Category: Agile

Management by Spreadsheet? You’re Doomed

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How Bad Operations Management – Capacity Utilization and “Managing by Spreadsheet” – will destroy your company.

Of course, this favorite tactic of ineffective operations managers takes so long to unravel everything you’ve worked for that leadership never figure out what happened. After the laws of economics bring the company to its knees, smaller in revenue and resources, they begin growing again, repeat the same mistakes, and crumble.

My colleagues and I enjoy calling this flawed approach “Management by Spreadsheet” – and it is unfortunate that this is a scenario where leaders rarely learn from history and are proverbially doomed to repeat it.

I understand, knowledge workers are expensive and variability of demand for their brilliance as spending on payroll rises is a terrifying prospect.

But I promise you this: The moment you attempt to control variability in capacity utilization for your individual allocable resources, you have signed a death sentence for your knowledge-worker-dependent company.

Why? A focus on capacity utilization sends a clear message to employees that there is nothing more important than the time they spend actively engaging in the most important function on their job description – which you probably put right on that spreadsheet. Every individual will now maximize their own workflow and they will do it at the expense of the overall system.

How? This emphasis tends to be set squarely on the “run” phase of each worker’s process. For example, a developer now has the clear message that optimizing for time spent coding is the only expectation from leadership. When an individual worker in a complex process optimizes their own capacity utilization, there are a number tactics they pursue:
– Isolation from other workers rather than collaboration.
– Dependency on other workers to complete the planning, setup, and validation portions of their workflow, decreasing quality and overall value-add.
– Demand to receive ever-larger batches of work to increase the amount of time they can work uninterrupted.
– Increasingly large-batch output, increasing cycle time and decreasing quality.
– Increased external locus of control as anything outside their large-batch run-phase focus is not their “job” anymore.

As a dog returns to his proverbial vomit, so also the operations leader focusing on capacity utilization will do everything in their power… To make this situation EVEN WORSE. (S)he will add capacity to alleviate bottlenecks.

The complex system in which individual processes optimize their own run-phase process inevitably puts immense stress at a single point in the system. Whether one person or an entire department, capacity utilization management will create one crisis after another due to bottlenecks. The individual (or team) who becomes the bottleneck becomes overwhelmed and will wave every red flag they have as high as they can.

And leadership, who put them in this painful situation, attempts to save the day with additional control over capacity – by adding NEW resources at the bottleneck.

Of course, because variability of demand was the original problem, this means capacity bottlenecks will emerge in each subsequent silo in the system over time. Typically, this does not happen within the course of one project so no one can see it except the leader who is making the bad decisions in the first place.

In software development, where resources are extremely expensive and in short supply, this has horrible consequences – many projects can stall at the same bottleneck due to the lengthy cycle time of “talent acquisition”. Companies make hiring decisions in a state of crisis, when they are least likely to consider the long-term impact of the decision for their payroll or company culture.

At first, this leads to increasingly expensive hiring decisions with the fallacious assumption that resolving this one bottleneck will balance out the system. Then, due to variability in demand and increasing batch size and feedback cycle time, other bottlenecks inevitably emerge.

This is when leadership starts doing things that make alarms go off for everyone – suddenly, because the operations tactics have made payroll expense more of a burden than ever, the company stops hiring expensive resources out of panic and begins taking the cheapest body they can throw at the bottleneck in the shortest time.

You will see your first major walk-out of your most important resources begin.

In a state of denial, a capacity utilization manager will see this as a windfall, since payroll just went down. A systems view sees this is the beginning of the end, because the ratio of people with the most historic commitment, highest barriers to exit, and longest legacy of contribution to company culture – to those who are cheap and new and willing to leave any timeout – has just shifted drastically.

If you haven’t realized it yet, that spreadsheet is lying to you and it is pushing you toward financial crisis.

The truly sad thing is that some portion of executive leadership – sometimes all of them – actually believes things are getting better. More numbers and more spreadsheets translate to “we’re doing the best we can with a hard situation.” So the capacity utilization advocates survive the crisis that follows, because they have the spreadsheet that pacifies the misled leaders. The focus stays on utilization, bottlenecks, and talent acquisition, continuing the downward spiral.

Of course, you’re also no longer leading the same company as when you started tracking capacity utilization of allocable resources – whatever cross-functional teams composed of collaborative contributors you had are gone. Sometimes, an entire functional unit has turned over, leaving you with a group that was forged in the mold of large-batch, long queue, high cycle time work.

A few bad projects and damaged customer relationships later and that variability of demand combined with the additional capacity from less effective resources create a perfect storm. A small but perfectly manageable drop in demand and every individual can no longer maximize their capacity utilization.

Panic ensues.

Your most expensive resources probably start looking for another job because they see very clearly that the marginal return on their weekly payroll just tanked.

The second walk-out occurs at this point, continuing to strain relationships with existing current customers while placing the occasional project in crisis as another resource is taken from their silo and expected to hit the ground running.

Revenue is still falling, so low performers are sought out and “unnecessary” benefits are reduced. Fire a couple sales people here and a few testers over there because they can’t easily prove how they add value. Replace your talent acquisition rep. Anyone that was never a bottleneck, in fact, is expendable – but you’ll start with anyone you can get away with firing so that you don’t have pay out accumulated vacation or other obligations.

I assure you that the entire company sees that this fierce loyalty to “managing by spreadsheet” has resulted in the destruction of everything that made your company an awesome place to work. Everyone is now looking for a job.

Because the system has been trained against responsiveness to demand variability, it only takes a few more waves in the natural ebb and flow of demand to make you desperate enough to layoff anyone who is too expensive for their contribution at the exact moment of desperation. Anyone who was holding off on leaving the company due to timing or a sense of pride in “finishing what you start” will now also actively look for a job.

Now that you’ve shrunk to the point that less managers can “manage” the spreadsheets, you fire them, too.

Congratulations, you have basically destroyed everything you had worked to achieve with your company.

Unfortunately, many companies do not not learn their lesson, never ask the right questions, continue their flawed approach, and repeat the cycle of growth and collapse until the reputation for mismanagement makes it impossible to continue the vicious cycle.

If you are at any stage of this debacle, it’s not too late. The same internet upon which you found this post was built based on scientific principles from economics and queuing theory that can save your company.

Send me a message to find out how.

7 Simple Steps to Agile Transformation

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I am never sure how to answer someone who says “What is agile?” After all, my mind is racing so fast that my ultimate, simple explanation – “A way to innovate and deliver products more effectively” leaves me wishing I could kidnap people for a 3-day course on lean-agile and continuous delivery.

What I can simplify (for someone who has a basic understanding of agile) are the steps in a true transformation, so that they can let me know where they are in the process.  Note that I have ordered these quite logically, while the real world is full of resistance, grey area, and co-evolution.

  1. Establish a cadence of synchronization (typically, this is scrum). Hypothesize the results of every change ahead of making it, test it, and validate or invalidate the hypothesis.  Inspect and adapt.
  2. Change from a human resource allocation mindset to a well-formed team mindset.
  3. Change from a finite project mindset to a living product mindset.
  4. Sell who you are, not what you plan to have on a shelf in X months.
  5. Change from a P&L and ROI mindset to an Economic Value Flow across the organization mindset (including upgrades in equipment, training for knowledge workers, benefits that raise barriers to exit).
  6. Change from centralized (top-down) market research, innovation planning, and risk assessment to distributed control over prudent risks.  This requires a framework for self-validation of discoveries, exploitation of opportunities, and communication of results.
  7. Change from performance tracking and formal leadership to systems optimization and organic leadership.

Hit Contact if you’d like to discuss your scenario or any of these points – I’m always available.

Do Project Tasks go in a Scrum Product Backlog?

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I get this question frequently when training agile and scrum teams:

Do Project Tasks Belong in a Scrum Product Backlog?

YES.

Since answers to this question I have seen in chatrooms are typically insufficiently argued as part of a crazed political debate full of comments taken out of context, this very pragmatic question deserves a bigger picture answer – because the need to ask the question is a symptom of a stagnating transformation.

A successful shift from stage-gate or waterfall development processes to agile, Scrum, or Kanban requires a fundamental change organization-wide: from maximizing ROI and shareholder value to maximizing Economic Value Creation and sustainable competitive advantage. If this shift does not occur, the improvements gained from agile practices will inevitably stagnate.

Jez Humble refers to this state as Water-Scrum-Fall, that unfortunate state where most agile and DevOps initiatives plateau.

Most often when I talk to development teams, Product Owners, and ScrumMasters, this is often blamed on a lack of executive buy-in.

I completely disagree.  

I have also blamed a manager or two for the imperfections in the agility of a company, so I can relate to this view. To show you why you might not even want executive sponsorship, let’s revisit the view of a corporation as a minimum viable superorganism.

Complex Adaptive Systems Leadership

A corporation is not a machine with various parts to replace or maintain in isolation, it is a superorganism. It is a biological phenomenon that is not sufficiently explained by social contract theory or through monetary theories of motivation. Judgments about this reality are very easily clouded. Unfortunately, once measurement and monetary incentives change the natural behavior of the superorganism, it is difficult to change back – making it easy to fallaciously claim this as proof of their effectiveness.

Quantum physicists have suggested that undisturbed systems in the universe naturally stay in multiple states simultaneously, unless someone intervenes with a measurement device. Then all states collapse, except the one being measured. Perhaps what you measure is what you get. More likely, what you measure is all you get. What you don’t (or can’t) measure is lost.  – H. T. Johnson, “Lean Dilemma”

So when you hear “We need more buy-in from management” this is absolutely incorrect.  It is even counter-productive!  Adaptations by a complex system, that disruptive creativity and innovation agile champions desire, can only occur through organic, emergent leadership – a tribal, heretical rebellion. Adaption to a new stimulus may have a focal point, a “leader” who organically builds up energy in a new direction – but this leadership is an emergent property the complex system. In contrast, formal leadership (“management”) is a crystallization of a complex system, an attempt to reinforce a desired “normal state” – a force that exists counter to emergent leadership and adaptation. By default, formal leaders at all levels of an organism are incented (through power, money, and Agency Dilemma) to maintain homeostasis – i.e. the status quo. Even if a formal leader becomes the emergent leader of adaptation, this will be odds with her formal leadership. Unless she is willing to risk the loss of formal leadership, she will dissolve her capacity for emergent leadership and resume promotion of homeostasis – no matter how much it dampens creativity, innovation, and sustainable competitive advantage.

Evolution of a superorganism through disruption – whether a lean or digital or agile “transformation” – cannot occur if any one piece of the system is optimized in isolation from the whole because any superorganism, as a complex adaptive system, will exert tremendous energy to maintain homeostasis. The larger the superorganism, the more likely that optimization of one function or team will result in a net loss of desired adaptation (whether the desirable “adaptation” is called innovation, process improvement, or “growth”).

So, when a formal leader blesses a piloting of lean and agile practices by a completely isolated team, this is the superorganism equivalent of a mother’s amniotic sac – the team can establish itself as a unique complex adaptive system while in isolation, fed by the resources of the maternal superorganism but shielded from the homeostatic processes of the parent system. The moment this new team is re-integrated into the larger system, continued adaptation is unlikely. The company attempts to spread the innovation and creativity culture they achieved but instead can only formalize a shift in a subset of practices.  These practice, outside the context of psychological safety, a well-formed collaborative team, flop. No single activity of the pilot team will have the same value implemented outside the context of the pilot team’s “bubble” that safeguarded it against the homeostatic forces of the superorganism!

But wait – what about that “net loss” in innovation, creativity, and efficiency I claimed?

In practice, a company that adopts an agile process (let’s say Scrum) as a change in behaviors isolated to the teams developing software causes the rest of the system to expend energy maintaining homeostasis, and even more energy wasted by agents accommodating these homeostatic forces so that the development teams can preserve their no-longer organic place in the system.

I think you know exactly what that looks like:

  1. Updating documentation processes without seeing them as “artifacts” that emerge from an adaptive process rather than social contracts that require formal sign-off.
  2. Replacing one tool with another, causing a new set of employee workarounds to occur.
  3. Increasing frequency of software releases without changing the size of organization commitments.
  4. New meeting names that don’t change communication patterns or the homeostatic, status quo, “normal” flow of information.
  5. Continuous backlog decomposition as a manual transfer of a large-batch investment into small-batch development items.
  6. Oops! Another manual transfer at the end –  of small batch engineering back into large-batch approval processes.
  7. Changing job titles without addressing diffusion of responsibility and the lack of psychological safety inherent in the culture of the system.
  8. More overhead and forced “transparency” than if nothing had changed, through extra meetings, reports, metrics, and analysis, due to the natural distrust between formal leadership and emergent leadership, and the lack of trust in information flow between the homeostatic processes and the aberrant nomenclature of the development teams.

In the middle of all this, a large organization grabs their Project Managers and their Business Analysts, or anyone cheap who is around and doesn’t have the “status” a Product Manager, Director, or VP, and switches around their responsibilities to call them “Product Owners” and “Scrum Masters”.

What a debacle.

The newly-minted Product Owner receives Project Plans full of important tasks and milestones and big nasty Use Case document and an even bigger, unapproachable set of Technical Specifications – and is told to manage what the team delivers with User Stories.

Now in the midst of all this, should the Product Owner include Project Tasks in the Product Backlog?  Or to get down to brass tacks, could a task ever be a Product Backlog Items?

Absolutely!

But not all of them.

Some “Technical” Tasks (specifically not User Stories) are still Product Backlog Items

Technical tasks that create demonstrable economic value that the organization can capture, a known cost of delay, but are completely invisible to the user STILL NEED TO BE PRIORITIZED relative to other potential Product Backlog Items.

This, of course, is why the question of if these belong in the backlog is sign that a systemic shift in thinking has not occurred. If you are optimizing for project ROI, then these tasks just don’t have the marketable, monetizable potential of each Use Case. If you have a systems view of optimizing the flow of economic value creation, these tasks are judged relative to any other potential investment. Economic investment is continuous, the economic value created can be judged continuously, delivery and value capture is continuous, and you can prioritize based Weighted Shortest Job First or another collaborative decision making process about the of Cost of Delay.

“Artifact” Tasks are an Agile Anti-Pattern

There is, however, another kind of project task in Water-Scrum-Fall that SHOULD NOT be in any development team’s backlog: artifact tasks. These are things like “Complete wireframe for new home page” and “Document Social Integration for PokemonGo”. No matter how you small-batch these tasks, these are not Product Backlog Items. These are not even artifacts. Artifacts are the tangible leftovers of the creativity and innovation of a strong agile software team. A documentation, design, or planning task is antithetical to economic value flow. It is a trap. A box you put your money in and bury. It takes all the value-add, throws it in a pile, and lets it sit there, unused, as it become gradually less valuable.

This mini-waterfall process – this outrageous, lean-agile anti-pattern – surfaces in three ways, all of which I whole-heartedly reject and will actively undermine the capacity of others to pursue it in hopes that my heretical tribal rebelliousness will gain emergent leadership support:

  1. Business Kanban and Program Increment Planning tasks that lock up all creativity and innovation prior to the development team passively receiving instructions (as you see in shoddy implementations of the Scaled Agile Framework)? FAIL! TRY AGAIN!
  2. Tasks for non-developer “members” of the development teams completed as Sprint Backlog Items separate from the User Stories, thereby formally dividing cross-functional collaboration and preserving us-them Guilds (whether in dual-track Scrum or within even the shortest sprint)? FAIL! TRY AGAIN!
  3. Sub-tasks that formally divide up User Stories into function-specific tasks to complete? FAIL! TRY AGAIN!

These are all agile anti-patterns that prioritize tools, social contracts, and “process” over collaboration, communication, relationships, and creativity. You will never disrupt your organization, and your organization will never disrupt your industry, sorry.

“Milestone” Tasks are a Continuous Delivery Anti-Pattern

Since we started this asking if the BA / PM as PO ought to put Project Plan tasks into the Scrum Product Backlog, I’d hate to leave out “milestones”. Now you may say, “Andrew, that’s ridiculous, no one would treat a dependency as Product Backlog Item!” Indeed, ridiculous. But that’s the ultimate sign of your Continuous Delivery anti-pattern. Truly optimizing the flow of economic value creation across the entire complex adaptive system would completely remove “milestones” and “dependencies”. If you can’t get rid of Project Plans completely, and continuously deliver and validate Finished Story Benefits for ALL work that the organization takes from identified pain to economic value capture, whatever you started pursuing in your agile, or digital, or lean, or devops transformation, you’ve plateaued as a company.

And this is the really the paradox that made the lengthy description of complex adaptive systems leadership necessary. This hurdle is NOT something that “Needs executive buy-in.” This is something that is accomplished through outright insurgency, tribal heresy, and fait accompli rebellion.

That’s because Continuous Delivery takes more than agile ceremonies and user stories. It takes developers who are proud of knowing business context. It takes refactoring that no one approved. It takes a team move to Git from Subversion without telling anyone. It takes a handful of people setting up a Continuous Integration server no matter how often the nay-sayers tell them it’s useless. Continuous Delivery is a change in engineering practices and development culture that tend to happen without formal leaders needing to approve anything.

It just takes the right people having enough pride in being BETTER that they draw a line in the sand and defiantly announce “THIS IS OUR CRAFT!”

A Heartfelt Epilogue: Real Creativity, Innovation, and Disruption is MESSY

Now listen, human-to-human, if all you know about “agile” comes from that one book you read, YouTube, or a two-day certification, I won’t be surprised you’re thinking, “Wait, Andrew, that’s nothing like agile! How do I report you! How do I get you stripped of all your certifications?” That’s great. That reaction means I hit a nerve. Fantastic! Contact me and let’s talk about taking agility to the next level.

Truth is, I don’t look to my four certifications, five training course, three conference, my blog, OR EVEN my five years of attending, speaking at, and hosting MeetUp’s on agile as the proof of my legitimacy on these topics. I measure my expertise in the number of experiments, including the major failures I have been through with my development teams. The reason is simple: complex adaptive system leadership is an emergent property that require deep entanglement and shared experiences in the trenches. And, as it turns out, I’ve been in the thick of every kind of good or bad lean or agile possibility, trained people in that context, debated ferociously about it in multiple companies, and I have compromised my values or experimented with teams to directly challenge every single principle your little YouTube summary glossed over.

If at this point you think some teacher let me down and it’s a real shame, I’ll be happy to give you a recommended reading list and YouTube list and introduce you personally to other thought leaders that dive, like I just did, into the MUD of how you actually achieve: creative innovation, strategic and operational agility, and lean, continuous delivery of disruptive economic value.

Either way, reach out so real dialogue can get started.

You do NOT want Transparency

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Disruption and Transparency

As a custom app dev consultant I constantly get inserted into the space between organization silos – between marketing and accounting, between sales and operations, between IT and product management.  The agency life makes you a fly on the wall in meetings where groups who avoid each other are forced to work together directly for the first time. Maybe it is the nature of disruption, whether it is a lean, agile, or digital “transformation” – but it creates immense hoopla about and demands for “transparency”.

Transparency is promised all around, named as a priority in meetings, and complained about when people feel like they’re out of the loop. As the old bard said, “Ay, there lies the rub.”

Transparency is not what anyone wants.

Requesting transparency, instead, represents the desire for visibility and proper prioritization of important information as it flows to the people who will be impacted by it.  If someone doesn’t have an understanding of what information they want prioritized, “transparency” is really just an expression of distrust.

Transparency is saying “I don’t know what information is important, I don’t trust you to prioritize it for me, so give me access to all of it.”

Now don’t get me wrong, this post is not about how to allow or restrict access to data. Instead, if you are part of a disruption-in-progress, keep an eye out for communication anti-patterns.  When a complex system is creating new cultural repertoire, adapting to disruption, new information flows must be created.  New decision patterns emerge.  Some people like the change and others are oblivious to it until the day it hurts them because they personally failed to adapt. 

Examples of Communication Anti-Patterns:

  • Email notifications that are really just internal company spam.
  • Managers who request to be added to meeting invites “just in case” they want to pop in.
  • Sending someone a raw (and sort of meaningless) export of data in spreadsheet form as an “answer” to their question.
  • Stakeholders who demand access to the agile tool (JIRA, Rally, Trello) but never look at it.
  • You get a casual question about status and answer by forwarding several email chains.
  • Making up new KPIs and performance metrics that don’t matter.
  • Virtually every version of reports on “utilization” that I’ve seen.
  • Anonymous complaints to executive leadership about secrecy around financial status.
  • Weekly meetings that review numbers that only change quarterly.

I’m sure you have another hundred examples, just like I do.

So whether you adopting a new tool, some kind of “enablement” software, in your aspirations for lean scalability, changing your agile or DevOps processes to encourage innovation, or embracing digital transformation as a path to new business models and potential revenue: be human.  When nonsensical requests for transparency happen, let it inspire a dialogue (or several) about what information is most important to each person and the best way to present it.  If you didn’t see the future and have all those conversations up-front, guess what?  No one does. Start driving human dialogue as soon as you notice there is a communication anti-pattern.

Visualize Your Work – and Show it off!

And, if these aren’t problems you’re having right now, you should still think about the best ways to visualize your work in progress. You will benefit psychologically, someday you’ll be able to answer new but important questions to a manager or colleague more appropriately, and you’ll discover what you can teach to other who are earlier in their professional journey.

Why? Why? Why? Why? Why? (5 of them)

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As I described this weekend on Snapchat using the example of my house, Root Cause analysis – or asking the 5 why’s – is essential to lean scalability and a thriving culture of relentless improvement. In complex systems thinking, you must see problems (lack of quality, decreasing sales) as a symptom of the system as a whole.

I bought my first home in November in a north suburb of Chicago. Naturally, that means finding little issues here and there as I go. It was originally built in the 1950’s and I knew it was in a neighborhood that had flooded a bit a few years back. I was excited from the first tour to see a fantastic dual sump pump system in the finished basement.

Unfortunately: The previous homeowner had treated the symptom, not the problem.

A house (like a software product or tool in its context) is part of a complex adaptive system. It is inserted into a biological ecosystem, and integrated with multiple networks (cable, electrical, plumbing, roads). What the previous homeowner did is a mistake many of us make when it comes to eCommerce, marketing campaigns, enterprise software, you name it – the symptom was treated in the context of a system in homeostasis without changing the ability of the system to adapt to deal with a chaotic event.

SO – my basement has flooded, just a little, three times this spring.

Enter the “5 Why’s” Analysis:

1- Why is the carpet wet in the basement?  The sump pump didn’t pump out the water quickly enough. If I were to continue to treat the symptom, I might upgrade the sump pump, which is expensive and might not work (and what we tend to do in the workplace).

2- Why didn’t the sump pump handle it?  There was too much water around the house, building up hydrostatic pressure. The second time we had flooding, I noticed that the water appeared to have come in from all sides, not from the sump pump reservoir overflowing. (i.e. without “going to the place” I might have continued to blame the sump pump)

3- Why was there too much water around the foundation? I have a negative grade, meaning my lawn on one side slopes slightly toward the house. Again, easy to blame that and spend a fortune on a re-grading (legacy system migration anyone?) but I had the joy of really, really “going to the place” and spent an 1hr flash-flood storm OUTSIDE, managing the flow of water in non-normal conditions. After all, the yard may slope slightly, but there are 4 basement egresses with drains in the bottom that run to the sump pump…

4- Why did so much water flow to the basement window wells that the drains couldn’t get the water to the sump pump quickly enough? (notice that we are finally getting somewhere in our root cause analysis!) Once I was out in the storm, it was clear that the rain on its own was not the issue: despite having cleaned out my gutters hours before the storm, the winds that blew the storm in kicked lots of new leaves onto my roof, blocked the gutter, and a waterfall of water came off the gutter onto the negative grade instead of going down the downspout system that drains the water in a safer direction. What I also noticed was that the sidewalk gradually filled with water from the downspout nicely – meaning there was a certain amount of in-yard flooding that could occur before the water would pour unchecked into my window wells. (note, I could invest in LeafGuard or something as part of a total replacement of my gutters, but have we really found the root cause?)
5- Why doesn’t the system (my house in its context) handle a the flow of water in that quantity? Now we’re down to business. The soil has a high clay content and hasn’t been aerated recently. The previous homeowner removed bushes on that side of the house but not the roots and stumps. The downspouts eject water 3 feet from the house, but into an area of the lawn that can be easily filled with water that will then flow back to the egresses.

Root cause – The system is not prepared to handle the flow of unwanted inputs under non-normal conditions.

Oops, I slipped into discussing emergent leadership in complex adaptive systems.  What I meant was, nobody had bothered to look at what happens to the flow of excess water in flash-flood conditions.  Just like I frequently see no one planning for “storms” in their agile or devops culture, their social media presence, or omnichannel efforts.

To round out the story, now that we have a ROOT CAUSE.  I can come up with a….

Solution – Create a sub-system that encourage adaptation to non-normal systemic conditions.

Sorry, I did it again.  But you really can’t tack on a new tool or process if you have underlying cultural factors that need to be addressed.  For my house, the answer is simple, add a French Drain system that will handle excess water during a flash flood.

Now, with my years in custom app development consulting, the parallel is really quite striking. Investment in a bigger pump, a total re-grading, or new and improved gutters would have been an expensive way to deal with emergent properties of the system without helping it adapt properly to non-normal stress. The french drain and dry well implementation I have started will require some hard work (i’m digging it by hand!) but potentially no cash (I already have more river stones than I know what to do with).

  • I’ve discussed how this applies to agile or DevOps transformations that don’t address cultural problems.
  • I’ve shown how bad investments in software happen due to a lack of understanding of the root cause.
  • Look for more on how this applies to eCommerce and Marketing on the way!

Your ROI is Total BS

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ROI is meaningless.  GP% is meaningless.  Signups.  Clicks.  Views.  None of these tell you anything meaningful or actionable.  None of this ensures survival.  In fact, it is through sheer mass that some enterprises survive.  It is the churn of hype cycles and perceived value that keep new customers fooled.  But it is definitely not sustainable.  Big investments end with big blunders that result in mass layoffs and enormous bankruptcies.  The name is the only thing that survives. Is that the company you set out to build?  No.

Let’s assume you are a software company selling enterprise SAAS.  Your entire company is the value stream.  The ongoing operating costs are less than ongoing revenue.  Investing in the sustainability of your model of economic value creation and capture is every dollar you spend.  Those dollars, little by little, react with the market either creating or negating value creation.

The problem is that most enterprises work from the assumption that large investments equate with economies of scale.  While this may be true of investment in automated manufacturing there are no economies of scale in software development.  It is the individual knowledge workers that create innovative software.  The velocity with which you can adapt as a system combined with superior understanding of problem-solution fit in the market is the key to competitive advantage.

The question of how to invest should be quite simple when you are a large company that has revenue growing at the same rate as costs – small investments per opportunity with maximum ability to correct an incorrect investment.

That is enterprise agility.

Enterprise Agility is the speed at which an incorrect decision is recognized corrected.  The smaller the investment decision, the faster the return is known. Lean trims the excess weight, off-balance feedback, and poor technique that undermine agility.  The effective flow of information across the creative process of knowledge workers is essential.

This is where you must realize that unless you layoff staff, you’re investing the same amount continuously.  The ROI of a project is as meaningless as the ROI of a developer day.  The input of resources is relatively static, maximizing the value stream as a system is essential.

This is why the a right-place/right-time, brilliant, socially-savvy entrepreneur-engineer is the most agile and lean possibility: perfect and instantaneous knowledge-sharing internally (in the brain), distinct competitive advantage through the extremely unique skill set (s)he has grown to master.  That is the sprinter that you want your Superorganism to become.  In the right place, at the right time, with the correct knowledge and materials, with instantaneous information flow across the value stream.

So if ROI is meaningless to decisions (because we are paying for individual pursuit of knowledge-worker-creativity regardless of rate of return), how do we possibly make rational financial decisions about innovation, discovery and exploitation of economics rents?  In fact, lean manufacturing has studied this for decades.  When the rate of investment (the cost of production) is held constant, prioritization of economic value added rather than expected rate of return should be our focus.  In a zero-sum competitive game with uncertain returns and asymmetrical information, the time between investment and value capture is the only meaningful variable we can impact.  While cost of delay versus product lifetime return on investment may be more difficult to understand when looking at Toyota and the Prius, this is easy to see with Software as a Service, because the continuous addition of value in exchange for subscription-based fees creates two roughly stable lines. The only meaningful way to improve investment is to exploit information asymmetry more effectively than your competition.  Since you are investing the same amount continuously, you must minimize the cost of delay of value capture.

To put it another way: In a system with continuous investment, only the opportunity cost incurred due to delaying an investment matters. This is not first-mover advantage at the new product-market level, this most-effective exploiter of innovation as an a competitive advantage.  This requires a shift to systems thinking and investment in strength of culture. Money is not your scarcest resource. Brilliance-time (that you’re paying rent for daily) is your scarcest resource.  To maximize value capture, you must maximize the time spent in a state of market information asymmetry.  At the current pace of innovation and obsolescence, the only way to maximize value capture is to minimize cost of delay due to incorrect prioritization.

This implies three goals:

1 – Minimize the impact of an incorrect investment of system-brilliance-time by reducing size of each commitment

2 – Increase the adaptiveness of the system to maximize throughout and future adaptiveness

3 – Minimize the time it takes to receive feedback (primarily through analytics) from the market

4 – Make appropriate risk-taking and experimentation a normal part of every creative process

Enterprise Toxic Waste

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In a complex adaptive system of knowledge workers, the ability of a group to creatively adapt to an external stimulus becomes impossible once all of the organization’s energy is expended on maintenance of internal homeostasis. To the extent that leadership is an emergent property of the system – in which an individual organically focuses collective energy into new adaptation in response to an external stimulus – it can distribute the pressure to innovate across the entire organization.  When all potential energy is focused on individual self-protection, emergent leadership is stifled. The superorganism “behaves” exactly as any evolving species “behaves” – when conditions are favorable, individuals focus resources into reproduction, increasing the likelihood of variation and aggregate potential for adaptation as a species.  When conditions are unfavorable, resources are dedicated to individual self-preservation, reproduction is reduced, and the species is “culled” leaving only the adaptations that best fit the pressures of the current unfavorable context.  This ebb and flow of creativity and narrowing is seen within the organism as well: in favorable conditions, the cells work toward reproduction, maintaining the health of the system (the body) while in unfavorable conditions the individual cell maximizes its own self-preservation to the detriment of the body (cancer).

“Tech” – currently represented by software, apps, and the web, thrive on innovation and disruption.  The industry as well as organizations attempting to compete through innovation is driven by the desire to maintain a continuous state of innovation at the superorganism  level; instead, most superorganisms (companies, the enterprise) even in the software industry remain cancerous, slowed to a near-death state, presenting painful symptoms far removed from the root cause of dysfunction.

This wasted potential for innovation, sustainable competitive advantage, minimum viability, and adaptive survival is not the fault of any individual and is not strictly caused by the official mission or formal structure of the organization.  This is a cultural issue, not a policy issue.

The formal leaders of a complex system, the managers and executives who are synthetically, socio-contractually positioned to act as the official drivers of innovation (or “vision” or “strategy”) for the organization cannot bureaucratically force creativity and adaptation, as these must emerge organically from favorable conditions across the whole.  Often the formal leaders are charged with being the exclusive source of adaptive creativity despite the fact they are typically in the worst position possible far removed from the external stimulus – to be relied upon for the emergent leadership that drives innovative adaptation.  The inherent waste then is two-fold: the official manager is unlikely to consistently display emergent leadership while the presence of a formalized leader prevents others from organically emerging.  Whether the creative adaptation desired by a manager is valuable and likely to succeed or not, the manager must  force action against the system, as a toxin, a betrayal of the natural state of the system.  In response, the complex adaptive system protects itself against the likelihood of a failed adaptation through cancerous self-preservation of maladaptive patterns.

Unfortunately, if this continues in the context of increasing demand, the growth to supply it exacerbates the likelihood of failed formal leadership and the need for individual or self-preservation.  The waste only grows.  To counter the failure of fewer, more detached formal leaders, the existing formal leaders of many organizations continue to add formal layers in hopes that elevating “high-performers” to official power can mitigate the systemic failure to adapt properly.  This is problematic because the optimization of formal management further decreases the likelihood that any enmeshed individual could organically emerge to lead systems adaption – every individual is progressively more disconnected from the system as a whole.  Silos arise, stage-gate processes are crystallized, and creativity – without needing to be actively stifled – is now unlikely to impact the system as a whole.

Before we move on, promise me you understand:  lean does not mean layoffs.  Toyota’s dedication to the individual on the factory floor is central to its success.  If you try to mimic their process improvement, focus exclusively on eliminating waste, and then cut staff to save money, you’re doing it wrong.  That’s a huge leadership failure. Hacking off a portion of a complex adaptive system will direct any energy gained from increased efficiency toward self-protection.  It is never worth it.

Game Theory shows us that the best way to build sustainable competitive advantage is to invest in resources that create and maximize information asymmetry against our competitors.  On the other hand, we must also raise barriers to exit and increase switching costs for our scarcest resources, people. The more scarce, unique, and hard-to-steal your people are, the more defensible your unique value proposition and the higher your economic rents.  This requires a culture in which the individual has psychological safety in which to take prudent risks.  Trust – the kind that is earned through time in battle together – really trusting in peers, superiors, and subordinates is essential. The individual must be invested in and given the resources necessary for their pursuit of mastery, autonomy, and purpose.  Only then can teams organically self-organize around new forms of adaptation.

Inside that organization, you need the opposite conditions compared to the outward-facing competitive landscape in order to maintain margins and economic value captured.  Maximizing market information asymmetry requires close to perfect internal symmetry of knowledge – in other words, alignment.  Real alignment of understanding of the problem, the objective, and the acceptable risks in pursuit of a solution.  You need continuous throughput that maximizes value add and minimizes waste.  You need low barriers to meaning and purpose and high barriers to exit.  You need slack and creativity.  You need to encourage the tension and paradox and dissent that creates new ideas, while ensuring the organization as a whole is respect-based and disciplined about change.

In Lean we call this Minimum Viable Product. The “product” that must be minimally viable is not a product on the shelf that a consumer buys. The “product” is the sustainable business model that creates economic value that can be captured.   Whether there is one product for sale or hundreds, built by 15 people or 5,000, the minimum viable product is minimal if all consumers receive more economic value than their transaction cost at a price that is great than the cost of production; it is viable if there are enough consumers and enough demand to make the business model of production sustainable.

Seen in this way, the upgrading of any resource across the value stream to maximize minimum viable production should be considered as part of a single improvement roadmap, regardless of its handling by accounting “on the books” – whether it is an enhancement to a software product, brand recognition, acquisition of a competitor to gain market share, or training developers on a new programming language or delivery methodology.  In the end, all of these initiatives are the investment of capital for the purpose of economic value creation protected from competitive influences through creation and protection of unfair advantage.

This is critical – and why vanity metrics are so dangerous.  Even a very unhealthy, unsustainable company can create conditions of information asymmetry that protect its existence in the near-term, but touting a graph that shows increasing revenue, increasing company size, and increasing market share / number of customers does not paint a sufficient picture of the sustainability of the business model.  These numbers are a given. When they aren’t, companies love to find some other numbers that comfort them instead.

What a toxic, carcinogenic waste.

DevOps Athleticism

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Let’s face it – being small makes it look easy to be nimble.  Look at your average kindergartener: they may not always be graceful, but their capacity for unexpected action or a rapid spontaneous change in direction at full speed is frequently mind-blowing (for each of mine, it was usually a sudden jump into the risk of oncoming traffic).

So it’s understandable for the established enterprise to look at the youth (and occasional hyperactivity) of startups – and small companies who never grew up – and feel a little fat, a little old, a little bit brittle.

That metaphor doesn’t need to end there, though, because there are also large companies maintaining a portfolio that balances finding new opportunities on the one hand and exploiting new opportunities on the other.  These are two very different operations, though, and companies find balance difficult.  Just like hyperactivity is internalized in the executive function of adults who had physically hyperactive childhoods, that rebellious startup creativity can survive unscathed within the mature organization. By doing so, you can simultaneously continue category-killing through innovation despite staying the course and reaping decades of fruits on already-mature markets and products.

Likewise, to extend the agility metaphor, life is full of athletes in the top quartile of height and body mass index. They top the BMI charts compared to average scrawny-but-chubby adults despite doing it with rather lean body composition.  They are practically outliers, and definitely don’t fit the “standards” set by statistical BMI.  More importantly these individuals put “nimbleness” to shame; and just look at those kindergarteners revere them. Look at the heroes of the NFL: agility doesn’t begin to describe their mastery of movement.  Look at star hockey players in the NHL: they move with the power of an elephant, the stamina of a gazelle, and the grace of a ballerina.  The stereotypical Hollywood karate master black belt may have a very thick, potbelly body-type, but the master needs very little movement, in just the right places at just the right time, to send an opponent flying.

So it’s simplistic at best to “think like the startups” or “be more agile”.  You cannot transplant a culture.  Size alone is not their advantage, strength alone is not their advantage, tenacity alone – as much we love a good underdog story – is not their advantage.  To emulate any ONE  attribute of the lean-agile startup on the rise is foolish.

Stop talking about enterprise at-scale agility like you’re trying to be that kindergartener veering into the street unexpectedly. 

It’s more than being lean, or gaining experience or agility. At scale you need to build repertoire of enterprise-grade DevOps Athleticism!  It’s one thing to have an impressive vertical jump but quite another to jump over a fence, hurdle over a tackling safety, or parkour up a building,

Training for Obstacles

For the support engineer team, kanban looks a lot like an Olympic marathon team.  You constrain WIP (focus/movement pattern), create a sustainable pace, and fuel as you go – you train for the long haul by (basically always) running for distance.  It may be fragile spaghetti code built over the decades, but you your crack team knows it inside out.  But that’s not the majority of your at-scale enterprise.  As you get further from a continuous flow of relatively similar requests and move toward innovation and greenfield disruption efforts, kanban and even scrum are going to fail unless you include the assumption of uncertainty and churn in your overarching process.

This is like the difference between a New York marathon versus Tough Mudder or another obstacle-rich competition.  If you don’t build your capacity for speed-strength and coordination against unexpected obstacles, you’re likely fall short. The long and short of it is, if you can count on a marathon, kanban your way to glory.  If unpredictable obstacles and risk-taking for glory are fundamental, stop whining and start training. Look for extra opportunities to beat down tough challenges instead insisting on a slow and steady pace.  Speed and sustainability need to be loosely coupled in a strong DevOps process.

Jumping the Fence

I can tell you from experience that maximizing raw strength in the barbell squat does not correlate to jumping higher.  If you need to jump higher to make a layup, you do things like box jumps.  If your really daring, leverage your box jump into jumping over a 3-4′ fence (or hurdle) from a standing position.  Raw strength on the one hand and sprint speed on the other don’t give you the actual agility, coordination, and explosive power you’d need.

Similarly, coordination of multiple teams is more complex than strengthening, quickening, or improving communication with each team individually.  Establishing a cadence of synchronization and opportunities for cross-pollination of ideas – even as you increase the independence of each team  

This extended metaphor has a great caveat – go find a 3’ tall picket fence, stand in front of it, and try to jump over.  Assuming you haven’t been practicing, I bet your body stops you.  The same is true of a healthy DevOps system – when you try to launch into a painful bout of stupidity, the developers stop you.  If you’re smart, you don’t force yourself into a giant failure.  Instead, you practice a bit and ramp up your agility to get your entire body confident you won’t end up in the hospital.

Throwing a Punch

You don’t throw a punch with your arm.  You throw it from the ground up, leveraging the perfect twisting launch of one square inch of fist powered by your entire body.  If you’re the square inch that gets to land the winning knock-out blow, don’t get cocky.  You’d be nothing without the support and power of the entire body.

5 Simple Rules for Real Agility 

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There is a very wide spectrum from the mythical evil-waterfall-monolith to a perfectly lean and utterly agile continuous delivery of value. In fact, scratch that, it’s not really a spectrum. It’s not even a consultant’s two-by-two matrix. It’s a complex multivariate systems-view that is needed, and fighting religiously for absolutes doesn’t help improve any of the real trials and tribulations on the front lines.
Come on – Don’t try to enforce one-size-fits-all agile or lean or kanban. Instead, create your own adaptive center of excellence from any approaches & tactics, new or old that can provide insights into the variety of techniques that can be adopted for each situation.  

For example, a really well-formed support team could move to kanban and get rid of most of the scrum ceremonies. Likewise, not every multi-scrum-team product needs a cadence of Program Increment planning – but (be honest) some do.

The bigger the organization, the more important it is to be practical in your approach to change you’re passionate about. Self-check: Are you asking for a change that makes the organization easier to work in, better at serving the customer, or more sustainable as it grows? Great! Don’t let fundamentalism get in the way of the spirit of agility and the purpose of your organization.

….Especially if you are an enterprise that is “mid-transformation”.

In fact, rather than worrying about drastically changing to a new and elaborate process with all the answers (which will definitely FAIL), there are just a few underlying principles that will help evolve an enterprise toward lean agility:

1 – Each time you make a business decision, make one that makes it faster to validate your assumption than if you hadn’t made a decision at all.

Anytime you make a decision, make it easier to recover from it as an organization if you are wrong than if you had done nothing at all.

2 – Challenge the biggest assumption first, working to disprove one hypothesis at a time

3 – Each time you touch code, leave it simpler to understand and easier to change than if you hadn’t coded at all

4 – Create an environment of psychological safety for your people

5 – Do no harm to the user

The DevOps Secret that IT Won’t Tell You

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DevOps. SAFe. Scrum. Kanban. Did you shiver? The experts have you scared you’re doing it wrong (you know, IT – all of IT). The certificate-teachers need you to need them so they can get paid. The coaches and consultants are taxing your #FOMO (Fear Of Missing Out) on ALL THE AGILE.

Get. Real.

It’s an impossible dream: The perfectly lean and agile software process would be just one person – a masterful engineer with great people skills and business acumen who can hang around a group of people to see what troubles them, create an intuitive software tool that relieves the pain, and collect cash from them while obtaining ultra-constructive feedback. In other words “dev” and “ops” as one person.

Ever seen that happen?

That said, every additional person involved in the flow of DevOps information is either a value-addition or a source of systemic waste. More often, everyone involved is a bit of both. As more bodies are thrown at a problem, it is likely any one of them can only spend 10-20% of their time actually adding value. The other 80% – and all overtime – is typically waste due to waiting on information from others, or over-documenting our value-add so others can consume it.

So it isn’t that IT won’t tell you the secret, if they know at all. It’s easy to crack jokes about how little other people accomplish despite working long hours, but less likely that anyone raises their hand and volunteers the truth about how much time is wasted.

– Waiting for clarification

– Waiting for updates to install

– Waiting for SVN code check-in

– Waiting for someone else to check their code, setup a VM, or answer what their code means

– Waiting for the next meeting

– Waiting for the inspiration to work on something meaningless to you

The great big DevOps secret is that no methodology will fix all that waiting. Over-specialization creates a world in which teams throw big piles of shit over the fence, each group speaking it’s own language that no other group understands. New philosophies won’t fix bad relationships, a toxic culture, and shit tools. It takes time, work, and fearless leadership.

Otherwise, Agile, Scrum, Kanban, and DevOps – or any other recipe for “when to meet” and “what to document” – are like 30-day fad diets; it’s a false hope and a gimmick and it doesn’t change the sedentary fast-food lifestyle that keeps you fat in the first place.