Invest in Growth, Savings or Risk Reduction?

ABPMP Denver put on a great panel discussion on Tuesday evening on the topic of the state of project work in the current economy. First thanks to the great panelists for sharing a collective generation of great insight: Bill Gilbert, EVP and COO, Statera; Donald Davidoff, Group VP Strategic Systems, Archstone; and David Neitz, VP Solutions and Innovation, Fiserv Investment Support Services.

I’ve been ruminating on a lot of the topics covered, but the one I keep coming back to is the answers to the question ‘what are companies investing in in today’s economy.’  The answer from the panel was basically, ‘It’s all about risk mitigation in 2009.’ While I get that, it seems like conventional wisdom perhaps goes against best wisdom in this case.

Conventional wisdom states that:

• In good time, companies invest in growth
• In bad times, companies invest in savings
• In really bad times, companies invest in risk reduction

I suggest this should be turned around:

In good times, irrational exuberance suggests that companies might spend more time and effort looking for their blind spots and focus on reducing any risks that could displace what is working today or could work against them when tides turn. Especially the recent history of Enron and Leman Brothers has shown that blindly chasing the greatest new ideas can be catastrophic.

In really bad times, companies have the luxury to investigate new opportunities more rationally. They can take their time in developing, and perfecting new offerings, and take advantage of lower costs and more resource availability to grow. There is a lot of recent buzz about great companies founded in recessions.

In all times, companies should be able to use well justified business cases to invest in savings and continuous improvement of current business processes.

Lean, Agile – Kanban, Scrum

David Anderson at Agile Management has two new blog posts that got me thinking. The first is How to Start with Kanban which lays out how to implement  Kanban for software development in 10 easy steps (I like its simplicity.) The second is Blogosphere Buzz about Lean & Kanban which is a comprehensive review of blog articles coming out of the Florida Lean & Kanban conference. All this Lean Kanban talk got me thinking about what really is the difference between all these terms. My conclusion in summary is: Lean and Agile are concepts that allow for more flexible, lower cost development or production – Kanban and Scrum are two approaches for implementing these concepts for software development.

My Laws of Development try to show how Lean (and Six Sigma) are the foundation for Agile and are adopted from the first book I studied on lean and applied in my early consulting days, Factory Physics, Foundations of Manufacturing. When first introduced to Lean as a software development concept more broad than Scrum through Mary and Tom Poppendieck’s book and an Allan Shalloway conference, my reaction was something like: yes, but both use the same concepts at different organizational levels. The fact that lean concepts extend into the scrum cycle by ensuring that there is a limited amount of focused work at the development team level is often overlooked. My reaction to Kanban has been similar over the past couple years as it has gained popularity. While Scrum and XP use story points or ideal man days to limit WIP, Kanban borrows a more direct tool from lean manufacturing to accomplish the same objective through the Kanban (simply meaning ‘card’ in Japanese) itself.

Agile and Scrum, while while they can be more broadly applied, have grown primarily as a result of lean (originally manufacturing) concepts being used to improve software development. Kanban will always be more broad than software development; though, there appears to be movement to capture the term specifically for software development.

I guess, I still go back to the founding principles of lean. If we understand the principles, it allows for adoption to specific needs across a wide spectrum of verticals and organizational levels without taking sides on the latest terms and tools to emerge from applying them.

What Happened at Lean & Kanban

The Lean & Kanban 2009 conference, wrapped up this week and there has been a lot of buzz about it. I like a summary by email from Dean Leffingwell over at The Agile Executive. Among Dean’s takeaways on the conference are:

I obviously think Lean Software will be big. It will be to the enterprise what Scrum is to teams.

I believe that Kanban (a subset of lean, being used as an agile team method now), will be more readily adopted in 3-5 years than Scrum.

He gives a number of reasons. I won’t list them all, (go read the post) but among them are:

• Easier to adopt at the team level.
• Far less overhead for planning and estimating, and fewer ceremonies (approaching zero in the edge case and with appropriate context).
• Support from industry stalwarts such as Lockheed Martin, who are applying proven lean manufacturing practices to software development for projects like the Joint Strike Fighter.
• Lean optimizes the whole enterprise and gives you tools to reason about the enterprise, from order to shipment, rather than just the team optimization.

I tend to agree in that Lean is the foundation for improvement in a wide variety of areas with software development being just the latest to embrace it with gusto. I differ some in that I have always thought of Agile and Lean as interwoven and perhaps make less of a distinction than Dean between them.

For more conference coverage, read Dean’s blog where he’s posted his full presentation. Or, Leading Agile has live blogged much of the event if you really want to dig into things.

Balanced Scorecard Tools

I am a big believer in creating an overall score card for an organization and measuring performance against it. The Balanced Scorecard remains one of the best ways to accomplish that goal for an organization. I recently found a great set of tools from Mark Graham Brown that simplify getting started. I especially like the Excel Templates. You will also find Supplemental Materials => Excel Model | PowerPoint | Case Study | Workshop | Project Plan | White Paper. If you’d like to get a broad overview of the Balanced Scorecard, there is also online training and how to guides (I’ve not looked at these, but expect they match the quality of the other tools.) => online | take exam | pdf | exe file | word. So what are you waiting for, get started on actively managing your company’s strategy today. I’ll share more on how to move beyond excel designs in a later post as I review some promising cloud tools.

Denver ABPMP Meets Tomorrow

If you can be in Denver tomorrow, Feb 19 between 4:30pm and 6:00pm, please join us. We are meeting at:

Oracle Building, Denver Tech Center
7700 Technology Way
Denver, CO

Guest Speaker: Steve Towers
Moments of Truth, Making customer satisfaction work in your favor

Steve Towers is the founder of the Business Process Group (www.bpgroup.org) a global business club (originally formed 1992) exchanging ideas and best practice in Business Performance Management, Transformation and Process Improvement.
He leads from the front and works with many of the leading fortune 500 companies as a mentor, coach and sometimes consultant specializing in the implementation of performance improvement, process change and transformation.

An inspirational speaker and author of several books including “A Senior Executives guide to BPR”, “In Search of BPM Excellence”, “Thrive! How to Succeed in the Age of the Customer” and recently “Customer Expectation Management – Success without Exception” he is noted for his direct and pragmatic approach. Steve previously worked for Citibank where he led restructuring and business process transformation programs both in the US and Europe.

Gartner Says Most Organizations Lack All the Skills Needed to Implement and Optimize Their Business Processes

While this article is not new, its title caught my eye while doing some other research.  Quite a bold statement from Gartner. I wonder why there’s not the typical 80% chance by 2010 parenthetical?

I do agree with the extract: “Successful BPM requires an agile iterative approach to process change. Many internal IT organizations and external service providers (ESPs) are still practicing business process re-engineering, using ‘waterfall’ software development methods and calling this ‘BPM’,” said Michele Cantara, research vice president for Gartner. “BPM is intended to empower business stakeholders to work collaboratively with IT to change the solutions supporting business processes. Most ESPs do not possess the governance, modeling and change management skills to effectively foster this collaboration.”

Quite an endorsement for Agile from Gartner! You can read the article here to find 11 less agile steps that Cantara recommends to help determine how organizations should source BPM skills.

The Process Center of Excellence

A final post in a series addressing some of the lessons and take aways from experience in establishing Centers of Excellence.

Every organization knows they have a responsibility to optimize financial resources. I don’t know of a business that does not have a CFO or the equivalent and appropriate staff. Most also have acknowledged the importance of their information resources and have a CIO or CTO organization. Most also realize that they need to effectively manage their human resources and have established a Human Resources department.

With processes being perhaps the most critical resource an organization develops, I wonder why most are less enthusiastic about optimizing processes and appointing a chief process officer. This officer would lead a Process CoE that focuses on two critical activities within the business:

1. Optimize and Continuously Improve Existing Processes
2. Create New Capabilities

Some organizations have addressed the first of these using six sigma and lean. I applaud Motorola and others that have embraced this as a practice, ideology and goal within their organizations. The structures and concepts of lean six sigma fully address the first activity.  Motorola credits six sigma with delivering at least $16 billion in savings between 1987 and 2001.

But, it only addresses half of the requirement of a Process CoE. Motorola, as a case study, has demonstrated an extraordinarily difficult time adapting to changes in their business model and producing next generation products and capabilities. Witness the recent woes and impacts from the 3G cellular transition. This, I believe, is from their lack of focus on the second critical Process CoE activity, creating new capabilities. Despite the DMADV methodology within six sigma, few shops actively nurture capability development as an activity. This leaves them unable to successfully transition to the next strategy, market, or product.

Creating new capabilities first requires an organization to recognize that a new capability is required. This takes strong outward facing skills not honed in six sigma. It also requires the ability to create new partnerships, attract new customers, enable new value chains and master new processes, tools, skills and technologies. None of these are Master Black Belt competencies. I am currently working with an organization that is building an new internal capability, and I can say it is nearly as difficult a work as a start-up organization faces. (I say ‘nearly’ only because they have some existing structures that can be borrowed and fewer capital constraints than startups where I have worked.)

My vision of a Process CoE would expand on the six sigma foundation to nurture both of these critical activities. At the core of the center would be strong analytic problem solvers that would improve existing processes and design new ones. We would borrow heavily from IT, HR and other speciality resources when needed. Around them would be project, program and change managers that would stitch together the complex dependencies that would ensure readiness for working differently. And, sitting on top of that would be visionaries moderated only by an enterprise prioritization and resource allocation process. These visionaries would focus on expanding use of the organization’s core competencies and pushing leaders to explore new opportunities and relationships to keep the business relevant for an ever changing world. A truly agile enterprise would be the result.

When Lean Six Sigma Works

While titled So What is Lean Six Sigma, I think this article does one of the better jobs of pointing out the strengths and limitations of the practice.

Creating Value Stories – ABPMP Summary

I presented this Thursday at the ABPMP Denver meeting on the topic of how to build  support for BPM initiatives. My message was primarily that to get traction and support for these initiatives, internal and external services organizations need to create a compelling value story. “Stories” are how these initiatives communicate how they will solve need and meet organizational goals. Here are the presentation slides for Consultative Selling and Business Cases for BPM ROI.

I am glad to see how the Denver ABPMP organization has grown over the past year and a half since its founding. I think the membership has matured as BPM has gained more acceptance. I look forward to working with Brian Brinks and his directors as they continue to grow it in the next year. Thanks also to Tony Pasma from Global 360 who co-presented.

How to Survive the Downturn

Is a downturn inevitable? Given all the talk in the past couple months, it seems that a downturn can no longer help but to become a self-fulfilling prophecy if it has not already set in. The only question is how long and how deep?

How should companies approach these uncertain times? Most of the companies I am talking to seem to be continuing much with business as usual. Granted, I am not currently working with investment banks nor home builders, but even a company I am working with that is focused on consumer banks is seeing strong interest in their new product. Not all banks used leverage and risky instruments to grow quickly and most have strong balance sheets. Sure there’s turmoil and risk. But only a small percent of businesses really “did anything wrong.”

Bernie Thompson has a post on Lean Software Engineering urging companies to Get Lean to Survive the Downturn. It focuses on executive priorities during a downturn and basically postulates that the right things to do before are the right things to do now. He suggests that:

…to steer the corporate ship to account for the increased external risk and uncertainty:

1. Re-prioritize to focus on the highest probability, nearest term revenue opportunities
2. Cut spending to preserve cash
3. Look carefully for unique opportunities in the surrounding turmoil

He concludes with “The urgency of a downturn may, in fact, be the best opportunity to adopt changes that will pay off even more when things turn up again.”

I happen to agree with this assessment and especially like the third point which he elaborates on in the article. Now is a great time to continue to improve how you operate and to re-invest in the future. Sure, increase focus and tighten up on discretionary spending (both are part of being lean,) but keep delivering the fundamentals while improving on the key differentiators. And stay on the look-out for opportunities that may only be available in these more unsettled times.

Oh, and don’t forget to surround yourself with positive people and turn off CNBC. Let’s stop the prophecy in its tracks. I’m not sure the downturn has to affect the broader economy like it did Wall Street. Get out there and keep improving.