Lean PMO: Managing The Innovation Portfolio

One of the first exercises I run with executive teams is mapping their business portfolio to visualize current work in progress and how it aligns to the overall business strategy. Without exception, every time I run this exercise the gap between current state and desired state is far wider than every executive believed, hoped or even imagined.
lean portfolio mapping

Portfolio mapping requires taking an end-to-end view of the lifecycle of initiatives in your organization. Lean Enterprises’ consider four main domains:

  • Explore early stage initiatives that are bets for the future with high degrees of uncertainty
  • Exploit initiatives that have achieved product-market fit and the organization wants to grow and scale
  • Sustain initiatives that have become repeatable and scalable business models, products or services that drive the majority of revenue for the organization
  • Retire initiatives that are long lived, no longer beneficial (even limiting) to the organization future success or strategy and should be sunset from the portfolio

Lean Enterprise

Initiatives that do not achieve desired outcomes in any domain should be killed, and their investment transferred to other initiatives.

High performance organizations focus on building capability to continuously move initiatives through the model from Explore to Retire. They understand that using the same strategy, practices and processes across the entire portfolio will result in negative outcomes and results.

Poorly managed organizations tend of use the same standardized approach for all domains. They fail to recognize the need to adapt their analysis, evaluation and control mechanisms to design a system that will provide the correct amount of governance and measurement to enable business leaders make high quality decisions based on learning outcomes and data derived from executing the work in each domain.

Typically these companies portfolios are orientated solely toward high revenue generating initiatives. Valuable cash cows that become prized assets, protected and milked dry. Lean Enterprises’ however know that one day the milk will run dry.

Explore

New initiatives are inherently risky. When aiming to explore a new business model or product it is imperative investment is limited by setting boundaries around time, scope, financial investment and risk. We do this not because we are cheap. We do this to create ‘safe to fail’ experiments and build in quick feedback loops to understand if we are achieving the desired outcomes.

Lean Enterprise portfolio

In the Explore domain our goal is to test the business or product hypothesis at speed using a cross-functional team to experiment with the customers the solution is targeted at. By designing fast and frequent feedback loops into the team’s exploration we can limit investment, maximize learning and avoid creating ‘bet the business’ scenarios that are too big to fail.

Also, by limiting investment into smaller bets allows us to make more bets, enabling us to test many ideas to discover what works and what doesn’t. This is the principle of optionality applied to business model innovation and product development.

Lean Enterprise Book

Most of the ideas that we believe are great aren’t actually that great at all. By creating optionality in how we design our testing process we can create many opportunities to learn, not just one.

Yammer used a concept of 10×2 to design feedback loops and limit investment in early stage ideas. Their approach constrained teams to no more than 10 and no fewer than 2 people when exploring ideas. Also their iterations could be no longer than 10 no shorter than 2 weeks before teams had to demonstrate their achievements designing feedback loops directly into the development system.

Principles and capabilities of Explore

  • Cross-functional multidisciplinary teams
  • Make lots of small bets
  • Boundaries of time, scope, financial investment and risk
  • Design experiments are safe to fail (the only true failure is the failure to learn)
  • Create a sense of urgency
  • Demonstrable evidence of value to proceed

Exploit

For those few initiatives that achieve escape velocity and exit the Explore domain, teams can continue with a sufficient level of confidence that they are building the right thing, now they must embrace building it the right way.

Lean Enterprises understand the project paradigm is broken only further propagating organizational silos, conflicting priorities and measures of success. They understand the importance enabling cross-functional teams to experiment directly with their customers and users. Effort and measures of success are tied to business outcomes not output.  

As the team collects data from experimenting with real customers and users it improves its understanding of how the business model, product or service is performing. The team can then develop more targeted and sophisticated hypotheses based on the knowledge created from genuine user feedback.

Lean Enterprise pmo

Amazon designed the concept of Two Pizza teams – independent, long lived customer facing teams that were small enough to be fed by two pizzas. This enables context to be held within the group as the business model, product or service grows, while also allowing the team to become autonomous and learn together at speed. Leadership can then continuously evaluate how the initiative is performing based on frequent feedback loops, and can help to make further investment decisions on how to scale it up, down or to kill it based on the outcomes achieved.

Principles and capabilities of Exploit

  • Create end-to-end customer facing teams, not project teams
  • Continuous evaluation funding model
  • Target condition is to achieve break-even point
  • Data-driven, fact-based decisions based on accumulated knowledge
  • Maintain a sense of urgency
  • Set a vision, trust the team to get there, clear blockers and support as they proceed
  • Make knowledge sharing and organisational learning easy

Sustain

The majority of large organizations have built their entire business on a single business model and/or supporting products that achieved product-market fit and continued to grow beyond early expectations. They have extended their market, region, and/or sector to achieve exceptional financial success and achieve wide customer adoption and reach.  

Lean Enterprise program

The challenge they meet is how to avoid ‘feature fallacy’ – the fallacy that simply adding new features will add more value. This manifests itself as overloaded products with features, tools and customizations that customers often never use or are even aware of.

Think of a product you have used for a number of years. Are you aware of all the new useful additions to it? Adding new features does not equal adding more value to customers and users. The feature fallacy often represents wasted effort and investment that could be spent elsewhere.

Etsy design for continuous experimentation. Teams at Etsy work closely with product, marketing, and engineering to scout, build, instrument and improve Etsy’s product portfolio to make sure that they are improving business outcomes for all their stakeholders – customers and users included.

The goal is to use data-driven decisions based on usage and profitability to enhance what customers desire – not just copy what competitors release or what HIPPOs (HIghest Paid Person’s Opinion) want to have.

By continually adding more and more features to existing products, organizations end up with huge monolith applications that are difficult, slow and costly to change or build upon.

The trick is to break out new ideas,  implement them as an Explore initiative and drive them through the end-to-end lifecycle flow again. This provides all the benefits and rigor of each stage while building the capability to continually create new business opportunities for future on-going success.

Principles and capabilities of Sustain

  • Beware of the feature fallacy
  • Focus on what is valuable – where can we win?
  • Don’t get lazy. Success hides suboptimal issues
  • Keep discipline with fact and evidence-based decisions
  • What is being used, improved or removed?
  • How could we disrupt or get disrupted?

Retire

All good things must come to an end. The difficulty for most organizations is that many systems in their portfolio are not well understood. Often the people that built the original system long ago on a ‘project’ have left the company. No one knows how to change, adapt or turn off the system or what impact it may have. Fear runs through the organization because the entire company’s business model is dependent on a COBAL program running on a 486. It may sound like a joke, but this is the reality for most organizations.

High performance organizations continuously seek to reduce the complexity of their systems to free up people and investment to Explore new opportunities. By simplifying their systems they are able to innovate faster, cheaper and more frequently.

Ask yourself the question “When was the last time we sunset a system, product or feature in our team?” If you can’t remember then it is a smell. Over time the weight to legacy systems and technical debt will grind your innovation capability to a halt. Keep it within control. Remember that effort not spent on keeping legacy systems alive frees up opportunity to focus on new initiatives.

Principles and capabilities of Retire

  • Has it served its purpose? Can we sunset it?
  • It is providing value? Kill it if it is not.
  • Are there better opportunities to invest in?
  • Continually look to reduce product and system complexity
  • Simplifying helps to support further innovation
  • Free up funds and capability

Conclusion

Business models are transient and prone to disruption. If your organization is reliant on a single business model, product or service to guarantee its on-going survival then safe to say it is in a precarious state. You’re only one technology innovation, customer loyalty switch or economic decision from irrelevance.

Lean Enterprise Disrupt

To be successful, a company should have a portfolio of products with different growth rates and different market shares. The portfolio composition is a function of the balance between cash flows. High growth products require cash inputs to grow. Low growth products should generate excess cash. Both kinds are needed simultaneously.

Lean Enterprises know that building the capability to continuously seek out new business models, products and services is the key to ensuring their future business relevance, growth and evolution.

If your executive team is unclear on how your portfolio is performing and what initiatives you are exploring, exploiting, sustaining and retiring, get a cross-functional group together and map out your portfolio to visualize your work in progress. Ask if it is achieving the desired outcomes and aligned to your business strategy and objectives.
Share the results of the exercises with your teams and business leaders. Then starting getting deliberate about investment of time, effort and people in becoming the business you want to be.

References

$3.4 trillion reasons to become a Lean Enterprise in 2016

How well does your organization respond to changing market conditions, customer needs, and emerging technologies when building software-based products?

This book explores how to apply the ideas that Eric Ries illustrated in the book, Lean Startup,  into the context of a global, highly complex and traditionally managed enterprise, leveraging management and operational principles such as Agile and DevOps. It is a great read for anyone that wants to create a culture of learning and experimentation that will allow their organization to change and adapt. It advocates creating empowered teams that are focused on business outcomes and increasing the speed of delivering business value

said John Marcante, CIO at Vanguard Group, one of the largest investment management companies on the planet managing over $3 trillion in assets alone.

lean-enterprise-book-how-business-leader-create-lean-enterprise

My book, Lean Enterprise: How High Performance Organizations Innovate At Scale was nominated by John Marcante as the must-read book for business leaders in 2015 for Enterprise Project – a community-powered conversation about how CIOs are driving the future of business.

Full article: https://enterprisersproject.com/article/2015/11/2015-cio-holiday-book-twitter-contest

Work with me: http://barryoreilly.com/about/

Lean PMO: Explore vs Exploit

The challenge for organizations today is growing the capability to continually adapt, adjust and innovate. To be successful in an ever accelerating environment, organizations need to make continuous innovation a deliberate practice that is integrated into the fabric of the organization. For Lean Enterprises, this begins and ends at their portfolio.

In the last half century the average lifespan of a company listed in the S&P 500 Index of leading US companies has decreased by more than 50 years, from 67 years to just 15 years today. Professor Richard Foster from Yale University estimates that by 2020, more than three-quarters of the S&P 500 will be companies that we have not heard of yet. Since 2002, Google, Amazon, and Netflix have joined the S&P 500, while Kodak, RadioShack, Palm and Compaq have all been forced off, essentially by changing technology. General Electric is the only company that’s remained on the S&P Index since it started in 1926. Why? Simple. They have managed to constantly evolve.

In the future two types of organizations will remain. Those that continue ‘as is’ once they have found a business model or product fit by optimizing for that specific market. Their strategy will be efficiency and optimization to harvest as much profit as possible for a 5-10 year horizon. The trade-off will be their ability to adapt to change. When the industry business model changes, their business will slowly collapse.

Moore

In contrast, Lean Enterprises are companies designed to operate in an environment of continual change and on-going evolution. They develop a capability to adapt and evolve to meet new market opportunities and threats. They will survive for longer because their structure, strategies and processes support the continual search for new business models, products and services. Once identified they rapidly maximise and scale opportunities while embracing the creative destruction of their own portfolio before another competitor does.

Explore and Exploit: two competing organizational dynamics

Almost by definition, an enterprise’s primary business models are based on known and well-understood product or services offerings. Existing business models have been proven, and the domain in which they exist is well-understood. The primary role of business functions is to execute these business models, with the goal of incrementally improving efficiency over time to out-compete. Plans, processes and measures can be put into place to optimize and monitor the performance and health of the products and services offered. Forecasts are regularly created for capacity, revenue, growth and sales. Targets can be based on understood data accumulated and analyzed over time with a reasonable level of confidence.

When operating in the new economy, simply trying to improve existing initiatives and optimize efficiency is not enough to provide long term sustainability. Organizations need to be continually in search of new opportunities to stay relevant. Explore is fundamentally a different operating environment compared to Exploit. Organizations need to to leverage new technologies, customer insights and emerging trends to unearth new business models, products and services their customers and users desire.

Typically, existing organizational structures, strategies and processes for executing initiatives simply do not work in an exploratory context.For example, measuring return on investment during explore phases makes little sense and provides little insight as you are typically investing to reduce the uncertainty of building the wrong thing. Few new business models or products generate large revenue in the beginning hence will also fail to measure up to more mature initiatives that are in an exploit phase or later.  

ROI

There is a necessary tension between explore and exploit. In particular, as Clayton M. Christensen in The Innovator’s Dilemma brilliantly captures, successful enterprises win or lose on execution and thus tend to squash exploration in favour of harvesting a known working business model, product or service.

Exploring new opportunities and exploiting existing ones are fundamentally different strategies requiring difference structure, competencies, processes, and mindset. It is hard to overemphasize the key point: management practices that are effective in the exploit domain will lead to failure if applied to exploring new opportunities – and vice versa. The differences between to two domains are list below:

Explore vs Exploit

 

Conclusion

A key goal of successful portfolio management in the enterprise is understanding how to balance exploring new business with exploiting proven existing business models – and how to transition businesses successfully between these domains. Leaders must understand the difference between these domains and be able to design, implement and operationalize the required mindset, strategies and people that govern them. If it’s fallen to the CEO to manage the organization has not built the capability and will struggle to continually evolve.

References

Lean Portfolio Management is covered in our book, Lean Enterprise:How High Performance Organization Innovation At Scale.

Get in touch to run my workshop on Lean PMO at your company. 

Lean Enterprise in Africa

Last week I achieved a significant personal goal. When we released Lean Enterprise: How High Performance Organizations Innovate At Scale, I set myself an objective to visit every continent on the globe to engage local communities and business leaders interested in the mission to change the way we work in large organisations forever. I’m delighted to say that by visiting South Africa last week I have achieved it – in 300 days!

Lean Enterprise Africa

Why I wanted to go to Africa… and save the best till last

Working at ThoughtWorks has helped me experience and understand what true social and economic justice means. I’m also lucky to have colleagues and friends that believe in equality and opportunity for all. Therefore to help me develop a deeper understanding of the South African market I asked Aslam Khan, our General Manager at ThoughtWorks, for his viewpoint;

“On the continuum of software development in South Africa, we have 100 year old companies like Standard Bank and highly successful startups like Fundamo (acquired by Visa), and iKubu (acquired by Garmin).  In that continuum we have extremely lean and nimble organisations that can compete with global tech giants in terms of process, efficiency and sophistication of software solutions.  We also have slow changing organisations encumbered by decades of legacy software. That takes a long time to change and that change is being forced by a shift from product and service centricity to customer centricity. Thus, software and processes need to change to accommodate the shift in strategy.  Many will then look towards becoming a lean enterprise.

Regardless of the continuum, the limiting factor is the density of software talent in the country.  The history of apartheid and its decimation of the education and social systems has yielded a privileged minority with the necessary skills to tackle a national and continental scale sector.  Compared to the other countries in the BRICS (Brazil, Russia, India, China, South Africa) cluster, South Africa is lagging in density of software developers.  This cannot be addressed until we address the upstream social and education problems.  Until then, South Africa will continue to be a net importer of software.”

We have many challenges in the technology industry based on diversity of thought, gender and privilege. That is why capability building is such a key aspect to creating a lean enterprise.

Talent shortage

There will never be enough experienced people in new technologies — no one will have five years of lessons learnt in the latest and greatest programming language or tool! This is why it is so important to create a culture of experimentation and learning in your organisation. You need to build your people while they build new solutions to new customer problems. Organisations that will thrive in the future are not the ones with the most people with 15 years experience in Java. It will be the ones that have created a capability to continuously learn new skills and technologies, adapting to the changing environment both inside and outside your business. As my co-author Joanne Molesky often says, “What worked for you today, may not work tomorrow”.

So what did you do?

The trip kicked off with a local meetup event in the ThoughtWorks office in Johannesburg with my friend and colleague Rouan Wilsenach. The event was targeted at practitioners with the goal for Rouan and I to share our experiences, lessons learnt, along with the tools and techniques we regularly use when trying to drive change in large scale organisations.

With Rouan

What was billed as a 45 minute session turned into a 2 hour dialogue between ourselves and everyone in the room. Typically I try to keep the presentations short and emphasise the question time at the end. However, the attendees in Johannesburg just wanted to keep going and going. More questions, more stories, more sharing. It was without doubt one of the most enjoyable sessions I’ve done.

Meeting Business Leaders

The following evening we ran another of our Lean Enterprise Executive Briefings in Sandton with 25 business leaders from some of South Africa’s largest organisations in attendance. It was a very open and transparent session, with many attendees sharing their own experience and learnings on embracing lean enterprise in their organisations.

As with many of these sessions, creating a space for leaders in different organisation to collaborate with one another in a safe environment fosters a great sense of community and a network to know you’re not alone.

The key themes that emerged are well known to us all. Many organisations have suffered the crippling consequences of not adapting to new business models because of the enormous challenge of developing a new organisation mindset. The difficulty of trying to balance experimenting with new ways of working while still achieving lofty targets to improve delivery or reduce costs is daunting.

The most vigorously debated subject was understanding the true outcomes of strategies they have devised to achieve organisational objectives and goals. It easy to point at Executives, make jokes and say they have no idea what is happening in the organisation, but must remember that a lot of the time they are making decisions based on information as it is collated and presented to them by others. The details and facts are so watered down and sanitised by the time they reach their desk that they are essentially meaningless. They are making decisions in good faith based on watermelon reporting: hence it should be no surprise that they don’t achieve the desired result.

The challenge for all of us is to create an environment where it is safe to share the real information across the entire company without repercussion. To make better decisions, we need better quality of data on which we base those decisions.

Another way for Executives to bridge the gap between their ambitions and customer needs is to gain first-hand experience of a customer’s interaction with the product or service. They also need  exposure to the experience of the organisation’s people trying to deliver that service or product. This is the principle of ‘Go and See’. In order to change your mental model of a situation, you must experience it. The best way to achieve that is walking a mile in your customers’ and team members’ shoes. In so doing, leaders are able to reshape preconceived notions and respond appropriately to what customers/team members want, and how they want those needs fulfilled.

Meeting leading Organisations

Finally, I had the honour of being invited to Standard Bank to give a keynote to the senior leaders in the organisation. Standard Bank Group is the largest banking group in Africa by assets and earnings. Its 49,000 employees operate in 20 countries in Sub-Saharan Africa, serving over 15 million customers.

Lean Enterprise Johannesburg

Standard Bank are now two years into their journey and recognise the critical role that technology plays in meeting the ever-evolving needs of their customers, Standard Bank partnered with ThoughtWorks to develop their new Internet banking website, an essential customer-facing platform for their business.
It was fantastic to see such strong executive support and team engagement in transforming a bank at scale. They are constantly challenging themselves to move forward and think about the next thing. Embodying the mantra of lean enterprise, THINK BIG, start now, learn fast.

Summary

To visit Africa was a privilege. The openness, transparency and willingness to learn was a refreshing reminder as to why I love meeting people and organisations as we all go on this journey together.

Upon reflection after all the airports, flights, hotel rooms, good, bad and indifferent coffees there is one thing that continues to hold true. Lean Enterprise has helped me build my own global community for which I am very grateful, and my only wish to continue to grow it and make it stronger.

300 days | 28 events | 9 countries | 6 continents | 1 global community

social-justice-fist

Thank you Australia, Brasil, Canada, China, Germany, Ireland, South Africa, the United Kingdom and United States for inviting me to your fantastic countries.

What is ‘Lean Enterprise’ and Why it Matters

The acceleration of change impacts technology, consumer expectations, and economic models. Nowhere has this been so profound as in the decease in the lifespan of companies​ on the S&P 500​, from 67 years average in 1920 to 15 years today.

In order to survive​,​ organizations need to ​innovate at scale. Technology is now core to business​,​ but business is not only technology. Transformation in organizational structure​and governance​, financial ​management, product development and culture must accompany technical excellence to optimize innovation and ensure ongoing business relevance.

Will your organization be able to keep up with the pace of change?  Will you be a disruptor or disrupted? Lean Enterprise: How High Performance Organizations Innovate at Scale proposes a roadmap for competitive survival. In our new book, we share how leaders can create thriving ​organizational ​cultures​ required to build an adaptive, resilient Lean Enterprise ​that can survive the future.

lean enterprise

[podcast] Lean Enterprise interview with Software Engineering Radio

Johannes Thönes interviewed me recently for SE Radio regarding our book Lean Enterprise: How High Performance Organizations Innovate At Scale.

Interview introduction by Johannes: “A lean enterprise is a large organization that manages to continues innovating while keeping its existing products in the market. O’Reilly talks about the idea of scientific experiments and the build-measure-learn loop popularized by the lean startup method.

He shares his experiment of an online wine seller using Twitter. He further discusses the challenges for enterprises trying to do something similar and introduces the three-horizon model, to manage innovative, growing, and sustaining products.”

Related Links

Make Failure Taste Better With Failure Cake

For any leader in business one of the most challenge aspects (and a question I get asked a lot) is how to manage failure — especially in large organisations?

Typically, workers within organisations fear how executives will respond to lack of success. On the other side, executives cannot seem to get the message through to workers to embrace experimentation and be bolder. A paradox of purpose, expectation, and culture that ultimately damages both parties ambitious of improvement.

Innovation is an exploratory event. There is no guarantee of achieving a desired outcome. Any work we undertake inevitably results in either success or failure. But failure is not the opposite of success, it is the step prior to achieving success. Both results are part of a learning process.

Failure Cake

When undertaking any new initiative we all stumble along the way, and those that follow also struggle and fall. Put simply: if you’re not failing, you’re not really trying. As Joanne always says: playing it safe is actually risky for your long term business success.

Safe Is Risky

It’s hard to fail but what is even worse is to sit there and never attempt anything new, risky or unknown.

The result of failing is never one moment of oversight or a sole individual’s actions. It is a series of events that leads to failure. Yet cultures that seek to punish people for mistakes or find one neck to choke actually achieve a worse outcome. People freeze; hold position while the world, customer needs, and the competitive environment rapidly evolve around them.

Companies are always trying to find ways to dispel this inertia to change. At our recent event at the Churchill Club, Jody Mulkey, CTO at Ticketmaster, shared how they had created an award for “Epic fails” to encourage more experimentation and risk-taking in their business.

One of my favourite culture hacks was introduced to me by Tom Sulston while I was at the Agile/Lean Europe conference in Berlin, and giving a presentation on ‘Mental Models for Agile Adoption’ with Jo Cranford in 2011.

When you experience failure the best way to make it taste better is eating up some Failure Cake!

4our-cake

How Failure Cake Works:

  1. Someone identifies an exception in the system.
  2. A person or team accepts responsibility for the exception and takes ownership for the resulting failure.
  3. The person (or team) that accepts ownership for the exception buys cake for the team.
  4. The person brings the cake back to the team area and calls all parties together.
  5. The team eat the cake while discussing the exception and how they can develop options for future mitigation or improvement. Remember the retrospective prime directive!

“Regardless of what we discover, we understand and truly believe that everyone did the best job they could, given what they knew at the time, their skills and abilities, the resources available, and the situation at hand.”

It’s not the failure that we celebrate, its the discussion and learning that follows.

Plus, how can you be angry with one individual or team if they’ve just bought you cake!

Taking risks still carries responsibility and accountability. By defining boundaries in terms of scope, effort, investment, and risk level you take you can create scenarios that are acceptable and recoverable should your hypothesis turn out to be flawed. This is what we term ‘safe-to-fail’ experiments in Lean Enterprise: How High Performance Organisation Innovation At Scale.

Next time you or your team fails, use it as an opportunity to improve, build knowledge and trust within your team. Go buy a cake. Maybe even invite another team along to the party and share your success and failures together. Our biggest advances are rarely achieved alone; it’s the shared lessons that help us make progress.

Remember, it’s a privilege to taste failure! Demonstrate the behaviour you wish to see in others and act your way to a new way of working. Make a cultural impact to stamp out stigma and encourage others to experiment their way to new heights… all while eating fantastic tasty cake along the way!

References

Cakes kindly inspired from http://www.cakewrecks.com

[Videocast] Lean Enterprise: The Future High Performance Enterprise at the Churchill Club

Churchill Club
The acceleration of change impacts technology, consumer expectations, and economic models. Nowhere has this been so profound as in the decrease in the lifespan of companies, from 67 years average in 1920 to 15 years today.
In order to survive organizations need to arrange for high performance and innovation at scale. Technology is now core to business but business is not only technology. Transformation in organizational culture, financial governance, product and people development must accompany technical excellence to optimize innovation. Will you be able to keep up the pace of change?  Will you be a disruptor or disrupted?
Churchill Club
During this session at the Churchill Club in Santa Clara Bask, Barry, Joanne, Jody and Jonathan shared their perspective on how leaders need to create thriving high performance organizations of tomorrow and what are the key attributes of success.

Participants

Jonathan Becher, Chief Digital Officer at SAP
Bask Iyer, Chief Information Officer at VMware
Jody Mulkey, Chief Technology Officer at Ticketmaster
Joanne Molesky and Barry O’Reilly, co-authors of Lean Enterprise: How High Performance Organization Innovate At Scale and ThoughtWorks

Tagged , ,

Lean Enterprise Book Tour: North America and Europe

Today Joanne and I commence a three week series of events in North America and Europe to support the launch of our book with Jez, Lean Enterprise: How High Performance Organization Innovate At Scale.

The response to the book has been fantastic. Thanks to everyone that has taken the time to write a review on Amazon or O’Reilly Media. If haven’t already, please add your thoughts too — we thrive on feedback!

The purpose of this series is to engage business leaders in discussing the topics covered in the book, along with how you can start to implement them in your own organizations.

Lean Enterprise

By 2025, 75% of the companies in S&P 500 will be replaced. In 1960, the average lifespan of a company on the list was 61 years. In 1980, it was 25 years. Today, it’s 18.

The pace of change is accelerating. Organizations must continually revisit the question, “What businesses are we in, and how can we organize to maximize our long-term potential?

We’ll show how you can lead in the era of disruption by sharing pragmatic strategies on navigating the most troublesome and counterintuitive aspects of scaling innovation. Gain insights into processes, portfolio and financial management practices, and organizational design and culture that will help you unleash innovation in the enterprise.

This is an exclusive executive event, and space is limited. Reserve your spot today, and we’ll confirm your registration

Schedule

  • Dallas – Wednesday 27 May
  • Atlanta – Thursday 28 May
  • Toronto – Tuesday 2 June
  • New York – Wednesday 3 June
  • Chicago – Thursday 4 June
  • Santa Clara – Tuesday 9 June
  • London – Thursday 18 June

In Santa Clara, we are hosting an exciting breakfast program in partnership with Churchill Club.

Joanne, Jez and I will join Jonathan Becher, Chief Digital Officer at SAP; Bask Iyer, Chief Information Officer at VMware; and Jody Mulkey, Chief Technology Officer at Ticketmaster to discuss key trends and their implications for the future of the high-performing enterprise. More details here.

What if I cannot make it?

If you are not able to attend, I would recommend tuning into the recent series of webinars Joanne, Jez and I did with O’Reilly Media.

You can also download sample chapters of the book for free here!

We’ll be tweeting on #LeanEnterprise and posting more thoughts as we go.

Hopefully see you along the way!

Blow Up The Business Case

Writing a well-crafted business case may be key to securing funding but it has little impact on whether your initiative succeeds or fails. A clear product vision, strategy for testing it and knowing which initiatives to start, stop, or continue will serve you better every time — especially if your goal is to create a high performance organization.

Blow Up The Business Case

Blow Up The Business Case

While the discipline of creating a business plan is useful it doesn’t guarantee anything; except maybe that the plan will change once it comes into contact with customers. So it begs the questions, how do you manage investment risk without simply writing documents, cloning other companies success by becoming ‘The Uber of [insert domain here]‘ or implementing the next great HiPPO (High Paid Person Opinion) idea?

In the webinar ‘Blow Up The Business Case’ hosted by O’Reilly Media, I presented how to take an evidence-based approach to investment decision-making by creating a framework of evaluation to manage and prioritise your organization’s projects and products. It discussed how use techniques such as customer discovery, hypothesis-driven development, and innovation accounting can minimize risk, uncover and inform options, and get the optimal return on your efforts.

Throughout the course of the webinar I asked the attendees three questions to get a sense of what techniques they are currently using and how they are incorporating customer/user feedback, measurement and decision-making frameworks into their development process to drive success in their own organisations. As ever, the results are both interesting and surprising.

Closing the learning loop with customers and users

How often do you get feedback from real users and customers in an iteration?

How often do you get feedback from real users and customers in an iteration?

The two biggest risks to any investment in a new initiative is not how much it costs or when it will be done; but reducing the uncertainty of will it get cancelled and will anyone use it? The way a user tells you that they like your product is they use it. Customers tell you that they like your product by sending you money for using it.

If you’re not talking to the people ultimately responsible for the success of your products, how can you know if you’re creating something they deem to be valuable and worth sending your their hard earned cash for the honour of using it?

“The most expensive way to find out if something works is the build the entire thing, then find out if people use it.”

Involving customers and users in your development process helps to close the learning loop with the people that matter in making your product a success. If you are serious about co-creation get them involved!

What gets measured gets done — Peter Drucker 

How do you measure the impact of work in an iteration?

How do you measure the impact of work in an iteration?

Understanding the results and impact of our efforts should be the key focus for any high performance organisation and team. Sadly too many teams live in a world so disconnected from business/customer/user success that they only focus on their own inputs and outputs not outcomes.

Organizations that see technology and software development as a cost centre simply care about how much work gets done, not how effective that work was in achieving our ultimate business/customer/user goals. Teams also tend to fall in love with their process… how great and efficient their process is — often its all they want to talk about.

Stories complete is a vanity metric to make you feel good or get management off our back. Velocity, lead time and cycle time are process metrics. Information gained and economic value captured are outcome metrics. Velocity, lead time and cycle time tells you how well your process is working, not how effective the team has been about achieving business outcomes — bottom line impact for our efforts.

High performance teams understand the difference between vanity, process and outcomes metrics. They focus their one metric that matters to solve problems aligned to our current goals — which may be process or business focused depending on the problem they are trying to solve.

Frameworks for decision-making, evaluation and investment

How do investment decisions get made in your business?

How do investment decisions get made in your business?

Death by steering committee or HiPPOs handing out orders to implement — you decide. Engaging teams by framing problems to solve, rather than order to take, has a huge impact on how leaders can encourage teams to work in an innovative way.

Creating a framework for making decisions based on the ambiguity that is inherent when innovating and operating in conditions of extreme uncertainty is a critical factor for high performance teams. No one person can be expected to get it ‘right’ every time.   The goal of using economic frameworks such as Cost of Delay or WSJF is not to provide a magic number. The goal is to force people to expose and explain their assumptions behind why they came up with that number. The added advantage with exposing assumptions is that they are shared, testable, and we can create experiments to exercise those assumptions in learning loops.

It also means that we can start to create and link economic information back to business outcomes to provide a common language that is universally understood across the organisation — money!

Conclusion

The new business case isn’t a hundred page document with well crafted numbers and arguments as to why your idea is the best. It’s a runway for testing and learning all our best ideas to find out what what works, and what doesn’t.

When you are putting together your next business case, try using the following principles to set up for success;

  • Get across functional group together that understands and represents the organization
  • Map ideas out at speed using a canvas (like business model or value proposition canvas)
  • Treat the canvas as a living document, updated regularly based on the learnings from testing out your ideas
  • Test ideas with real customers and users — close the learning loop together
  • Optimise to reduce the uncertainty of building something no one wants and stop wasting peoples time
  • Create a framework for the evaluation of ideas for future investment.
  • Set investment boundaries around time, effort and scope to build in feedback loops for course correction or close.

Further references

Blow Up The Business Case was the final session in a series of three webinars with my co-authors and I. You can check out Joanne Molesky presenting ‘Financing Alternatives for Software Delivery‘ and Jez Humble talking about Running Agile Programs At Scale on O’Reilly website. All these ideas and more are discussed in detail our book, Lean Enterprise: How High Performance Organization Innovation At Scale

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