Route to Enterprise Scale Agility

Of all the imperatives of digital transformation, the one success factor on which there is consensus is “enterprise-wide agility”. Agility not limited to IT services alone, but all enterprise services working together. Be it the “software development process” or the “employee on-boarding process” or “the procurement process” – agility is rapidly becoming a cornerstone of our digital world.

The method wars

There are several agile methods and variants, and most organizations experiment with a few, often supported by specialized advice and guiding tools. While Scrum is probably most prevalent in IT, Kanban and Lean are significant too. Without going into merits of each, it is pertinent to characterize each, albeit briefly.

Scrum provides a structured model, making it useful for transitioning from traditional development structures and methods. Where workflow is crucial as in service delivery, Scrum maybe constraining, but has value in its routines. Kanban enables evolutionary change, focusing on waste reduction and quality improvement, through visualizing and improving workflow. Kanban helps identify process bottlenecks, manage workloads, and predict output based on flow capacity. Lean adapted from lean manufacturing principles, focusses on fast and smooth flow of work, helping deliver value quickly and predictably, learning and improving through early feedback, using data evidence to make decisions.

Most agile frameworks reach their limit when aiming to “agilize” more than a few teams, let alone achieving agile collaboration of several hundred people across the business. The key reason is that most agile methods focus on team-level performance, often leading to local optimization but global sub optimization!

So what works best?

The challenge and approaches to achieving enterprise-wide agility is keenly conferenced (legitimate verb?), experiences shared and approaches evangelized.  Unanimity exists that competitiveness in our digital age requires businesses to achieve agility at scale, not in projects and portfolios alone, but across functions, across the business.

Given the context, it was a privilege to join the Lean Kanban India conference in Bangalore (Sept), the Agile Expo in London (Oct), and the Lean Kanban Central Europe conference in Hamburg (Nov) this year. At Bangalore and then again at Hamburg, I caught up with David Anderson.navin-anand-david-anderson-at-leankanban-india-2016-bangalore

David Anderson is a pioneer of the Kanban Method for knowledge work, having started with early experiments at Microsoft. A Scot living in Seattle, David is considered a pioneer, and is perpetually on the move – coaching and advising individuals and teams – on how to deliver greater productivity and quality using the Kanban Method, through and an evolutionary approach, using the Kanban principles.

For enterprise scale agile implementations, David advises Enterprise Services Planning, a system for scaling agility in large businesses that operate in complex environments. But, large businesses by their nature have built standardization to enable them to deliver on scale. This does put constraints on adaptability and all too often efficiency. While the path taken may differ, the end goal is business-wide agility.

The subject presents enough to consider and think about, so here are a few interesting excerpts from my exchanges with David Anderson:

Which framework offers the best opportunity and returns on enterprise scale agility initiatives?   

David – “Kanban has become commonplace in professional services work environments across the globe, with wide acceptance in Europe. There is increasing evidence of high returns on Kanban implementations. People are stopping to question its validity; they are simply doing it and finding it useful. It’s adding value in their lives and making work easier and more fulfilling.

On my recent trip to China, I visited some companies with large scale Kanban initiatives. Without naming them, to protect the innocent, three of largest companies I audited have ongoing Kanban implementations with 3000 to 5000 users each. They reported productivity improvements ranging between 10-50%, on average over 25%. One these implementations spans more than 10 product units at this electronics giant. They have already seen productivity gains equivalent to 1250 FTE engineering staff. The ROI at two of the firms audited demonstrated returns of $300-400 to every $1 invested. For obvious reasons they now intend to scale usage to 100,000 staff to drive even higher returns.

Larger scale implementations are producing significant productivity gains, minimizing the need for workforce expansion. The big economic gain apart, they also see that Kanban has enabled them to side-step the “war for talent” and the associated time and costs. Another key motivation for executives driving Kanban adoption has been their ability to enable a culture of collaboration and trust, which in turn is helping with attracting and retaining some of the best talent.”

What are the key risks in the adoption and scaling of Kanban to drive enterprise agility?

David – “Kanban initiatives seem to do no harm, and tend to take root with minimal resistance and coaching. There are few stories of the aborted implementations or early failures.  The root lies in the Kanban principle that you “start with what you do now”. This evolutionary approach, when contrasted against traditional approaches to change and agility management, dramatically improve the potential of success. But having said that, we know that greater transparency and visibility comes with its own organizational and behavioural challenges.

In my observation, adopting Kanban at scale across the entire businesses is becoming an easy decision, and I certainly expect to see much wider adoption globally over the coming years.”

Would you say that the Kanban method is achieving all it can?  

David – “Kanban provides massive ROI for knowledge work, with almost no downside. It is a truly a low risk, high impact approach to improving business performance. While the results we’ve seen globally are tangible and significant, reality is that nearly all of these are scratching the surface, and are yet to fully achieve the essence of the method that we first implemented at Microsoft’s IT department in 2005.

Even the better implemented Kanban’s are yet to implement a true “pull” system, thus limiting the full benefits we might expect. Sure 10-50% productivity improvement at a scale of 5000 people needs to be congratulated but when organizations fully embrace Kanban they can achieve 100-700% productivity gains, while dropping delivery times by greater than 90% in many cases.

The broad adoption of Kanban that we see around the world is in fact shallow when compared with the real thing. We often refer to such implementations as “proto-Kanban” – usually an early step in adoption, but just a step in the longer journey to enterprise scale. Enterprise scale implementations are characterized by end-to-end “pull” systems, which offer a far greater reward than merely visualization and relief from individual overburdening that we observe in early stage Kanban implementations.

Not to take anything away, broad Kanban adoption is a blessing, with individuals and organizations seeing enough benefit – enough to be forgiven for thinking they are done, and that Kanban has delivered on its promise to improve their workplace. Our challenge, then, is to make them see that there is a lot more that can be done. We need to see broad Kanban adoption as a platform on which to build success at the next level – a platform for “pull” at enterprise scale!”

Flow is the crux of agility. Any method deployed must focus on transparency, balancing, unblocking and managing flow.

Can you explain what this “pull” system is? What are its evident characteristics? 

David – “The evidence really lies in the focus of managers, the planning and prioritization of work. Instead of managing people, planning deterministically, focusing on utilization levels the focus shifts to customer work orders, flow rates, flow efficiency and balancing demand against capability. If this hasn’t happened yet, it is unlikely that you have a true pull system in operation. It also impacts the way you interact with customers, the way work is selected, sequenced and scheduled. If the planning methods and prioritization logic is unchanged, you are not yet looking at flow, its imbalances, variations and balancing demand against capability.

Finally, if you’ve truly moved to pull you can understand business risks such as the cost of delay, offering different business services models, based on urgency and risk, with service delivery implemented through capacity hedged classes of service.

In short, if you don’t have deferred commitment, replenishment meetings to decide what to work on now, what to leave until later (and, if so, how much later), and what to discard altogether, together with service level agreements and classes of service, you most certainly haven’t made the transition to a “pull” paradigm.

You are still doing things the same old way, just with more visibility and some sustainable pace for individuals, which has improved quality, reduced rework, shortened delivery times, and given you up to 50% productivity improvement as a reward. If you can build on this established base, you could enable further improvements of 4 to 8 times your existing achievements.”

It sounds awfully hard to achieve “pull” at enterprise level. What have been your observations?

David – “If Kanban has already helped us with better visualization, better quality, more collaboration, a higher trust workplace, and a more sustainable pace of work, and given us gains of 10-50% why would we care to take it further?

The bottom line is that even in early Kanban implementations a decade ago we were seeing gains of 200%+ in productivity and drops in delivery times of 90%+. By failing to implement “pull”, Kanban adopters are leaving gains of at least 4 to 8 times more than they’ve already achieved.

The first Kanban system at Microsoft in 2005 produced productivity gains of 230%. It was replicated at Robert Bosch’s South Bend, Indiana facility in 2006. In the same time-period, a Lean implementation at Hewlett Packard’s Laser Printer Firmware facility in Boise, Idaho produced 700% productivity gains with half of that being directly attributed to the Kanban system inspired by the example at Microsoft.

When managers are willing to embrace “pull”, to take on the leadership required to adopt new ways of thinking, new ways of managing, and to go and re-negotiate the interface and contract with the customer, the results are beyond their wildest dreams. So great, in fact, as to seem unobtainable and mythical. But they are not! These improvements are real, historical, well documented and repeatable!

It’s easy to see why Kanban adoption is almost universally so shallow, and it is easy to explain why the Agile software development community was content, even determined that Kanban should be viewed as just a visual board and not a pull system featuring a virtual signal card system for deferred commitment as it was originally implemented and documented.

Getting to “pull” is a paradigm shift. It is a discontinuous (or disruptive) innovation in management thinking within the enterprise. If you merely adopt a visual board and relieve your workers of overburdening with some personal work-in-progress (WIP) limits, you don’t have to change paradigms. Shallow Kanban implementations represent continuous innovation within the existing paradigm. Managers don’t have to change their behaviour. People don’t need to be re-trained. It isn’t necessary to negotiate new interfaces and contracts with existing customers. Customers aren’t impacted at all. In fact, they may never be aware of the changes.”

So what does it take to implement end-to-end pull at large scale? What is needed to unleash the potential 800% productivity gains? How can we actually achieve business agility at scale?

David – “The challenge is how to take it to the next level. Agile transformation requires deep commitment from management, but even large-scale change can usually be managed incrementally.

It would be all too easy to say, “Get a coach!”. While this may be important, it isn’t enough. There needs to be managerial sponsorship for the change, understanding of why it is necessary and what the benefits will bring, and the willingness to take on the leadership risk to make it happen. The personal career and corporate political risks are tangible.

Switching to “pull” and abandoning determinism for a more probabilistic style of management is foreboding. But evidence is strong that better results come from training and tools. The reality is that to unleash the benefits of up to 8-fold productivity improvements, not to mention the economic improvements from selecting the right things at the right time and managing risk quantitatively across entire product portfolios, managers have to change their behaviour.

Managers need the knowledge, the confidence and the tools to use the techniques that enable “pull”.  Businesses need to commit to training their managers and providing them with the right tools. By embedding most of the algorithms in the tooling, managers can trust the decision advice being offered and authorize commitments and schedules without having to recall all the fine-detail and intricacies of the training.

Meanwhile leaders need to make it safe for the management team to experiment in the use of their new knowledge. There needs to be a culture of “failure tolerance” as managers with years or decades of old behaviour to unlearn, gradually feel their way into a new way of decision making.

Managers can be trained in the risk assessment techniques, the mathematical literacy and the ability to use a dynamic reservation system, demand shaping, and capacity allocation to facilitate selection, sequencing and scheduling appropriately. These techniques and the decision supporting analytics are embedded in Enterprise Services Planning tools such as SwiftKanban ESP.”

Clearly then large-scale business agility isn’t just about technology. It is a new way of thinking and managing with a more open, creative, transparent and collaborative approach. There is of course an enterprise service planning method and tool that is required to improve the potential of success while minimizing risks. Is there a way to learn more, without selling the farm?

David – “I run classes, speak at events and occasionally get invited to chair webinars. On 15th Dec at a webinar sponsored by Digite, I discussed the key challenges faced by large scale agility implementations, suggesting pragmatic approaches when shifting to “pull” and leveraging economic benefits that at scale. Well, if you found this conversation interesting, you can find the webinar recording here.”

Contributor: Navin Anand


Top Ten Global Proficiency Challenges Impeding Growth

There are a few macro arguments for nurturing and mentoring global diversity skills at all levels of leadership and operations management in a corporation. Yet, it does not make immediate sense, lighting up an urgent need on the radar screen. While we can not escape but recognise that the global GDP is shifting axis, as is the global working age population; the world continues to get smaller as globalisation is set to accelerate.

But so what, does it create an imperative for a corporation working well in its local market?

Research points to the need for specific intercultural skills, and conspicuous gaps which may be holding back companies in their quest for success in diverse global markets. There are case studies documenting the experience of companies who do things differently and taste exceptional success in complex emerging markets.

But again, what does this really mean to a small or mid-sized company with maybe a few overseas relationships? Surely focus on quality execution, operational excellence, good management practices should be enough.

Let us try to break it down. Consider a mid-sized company, with no more than a few customers (partners or suppliers) overseas; maybe an outpost operation or two dotting the map; each a lean operation, reporting back into head-quarters. This picture fits millions of companies across the world, particularly in technology, services and outsourcing.

Now consider some of the questions nagging leadership and operations in this scenario. Ignoring clichéd management terminology, wonder how many of these, if any, have kept you awake.

  1. We do need to have a direct presence in this new overseas market, for better understanding, control and growth. But who do we hire and how? Is it better to hire a strong local professional to lead or should we relocate one of our best performers from the domestic operation?
  2. Will we be able to attract the most suitable and meritorious candidates in the local market? If we succeed, will this new hire be able to engage well with the rest of the organization and adjust to the organization culture?
  3. If we relocate a top performer from domestic operations, how much time and what effort will be required to gain insights and understanding of the overseas market? Will it effective in building relationships of trust with potential customers, partners and suppliers?
  4. How will we manage the operation remotely? If the operation becomes too independent will it develop its own unique focus and agenda? Will distance and differing time zones increase operations and management costs?
  5. Will we have the ability to acquire new customers? Can we build relationships of trust and value with prospects, customers and partners?

There are many ambitious companies who struggle with these and similar questions. Equally, companies who are more mature, have bitten the bullet and are beyond the stage of establishing a presence. The challenges and concerns with regard to the front-line operations in their overseas markets have moved on.

  1. We do our best; better than we do in the domestic market, yet our prospects and customers do not seem to trust us?
  2. Why are we overlooked for unexplained reasons in significant bids and decisions? Why does our credibility suffer?
  3. We are expected to perform and be creative, yet we are never invited in helping clients’ identify and debate potential solutions?
  4. We are expected to solve problems, deliver to high standards, work relentlessly and not expect to be paid for the extra effort? Is it worth it?
  5. We are cheaper than the local competition and yet we seem to lose out more often. Are the expectations of the market really fair and viable? Do we really understand the needs of our customers, their imperatives and considerations?

Do any these concerns resonate with your business? Undoubtedly the revenue side impact is the most crucial, but the element of investment and operating costs can be ignored. The opportunity loss, of time and resources, in unremunerative markets can become a disproportionate drain for any company. Such experiences and forays has drained the energy, expense and resolve of many a company pursuing a global growth agenda, particularly in the present economic climate.

There are no pat answers; of course not! Neither is there a single bullet solution. A part of the answer may lie in pieces of the jigsaw – the building of a suitable strategy, developing the best suited go-to-market model, executing it professionally, with the best management teams and practices, supported by locally tuned marketing, sales and relationship building, and so on.

However underlying all these pieces there is a fundamental foundation block. It may be labeled as – global proficiency, cultural intelligence or diversity skills. Its absence can render much of the effort, time and investment ineffective. This proficiency and skill is not about learning up “culture maps” or memorizing the cultural differences of the overseas market. They are more about understanding and appreciating the typical barriers, baggage and perceptions; building a self-awareness and an awareness of others; developing effective communication and most critically, improved judgement. In alien conditions this is the crucial pre-requite to assessing situations, enabling improved problem solving, strategizing and crisis management.

The impact list can be long, abstract and hence usually ignored; left to the common sense and maturity of the individuals on the ground. The pro-active attention and mentoring in this crucial area remains mostly absent, with training and coaching rarely considered. However there are severe costs and penalties. In worst case scenarios there are unexplained order losses, customer exits, rework and waste, team conflict, poor relationship and engagement management, failed alliances, ineffective collaborations, and so on.

After years of multicultural business experience, in a recent meeting, when I was told that “we have had a poor experience dealing with India and Indians”, I was relieved for the direct input. Why? In the majority of situations, such input is surmised, if at all, only after much water has flown under the bridge. You would agree that it is way easier to read the lines than between them, when faced with a tough business challenge.

Related articles

Why bother with diversity skills?

The opportunity to get ahead comes wrapped in the challenge. Nothing new then, it always does!

The challenge is both personal and organizational. It is about building cultural proficiency, an intelligence and a skill-set, to thrive in the diversity that surrounds us.

Many terms in our lexicon, such as, remote management, virtual teams, multicultural teams, cross-cultural management, and so on, all have a common root-cause challenge, the diversity amongst us. If only, we could all be alike!

The case for pro-actively addressing this challenge, of building the armour and strengths to thrive in global diversity, is becoming stronger every day, as demonstrated by its brief history.

Consider these arguments:

  1. Diversity is a fact within every large country and continent, be it the United States, Western Europe, India, Canada or Australia. From a few thousand miles it may not appear that way, but market segmentation experts, for votes or pizzas, will tell you about the diversity of their markets. A large enough domestic market does not offer the luxury of ignoring diversity.
  2. The Asian Development Bank projects that the world GDP will shift axis over the next 40 years, with a higher contribution coming from Asian countries. The considerations for such projection are obviously complex and based on several assumptions. However, it is not hard to be convinced of Asia’s increased participation in the world economy with its growing infrastructure, large consumer populations and increasing consumption.
  3. The working age population of the Western economies, Japan and China will decline in the next 20 years, while some countries in Asia and Africa will add another billion people to the global workforce. Obviously there are several implications of this phenomenon the world expects to experience, clearly shifting markets and supply sources, is one such.
  4. Technological changes have impacted our lives significantly in the past 30 years. The rate of technological innovation continues unabated, and the world does continue to shrink. In fact there could well be a common global culture evolving, as researchers study the commonality across our diversity.

The combined impact of these issues is a disruption that we should consider for a minute. The diversity we experience today will accelerate, and, within our own lifetimes. This can present a threat to many, who remain oblivious to the underlying opportunity.

A recent McKinsey survey elicited an overwhelming response that cultural proficiency was a top need for organizations seeking to achieve successful global growth. This is fairly compelling evidence for those who prefer surveys over experiential wisdom.

Let’s address this from the opposite side. What is the threat of inadequate cultural intelligence or diversity skills? This could be long list, but hopefully some of these will strike you as important enough in your situation:

  • Lost business opportunities, customer acquisition and relationship building challenges
  • Unreliable and inadequate supply chain to keep the business competitive
  • Dispersed teams out of sync on critical focus areas, goals, lose empathy and problem solving
  • Unhealthy employee conflict causing loss of productivity, morale and creativity
  • Failed and expensive hiring decisions, supplier relationships, market entries or customer dissatisfaction

In several countries there are statutes and compliance requirements driving inclusion of diversity in business and management. However, the business case for development of the “multi-cultural muscle” is getting stronger. It will increasingly become a critical determinant of success for professionals and companies in the years ahead.