Category Archives: Change Management

Leading Culture Change Means Changing Yourself Before Others

Leaders today are inundated with reasons to transform their organizations in search of better outcomes. New market entrants erode profit, competitors seem to be always moving ahead, all while customers seek higher quality and cheaper sources of service.

The pace and appetite for change is exhausting. Yet comparatively, it feels like your organization is sinking deeper into the mud. “We want to change but the culture here is too difficult to change”. It’s a frequent remark we have all heard and said but what does it mean?

Culture is the original business meme. Its meaning and usage are as abstract and intangible as the word itself. “If we just fix the culture we will be successful”. A statement full of positive intent yet lacking a clear directive or step to take.

A new culture is not a browser plugin. Leaders cannot simply select an extension, download and install it from the Web. Nor should, leaders expect the update to be applied only to others and not to themselves.

The prevailing thinking is the need to change people’s mindset. The belief being if we tell people to think differently, they will act differently. All hands meetings are called, PowerPoint decks are prepped and an executive tour is scheduled to rally the troops for the mission ahead. A one, maybe two day training session is delivered and the metamorphosis begins. But it does not.

Culture is our behaviors. It is the actions we perform. The way we talk, and treat one another. The way we behave reflects the values and expectations we have of ourselves, and of one another.

The single most important action of any leader is to role model the behaviors they wish to see others exhibit in the organization.

Actions are what matter. Not talk

Culture change does not lead with words, it leads with action. By changing the way we behave, our actions begin to change the way we observe, experience and eventually see the world. By seeing and experiencing the world differently, it changes the way we think about the world. People do not change their mental model of the world by speaking about it, they need to experience the change to believe and feel it.

John Shook: NUMMI

John Shook’s Change Model, http://www.lean.org

John Shook was the first American manager to be hired by Toyota. He moved to Japan without knowing a word of Japanese, just a desire to immerse himself in the organization for a prolonged period of time to learn the Toyota Production System by doing it.

What he observed was not a group of managers telling people what to think, or how to perform their work. Instead he experienced the deliberate practice of experimentation, reflection and improvement by all employees in the entire organization. Toyota had developed a set of behaviours that advocated continuous learning and adaptation to new circumstances.

What Toyota understood is that culture and circumstance is always unique and changing, and to manage change one has to be ready to learn, adapt, and apply new changes as they are happening.

A Journey for Leadership and Behavior.

Shook’s model highlighted that transformation starts from our behavior. Therefore, to start changing culture we need to change how people do their work.

In our experience a very effective first step for a major transformation is to start with a set of hand-picked initiatives that do things differently. We did this together with the engine manufacturing company Wärtsilä. Wärtsilä is over a century old manufacturing company that serves roughly half the ships in the world and has five billion dollar revenues – not a typical Silicon Valley startup.

To kickstart the transformation, leadership provided sponsorship and support to four cross-function teams to explore new ideas and ways of working. The purpose of these teams was to bump into and make visible the cultural glass walls that so often had stalled and hindered other initiatives.

Rather than have the four teams take courses or workshop ideas, the underlying idea was to have four teams experience a new way of working for real. This was ensured by selecting the top strategic innovation initiatives for the teams focus on.

The second step was to create an environment to cultivate the new ways of working. In other words, we made the workspace inspiring, different, and importantly, we let the team personalize it to make it their own. We provided guidance, tools and innovation frameworks for the people to leverage.

By embracing Shook’s philosophy, it was extremely important that the teams had a mandate to work differently and to really experiment with new ways of working, new behaviour. The mandate created a psychological safety net for them. Failure is expected when working creatively and trying out new ideas, and therefore, it was critical to enable safe failure and learning opportunities.

To further facilitate the cultural transformation, the teams broadcasted their intermediate results in demo sessions to the whole company. This turned out to be both popular and effective in further spreading the transformation by showing concrete results rather than talk of trying things differently.

blog-culture

In the demo sessions the audience gave scores to the teams, and the winning team always won quality craft beer. The happy winners of demo #1 from left: Shelley, Henri, Jan, and Martti of Wärtsilä.

Throughout the eight week program the teams fully experienced working in new, interesting and unforeseen ways. Rather than just reading a book or taking a course on lean, agile and design thinking the teams had to apply the new methods and mindset while creating meaningful outcomes for the business. For the individuals participating in the program it was an extremely effective way to safely learn new ways of working, and perhaps more importantly, to learn the limitations of the former company culture.

Jump-starting the transformation today

What did we learn from running this, and similar programs?

First, jump-starting the cultural transformation with a couple of spearhead projects, the right people and leadership support is very effective. The projects will demonstrate that the company’s own people can achieve the desired results and business outcomes with new ways of working.

Second, the people who have experienced new ways of doing are transformed. Applying the new behavior into real projects transforms their thinking about innovation and the whole company, which makes them the key people in spreading the new culture.

Finally, choosing the people to the spearhead projects is critical as those people will become the ambassadors for a bigger cultural change in the organization. They will tell the stories others will listen. They will introduce the new ways of working to others, as they are the people who know best how the new thinking applies to your company. They are the first penguins to dive into the cold water, swim and survive.

However, none of this matters if you, the leader of change, don’t change as well. As the leader of this change you are penguin number zero: the very first person who has to change your behavior. You need to be transparent about your vision, words, and actions. You need to work according to the new culture you wish to see.

This post was co-authored by Risto Sarvas and I.

I’m partnering with Futurice to host executive roundtable sessions in London and Berlin, as well as an event in Helsinki, ‘Lean Rocks’, all during February. Futurice and I will be offering bespoke training and workshops with clients in Helsinki during February, if you’re interested in learning more about this please contact me or Timo Hyvaoja

Talks At Google: How ExecCamp is tackling Business Transformation

I was recently invited to Google to share my experiences of working with executives from leading global organizations who have taken part in ExecCamp.

ExecCamp is an ‘intervention program’ where executives leave their regular roles for 4-8 weeks with the goal of launching new businesses to disrupt their existing organizations.

The purpose of ExecCamp is to provide executives with a deeply immersive experience in which they can develop new skills and capabilities to transform themselves and their organizations.

By embracing Lean Enterprise principles and learning by doing, ExecCamp helps business leaders explore the intersection of business model innovation, product development, organizational design and culture transformation.

10 Principles Of Business Transformation

Transforming organizations, teams or even yourself is challenging. There’s no one-size fits all method to achieve success. It’s a combination of hard work, persistence and patience.

The most successful enterprises are continually experimenting to learn what works and what doesn’t. They focus on meeting customer needs by clarifying goals, shortening feedback loops and measuring performance based on outcomes, rather than outputs.

To become a high performance organization you must develop the capability to continually adapt, adjust and innovate. This requires a deliberate practice of experimentation and learning.

But experimentation alone is not the answer. To enable and empower decision-making at scale, team members need a framework of reference to align their actions to the organization’s mission. The mission is the statement of purpose for what your organization stands for. The principles help individuals and teams to make independent decisions at speed that are aligned to the organization’s mission, valued behaviours and desired culture. It is not a set of explicit rules or command-and-control statements of how people should operate.  

Based on my own experiences I’ve distilled a set of 10 Principles Of Business Transformation to help businesses on their journey to become high performance organizations.

Think BIG, learn fast, start now

Every great mission needs a compelling and aspirational vision. The clarity with which you communicate the vision gives people purpose, direction and constraints as to why the initiative they are taking part in matters. Thinking BIG means challenging assumptions of we believe may even be possible.

For example thinking BIG at SpaceX is, “SpaceX designs, manufactures and launches advanced rockets and spacecraft. The company was founded in 2002 to revolutionize space technology, with the ultimate goal of enabling people to live on other planets.

However a vision is a theory, a set of beliefs and untested hypotheses that must rumble with reality.

In the information-age the organization that can most effectively accumulate new knowledge, and leverage that insight to make better decisions wins. Organizations with the highest quality information make the best quality decisions. To accumulate new knowledge we must experiment. By experimenting we learn. Whoever learns the fastest wins.

Be uncompromising with the BIG vision, but develop methods to learn fast what works and what doesn’t. Start testing the BIG idea with real customers and users as quickly as possible – even when it’s feels early and uncomfortable.  

Secure mandate, sponsorship and support

You will only be as successful as the level of leadership in your organization that gets behind the initiative. If there’s no support in the team, the leadership or executive group, then forget it. That said, making innovation only the CEO’s job isn’t going to cut it either.

If you want to be a leader of change it’s your responsibility to create the space, support and sponsorship to enable experimentation to happen.

Do this by focus on outcomes not outputs. Define constraints, limit investment, or risk thresholds to create safe-to-fail experiments. This creates a sandbox for learning and will result in demonstrable evidence of progress. It allows teams to explore uncertainty within the bounds of recoverable situations, reducing learning anxiety and paralysis from the fear of failure.

“If the highest aim of a captain were to preserve the ship, they would keep it in port forever.” – Thomas Aquinas

Right people in the right place

Putting change-averse people into a high change environment won’t break the system, it will break the people.

Similar to Geoffrey Moore’s model for technology adoption, there are all types of mindset in an organization towards change, from innovators to laggards.

Geoffrey Moore: Crossing The Chasm

Geoffrey Moore: Crossing The Chasm

Be aware of people’s natural bias when it comes to building teams capable of dealing with extreme uncertainty and frequent iteration. High performance teams start small with a cross-functional representation of business, technology and design. This is the nucleus to build a team around.  Be deliberate about how you form the team and the type of work – be it highly exploratory or otherwise – they focus on.

Act your way to a new culture

John Shook was the first American to be hired by Toyota. He moved to Japan in the mid-70s without knowing a single word of Japanese, only a curiosity to learn about the Toyota Production System. What he observed contradicted everything he had seen and heard in Western organizations. The Western belief was if you told people to think differently they would suddenly act differently.

What Shook actually experienced at Toyota was that changing the system of work is what led to a change in the way people behaved. People didn’t think their way to a new culture, they acted their way to a new culture. This is what SCRUM, XP and many other agile methodologies actually try to enforce – a change in the system of work using iteration, ceremonies, reflection and cross-functional teams to change how people interact and ultimately behave.

John Shook: NUMMI

Sadly many organizations still believe that sending staff on a one or two day certification course can suddenly make them agile, adaptive and aware. Often the result is people blindly following a methodology of what to do without ever understanding why they are doing actually it.  

Build the right thing, then build it the right way

Working software is an experiment, just a really expensive one.  

Unfortunately building the entire solution and only then testing it with customers is still the prevailing model of operation for most organizations.

One of the key components of the Lean Startup movement championed by Eric Ries is to encourage teams to test their business hypothesis as quickly and cheaply as possible. This is achieved by creating a Minimum Viable Product (MVP) – a basic early working example, prototype or experiment to test the area of greatest uncertainty related to the hypothesis.

lean-enterprise-mvp

Diagram inspired by Jussi Pasanen, with acknowledgments to Aarron Walter, Ben Tollady, Ben Rowe, Lexi Thorn, and Senthil Kugalur

A MVP approach enables you to fail fast and cheaply, while also gathering valuable data from the experiment. As you prove or reject different hypotheses, you build confidence that the problem/solution fit is on the desired path. You can then invest more to improve the fidelity of the solution, widen the marketing reach and/or enhancing the solution based on the data gathered — essentially increasing your exposure to risk in a controlled manner.

Deliver small, fast and frequently to build momentum

One of the most important aspects of agile and lean methodologies is working in small batches. Reducing the size of work batches enables us to optimize for end-to-end throughput of our system of work. This allows use to gather data against the outcomes we achieve and compare them to our initial expectations of success.

Secondly, the data we collect becomes inputs for reflection, decision-making and adapting strategies. How are we moving toward the desired outcome? Should we adapt the objective of our original mission? It’s how doing and learning enables better top-level decision making, not just in the execution of a given solution. The longer we wait to collect data to inform our next steps – especially when operating in extreme uncertainty – the higher the level of risk we are exposed to.

The best way to build trust with stakeholders is with frequent demonstrable progress. Showcasing small, completed pieces of work fast and frequently creates feedback mechanisms, trust and belief that team members can deliver.

Build in feedback loops with customers and users

Customer testing should be for breakfast, not dessert. If you’re not testing with customers as soon as possible to understand if their problem really exists and that your solution addresses it, then you’re wasting valuable time, effort and resources.

The best people to provide feedback on your hypothesis are real customers – not your boss, or colleagues, or even team members. Regular and direct customer feedback is your  guide towards fit, purpose and success. Make sure you design a system of work that gives the team frequent opportunities to test and incorporate customer and user feedback.

Following a recent ExecCamp, one of the participating executives sent me the following note:

“One of the team came to me today to ask to review the new designs for a system we’ve been developing. After ExecCamp the response was obvious to me… “I’m not the person you need to be testing with. The real people you need to talk to is our customers. Go find a few of them and get their feedback for what works and what doesn’t.”

Adapt your approach based on validated learning

Lean and agile aren’t just about experiments to create new knowledge, they’re about using that knowledge to make better and more informed decisions on what to do next.

Many experiments will ‘fail’, but even these will result in validated learning. Validated learning means that we test — to the necessary degree of precision and no further — the key assumptions behind the hypothesis to understand whether or not it will succeed, and then make the decision to persevere, pivot, or stop.

lean-enterprise-learning-loop

By defining and communicating what success looks like before we start we create an accountability loops to decide  if and when our initiatives are getting traction based the outcomes achieved.

Organizations that fail to define success before experimenting get caught in Plan->Do cycles, only validating outputs. Their success is on time, on budget, on scope without any learning mechanism to ask the questions; Did we achieve the outcome we expected? Are we getting better?

Demonstrate evidence for future investment decisions

Writing a well-crafted business case may secure initial funding, but it has little impact on whether your initiative actually succeeds or fails. As Douglas Hubbard documented in his book How to Measure Anything, the two biggest risks to any new initiative are not how much it costs and when will we deliver it but reducing the concern that the initiative will get cancelled and will our customers or anyone use it?

What’s important when making investment decisions is to take an evidence-based approach to ongoing funding by creating an evaluation framework to manage and prioritise future investments.

The cadence of iteration and review should match the level of uncertainty. For example, in financial markets traders get continuous and virtually real-time feedback on how the market is adapting in order to make further investment decisions and improve their probability of success. In contrast, an organization with an annual planning cycle and quarterly review process has only four iterations or feedback loops a year. In my experience, when working in a highly complex and adaptive environment four learning cycles per year is rarely sufficient.

You can minimize risk, uncover options, and get the best return on your efforts by using techniques such as customer testing, pre-defining measures of success and setting investment boundaries around time, effort and scope. This builds in regular feedback loops for course correction or close.

As I’ve said previously in blogs and talks on agility in financial management – It’s time to blow up the business case.

Scale lessons learnt to cross the chasm

Scaling agile practices or frameworks doesn’t work – scaling learning does.

Teams learn best from the lessons of their peers. What challenges did they face? How did they address them? What would they do differently?

showcase-lastminute

People remember stories and take inspiration from the experiences of others. Start by encouraging teams to showcase their experiments, discoveries and next steps. Make it easier for everyone to learn from one another, build momentum and drive change.

As a leader, your responsibility is to enable organizational learning by reducing collaboration friction between teams and designing systems of work with in-built learning mechanisms. The purpose of a learning organization is to help others make better mistakes, not the same mistakes.

Thanks to Qiu Yi Khut and Jonny Schneider for their feedback on initial drafts.

For more on these topics and theme read my book, Lean Enterprise: How High Performance Organizations Innovate At Scale, or follow my blog or Twitter

References

Why It’s Time to Experiment with Lean Enterprise

The use of software and digital services has exploded. It is now possible to build, evolve, and scale new products and services rapidly with little capital investment using technology and software. Startups target lucrative high-margin services, slowly eroding the profits of large enterprises that are unable to keep pace with the rate of change demanded by customers. This is driving established enterprises to re-examine their relationship and interactions with their customers and how they manage their people, products and processes so they can stay relevant and in business. Their search for continuous improvement has lead the market leaders to Lean.

20130311_145211

Simply put, Lean means creating more value for customers using fewer resources[1]. It focuses on the concepts of scientific experimentation, rapid learning cycles and adjustments that were pioneered by Toyota on their manufacturing floor. Today, more enterprises are using it in the context of information technology. Some have managed to improve value delivered through technology by applying the principles and concepts of Agile and Continuous Delivery. However, we find that there is still a gap in thinking about how to use technology as a strategic capability that prevents them from maximizing that value.

Too often we find IT is still viewed as an order-taking function or cost center to the business with no knowledge or relationship with the rest of the organization or customers. This lack of cross-functional collaboration and end-to-end thinking of processes and decision-making becomes a recipe for failure.

The most successful enterprises are those whose leaders focus on meeting customer needs by clarifying goals, shortening feedback cycles and measuring performance based on outcomes, rather than outputs.

We’re all in the technology business today. Even if our main business is tied to physical assets and people, it is technology the enables the delivery of our services to customers. Business leaders must have a good understanding of the capabilities of technology and create an environment that fosters learning and innovation to stay in the game. This requires fundamental changes in the way we manage and direct knowledge workers throughout our organization.

The most successful enterprises are those whose leaders focus on meeting customer needs by clarifying goals, shortening feedback cycles and measuring performance based on outcomes, rather than outputs. Failure to take an end-to-end view of business processes and how they affect all parties along the value stream results in an inability to adjust to customer needs in a timely manner, no matter how well your IT department performs. Rigid processes and structures designed to optimize functional silos such as finance, risk and compliance inhibit the ability of all teams to experiment and learn or prevent them from taking responsibility and accountability for the outcome of their work.

Lean thinking is a proven strategy that allows businesses to thrive in uncertainty by embracing change in a scientific and deliberate manner. The very heart of Lean thinking is to allow people to experiment to solve problems within the organization and improve the value delivered to customers. Set the direction you aim to go. Understand where you are and define a target condition to get to. We create an experiment to move towards that target condition. Finally, take the knowledge you learn to update your vision and inform your next step. It is an ongoing feedback loop and never stops, because change is always constant … as should be our evolution.

References

[1] http://www.lean.org/WhatsLean

[2] Originally posted for IBM Book Club#socbizbookclub #NewWayToWork  https://www.ibm.com/blogs/social-business/2016/05/09/why-its-time-to-experiment-with-lean-enterprise/

Think BIG, Learn fast, Start now!

lean-enterprise-book-think-big-start-now (1)

Your competitors have the freedom to see the world different because they’re programmed to THINK BIG,  Learn Fast, Start Now!

They don’t care about your legacy systems and mindset, how you operate your business, or the numbers you need to hit.

Your business is already dead. You just don’t know it yet.

How do you unlearn to relearn the skills you need to keep your business relevant?

In this keynote I share how we helped the largest organizations on the planet reinvent how they approach new product development and innovation in ExecCamp.

We take executives out of the boardroom and back on the streets to learn at light speed, and learn by doing.

You will learn how to:

  • Start new businesses inside a large enterprise
  • Train executives to recapture their entrepreneurial spirit
  • Blow up legacy mindsets and see opportunity through new lenses
  • Establish killer teams to conquer new territory
  • Create a culture of continuous experimentation
  • Test strategy through execution in minutes not months or years.
  • Launch winning products by starting small and acting now to make decisions based on evidence not conjecture

Find out how to turn your 50 year business into an adaptive, resilient entity ready for the fight for survival that lays ahead.

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

My new book ‘Lean Enterprise’ is now released

Lean Enterprise on Amazon

I’m delighted to announce that my new book, Lean Enterprise, is out. It’s been a fantastic journey and could not have been completed without the support of my family, friends, and co-authors.

I also want to thank everyone in the community who encouraged us, gave feedback, shared stories and provided guidance along the way. The final product is a collaboration of all our efforts, which hopefully will help move our industry forward to further innovation and excellence.

Gene Kim is calling Lean Enterprise “the classic, authoritative reference for how organizations plan, organize, implement, and measure their work.” Stephen Foreshew-Cain, COO of the UK Government Digital Service, says “it should be required reading for every executive who understands that we’re all in the technology business now.” Mary Poppendieck says its “the best current thinking about how to create great software-intensive products and services.”

You can click here to download a free sample of Lean Enterprise including  the preface and four chapters. You can purchase the ebook today or order the hardback (available for shipping from January 4th), at O’Reilly’s website.

If you are inspired by what you read, please write a review on Amazon or O’Reilly. Thank you so much.

In the spirit of continuous improvement, I look forward to hearing your stories of experimenting with these ideas.

Best wishes for the holiday season and hopefully see you in 2015.

Barry

Overview of Lean Enterprise: How High Performance Organizations Innovate at Scale

How well does your organization respond to changing market conditions, customer needs, and emerging technologies when building software-based products? This practical guide presents Lean and Agile principles and patterns to help you move fast at scale—and demonstrates why and how to apply these methodologies throughout your organization, rather than with just one department or team.

Through case studies, you’ll learn how successful enterprises have rethought everything from governance and financial management to systems architecture and organizational culture in the pursuit of radically improved performance. Adopting Lean will take time and commitment, but it’s vital for harnessing the cultural and technical forces that are accelerating the rate of innovation.

  • Discover how Lean focuses on people and teamwork at every level, in contrast to traditional management practices;
  • Approach problem-solving experimentally, by exploring solutions, testing assumptions, and getting feedback from real users
  • Lead and manage large-scale programs in a way that empowers employees, increases the speed and quality of delivery, and lowers costs
  • Learn how to implement ideas from the DevOps and Lean Startup movements even in complex, regulated environments

Praise for Lean Enterprise

“This book is Reengineering the Corporation for the digital age. It is destined to be the classic, authoritative reference for how organizations plan, organize, implement, and measure their work. Lean Enterprise describes how organizations can win in the marketplace while harnessing and developing the capabilities of employees. Any business leader who cares about creating competitive advantage through technology and building a culture of innovation needs to read this book.”

Gene Kim, co-author of The Phoenix Project: A Novel About IT, DevOps, and Helping Your Business Win, founder and former CTO of Tripwire, Inc.

“This book is a godsend for anyone who’s tried to change their organization and heard: ‘It’s OK for the little guy, but we’re too big/regulated/complex to work like that here.’ Humble, Molesky, and O’Reilly have written an easy-to-read guide that demystifies the success of Lean organizations in a way that everyone can understand and apply. Lean Enterprise provides a pragmatic toolkit of strategies and practices for establishing high performing organizations. It should be required reading for every executive who understands that we’re all in the technology business now.”

Stephen Foreshew-Cain, COO, UK Government Digital Service

“To thrive in the digital world, transformation must be more than technology driven—everyone within the organization must collectively work together to adapt. This book provides an essential guide for all leaders to change the way they deliver value to customers.”

Matt Pancino, CEO, Suncorp Business Services

“This is the book I’ve been waiting for—one that takes on the hardest questions in bringing Lean approaches to the enterprise. The authors provide solutions that are valuable even in low trust environments.”

Mark A. Schwartz (@schwartz_cio)

“This book integrates into a compelling narrative the best current thinking about how to create great software-intensive products and services. The approach in this book is both challenging and disciplined, and some organizations will be unable to imagine following this path. But those who make the journey will find it impossible to imagine ever going back—and if they happen to be a competitor, they are well positioned to steal both your market and your people. Ignore this book at your own risk.”

Mary Poppendieck, co-author of The Lean Mindset and the Lean Software Development series

“My job is to support people in practicing a scientific pattern, to help reshape thinking and working habits in business, politics, education, and daily life. The 21st century is increasingly demanding a way of working that’s cognitively complex, interpersonal, iterative, and even entrepreneurial. With Lean Enterprise, Jez Humble, Joanne Molesky, and Barry O’Reilly explain how software can and is leading the way to transforming our ways of working, which can change our ways of thinking and help us adapt to the emerging world around us.”

Mike Rother, author of Toyota Kata

“Nearly all industries and institutions are being disrupted through the rapid advance of technology, guided by the inspired vision of individuals and teams. This book clearly explains how the disciplines of Lean, Agile, Kata, Lean Startup, and Design Thinking are converging through the unifying principles of an adaptive learning organization.”

Steve Bell, Lean Enterprise Institute faculty, author of Lean IT and Run Grow Transform

“Building software the right way is a challenging task in and of itself, but Lean Enterprise goes beyond the technology considerations to guide organizations on how to quickly build the right software to deliver expected business results in a low risk fashion. This is a must read for any organization that provides software based services to its customers.”

Gary Gruver, VP of Release, QE, and Operations for Macys.com

“To compete in the future businesses need to be skilled at understanding their customers and taking the validated learnings to market as quickly as possible. This requires a new kind of adaptive and learning organization—the lean enterprise. The journey starts here in this book!”

John Crosby, Chief Product and Technology Officer, lastminute.com

“Rapid advancements in technology are creating unparalleled rates of disruption. The rules of the disruption game have changed, and many organizations wonder how to compete as new giants emerge with a different approach to serving their customers. This book provides an essential guide to those that have come to the realization that they have to change to regain an innovative competitive advantage but are unsure where to start.”

Jora Gill, Chief Digital Officer, The Economist

“Lean Enterprise was the book I gave my leadership team to get everyone on the same page about how we can challenge the status quo, remove roadblocks, and out-innovate our competition. By leveraging the continual insights we get from co-creating with customers, our people, and data, we now have so many additional new ways to grow our business.”

Don Meij, CEO, Domino’s Pizza Enterprises Ltd.

“While agile and lean methods have had a big impact on software delivery, their true potential only comes as they have a broader impact on enterprises of all sizes. In this book, Jez, Joanne, and Barry have set out what those changes look like—a realistic vision of how future companies will make today’s look like cassette tape players.”

Martin Fowler, Chief Scientist, ThoughtWorks

“This is an important book. It takes an informed and informative look at the fundamentals that need to shift to start building organizations capable of continuous learning and improvement. It moves well beyond the technical to the organizational. Lean Enterprise is a must-read for existing and emerging leaders seeking to ensure their company’s ongoing success.”

Jeff Gothelf, author of Lean UX, and Principal of Neo Innovation

“I was telling everyone to get this book for a year before it was finished. It documents the path being taken by the leading lean enterprises and the fat ones will be wiped out by the lean ones in the years to come.”

Adrian Cockcroft (@adrianco)

Want to avoid disruption? Then keep exploring

Article for The Economist Insights

Want to avoid disruption? Then keep exploring

Want to avoid disruption? Then keep exploring

Businesses have always come and gone, but these days it seems that companies can fall from market dominance to bankruptcy in the blink of an eye. Kodak, Blockbuster and HMV are just a few recent victims of the rapid market disruption that defines the current era.

Where did these once iconic companies go wrong? To my mind, they forgot to keep challenging their assumptions about what business they were actually in.

Businesses have two options when they plan for the road ahead: they can put all their eggs into one basket, and risk losing everything if that basket has a hole in the bottom, or they can make a number of small bets, accepting that some will fail while others succeed.

Taking the latter approach, and making many small bets on innovation, transforms the boardroom into a roulette table. Unlike a punter in a casino, however, businesses cannot afford to stop making bets.

Business models are transient and prone to disruption by changes in markets and the external competitive environment, advances in design and technology, and wider social and economic change. Organisations that misjudge their purpose, or cannot sense and then adapt to these changes, will perish.

The sad truth is that too many established organisations focus most of their time and resources on executing and optimising their existing business models in order to maximise profits. They forget to experiment and explore new ideas for customer needs of tomorrow.

What business are we in?

Believe it or not, photography giant Kodak, which filed for bankruptcy in 2012, actually invented the digital camera. Steve Sasson, the engineer who created the potentially game-changing technology in 1975, was met with puzzled bosses who could not comprehend the future opportunity, or why customers would ever want to view photographs on a monitor.

Kodak’s business was optimised for developing photographs, not capturing memories, so the idea was not explored. Had Kodak built the capability to bring new products to market and evolve its business model, it could have led the digital revolution from the front. Instead, the reverse happened: after years of foot dragging, Kodak perished at the hands of competitors who had grasped the digital opportunity.

Contrast Kodak with Amazon, a company that was once dismissed as mere book seller. In 2008, it experimented with what is now Amazon Web Services as a way to operate IT infrastructure more effectively. It soon realised that the approach it was developing could be used to provide external customers with computing services. Six years later, Amazon is the company to beat in the cloud computing market.

Amazon’s willingness to flip a business model on its head can create runaway success stories, while stubbornly clinging to an established business model often signals an organisation’s demise.

As Amazon CEO Jeff Bezos notes, “What’s dangerous is not to evolve.”

These are no happy accidents

Winning organisations are continually experimenting, testing theories to learn what works and what does not. The reality is that fewer than one in ten of these new ideas or products will work, but the ones which do pass the litmus test could have a massive impact on the business’ future fortunes.

When exploring new ideas, here’s a five-point plan that businesses should follow:

  1. Support the culture of experimentation. The only failure is the failure to learn. Leaders are responsible for creating and defining this culture.
  2. Don’t just set up a big project, make lots of small bets. Ramp up successes and limit losses.
  3. Give your initiatives enough money to do something, but not enough to do nothing. Focus on frequent demonstrable value and validated learning before further investment.
  4. Create co-located, cross-functional teams to explore the problem space with end to end responsibility for the product.
  5. Continuously evaluate the performance of your initiatives and adjust the direction based on frequent customer feedback.

These ideas form the basis of Eric Ries’ Lean Startup philosophy. But they also provide a way to evaluate and start up large programs of work within enterprises. We discuss an evidence-based approach to enterprise portfolio and program management based on these principles in our forthcoming book Lean Enterprise by Jez Humble, Joanne Molesky and myself, Barry O’Reilly.

I don’t do Agile, I AM Agile!

Too often in agile software development we tend to use methodologies and all their components simply because the rule book says so. Why not select the tool based on the context of the goal your trying to complete.

Anything that you use that does not lead towards a direct value add to the final product delivered is simply an overhead and waste.

This presentation covers discovering what is the minimum amount of practices that are required to achieve the goal of delivering a product we desire – safely, quickly and successfully. Thus allowing us to start getting feedback and improving it.

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Tradition vs. Lean and Agile PMO and Organisations

We are in one of the most interesting and disruptive eras of business change the world has known. The landscape and competitive environment is evolving at rates we have not seen before, and it’s only going to accelerate. The average life expectancy  for an organisation is plummeting from 67 years in the 1920s to 15 years today, according to Professor Richard Foster from Yale University. At the current churn rate, 75% of the S&P 500 will be replaced by 2027.

Below I have included a deck contrasting the differences between traditional and Lean/Agile PMOs and organisations, outlining the value a Lean/Agile approach can bring. I have been able to extended the deck with the help of David Joyce and Ian Carroll in order to start a discussion on how the future can look for organisations as they attempt to scale lean and agile practices and principles across the entire organisation.

Even though traditional models of how projects, portfolios and organisations are governed represent thinking that originated in the 1890s with Taylor (fixation on efficiency and utilisation) and Gantt (of Gantt chart fame) they seem remarkably impervious to change. Our challenge for organisations today is that they need to change to keep pace with our ever evolving business environment, otherwise we can never achieve true business agility.

I plan to post deeper insights into each area over the coming weeks, however for now I will paint the boarder picture of where the majority of organisations are at today, and how they need to start changing and learning to move forward and be competitive in this era of disruptive change.

As W. Edwards Deming said, “Learning is not compulsory… neither is survival”.

Key concepts;

  • How traditional PMOs and organisations are setup
  • Legacy mindset that are alive and still driving the majority of portfolio/organisation behaviours
  • Comparisons of traditional and lean/agile mindsets
  • Principles of lean and agile portfolio/organisation management
    • Organisational structure
    • Annual vs Incremental funding (Beyond Budgeting)
    • Limiting Work in Progress i.e. its only matters how many projects you finish, not start.
    • Managing and visualising capability
    • Coping with portfolio complexity through experimentation and validated learning
    • Removing the concept of projects and focusing on continuous delivery of value
  • Benefits of lean and agile portfolio/organisation management