This is our presentation at the Global Scrum Alliance 2016 in Munich.
As organizations scale Agile, one of the remaining pieces of transformation is the funding, budgeting and PMO. This talk describes how Value Management is applied to maximize the value of organization level investment. It includes concepts such as incremental and dynamic funding, outcome based goals, autonomous teams and measuring value (not work output).
2. Victoria Hall & Linda Luu
VALUE DRIVEN MANAGEMENT
Building an anti-fragile organization
enabling business agility at scale
3. 3
• Principal at ThoughtWorks; CSM, CSP
• Decades of industry experience as an
executive and individual contributor
• Lives in Santa Fe, NM loves the outdoors
Linda Luu Victoria Hall
• Principal at ThoughtWorks
• Lean UX, Product & Portfolio Coach
• Author of The Lean Product Guide
• Lives in San Francisco, loves vegemite
@LindaKLuu
4. 4
Only a fool would try to
make a 5-year prediction
in a world that is so
random.
Credit Suisse CEO, Tidjane Thiam
Source: http://www.businessinsider.com/credit-suisse-ceo-tidjane-thiam-at-bloomberg-evnt-2016-9
6. NARROWING THE GAP
6
TechnologyChange
Time
Tech available to
new disruptors
Enterprise’s ability to absorb
new tech evolution
Gap in ability to
explore and exploit
opportunities
Industry Models
Technology Maturity
Technology adoption use cases
Business Process
Business Model Evolution
TechnologyChange
Time
Tech available to
new disruptors
Enterprise’s ability to absorb
new tech evolution
Gap in ability to
explore and exploit
opportunities
24. COMMUNICATING STRATEGY
24
Vision Goal Bet Initiative
What will we
become?
How might we
achieve this
Vision?
How might we
understand more
about a Goal?
What actions
are we taking
to further learn
about or deliver
on this Bet?
We will be the
highest value
wholesale
distributor
Grow
presence for
small
business
customers
Expand self
service options
for pop-up
restaurants
Develop a
handheld
ordering
solution
26. OUTCOMES THAT MATTER
26
Patient health or
lives saved over
cost containment
Expanding
customer’s
financial
options over
number of
credit cards
opened
Profit per user
over schedule
gate met
Market share acquired over
number of leads generated
51. 51
What we’ve learned.
Executives must change
(it’s not just about the people doing the work!)
Right people, right roles
Products, not projects
Tech as enabler vs Tech at core
53. 53
DECIDING
WHERE
TO START
Think big, start small, move fast
• Thin slice approach
• Identify a reason to change
• Build small, cross-functional teams
• ‘Test and learn’ approach
• Align work to value
• Visualize existing investments - is everything aligned
to high value goals?
54. 54
BUILDING A RESPONSIVE ENTERPRISE
CULTURE
APPROACH
TO
SOLUTIONS
INVESTMENT
RISK
BUSINESS
VIEW OF IT
IDEA TO
REALIZATION
CYCLETIME
Responsiveness
over
efficiency
Weeks, not
months or years
Adaptive delivery,
incremental learning
over
Pre-defined solutions,
fixed plans.
Empowered teams,
owning outcomes
over
Command and control,
order taking.
Incremental,
Intentionally balanced
investment
over
Large, upfront investments,
‘wait and see’ approach
Partnership,
rapid delivery of value
over
Service provider,
delivering features
55. 55
THE LEAN PRODUCT GUIDE
A practitioner’s guide to building viable
products customers love.
Available on Leanpub
Free download for a limited time:
http://leanproductguide.com/
57. THANK YOU
57
For any questions, please contact -
Linda Luu (linda.luu@thoughtworks.com)
Victoria Hall (victoria.hall@thoughtworks.com)
Notas del editor
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Culture eats strategy for breakfast
You are experienced change practitioners– you know this
Have to change hearts and minds to enable true transformation
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referred to a movement transitions from being commonly practiced by early adopters and visionaries to being a common way of being for the more moderate main stream.
Agile in delivery has already jumped that chasm
There can be a chasm between the business side of an organization and it’s technology side. They may be unaligned and working at cross purposes, they may be working on totally different outcomes, they may not even speak to each other or collaborate very frequently. By bringing Value Driven Management into an organization – we are forcing the business to think about delivering more customer value earlier – often much earlier than they are used to.
We help bridge that chasm by principles of agility up the food chain to executives and other business partners – to affect strategy and decision making at every level of the organization.
What we are beginning to see is enterprises more interested in being Agile totally. They recognize that there’s a great deal of goodness in Agile for everyone not just for technology or delivery.
Herbert Benington
Manufacturing and construction
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Even though culture eats strategy for breakfast – still need one and preferably have one that is visible and understood by your organization.
We start here because – this is where executives are most comfy and
Certainly this is where you start to set priorities through allocation of $
Story
- artifacts
Some mechanics / explanation
EASY
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Here’s a common situation. We’re in a boat – your organization – and parts of the organization are pulling it in totallly different diretions.
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Our client a large wholesale distributor – they delivered mostly food but also supplies like napkins and plates to restaurants.
This is a tough business to make money in – price constrained since prices are well known in the industry it’s hard to differentiate on price.
Company mostly focused on efficiencies – keeping costs low. They’d evolved a kick ass distribution organization - warehouses, planes, trucks, drivers – everything.
But… over time what they noticed were... Smaller distributors starting to eat away their market share through being able to
better meet their customers needs. They were closer to the customer and able to move faster with trying new things.
In particular...
#
Better able to help these folks
Small business that couldn’t wait for an interaction with a salesperson.
More in tune with eCommerce and self service and this is where the smaller distribtors were able to excel and steal market share.
#
This was an acknowledged problem
Business wanted me too offering
Mktg – sales efficiency with existing offering
Technology – totally disconnected and working on a sales tool upgrade and platform unification.
#
Most places have a strategy but few have developed them to the degree that they capture all the work they are doing
We have an artifact called Lean Value Tree for sharing strategy – get to the specifics
For this example – We helped them develop a focused strategy to explore the space they wanted to advance in – And it looked like this.
Goal – 1st opportunity to set priorities and enable decision making through establish some constraints.
--$$ funding
-- MOS
Talk more in a second.
If you do this you – make it easy to talk about and share strategy at all levels and especially easy for anyone in your organization to see what they are working on and how it aligns to the overall Vision.
#
Branches give your organization clear alignment of ideas. Funding levels and Outcomes help to direct decision making at each level without overly constraining it.
Goal funding breaks down to Bets and Bets to Initiatives,
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The other decision that needs to be made is what outcomes is the org after.
Get away from keeping score based on schedule or budget and focus on outcomes that indicate better if we are making progress in a market – fundamentally are we making our customer’s lives better – easier in some way.
Outcomes that matter – decide on how you will measure progress.
Again – these help guide decisions at each level and gives the teams at each level a way to see if there are going in the right direction.
Want to focus on customer relevant outcomes –at the Goal level – things like cycle time to value realized and customer adoption of your solution.
Once you have all of these - you end up with…
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Putting it all on one page and sharing how you got there – creates the alignment that was previously lacking.
By thinking through these things- you force a discipline on the organization that helps you to streamline and to focus on your end users and on making them better
Deciding on funding levels and on how you will appropriately measure success –
helps give cross functional teams good boundaries to own the work to unlock their own creativity in how to solve problems and move the enterprise forward.
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As Reid Hoffman would say – ‘highly aligned and loosely coupled’ - delivery higher value and more value much sooner.
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Evidence based decision making that executes more quickly – learn faster and better.
This is how we operationalize the change in strategy.
In order to do all of this – it takes time; there is no “magic’ – you must change many things culturally. This takes discipline…
IF it’s hard to change one team to work in a new way – it’s exponentially harder to change the whole organization. One of the keys is to adapt what the PMO does and how it does it.
-PMO Limiting WIP Governance
#
Start with you are your PMO
Why start here – cross cutting for the entire enterprise and often sits between biz and product delivery
Way to get outsize impact.
Project management often called cat herding ; these cats are being herded … at all
In the old days – in traditional organziations..
#
Cat herding might look like this
Fundamentally the office tried to control what happened based on decisions and plans made far in advance of actual work/learning about whether or not those things were valuable.
We are after..
#
Something more like this that unlocks the creativity of an org through a more facilitative role – more of a coaching role – Scrum master-y like
VRO – why
-controller / accountant to coach/ facilitator
Shift to focus on value creation / delivery-
Do this by – making everything visible (strategy, LVT, allocation, capacity, when folks are coming available to work on next highest idea
Protect the process – governance and consistent use of MOS
Foster “evidence based decision making” Trade off trying to predict what’s to happen to accuracy in deciding based on what has actually happened.
The possibilities!
Large telecom - reduced the number of project managers by ½ - much less accounting, control & tracking - measuring deviations from plan - to one that was about facilitating decision making; helped to ensure transparency of decisions, alignment to valuable outcomes, helping to make decisions obvious. Moved them from “Oracle” based management - HIPO - to management where decisions were clear based on the outcomes of past actions and the stated strategy
Stop 20% of work at an entertainment services firm again since it didn’t align with work
#
Don’t let this be you
Use the VRO to help align work and to make capacity visible – often we encounter people and teams tryinig to work on a dozen things at a time
Resist the urge to start new work before you’ve finished work already in flight
LIMITING WIP is a first order practice for VDM not just for teams but at all levels.
Do not start work that doesn’t align simply because some executive thinks it might help
Do collaborate with cross functional teams to try and figure out the highest priority ideas to try
Do make capacity and usage visible
Do protect the process
Do not let this happen to you.
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Governance – Introduce PVR
Fundamentally – PDCA cycles - Act Measure/Review Choose
Decide more frequently
Levels
Time frames
What do you do, who’s involved, why important, focus on learning and results not beating each other
Stop, Pivot, Go More
Much easier to steer and we are risking far less financially since we are consistently making smaller investments and seeing whether or not those investments are paying off.
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Summarize – Move from left where funding and features are decided upfront and then tracked – where we typically do try and spend all of our budget or take all of our scheduled time
To making decisions based on feedback. Where we risk less over shorter periods of time and are constantly asking ourselves are we working on the most valuable thing.
Financial services firm reduced planning cycles from 6 mos to 6 weeks much more collaborative, cohesive, and creative.
away from adversarial business case justification of work which was largely fantasy
to incremental collaborative decision making closer to the activity that was producing valuable outcomes.
This is the promise
Introduce cultural piece important story.
Case study: Wealth Mgt
Before value management and scaling agile initiatives were implemented, kicking off a new initiative felt like this..
Unless you have a business case, idea, list of features disguised as a product roadmap and you know exactly how much it’s going to cost.
This goes contrary to taking an ‘test and laern’ approach to validating an idea.
As we implemented value mgt, this is what happened...
WHAT WE thought from media etc
http://www.businessnewsdaily.com/2698-americans-fear-retirement.html
WHAT WE FOUND – BOOMERS DON’T THINK ABOUT RETIREMENT IN THE SAME WAY AS THE PREVIOUS GENERATION
From have to, to want to
I do everything I’ve always done, only slower
http://www.aarp.org/work/retirement-planning/info-2014/boomer-retirement-little-savings-means-working.html
Team met with leaders and shared insights
Team met with leaders and shared insights
Story #2
GOB’S STORY – Miiddle management blamed for everything, responsible for nothing
http://www.geograph.org.uk/photo/3478403
Simply put, VDPM is an operational framework that enables an organization to rapidly respond to market opportunities, maximize the value delivered from their investments and tie together the strategy and execution people of the organization.
It is important for us to point out right up front, that when we say “investments”, we are not only talking about new product innovation, but also about all the investments made to deliver value to your customers. That means your Business as Usual (BAU) spend, including defect repair, operational efficiency changes, and technical debt management.VDPM is different than traditional approaches to portfolio management because it's focused on business outcomes that are aligned with the organization’s strategy and it unlocks the creative power of the organizations people.With VDPM, smaller investments are made and funded incremental. They are supported by a lightweight governance and planning process that facilitates periodic review of the desired business outcomes. This gives leaders the control to make investment changes when ROI isn’t turning out as expected, or to accelerate investments that are proving valuable much earlier than traditional portfolio management approaches.
We are a group of passionate individuals and a software solutions leader with technology at our core.
Over time we’ve grown to incorporate an experience design practice and organizational
development capability to help our clients to build solutions loved by their customers, as well as
helping to grow and exercise the organizational muscles that embed successful innovation.