity. • Continuous Improvement – Metrics generated as each work unit meets a progress step (column on a Kanban Board) allow analysis of the system to monitor current performance and identify points of future problems. Optimizing the first three principles increase capacity and reduce opportunities for process failures.
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45. 23. The new Kanban – Another Fork in the Road – Kanban without Scrum • Kanban without Scrum further enhances Lean flow by eliminating the time boxes that neatly separate iterations. Products are delivered continuously on an as completed basis. • Without Scrum sprints there are no regularly scheduled customer demonstrations, customer acceptance, sprint planning or retrospective meetings. These meetings are held as necessary and as convenient. This eliminates fixed schedules which often lead to meetings that have too small or too great of an agenda. Here again, flow is enhanced.
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47. 24. The concept of a Value Chain • Wikipedia - A value chain is a set of activities that a firm, operating in a specific industry, performs in order to deliver a valuable product or service for the market. • Katherine Arline1 - A value chain is the full range of activities – including design, production, marketing and distribution – businesses go through to bring a product or service from conception to delivery. For companies that produce goods, the value chain starts with the raw materials used to make their products, and consists of everything that is added to it before it is sold to customers. • Michael E Porter2 -Competitive advantage cannot be understood by looking at a firm as a whole. It stems from the many discreet activities a firm performs in designing, producing, marketing, delivering and supporting its product. Each of these activities can contribute to a firm’s relative cost position and create a basis for differentiation.
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49. 25. What is Lean and Lean Startup • Lean is the practice of continuously improving how you deliver correct, high quality products/service to customers when they need them. This is accomplished primarily by eliminating waste. • Lean Startup preserves precious capital and resources by testing customer requirements to avoid the waste of producing something that is not valued by the market.
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51. 26. Lean Startup embraces the entire Value Chain • Lean Startup views the value chain as the complete process of identifying the customer, creating and validating a product, producing it and actually selling it to a paying customer. Free samples don’t count. • Lean Startup seeks to conserve resources by encouraging quick failures in as small a way as possible. Created for startups it is equally applicable to large agile organizations as multiple Lean Startup processes can co-exist in an Agile organization. • Lean Startup is based on the idea that you need to accurately identify customer demand in order to deliver real value quickly. To do this you need to identify the smallest product that a customer is willing to pay for. This is known as the Minimum Viable Product (MVP). The MVP is then delivered as quickly as possible in order to judge its value and provide feedback to be able to improve, decide to produce or scrap the product.
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53. 27. Lean Startup- The tested MVP • Lean Startup extends the traditional concept of the value chain to include MVP identification and validation. You can’t have an efficiently profitable value chain without knowing (testing) the product’s value to the customer. The customer must be willing to pay for the MVP in some way for it to be valuable. • The identification of a minimum viable product (MVP) is only the first step. The MVP must be tested with the customer to determine if there is real potential value for the product. Surveys or focus groups are often employed to validate that the customer really wants the proposed product and is willing to pay for it. Sometimes vapor ware, mock-ups and wire-frames are used. • If it is not possible to test the MVP before committing to creating and deliver the product, production is done in as small a scale as possible. Failures are best when they are fast and cheap. Startups do not want to bet the farm on an idea that has not been validated. • If the customer does not validate the MVP, it is replaced with another one which is then tested until a viable MVP is found. This is called a Pivot.
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55. 28. Lean Startup- deliver then measure the true value of the MVP • Deliver the product to measure the market’s actual receptiveness. This is called “validated learning”. This feedback completes the Build-Measure-Learn BML cycle used in Lean Startup. • The purpose of Lean Startup is to create value that a customer is willing to pay for. Measurements of output and delivery to specifications are meaningless. • Measurements of success and failure are made using Innovation Accounting which helps entrepreneurs measure progress, set milestones and prioritize work. It also measures how much value is created for the input.
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57. 29. Integrating Agile Development to the Customer by using Design Thinking • To be truly Agile, customer satisfaction and customer needs, both known and unexplored must be the central driver of processes, process change and projects within an organization. Sadly, this is rarely the case in heavily silo-ed companies. IT most often listens to the voice of management not the voice of the customer. • A movement to bridge this gap called Design Thinking is helping companies improving customer journeys as customers cross silo-ed functions. Design Thinking uses many of the Lean Startup tools, integrating them into a framework that turns customer responsiveness into a competitive advantage. • Customer-centric design creates a customer experience by weaving together touch points from many different functions within an organization. No single internal stakeholder has a view into all of the components necessary for a seamless and profitable customer journey. Dedicated cross functional teams influence many internal groups to bring about the transformational mindset changes that are required to create a true competitive advantage. • Customer Persona is often used to simulate customer journeys through a customer journey map. Monte Carlo simulations can be run to identify bottlenecks and customer frustration points. The customer journey path tree can be optimized to improve flow and throughput.
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59. 30. “Scaling” frameworks to expand Agile Project Management • Agile Scaling extends Agile Development from the team level up to the program level. • In large organizations, agile project management practitioners are often challenged to integrate their initiatives with others going in their organization. Multiple scrum teams work on the same or different products, often • noticed their products often do not meet actual customer requirements or • In large organizations multiple development teams experience difficulty coordinating their production. Product Owners often serve multiple customers represented by siloed management groups. • To be more effective, project leaders have increasingly turned to Lean Startup and Kanban as we have seen. • Another approach is Agile Scale frameworks
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61. 31. Agile Scaling Organizations • Agile Scaling frameworks are recent and are quickly evolving into a mature discipline. If your firm runs multiple scrum teams, a plan for scaling will help coordinate development across silos and be more responsive to management. • Several authors and organizations have developed their own scaling framework. Each one has its adherents. A good approach may be to pick one of these frameworks and stick with that one. Your choice should depend on which of these organizations you feel comfortable with for coaching and training. • Scaled Agile Framework (SAFe) created by Dean Leffingwell http://scaledagileframework.com/author/deanleffingwell/ • http://ScaledAgile.com • Integrated into Rally Software • Agile Scaling Model (ASM) - Agile Alliance http://agilealliance.org
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63. 32. Agile Scaling Organizations 2 • IBM Agility at Scale - Scott W Ambler – IBM Rational • Large Scale Scrum (LeSS) created by Craig Larman https://www.scrumalliance.org/community/spotlight/craig- larman/june-2015/less-agile-or-less-agile • Promoted by the Scrum Alliance • Disciplined Agile Delivery (DAD) created by Scott Ambler http://www.ambysoft.com/scottAmbler.html • http://www.disciplinedagiledelivery.com/introduction-to-dad/
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65. 33. Making an Organization Agile • Richard (Dick) Ellis, PMP PRM CSM PMI-ACP SSGB • http://www.linkedin.com/in/richardellis86 • richardellis86@gmail.com