Enterprise App Strategy: The Resource-Based View

The Resource-Based View of Corporate Strategy

In my post Porter’s Five Forces for Enterprise Mobile Solutions I reviewed the classic but powerful theory elaborated by Michael Porter, a key thought leader in what is known as the Market-Based View of strategy.  This externally-focused view of competitive strategy is predicated on analyzing the industry in which a firm competes, the position a firm takes as one of many competitors, and the economic implications of that position.  This is often easier in hindsight and can be difficult to employ for strategic planning for some businesses – because the Five Forces method focuses on the economic value captured by a firm after external pressures erode the value created, rather than why or how that value is created in to begin with, the Market-Based View can leave business leaders scratching their heads.  Moreover, even when the impact of the Five Forces is clear at the business level, it becomes extremely problematic when looking at a multi-business corporation.  When a publicly-traded corporation has a diversified portfolio of unrelated businesses, what value does the corporation create for its shareholders independent of the businesses competing in their unique markets?  How does the multi-business corporation position each business in a way that creates synergy and sustainable, long-term competitive advantage?

Collis and Montgomery have dedicated their careers to answering the difficult questions in corporate strategy as thought leaders for the Resource-Based View.  They provide valuable guidance in answering the problem of how multiple businesses can create more long-term value together rather than separately.  In this post, I will summarize key elements of the Resource-Based View and apply them to enterprise mobile app portfolio strategy.

Sustainable Competitive Advantage

Businesses exist to create economic value that can be consumed in exchange for capture of a portion of the value created.  While Porter’s Five Forces focuses on the pressures that erode the value a firm can capture, the Resource-Based View looks at how to plan competitive advantage at the corporate and business level so that the competitive positioning a firm takes has long-term sustainability.

Let’s start with the their definition of corporate strategy:

“Corporate strategy is the way a company creates value through the configuration and coordination of its multi-market activities.”

Whether the corporation manages multiple product lines within a single industry (such an automotive corporation that competes in both the low-price and luxury markets) or manages multiple businesses in disparate industries, a firm must align the core value-creation processes to maximize efficiency, effectiveness, and longevity.

While I will revisit the topics of administrative context, scope of the firm, and the role of culture and managing change in future posts;  the fundamental key to maximizing sustainable competitive advantage is understanding the resources that make your firm competitive and how to organize around them.

For a resource to be a source of sustained competitive advantage, it must be valuable, rare, inimitable, and non-substitutable:

Valuable – A resource must enable a firm to employ a value-creating strategy by either outperforming its competitors or reducing its own weaknesses. The value factor requires that the costs invested in the resource remain lower than the future rents demanded by the value-creating strategy.

Rare – To be of value, a resource must be rare by definition. In a perfectly competitive strategic factor market for a resource, the price of the resource will reflect expected future above-average returns.

Inimitable – If a valuable resource is controlled by only one firm, it can be a source of competitive advantage. This advantage can be sustained if competitors are not able to duplicate this strategic asset perfectly. Knowledge-based resources are “the essence of the resource-based perspective.”

Non-substitutable – Even if a resource is rare, potentially value-creating and imperfectly imitable, of equal importance is a lack of substitutability. If competitors are able to counter the firm’s value-creating strategy with a substitute, prices are driven down to the point that the price equals the discounted future rents, resulting in zero economic profits.

Via: Boundless Management – “The Resource-Based View.” Retrieved 27 Jul. 2015

In Porter’s Five Forces for Enterprise Mobile Solutions I showed how custom enterprise mobile solutions can be employed against each of the Five Forces by protecting the efficiency, effectiveness, and consistency of organization’s core processes.  To plan an entire roadmap of apps, it is critical to judge the resources in each core process according to their unique value, rareness in the industry, difficulty to imitate, and resistance to substitution.

Resource-Based Strategy for Enterprise App Portfolios

We have seen that multi-market corporations must organize around unique resources to create high-margin value.  This is also why I discuss “enterprise” mobile app “portfolios” – the core operational processes at the team-level must come together seamlessly at the business level, while these business-level app “suites” or must come together in at the enterprise level.  The business level may be a separate competitive market for the operations process or the unique functional group in the corporate processes.  In either case, these processes are “proprietary” and deserve protection through custom solutions only insofar as the resources in each process are valuable, rare, inimitable, and non-substitutable.

Thus, the two critical questions that must guide your enterprise app portfolio investment strategy are:

  1. How does any single app upgrade your key resources?
  2. How does each app create and capture value as part of a portfolio in excess of the value it creates as an individual tool?

Because the driving vision of an app portfolio will only be as coherent and consistent as the strategic alignment of organization that creates it, planning a roadmap needs C-Level champions and cross-functional buy-in.  That said, what does it mean to find the “right” apps?

Upgrading Resources

Let’s use two examples as we explore the idea of “upgrading” resources to increase competitive advantage, one that has a product that is primarily service-based, one that has a physical product that results from manufacturing processes.

  1. Example A: Service provider –  A national hospital corporation with several medical centers, acute care, surgical, and other facilitates that operates in multiple geographic regions.
  2. Example B:  Product manufacturer – A US-based die forging company that shapes metal parts for other manufacturers across several industries.  Through high quality standards and technological investment, the company has “locked-in” several large clients that rely on them exclusively.

First, let’s analyze what is similar about these two corporations.

  • Both corporations have three main meta-processes – Operations, Business Development (including sales, marketing, and advertising), Corporate Overhead (including corporate leadership, accounting, finance, HR, legal).
  • Both corporations have skilled laborers and a strong culture of shared values.
  • Both corporations prioritize quality as a differentiation metric and believe in maintaining unmatched transparency.  Internal and 3rd-party audits are common.
  • For the sake of this example, business development and overhead are industry-homogenous and are not a source of competitive advantage for either corporation

Next, let’s identify and evaluate the top three resources critical to the competitive strategy for our example hospital corporation.  To select the right workflow that can be improved with a custom mobile solution, we must first know what resources are scarce, demanded by the market, and difficult to appropriate so that we not only upgrade the value creation of the resource but also capture economic rents long term.  This is our path to sustained competitive advantage through investment in a custom mobile app portfolio.

Example A:  Hospital Corporation 

Skilled Labor (Doctors, Nurses, and Technicians)

  1. Valuable – Doctors, especially nationally acclaimed surgeons, are in high demand.  The skilled nurses, medical technicians that support the doctors as part of the hospital’s value stream are all well-educated, heavily trained, and uniquely qualified to create specific value-add
  2. Rare – A top surgeon must have high aptitude, a long and successful academic career, and years of residency and practice in order to gain their skill and reputation.  Because the cost and time for education and training are a major barrier to entry into the field, and medical school enrollment is tightly controlled, the surgeon is an extremely scarce resource.  While the nurses and medical technicians are less scarce and education is less of a barrier to entry, competition remains high in geographic regions that have large competitors.
  3. Inimitable – Hiring and training practices are easily copied by competitors.  Corporate leadership expresses that strategic alignment, a shared value system, and the intense focus on quality differentiates their services.  While these could also be copied, late adopters would have significant learning curve disadvantages.
  4. Non-substitutable – While direct competition from small primary care practices and geographically-near hospitals (per market) is high, substitution for acute or surgical care is extremely low.

Cutting-edge technology 

  1. Valuable – Investment in specialized equipment is not only a major barrier to entry, many advanced treatments that this hospital system provides cannot be accomplished without this equipment.  As such, announcement of a new program and its associated technological investment is a common Game Theory technique for avoiding direct competition.
  2. Rare – Because hospitals avoid direct competition for advanced treatment by limiting duplicate investments, the scarcity of supply to the market is high.
  3. Inimitable – Although hospitals avoid direct competition, the approach of announcing investments ahead of time make imitation easy.
  4. Non-substitutable – There is no risk of substitution of advanced technology for this market, because substitutes were typically ruled out or attempts prior to demand for the advanced treatment.

Reputation for Quality

  • Valuable – Investment in business intelligence, consistent transparency to investors and the medical community, and a long history of audits by multiple 3rd parties has made the Reputation for Quality a critical differentiator in the competition for market share and for human resources.
  • Rare – Due to the extensiveness of focus and investment, this corporation’s care quality metrics are unmatched.  However, not all consumers are sensitive to this as a decision.
  • Inimitable – Although this approach is at risk of imitation, the late-adopter would always be years behind in building a history of transparent, verified data.
  • Non-substitutable – The only substitute for quality is quantity.  The highest-margin specialized treatments are not at risk, while acute or emergency care is at high risk of substitution.

Distinctive Competence

While every business has core competencies, only distinctive competence – highly demand, scarce resources value streams that are difficult to appropriate – will result in competitive advantage.  For our Example Hospital Corporation, the clear resource to upgrade is the is the doctors and surgeons that provide the highest-margin specialized care.  To upgrade the specialized treatment physicians as an economic resource, the competitive strategy of the Hospital must make the doctor, as a human resource, more valuable, rare, inimitable, and/or non-substitutable.

We can see some obvious tactics for upgrading the economic value of this resource:

  • Increased value to the market – by continuing to be a first mover for providing advanced technology for research and practice, these key resources will not only be attracted, but may be monopolized.  High barrier to entry from competitors into highly specialized treatment programs will likewise create high barrier to exit for the surgeons practicing these treatments.  Monopolizing a service, in this case, will monopolize the resource pool allowing high economic rents.
  • Increased scarcity in the market – by monopolizing any given hi-tech, highly specialized services as above, the market will be in a state of information asymmetry and economic rents can be preserved long-term.
  • Reduce imitation – To whatever extent the hospital can own the rights to Intellectual Property surrounding the training and practice of specialized services, the market will not be able to copy through resource appropriation.
  • Eliminate substitutions – in this case, substitutions are not a major risk so focus should be on reducing transferability of knowledge and raising barriers to exit for the physicians.

Although we have clearly established that technological investment is the right approach to upgrading this resource (the high-profile, ultra-specialist doctor) by increasing scarcity and information asymmetry, raising barriers to transferability and imitation, and increasing the value of the information property that is created, we have not found a compelling case to add a custom mobile solution to the existing technological investment.

While a high-performance, beautifully-designed app aimed at these world-class care providers may increase the effectiveness of existing resource upgrade plans, this is a perfect example of an “obvious” app that may be perfect as part of broader app portfolio strategy but is not the best first app in the Example Hospital Corporation’s roadmap.

“Businesses are full of pain points and apps today are hitting the obvious, low impact problems. We have to understand what the business impact of the problem really is and quantify why it is worth solving.”

– Alex Bratton, Founder and “Chief Geek” of Lextech Global Services

Via  A Good App Still Needs to be the Right App 

Instead, using the Resource-Based View of strategy, we need to look for resources that do not have an effective upgrade plan in place, resulting in transferability and negative economic rents.



Porter’s Five Forces for Enterprise Mobile Solutions

Porter’s Five Forces:

In the Market Based View of competitive analysis, Michael Porter’s The Five Competitive Forces that Shape Strategy provides the seminal framework for understanding where and how a firm ought to compete.

The Five Forces are:

  1. Threat of New Entrants – The threat of new competitors entering an industry is high when initial cost, in time or money to enter an industry, is low.   Common barriers to entry are:
    1. Learning Curve Disadvantage – A landscape in which only an expert can compete and training is either restricted or difficult to obtain.
    2. Economies of Scale – In an industry that compete based on price, businesses that have grown large can drive down operational costs and leverage their market influence against suppliers.  Firms competing on differentiation may also take advantage of Economies of Scale tactics to maintain margins and process repeatability.
    3. Technology Protection – In many industries, such as pharmaceuticals, the cost to do business requires Intellectual Property or significant investment in operations technology that must occur.
  2. Threat of Substitution – The threat of substitution is high when a product or category outside the industry could fill the demand for a good if supply were short and prices too high (e.g. if coconut water prices triple, bottled water could play the substitute role).
  3. Supplier Power – The threat of supplier power is high when there is resource or information asymmetry.  This is especially true when a consolidated mature industry is the supplier for a fragmented industry with no clear leader.
  4. Buyer Power – The threat of buyer power is high when there are fewer buyers than suppliers, or lower when demand is less than supply.  Any firm producing a B2B good or service is susceptible to this risk if there is extreme reliance on a single buyer, such as a chipset manufacturer that is one of several vendors for a much larger company that integrates, markets, and distributes.
  5. Competitive Rivalry – The threat of competitive rivalry is high when a market becomes saturated and homogenous firms compete based on price.  This threat is especially high when industries have players that begin engaging in price wars despite originally competing through differentiation in niche markets.

Mobile App Portfolio Strategy:

The Lean Enterprise approach to mobile solutions can take competitive strategy to the next level.  At the core of any firm, however large, a very small number of key processes are the “heart” of the value created.  Knowing and nurturing these core processes drives the competitive advantage of the firm – the output may be similar, but the throughput must become unique in the industry and difficult for competitors to copy.

To effectively compete in today’s economy, the core value creation processes must be proprietary and continuously improved.  Applying Lean Enterprise Kaizen – continuous improvement – through mobile solutions will raise barriers to entry, increase operational effectiveness, and shift bargaining power in your favor.  Pressure from each of the Five Force’s can be reduced:

  1. Minimizing the Threat of New Entrants – Investment in a mobile-first approach to Lean Enterprise Kaizen will not only raise barriers to entry against new competitors, it will also create learning curve disadvantages against existing rivals that are no longer as efficient or effective.  Read more on Lean Principles for Agile Stakeholders.
    1. Economies of Scale – As your mobile portfolio begins standardizing work, level-loading process blocks, and driving Just in Time operations, the cost of operations will drive down.  The goal will be to reach Minimum Viable Production – doing more of the high-margin activities that differentiate your organization while standardizing the work, focusing the worker, and reducing takt time.
    2. Technology Protection – The core processes at the heart of your competitive strategy will only provide competitive advantage so long as they remain proprietary, consistent, and scalable.  Any business has non-core processes that will benefit from off-the-shelf solutions (i.e. don’t reinvent payroll, several providers specialize in that).  By identifying a key process that can be transformed, protected, and optimized, higher revenue and margins, better leadership proprioception, and instant data access will disrupt the industry in your favor.
    3. Learning Curve Disadvantage – Although adoption rates for mobile devices has never been higher and companies everywhere are investing heavily in mobile, whether responsive or optimized web, native apps, or hybrid, very few companies are focusing on process transformation and even fewer on proprietary enterprise solutions.  This gives a multiplicative affect to the competitive advantage driven by an enterprise app portfolio:  competitors will need to learn what you do differently, how you built an enterprise app portfolio, and adopt a prioritization of disruption and transformation just to keep up.  
  2. Minimizing the Threat of Substitution – Threat of substitution is minimized through differentiation and quality assurance.  To the extent a product or service is perceived as unique and consistently valuable, the price elasticity of demand can be manipulated in your favor.  Mobile apps can facilitate the role of your core processes to this end:
    1.  Differentiation – streamlining processes that impact consumers will set you apart as an early adopter.  Maintain direct communication, make data instantaneous.  The consumer is becoming more sensitive to time-to-gratification.  Mobile solutions can remove every time a consumer-facing employee turns their back, puts a user on hold, or walks to a back office.  This turns sales reps into consultants, fully empowered to get the right product in the consumer’s hands with minimal time, confusion, or hassle.
    2. Quality Assurance – For both internal operations and consumer interaction, mobile solutions establish an intuitive guided workflow that standardizes the work to be done, focusing interaction on small batches of the overarching process.  Through Business Intelligence analytics driven by the application itself, key insights into bottle necks are simple to find.  Furthermore, when kaizen and “standard work” are facilitated by the tools built to make the employee’s work faster and more enjoyable (rather than a process document and managerial oversight) updates to the core process are implemented as part of updates to the app portfolio.  This is more than MDM version control, it is version control for process transformation.
  3. Minimizing the Threat of Supplier Power – The threat of supplier power is high when there is resource or information asymmetry.  Real-time data, and becoming a firm that demands it, shifts this balance.  You will have the freedom to determine whether you “put all the cards on the table” or maintain an information asymmetry of your own.  Knowing yourself and your suppliers with real-time data as it impacts your core processes will keep supplier power over resource prices at bay.
  4. Minimizing the Threat of Buyer Power – Unless you have exclusive access to a resource or protected rights to intellectual property, the only way to reduce the threat of buyer power is to diversify your revenue stream across a larger portfolio of consumers, whether product or service, B2B or B2C.  If your current buyer portfolio is skewed to a small number of large purchasers, streamlining your core processes, standardizing the work, and maximizing (operationally efficient) differentiation will provide a repeatable, scalable business model.  If you’re contractually obligated not to serve additional buyers, process improvement efforts should focus on heijunka (level loading) and delayed differentiation.  The ability to maintain operational efficiency despite the ebb and flow of suppliers and buyers will insulate against the threat they pose.
  5. Minimizing the Threat of Competitive Rivalry – Direct competition through pricing wars kills margins industry-wide.  To any extent “coopetition” can occur, margins can remain healthier for everyone.  Each player positions themselves in the industry such that they compete for a specific market – Player A competes for the price-sensitive, Player B for the luxury experience, Player C for a reputation for the highest quality.  Across a large geographic region, these three strategic positions can be focused territorially.  Every mobile app in your portfolio is a tool with a specific purpose.  Every tool has one number that defines it:  Gross Revenue, Conversion, Items Per Ticket, EBITDA.  Mobile app solutions need to maintain laser focus on the strategic position you intend to maintain and the one number that indicates if your solution is succeeding:
    1. Competing on Price – Whatever your industry sells, part of the market skews more price-sensitive.  If your position in your strategic landscape is focused on low costs, your focus for mobile enterprise solutions should focus increasing operational effectiveness.  The goal is to maintain current price and revenue increasing gross margin. This is especially true if your industry is already in a state of no-growth, zero-sum competition.
    2. Competing on Quality – Every product or service has quality as a perception of value created.  For a car, this may mean low maintenance or high safety ratings.  Competing on quality is one form of differentiation and pricing should be higher than price-based competitors.  Mobile solutions for these enterprises should focus on real-time analytics, providing transparency to management and the market into actual quality scoring.  This “dashboard” is really a marketing tool, whether it is aimed at your executives, investors, or consumers.  The other side of this solutions should be process analysis and notification, making any part of the workflow capable of automatically alerting someone that quality is at risk.  For more on the fundamental principles of “autonomation”, the Toyota Production System is the best introduction.
    3. Competing on Luxury – Every industry has conspicuous consumption.  For products, these are the premium buyers and early adopters.  For services, this is the “concierge treatment”.  Typically, you’re combining both tactics when competing on luxury – creating the most pampered experience for the luxury consumer.  Mobile solutions in this enterprise space should focus on enabling maximum attention to the consumer, and assist in consistency of the consultative nature of the employee workflow.


This high-level overview of how to apply Porter’s Five Forces to your plans for Enterprise Mobile Solutions should be a conversation starter.  If you specific questions about your industry context, target market, or what custom enterprise solution would be right for you, reach out at AndrewThomasKeenerMBA@gmail.com

Agile Priorities: Keeping Documentation Lean

Agile Transformation

If you want your agile transformation to fail, allow the development team and all supporting functional teams to focus on the waterfall deliverables and dependencies to which they are accustomed.

In “Fixed Budget, Fixed Scope? Be Agile Anyway.”  I argued that agilists, especially newcomers, must understand that the Agile Manifesto is a statement of priorities – at times, tools and interactions, comprehensive documentation, contract negotiation, and following a plan are all part of the product that is created by the process that keeps your teams in business.

In software development, this is the exception rather than the rule.  

For “core” Scrum, the proverbial “one-team-in-a-garage”, this is pretty simple.  Everyone you need is in one room.  When scaled, a delivery organization is often “compound-complex” – it is “compound” when two or more independent functional knowledge areas must cooperate and “complex” when at least one knowledge area has dependency on another (these aren’t fancy concepts, just basic grammar).  The moment a delivery process moves beyond one-team-in-a-garage Scrum, there is compound-complex value stream:

The web team and mobile team will build a user-facing experience, while the middle tier team provides RESTful services, only after sales executes the contract and the Product Owner builds the backlog; meanwhile, UX, BA’s, and QA’s will provide documentation.

In this value stream, the “Wildly Important Thing” is the software that a user will consume in order to drive revenue.

Because Communities of Practice have their own traditions and methods of proving extrinsic value, shifting their priorities is much more difficult at scale.  Plan to change the physical distribution in order to overcome the functional “clumping” that Waterfall encouraged.  Moreover, agile transformation will require finding and eliminating the agency dilemma of managers who built their kingdoms around waterfall values.

Resolving Wasted Effort

If agile at scale has not improved company-wide quality and velocity, it is likely due to waste in the overarching process – you must remove any activity that does not drive value creation that a user consumes and the business will capture.  This is the central rule of the User Story – if it does not make a difference to the user (and occasionally the owner) it is wasted energy, a distraction.  You find this clearly stated, often, in Jeff Sutherland‘s various descriptions of “Bad Scrum” – without delivering working software that matters to the user an organization will be stuck in a self-reinforcing cycle of inefficiency and ineffectiveness.  No one is making a difference in the world, selfishness increases, velocity never improves, no software is delivered.

For a compound-complex process to stay agile, the Lean principles of Just-in-Time and Just-Enough to must be applied to all forms of documentation – business rules, persona descriptions, wireframes, UI designs, sliced assets,  value mapping, technical constraints, market conditions – all are a means to pleasing the user, not the end goal (software that a user values).  The User Story is the cornerstone of efficient, effective product delivery because it is a “reminder of a conversation” about a result from which a user will derive value.  For some teams, a set of wireframes can all but replace “cards”.  An image of a login screen is sufficient to drive the conversations a team needs to have about client-side validation, security requirements, and authentication method.

The Product is Everyone’s Deliverable

To move to next-level agile, at scale, an organization will need to blur its understanding of “business planning”, “requirements documentation”, and “UX Design”.  While there may be a need for full, distinct teams of experts at each of these disciplines, these approaches to defining what the software will be should converge on a single goal – building great software.  A popular article on Lean for UX, Lean UX: Getting Out Of The Deliverables Business leads with this statement:

Wireframes, site maps, flow diagrams, content inventories, taxonomies, mockups […] crystallized the value that the UX discipline brought to an organization. Over time, though, this deliverables-heavy process has put UX designers in the deliverables business — measured and compensated for the depth and breadth of their deliverables instead of the quality and success of the experiences they design. Designers have become documentation subject matter experts, known for the quality of the documents they create instead of the end-state experiences being designed and developed.

Having started my career as a Business Analyst, this is painfully resonant.  It is unfortunately easy for management move from training “the tools of the trade” – spreadsheets, slide decks, requirements documentation, technical specifications – to judging the tools independent of the software to be delivered.

Here are a few rules to follow to get UX, UI, and BA’s out of the deliverable business and into the well-formed team:

  1. Never say “final sign-off” regarding artifacts – whether working for internal stakeholders or external clients, if software is the deliverable, it is the only item requiring sign-off.  Every other artifact is is a tool for getting working software in the hands of users.  Make sure you are “responding to change” at the request of real users of working software – no amount of planning or documentation will survive contact with the user.
  2. UX/UI Refinement should mirror Backlog Decomposition – Prioritizing working software does not mean there is no product roadmap, it does mean that time and resources should only be invested in the software most likely to be built in the near future.  This starts as a process diagram of all possible Epics that could be built, and how the user gets to each of these features.  The upcoming 2 to 3 features should have relatively actionable wireframes.  The team should feel certain about the UI design of the current and next sprint.
  3. Create paradigms, not screens – the most important expectation to break is the annotated UI composition per screen.  Some screens absolutely benefit, many do not.  A well-formed team should have enough shared understanding of technical constraints, design paradigm, and business context that a conversation is sufficient to drive the whiteboard-to-working software process.  Wherever possible, establish a paradigm for a product is intuitive to build.  If it isn’t intuitive to the developer without extensive documentation, how likely is is it the user will find it intuitive?
  4. Document releases proactively, but in accordance with your level of certainty – If there is a product that will require knowledge hand-off, a support guide, or other formal documentation, maintain the tension between what makes sense to proactively document (so you don’t spend a full week post-release) while wary of what will change (likely anything more than a sprint in the future).

Following these rules, the software development process in an at-scale, compound-complex organization can focus on the user enjoying a working product.  Aligning vision and expectations along the agile priorities will remove fear of failure or criticism, increase team velocity, and result in the best possible products.  Then, your team, business, and enterprise can pursue kaizen – and the real magic can happen.

Fixed Budget, Fixed Scope? Be Agile Anyway.

Innovation is Sexy:

Scrum is typically taught with its most innovation-focused form as the example, born from fast-paced software companies who disrupt markets and kill categories.  This is the sexy version of Scrum: a highly elastic process for delivering complex products with emergent design.  In the real world this is not the only context in which Agile, Scrum, Lean, and XP principles can and are utilized to increase quality and velocity.

If you are a newly-trained Scrum professional, bright-eyed and full of hope, do not get discouraged by convergent, fixed-budget, fixed-scope, fixed-timeline projects – be agile anyway!  This is how to do it.

The Agile Manifesto:

It is important to remember that the Agile Manifesto is a set of priorities, not a set of laws. To any extent we can, we strive to prioritize in the direction of team collaboration, continuous improvement, and emergent value creation.  However, there are some occasions when you will have to put additional energy in the secondary priority.  Strategy is the art of trade-offs, so make sure your organization is aligned and the strategic vision is deliberate:

  1. Individuals and interactions over processes and tools – Never lose sight of prioritizing the people who huddle around your solution, never stop collaborating.  Encourage face time and green time.  However, there are highly regulated industries with static expectations, accounting control benchmarks, FDA guidelines, or stable dividends paid to investors for decades.  A well-documented, repeatable process for how software, hardware, or other product will be delivered over the course of a long-term project will assist tremendously with stakeholder confidence.  Make priorities clear on all sides of the contract, set the expectation that communication and availability are mission-critical, but understand that there will be little risk tolerance for out-of-control processes.  Maintain your agility by keeping your document alive and lean, maintain elasticity, but make sure the tools used and the processes adopted, and the pace of process change, gives your fixed-scope, fixed-budget project a stable context for predicting delivery and ROI.
  2. Working software over comprehensive documentation – Delivering builds early and often is the best way to be truly certain of product status.  In emergent product design with incremental feature addition this feels natural.  There is an MVP planned so an opportunity to pivot is assumed, the feedback loop on the progress of high-quality incremental delivery is the best way for stakeholders and users to see and feel the value that is emerging.  When working with waterfall-minded stakeholders – especially if they are an external client – fixed scope, fixed budget, and fixed release dates cannot always be avoided.  However, convergent delivery does not preclude the XP and Scrum best practices of well-formed agile teams and an openness to documentation-heavy products will drive velocity and success waterfall organizations have never seen.  Instead of negative reactions to the expectation of comprehensive documentation, approach documentation as a secondary product and maintain the same expectations of prioritization, collaboration, and responsiveness.  Moreover, a convergent, finite project likely came to you with extensive documentation.  This documentation will require some additional work, but it should not be ignored.  Even though this is a source of waste that is removed during agile transformation and lean consulting in “sexy” emergent product delivery, handling waterfall requirements as documented stakeholder demands can be incredibly helpful in convergent product delivery.  The Product Owner still must aggregate, consolidate, and complete backlog decomposition with the team.  The XP user story and a prioritized backlog should still set the delivery cadence.  Be open to documentation and transparent to stakeholders about its actual ROI after it is delivered.
  3. Customer collaboration over contract negotiation – Good fences make good neighbors.  Some large companies simply cannot risk an open-ended and loosely-defined relationship, especially with vendors or contractors.  If you’re competitive strategy relies on these types of contracts, inspect and adapt.  Find how negotiation can be expedited, build in the process of collaborative relationship change, and build well-formed teams that are as adept at ramp-up as they are at innovation.  The capacity of a Scrum team to quickly assimilate a knew business and architectural context will drive success in products and relationships of all types.  Answering the internal needs of various business functions or developing solutions in new industries requires a team aptitude for understanding new contexts effectively and efficiently.
  4. Responding to change over following a plan – Change is inevitable in product delivery – the demands of the market, the technological tools available, and the state of the product being developed are a state of continuous evolution.  New requirements previously unnoticed will surface in the course of a project.  Even in a mostly-waterfall project, a great Product Owner will apply XP and Lean principals to minimize waste and maximize up-front value.  Great Scrum teams will perpetually improve, increasing velocity.  We often talk about “waterfall projects” versus “scrum projects” when we really mean emergent versus convergent delivery – fixed budget, scope, and deadlines do not preclude scrum, lean, and XP practices, they constrain them to a known outcome.  The difference between delivery by a helpless group of Project Managers and Business Analysts disengaged from team performance versus delivery by a powerful Product Owner and kaizen-crazed ScrumMaster and team is not dependent on emergent product delivery!  Collaborating around the highest value backlog items up front, swarming impediments, and tracking the variance of forecasted-to-actual product-level burn down will allow fixed dates to be met appropriately.  Responsiveness to change needs to be supported by a strong relationship of trust, which must earned.  If you are in a custom software shop, responding to RFP’s and entering into fixed projects is often the inevitable first step to earning the trust that will lead to a more agile relationship, so make efforts to meet the comfort level of the customer’s stakeholders while including a healthy process for addressing requirements changes.


The values, practices, and behaviors of agile, scrum, lean, and XP have wider applicability than open-ended emergent product design.  Staying open to the unique lessons that can be learned in seemingly less-than-ideal projects will be a terrific opportunity for the kaizen-driven team to grow.  If a rigid process and convergent projects have caused the shine on your Scrum mindset to dampen, step up or step out: don’t let the context defeat you, stay true to your agile values.  On the other hand, if you find yourself in a long-term no-win situation in which you cannot drive change for your team(s) and users, maybe a sexier career path is out there for you to consider.

Incremental AND Iterative Product Delivery

Highly-effective agile teams deliver user-valuable software incrementally and iteratively. What’s the difference?

Incremental Delivery:

An increment is “something added as part of a series of regular additions.” Scrum relies on incremental by employing the user story (originally promoted by Extreme Programming and written about extensively by agile champion Mike Cohn).  The user story is the fundamental building block of how sprint commitments in Scrum are managed.  Incremental delivery relies on intra-sprint-based “vertical slice” delivery, in which new features are divided up like sashimi – as thin as the skill of the chef can accomplish.  Effective vertical slicing is a best practice in Scrum and XP because incremental delivery minimizes uncertainty in any given sprint and release, throughout the development of a complex product.  Vertical slices follow the INVEST rules for user stories:

  • Independent, end-to-end, “shippable” increments of the emergent whole.  The slice could be delivered fully tested without any other product increment and create value for the user or owner.
  • Negotiable, in planning and expectations with users and stakeholders, allowing delayed incorporation of enhancements or, if a major pivot becomes necessary, easily removed from the product roadmap (without previous over-engineering, over-planning, or over-documentation).
  • Valuable to the user or owner, likely in a way that is sufficiently noticeable that it is monetizeable.
  • Estimable by the delivery team because the User Story does not generalize or hide uncertainty.  An inestimable story is often an Epic.  It is either complex enough to warrant a technical spike or compounds enough feature work that it should be broken into independent, smaller, user stories.
  • Small enough to be estimated by a team, with certainty, and deliverable fully-tested within a single sprint.
  • Testable by virtually any team member because the expected outcome is qualitatively or quantitatively noticeable (as part of its being value) to the target user.

The INVEST method for user stories ensures that planning and development occur just-in-time so that the emergent product can regularly evolve in response to changing stakeholder demands.  More importantly, in the fast-paced markets in which agile/scrum/lean/xp programs compete today, incremental delivery maximizes the freedom to release the Minimum Viable Product and pivot in a new direction based on real-time feedback from users.

Iterative Delivery:

An iteration is “a repetition of successive approximations in which progressive versions evolve to a desired level of accuracy.”  Iterative delivery relies on an openness to prioritizing value that is good-enough rather than perfect.  The perfection of a single feature or a single screen, as defined by one Stakeholder, Architect, UI Designer, or Engineer and taken out of the context of the overall emergent product leads to unnecessary delays, lack of decisiveness, and delayed time-to-market and ROI.  The Scrum team avoids working in a silo through collaboration, entrusting the Scrum Product Owner with accountability for decisions.  In contradistinction, over-analysis and churn prior to meaningful user feedback is utterly inefficient and ineffective.  Thus, while Just-in-Time vertical slices maximize the freedom to bring Lean MVP’s to market and pivot as appropriate, iterative and “just-enough” Lean delivery is equally critical to ensure that increments can evolve based on user feedback instead of non-plans made due to (unnecessary) fear of scrutiny.

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