Using Agile and Lean to Lead Business Transformation A Case Study Introduction Situation Initial Assessment Introducing Kanban to the development organization Approach to Achieving the Business Objective Introducing Kanban at the strategy execution level Ceremonies for the Strategy Execution Kanban Results of our effort Application of Boyd’s O-O-D-A

Dennis Stevens Synaptus dennis. stevens@synaptus. com. 770. 851 Dennis Stevens Synaptus dennis.stevens@synaptus.com 770.851.8025 web: www.synaptus.com blog: www.dennisstevens.com twitter.com/dennisstevens Agile Project Management Agile Project Recovery Kanban Lean – Agile Transformation

Agenda Obstacles to Business Transformation Overcoming Obstacles to Business Transformation Case Study Situation Initial Assessment Introducing Kanban to the development organization Approach to Achieving the Business Objective Introducing Kanban at the strategy execution level Ceremonies for the Strategy Execution Kanban Results of our effort Continuous Transformation - Boyd’s O-O-D-A

What makes transformation hard? #1 Difficulty translating transformation goals into specific action #2 Methods of problem solving that aren’t sufficiently collaborative to address different perspectives and competing concerns #3 Challenges coordinating across teams resulting a lack of focus and abandoned efforts

By the way Culture, culture, culture The obstacles to successful software development are often not in the software development organization We have to change the habits and conversations in the organization to make lasting change Lean and Agile provide us tools to overcome the obstacles to transformation – while creating the potential for changing the culture

Overcoming transformation challenges #1 Difficulty translating transformation goals into specific action Business Value-Performance Heat Map (Story mapping, Business Value, Performance) Explicitly connect the transformation effort to business capabilities

Overcoming transformation challenges #2 Methods of problem solving that aren’t sufficiently collaborative to address different perspectives and competing concerns A3 Problem Solving (Lean) Leverage a proven collaborative problem solving and planning tool

What makes transformation hard? #3 Challenges coordinating across teams resulting a lack of focus and abandoned efforts Transformation Execution Kanban (Lean -Agile) Use visible tools for tracking and coordinating the status of transformation activities

Case Study: Situation $100 million retail service provider Merchandising Remodeling Construction Resets The economy has drastically reduced remodeling and construction Significant shift in the market eliminates merchandising The entire business focus is now resets Not traditionally profitable – and the business processes and technology were not optimized to perform resets merchandising offering went back in-house due to customer margin pressure and conflict of interest concerns; Remodeling and Construction were significantly down due to lack of investment by customers; leaving resets as the core business

Initial Findings: Technology Software development was technically competent but not very mature and in churn The system had been designed in information silos Spreadsheets and personal recall were used to run the business - the spreadsheets were the glue between the information silos There was a lack of access to any management information in the system – there was no useful reporting – management couldn’t get out what they needed Over 40% of technology developed over four years had not been deployed in the business

Swivel Chair Integration Approach: Technology Performed information flow analysis against current systems and processes to address the new needs Six systems and over a dozen spreadsheets Swivel Chair Integration Everything needed to be fixed. Within the timeframe we couldn’t fix the entire system – we need to focus on just the areas that we could change to achieve the strategy.

Approach: Technology Established Kanban board for development - visualized their process and all the existing work Established three classes of service based on source of funding Still have not explicitly limited WIP on the development board Major bottleneck was in customer acceptance Next Analysis Development Acceptance “Done-Done” (5) (3) (5) (3) NPD NPD has since moved to an online board – not visible on our board anymore. Switched payment for Defects from hours committed to hours moved to Done-Done Core system WIP is limited from the strategy board – that’s next By the time the developers delivered anything – the business had moved on. Either solving it with a spreadsheet or deciding it wasn’t actually that important to fix. The problems would then reemerge later – repeating the same crisis over and over. Enhance Core System Enhancex of 40

Identifying the Constraint Having visibility into the constraint create the opportunity for conversation with the business. Why is the stuff the business asked us to build not the stuff the business needs?

Addressing the Constraint We had development under control – but we had to get rapidly get business results We needed to help the business articulate the most important requirements to technology We needed to understand the conflicting concerns in the business that resulted in the low adoption rate We needed to create focus on implementing change in a time of rapid shift, turmoil, and duress

Initial Findings: Business Owners: Very successful entrepreneurs with deep understanding of the industry – innovative and strategic thinkers Management: Tactically focused, in transition, stretched very thin Lack clear line of site to their costs or economic drivers in this new business model Out of necessity run the business on intuition and response to crisis Back office: Very hard working knowledgeable people Overall: Not a demonstrated history of getting ideas from concept to implementation

Approach: Business Facilitated Strategy Articulation based on Strategic Goals, COGS model and SWOT analysis We changed the senior leadership conversation from “technology” to “business outcomes”

Approach: Business Analyze business model to identify capabilities This changed the line manager conversation from local improvement to system improvement

Verb Noun (Action – Entity) Approach: Business Assess the Business Capabilities Value (border) How strongly does this affect focusing objectives? How strongly does this affect standard operating objectives? Is this value-added? Supporting? Controlling? Performance (fill) How is this capability performing today? Would a small improvement here improve BT bottom line performance? Do we understand how to improve performance? Risk (dot) How difficult is this capability to scale (for CR1)? Is this constrained by Customer (HD) policy? Is the process complex? Highly dependent on other capabilities? Subject to compliance issues? Verb Noun (Action – Entity) KEY High Value Medium Value Low Value Low Performing Medium Performing High Performing High Risk Moderate Risk Low Risk

Capability Value Performance Map Building this model resulted in a lot of explicit conversations about business value, performance, and risk at the business outcome level.

Assess the model Capability Map gave us clarity on what the business did and what we had to change to deliver value. Assessing the model determined what was most important to the business. The business was aligned with the outcome because they developed it.

Swivel Chair Integration Approach: Business The most important areas to focus on became clear – to technology, to management, and across the business. Swivel Chair Integration Everything needed to be fixed. Within the timeframe we couldn’t fix the entire system – we need to focus on just the areas that we could change to achieve the strategy. We aren’t trying please every individual – the conversations are about the bigger business outcomes.

Overcoming Obstacles to Transformation #1 Difficulty translating transformation goals into specific action Strategy is clear and there is a shared context within the business Clearly understand what capabilities need to change and the impacted processes and technology Different perspectives and competing concerns have been addressed

A3 Problem Solving: Overview Notice the result of the A3 shows three key standards to get work done. Outcome – Deliverables in the context of the problem & prioritized (isn’t this what we want from the business?) Sequence – what order do they need to be done Timing – When will it be done (can be assigned at the last responsible moment) Owner - Coordination

A3 Problem Solving: Outcome Notice the result of the A3 shows three key standards to get work done. Outcome – Deliverables in the context of the problem & prioritized (isn’t this what we want from the business?) Sequence – what order do they need to be done Timing – When will it be done (can be assigned at the last responsible moment) Owner - Coordination

A3 Problem Solving: Outcome Notice the result of the A3 shows three key standards to get work done. Outcome – Deliverables in the context of the problem & prioritized (isn’t this what we want from the business?) Sequence – what order do they need to be done Timing – When will it be done (can be assigned at the last responsible moment) Owner - Coordination

A3 Problem Solving: Analysis Notice the result of the A3 shows three key standards to get work done. Outcome – Deliverables in the context of the problem & prioritized (isn’t this what we want from the business?) Sequence – what order do they need to be done Timing – When will it be done (can be assigned at the last responsible moment) Owner - Coordination

A3 Problem Solving: Analysis Notice the result of the A3 shows three key standards to get work done. Outcome – Deliverables in the context of the problem & prioritized (isn’t this what we want from the business?) Sequence – what order do they need to be done Timing – When will it be done (can be assigned at the last responsible moment) Owner - Coordination

A3 Problem Solving: Plan Notice the result of the A3 shows three key standards to get work done. Outcome – Deliverables in the context of the problem & prioritized (isn’t this what we want from the business?) Sequence – what order do they need to be done Timing – When will it be done (can be assigned at the last responsible moment) Owner - Coordination

A3 Problem Solving: Sequence, Timing and Owner Notice the result of the A3 shows three key standards to get work done. Outcome – Deliverables in the context of the problem & prioritized (isn’t this what we want from the business?) Sequence – what order do they need to be done Timing – When will it be done (can be assigned at the last responsible moment) Owner - Coordination

Overcoming Obstacles to Transformation #2 Methods of problem solving that aren’t sufficiently collaborative to address different perspectives and competing concerns Management follows up (some actually do) with their line managers from their A3s. We have a clear understanding of what needs to happen to delivery the solution – not just the technology We have explored unintended consequences and gained acceptance of the solution from the impacted parts of the organization We understand the relationship between the technology deliverables and the other parts of the organization

Now the big obstacle Execution Technology is a small component of the solution - how can we coordinate the necessary process and organizational changes across HR, the field, accounting, and operations? How can we get technology deployed so that the business realizes the value? How can we get management to maintain focus?

Strategy Execution Kanban Board Expand / collapse tasks from the plan in each column Next Analyze Prepare Execute Measure Expedite Acceptance Criteria Acceptance Criteria Acceptance Criteria Acceptance Criteria

Strategy Execution Kanban Board

Strategy Execution Kanban

Strategy Execution Ceremonies Walk the board with management once a week. Blocked items are flagged with a red tab with a note of who needs to unblock it. There is a lot of focus on getting stories on the technology board through acceptance now. We have an expedite column on the management board. We limit crisis to one at a time. Board ensures current projects maintain (regain) focus. Today, the line managers are more interested because they need to move their card to execution – defects often still linger in acceptance.

Overcoming obstacles to transformation #3 Challenges coordinating across teams resulting a lack of focus and abandoned efforts Expand and collapse model makes coordination explicit We have structured conversations about how to get to “Done” The business is motivated to pull work from acceptance in development – we have elevated the constraint

Results Achieved focus across the business Reduction in the crisis management tendency Technology deployed on time – continue to refine and deploy enhancements in flight Provide management with real time data to manage their resets Business is delivering work profitably Trust has been established between us (effectively the technology group and PMO) and the business Continuous transformation model in place in the business Development and deployment was iterative. Basics in place at kick off. Continued to refine and deploy enhancements in flight. Despite lack solid engineering practices. Aggressively followed up daily on use of the system. The engagement has been extended and the contingency will be paid

Success Attributed To Visual control of the Kanban board Focus Momentum Shared Alignment Visual nature of the strategy articulation Decisions by developers and management are made in a shared strategic context Collaborative nature of the capability map, A3, and the Kanban board Shared understanding Participative design Accountability Rapid maturing of the organization regarding strategy execution Courage and commitment of the Beam Team leadership

Model of Continuous Transformation

Time as a Strategic Differentiator The new Bargain of Agility The primary concept of the new Bargain of Agile is to expend the least resource possible to exploit the next most valuable opportunity. Observe Orient Decide Act Unfolding circumstances Implicit guidance and control Implicit guidance and control Understand Culture Tradition New Information Previous Experience Synthesis Action (Test) Observations Feed Forward Feed Forward Decision Feed Forward OODA Military strategist Colonel John Boyd described the OODA loop for fighter pilots. It has since been applied to define the Marine Corps Doctrine in Maneuver warfare. Chet Richards applies it business strategy in Certain To Win. The primary concept is to expend the least resource to accomplish the next objective and to operate at a decision cycle faster than your competition can achieve. This allows you to go farther and faster than your competition. Unfortunately, it can not as simple as “observe, then orient, then decide, then act.” In fact such a sequential model would be very ponderous and would not well describe how successful competitors operate. The key to quickness turns out to be the two “implicit guidance and control” arrows at the top. In other words, most of the time people and groups do not employ the explicit, sequential O-to-O-to-D-to-A mechanism. Most of the time, they simply observe, orient, and act. There is data coming out to support this (see Gary Klein’s book, Sources of Power.) The question, of course, is, “What action?” A thinking opponent doesn’t provide us with a laundry list of his tactics so we can work out responses in advance. The mechanism which handles this uncertainty and makes the loop function in a real world situation is “Orientation.” As we suck in information via the “Observe” gateway, it may happen that we notice mismatches between our orientation and what we’re observing in the real world. If we don’t spot these mismatches and correct our orientation, the actions that flow from it may not be as effective as we intend. This can open up opportunities for our opponents. Boyd’s concept of strategy places heavy emphasis on attacking the other side’s orientation to open up just these kinds of opportunities, and he suggests many ways to do this. Note that “OODA” speed is quite different from the speed of our actions. Doing something dumb or irrelevant, but doing it at high speed, may not provide much of a competitive advantage. The “Decision/hypothesis” block is the learning part of the loop, where we experiment and in the process add new actions to the Implicit Guidance and Control link. You can also think of it as programming orientation for future intuitive actions. Outside information Feedback Unfolding interaction with the environment

Dennis Stevens Synaptus dennis. stevens@synaptus. com. 770. 851 Dennis Stevens Synaptus dennis.stevens@synaptus.com 770.851.8025 web: www.synaptus.com blog: www.dennisstevens.com twitter.com/dennisstevens Agile Project Management Agile Project Recovery Kanban Lean – Agile Transformation