Could an Enterprise be a Republic?

The current year is a good example of circumstances in which agile practices are beneficial. Our world is volatile, uncertain, complex and ambiguous. The quantity and quality of customers’ purchases have varied greatly. Forecasts for the future are uncertain because the facts needed to make decisions are not known. The situation is so complex and new that our traditional ways of planning our activities are not possible.

Sitra has renewed its mega-trends for 2020. Population growth is declining. We are getting older. However, technological development continues to be strong. A long period of peace has enriched humanity. The result is a shortage of demand, as a large proportion of people already have almost everything necessary. Being overweight is a bigger problem than hunger.

As the economy changes, so does the world of work. Employment in a permanent employment relationship is declining because employers are no longer able to protect their employees from changes and fluctuations in customer purchases. We want to get rid of fixed costs, which increases the amount of variable costs. There will be outsourcing. Employment relationships become short-term, part-time and flexible. Businesses are looking for cheap labour and networking with other organizations.

We then end up in a situation where the leader has no subordinates but partners. New ways of leading are needed to lead equal partners.

Authoritarian leadership

Authoritarian leadership is a current reality in companies, at the state level, and in various other organizations. It has many different forms, but the hierarchical organizational structure is its most typical manifestation. In a class society, the king and the nobility have privileges in terms of both decision-making and income distribution. Corporate management, on the other hand, emphasizes its work to maximize shareholder value.

Centralized decision-making is at its best when quick and holistic decisions are needed. Warfare is an example of a situation where there is no time to discuss different decision options. However, a manager can become a bottleneck and the quality of decisions depends on the manager and the information available to him/her.

The execution of the leader’s orders is difficult without the involvement of subordinates. Compliance must be monitored. Rebels are punished and supporters are rewarded. Civil liberties such as freedom of expression and sources of livelihood are restricted. Media control and propaganda are management tools to stay in power, even as the number of lower-level leaders grows.

Ultimately, stifling citizen initiative and innovation will erode authoritarian societies. The palace revolution is a more likely option for them than a popular uprising.

In the corporate world, a subordinate is rewarded for obedience with pay, bonuses, employee benefits, and career advancement. Rebels and dangerous competitors, on the other hand, are fired or excluded from the networks.

Republic

The republic is a form of government that, throughout history, has proved to be a model in which nations have prospered with the ingenuity and entrepreneurship of large masses of people. Also on the business side, innovations largely take place in small business networks.

The republic is ruled by law, not by a ruler or a ruling elite. All people are born equal. The law is the same for everyone, and no one has privileges based on their identity. In the authoritarian model, typical ways to define a privileged class are descent, race, religion, language, gender, caste, age, party, and so on.

In the republics, decision-making is decentralized. Municipalities and provinces have self-government and decision-makers are fixed-term representatives of the people and elected by them. Major issues are decided by referendum. Organizations are low and decisions are made at the lowest possible level.

The constitutions of the republics define civil rights, which guarantee citizens e.g. the right to pursue a trade, to express one’s views and to be safe from unjustified arrests and penalties. They include safeguards to limit the potential for abuse of power.

As a consumer, a person makes his/her own purchasing decisions and companies adapt to consumer demand and its consequences.

An agile leader in a republican network?

So the world is changing as we get richer and get older. In a world of abundance, you don’t have to do everything yourself. For example, the music in Apple’s music store is not Apple’s own.

In the company, the manager finds that he/she no longer has subordinates, penalties and rewards. The people to whom he/she leads come from customers, several partners representing different suppliers and other stakeholders. There is no direct authority to command and influence must be earned. Still, together they form a team. Let’s think about leading a Utuber team.

It all starts with a change of attitude. The purpose of work, autonomy and self-development are of great importance to individuals. The team is based on trust, fairness, reciprocity, openness and respect. Our partners are professionals, not subcontractors or employees. They have other options.

Because our cooperation is based on the desire of equal partners to work together, we write cooperation agreements instead of an organizational chart. The Constitution of the Republic is equivalent to the shareholders’ agreement of the company’s founders. In projects, the participants have to get WIN-WIN-solution where each party’s responsibilities and rights are defined. The salary model is connected to the income stream received from the customer.

Of course, the agreement is only the starting point. An agile leader needs to be present, participate, listen, and serve his/her team. So what can he do for his team? Facilitation, counselling, mentoring, training and coaching are a key set of services, but on a case-by-case basis, there are a whole lot of more. Decisions are made by those who are best placed to do so. Openness, honesty, fairness and respect are crucial in interactions. The free rider problem will not be eliminated by mere agreements, despite security mechanisms. Everyone must grow in the responsibility and reciprocity required for cooperation.

Summary

The Republic model teaches companies how a large number of people can work effectively as a loosely networked community to solve complex, changing, and ambiguous problems. In addition to the laws, the parties need a strong belief that life can give more than a zero-sum game.

Critical Thinking

Agile thinking that is common in the IT industry is suitable for other areas of life as well. In this post, we apply it to current topics. By critical thinking we mean skepticism about using unverified assumptions in decision making.

Solving Complex Adaptive Problems

We use Scrum framework within which people can address complex adaptive problems,. Its core is empiricism that asserts that knowledge comes from experience and making decisions is based on what is known. It employs an iterative, incremental (repetitive and additive) approach to optimize predictability and control risk while productively and creatively delivering products of the highest possible value

In complex problems cause and effect relationships are difficult to observe. They are non-linear. For example the spread of a pandemic started exponentially and has a long tail towards zero. It has a  feedback loop where immune people do not spread the disease. Incubation period is an example of a time delay between the cause and effect.

In complex problems cause and effect relationships are difficult to observe. They are non-linear. For example the spread of a pandemic started exponentially and has a long tail towards zero. It has a  feedback loop where immune people do not spread the disease. Incubation period is an example of a time delay between the cause and effect.

To analyze a problem we identify the influencing factors. For example the spread of a virus depends on the virus itself and how people socially distance from each other. Fish-bone diagram can be used to describe the factors.

Causal loop diagram shows the influencing factors and their relationship.

 

Cause or Effect?

Vitamin D has been proposed as a solution but we are not sure whether the vitamin reduces viral infections or viruses consume vitamin resources or a person prone to infections also has limited vitamin reserves or some combination of these.

Just correlation of factors is not enough. We need to ensure the mechanism. We may have a mechanism but not the effect. Timing and dose has an impact on its effectiveness and adverse and side effects in humans. We can use calculations and computer models, test tube and laboratory tests, pathology and experiment with animals to fail faster.

Because causes have their own causes, we do root cause analysis to go deeper. 5 whys is a typical technique to find the factors that should be changed. For example we would like to know why some of the old people who had the virus died. Note that unambiguous, simple chain of causes and effects does not necessarily exist.

In wicked problems effect emerges from the collaboration of several influencing factors,  observations look chaotic and statistics do not show enduring correlations. You may find bounds within which the effect fluctuates. They are called (strange) attractors.

Scientific Method

Scientific Method is based on empiricism. Organizations thrive with the culture of experimentation.

Randomized double-blind study is the gold standard of empirical research. If we are developing a new drug we need to know whether the healing is due to the drug or something else. In a such study patients are randomly divided into two groups: 1. those who get the new medicine and the best treatment and 2. Those who are receiving placebo and the best treatment.

Results depend on the sample and patient selection. Because there is a chance of chance, studies have be repeatable. We need to create the research plan in advance and define success. Is it to be alive 5 years after the study, or 50 years or something else.

When we are designing complex products we need to have empirical evidence, facts , to support our assumptions the product can be built and that customers want to buy it. A/B-testing is widely used.

Cognitive Bias, Image Marketing

When we look at any information, thinking slow and analytically takes energy. We use intuition, the fast way instead[1].  Then we have deal with cognitive biases [2] and logical fallacies[3]. It is easiest to deceive oneself.

We believe that we know more than we really know. We believe in people like us. We advocate results that useful for us and confirm our assumption. It is easy to be right in hind-sight and think in a given context, inside the box.

Logic is difficult. So, we trust authorities and attack persons. Our chain of reasoning way is invalid, even circular. We generalize isolated cases. Falsifying our claims may be impossible. Our arguments may be contradictory which is called cognitive dissonance.

We need to use evidence based science instead of relying on image marketing. Image marketing appeals to emotions. It uses adjectives, especially fear, threat and danger. Your own product is combined with words perceived as positive and competing products with negative ones. The meaning of the words may be modified

You should be attentive when you see overwhelming number of repetitions and one-sidedness of the view. Everyone says that AI and  robotics are coming. You notice words of understatement like ‘predicts’ and ‘could’ in “Professor predicts 100M could die”.

Furthermore,  you see that title does not match content. It may be just a clickbait. Research and facts are missing. In the worst case there are no facts or facts do support the arguments or perception of the facts is exaggerated. Storm in a glass of water is reported as a global catastrophe.

Proceed Adaptively Step by Step

Because we do not know the outcome in agile uncertain world, we proceed step by step. We adapt after each step because, we cannot make a comprehensive plan. We are moving forward all the time. Error steps are possible and allowed.

Agile leaders are humble servants of others that catalyse the discovery of new problems and better solutions. Life in uncertainty is like life of a scientist and a gardener.

Agile leaders tolerate and appreciate different opinions. Fact-based solutions succeed and bad ideas fail quickly when we have freedom of science and free discussion & communication. Censorship is detrimental to creativity.

References

  1. Kahneman, Tversky: Thinking slow, thinking fast,

2. https://en.wikipedia.org/wiki/Cognitive_bias

15 Ways to Fail in Managing Backlogs

Agile development emphasizes effective communication and learning through continuous feedback. Backlogs are tools to manage the discussion about the features of an evolving product. They are simple in form but demanding in content. Here are a few challenges.

1. Too detailed

By writing detailed development blue prints like traditional requirements specification, the product owner wastes time and takes up space from the creativity of the development team. The things in the backlog are comparable to the product breakdowns presented in traditional project plans. They are intentionally incomplete.

For example, a software developer will probably know what kind of program logic is needed to implement the return, OK, add, change, and delete buttons in the interface. In this case, no separate user stories are needed to describe them in the backlog.

2. Too big, projected too much

A Backlog with several hundred or even thousands of items predicts the work of the development team for years to come. It is premature to include things that are not timely in the backlog. It is not even certain that they will ever be done.

3. Business benefit, metrics missing

In order to prioritize the backlog, it is important to understand why the product has these very features. Cost-benefit calculations must be possible at least at a rough level. For example, a user story: As a marketing representative, I want our website to use cookies so that we can target our sales and marketing efforts well to our customers. From this, we can continue the debate about whether the use of cookies is good business.

4. The “why” of the user story is wrong

For example, the user story: “As a customer, I want to use Digital Service X to save nature” probably describes the need less than “As a business owner, I want our customers to use Digital Service X to save 10% on our costs. Adding metrics often reveals whether we are doing the things that are actually required for a product to succeed.

5. Not Concrete, too abstract

The need for business alone is rarely enough. The development team wants to know what they need to produce. For example, what should the development team do to implement the user story “As a company owner, I want a strategy to secure growth in shareholder value in the years to come”?

6. Full page user story

The user story format is not suitable for all situations. Its use is not mandatory. For example, complex software logic or visual appearance is difficult to describe in a single sentence. The backlog can be augmented with various diagrams, sketches and calculation rules.

7. Architecture is missing

The structure of the backlog describes not only the work in progress but also the architecture of the product. In a good architecture and backlog, components (especially themes and epics) can be built, published, and replaced independently. A spaghetti code is easily generated from a ticket list.

8. No increments are generated

A traditional requirements specification often describes a large number of components that are integrated together just at the end. An incremental and iterative model of agile way of working where we have a constantly functioning and evolving product requires a backlog that supports that. For example, since the user interface and the backend are not built separately, they are also not separated into their own items in the backlog.

9. No discussion with team and users

Because the backlog is intentionally incomplete, the product owner, users and developers should actively discuss with each other. Understanding of the product is not conveyed through the sending of documents and emails but through the interaction between individuals.

10. No feedback: POC, alpha, beta, MVP

When writing a backlog, keep in mind that the product develops piece by piece. The product is made available to users and customers for evaluation at the earliest possible stage. It is better to fail with a proof-of-concept than at the end of an expensive R&D pipeline. The backlog tells whether the feature will be published in POC, alpha, beta, or later.

11. No changes, no reviews

The backlog describes the part of the product currently under construction. It differs from the project plan in that it is not frozen at the start of the project. Instead, the product is intentionally improved through customer and user feedback. The review is an event where the Scrum Team discusses the future of the product with stakeholders.

12. General definitions for the definition of done

General specifications such as non-functional requirements, security policy, and user interface standards are described in the definition of done. In this case, they are not repeated unnecessarily in the backlog.

13. The division of labor into teams is not communicated

The structures of the development organization, product, and backlog tend to match each other so that dependencies can be managed within each team. Strong planning in advance or large inter-team meetings have not proven to be a fast enough and interactive way to communicate.

14. Platform specific teams

It is difficult for a product owner to optimize the value of a development organization’s work if it consists of knowledge islands. In the backlog, platforms such as Android, iOS, and Windows are only considered at the sub-level, which belongs to one team.

15. Double work, missing parts

The backlog, open to everyone, spreads the overall picture of the product so that each feature is built exactly once. In terms of component reuse, the agile world is opportunistic.

Traditions and organization of work are the root causes of the above. The consequences unfold when you take into account the emergence of understanding and the changing needs as development work progresses.

Scrum Foundation Quiz

50 questions based on Scrum Foundation 2018 learning objectives.

Select the option that fits agile mindset the best.

Have fun.

Scrum Foundation Questions 1-10

Scrum Theory

Scrum Foundation Questions 11-20

Scrum Theory and Roles

Scrum Foundation Questions 21-30

Scrum Roles and Events

Scrum Foundation Questions 31-40

Scrum Events, first Artifact question.

Scrum Foundation Questions 41-50

Scrum Artifacts and their transparency

 

 

 

Business Case of Agility

Success stories and surveys support agile software development. In addition to anecdotal evidence there are little hard figures to guide our decision making. Here cumulative business value charts are used to describe the impact of agile and traditional choices to the bottom line. Focus is on visualizing the economic impact of individual agile practices and assumptions of their costs and profits.

A chart describing the cumulative earnings as a function of time is a basic tool for optimizing the return of investment, ROI. The line is higher all the time if we have multiple deliveries. It is still better if the more profitable increments are deployed the first. This advantage in time-to-market is clear also in the surveys. Double the results in half of the time assumes that earlier deliveries have business value and that the additional cost of more deliveries is small.

  • It is not trivial to find minimum viable products that create value especially when organizations do not improve their businesses continuously but use large projects with non-negotiable late deadlines. Waste of the inventory of the partially done software is not as visible as the waste of tangible inventories.
  • The cost of a delivery has been a show-stopper of agility. Business models were based on sales of new versions of software that were installed manually to each client computer. Each deployment package had to be tested and integrated manually. Without automation the costs can overcome the benefits of early deliveries.

The cost of change must be small if we proceed empirically and feedback directs our product and development process. Customers pay these changes when they create more value than the costs of delaying and implementing the the changes.

  • Extreme programming proposes a set of practices like test driven development, re-factoring and pair programming that change the cost curve, cost of change, such a way.
  • Waste of unnecessary features can be avoided by prioritizing product backlog items based on their business value and changing the order when appropriate.

Risks are an integral part of any design. In software development we do not commonly know what the users actually need and how we use  new technologies that create the results. The cone of uncertainty is high. Reports of more than hundred-fold effort differences are common. Sales, savings and profit estimates are so inaccurate that it is quite common to ignore them altogether.

  •  Whole investment is lost if  we do a wrong thing or fail in the implementation
  • Customers try to protect themselves by fixed price projects. Costs increase because vendors have to buffer their offers especially if penalties are used. Competitive bidding weight visible price or over quality and total cost of ownership. The bidding game sets customers and vendors against each other.
  • Incremental deliveries make risks visible and adaptation is easier.
  • Agile approach is a natural risk management system, but it often fails when appropriate action is not taken. Organization cultures must allow canceling and redirecting projects.
  • Queuing theory and theories of variation can lead to improved practices in handling unpredictable situations.

Traditional mass production uses specialized lowest costs work force, rigid processes and invests in tools. It locally optimizes the cost of the tasks that workers do and is often blind about the required administrative burden.

  • Cost of learning can be significant. It unavoidable when we do something new. Open workspaces, pair programming and shared responsibilities are agile practices that accelerate learning. It would be good if that could break Brook’s law.
  • Cost of teamwork is minimized in a cross-functional team in single location. Wastes of relearning, transfer of work, task switching and delays are minimized. Software development has dis-economics of scale because a lot of communication and coordination work is required.
  • Utilization rate of the specialist become easily low. To avoid that developers take part of multiple simultaneous projects which often leads to coordination chaos.
  • Cost of motivation is difficult to estimate but essential part of working life. Leadership style has an impact on the engagement of team members which may result in more value for the business.
  • Traditional big front end design tries to minimize the cost of rework but real life shows that a large amount of work is needed to correct the bugs, integrate the components and deliver what users actually need.

Traditional and agile approaches have different assumptions of the relative costs of the parts of software development. Agile assumes high risks, high integration and collaboration needs, low predictability and low cost of change.

Better Profitability with Lean Principles

Lean thinking is particularly well-suited to today’s battle of margins in a weak economic environment because it comes from Toyota’s innovations in post-war market, where demand for cars was occasional, sparse, intermittent and difficult to predict.

Customer Driven

In customer driven business model it is important to sell what the customers need and reserve production assets just after the customer’s order. Sales and marketing should emphasize customers more.  That sells better than pushing what we happen to offer. Listening to customers is an important way to find tacit signals necessary for developing the products. We can meet the needs by preferring simple and fast solutions and avoid the tendency to invest heavily and slowly. Consultation business can begin lightly without extensive materials and finalized products.  Consultants learn by doing, working together with the customers.Sales should not be overly concerned about the availability of the experts and resources. There are always more quotations than deals. Reservations should not be done before the commitments are clear.  Transparency helps everyone to adapt to rapidly changing situation in available consultants and speculations and realizations of the deals.

Flexibility levels loads

The ideal situation in which the company acquires the resources only when needed is not possible. Prices are higher if you cherry-pick.  Transaction and purchasing costs must be accounted and availability of the resources in peak demand is not a sure thing.

Impact of fixed costs to profits

Impact of fixed costs to profits

Profit calculation is more difficult when the equation includes fixed costs. Annual rent of a typical agile team room could be 10 000 €. The charge for the corresponding space in Technopolis is 400 € per day.  If the rented space would be used 10 days a year, it would cost € 1 000 a day. If we could use it 100 days a year, it would cost € 100 per day. It would save a lot if the same space could be used as the office space for the team, internal meeting room and meeting room for the customers. You have to invent how to profitably change the configuration of the space to fit the needs of the moment. It is probably cheaper than having separate rooms for each purpose or renting more space each time.Businesses are  crazy about premises in Finland. They have always too much space and in too costly locations. Home offices have a clear competitive advantage.The situation is the same if we look at the profitability of the sales.  If the profit of a consulting day after variable costs like accommodation, travel and the consultant’s fees and the avalanche of the general expenses is € 200 to cover the seller’s costs, each salesman must sell  500 days a year to reach € 100 000 gross margin paying a typical 5 000 € monthly salary for him. If sales are lower keeping the margin by increasing the selling price makes it more difficult to sell in a tense competition situation. ICT professionals have full-time employments because getting good people in bad terms is not possible. There is a long learning curve for each task and there is no visible end of the demand of their skills. Vendors’ success factor is a small cross-functional team in which all members are able to do virtually any of the tasks in the backlog. In addition, the team members could be responsible for a product development, support, sales support and marketing (especially brochures, blogs and public appearances). This ensures useful work throughout the year despite of the typical seasonality.If an organization is heavily based on specialized roles in its business model the weakness in demand is immediately reflected in the bottom line. It can not guarantee adequate income to its partner network and which fades away focusing on other customers.

Flat organization

Lean organization does not require a strongly specialized and multi-tiered hierarchy of managers because teams will make virtually all operational decisions. Maintaining and calculating profit margins is easy because organization’s general expenses are not significant. To get any work done creates a huge amount of coordination work if every task has its own manager. It is a slow and expensive. Trade of squirrel skins, purely speculative budgeting, performance management, etc. will add operations its own heavy share in the bottom line.Economic monitoring is simple. Lean measures throughput times in addition to sales and gross margins.

Scrum Gathering Prague Focused on Agile Leadership

Keynotes of Niels Pflaefing “Organize for Complexity” and Brain Robertson “Holacracy: A Radical New Approach to Management” summarized the agile position on leadership.

In a rapidly moving world old paradigms of management are not fast enough. Teams near the customer must do the decisions using the power that organization’s constitution assures them.

More information about their ideas can be easily found from their books: Organize for Complexity and Holacracy .  These ideas of leadership are essential in understanding why agile transformations are so difficult. It is hard to be agile if the management structures are not changed.

Another hot topic was scaling. SAFe is not the only option and LeSS seems to get more support from the agile community than it, because SAFe’s top down approach is less capable of  changes.

Scrum Alliance has now more than 400 000 members and it is growing with about 6 500 new members every month. The number of trainers and coaches is now 188. Members will get more content in Scrum Alliance’s site and trough the learning consortium.

Scrum Gathering Berlin 22.9-24.9.2014

Scrum Global Gathering 22.9- 24.9.2014 in Berlin was sold out. Its 600 participants heard the good news:

1) The number of certified members of Scrum Alliance of  is now 350 000 and it will grow by 5 000 every month.

2) Certifications will be extended so that the number of the upper level of Certified Scrum Professional certificates will be determinately increased with the help of additional training courses.The 200 trainers and training companies  involved in the community will increase the range of advanced training courses in the  technical and the leadership areas.

3) Scrum is converging as the organizations in the area, Scrum Alliance and Scrum.org (8 000 members), agreed on a common definition of Scrum.This means in practice that our offerings of current and forthcoming trainings at agile leadership, interpersonal skills, facilitation, agility, scaling, Lean, Kanban, Certified Scrum Developer, agile testing, agile architecture, etc, etc will get increasing global marketing support from Scrum Alliance.Course development takes place in the spirit of the Lean Startup based on customers’ needs.

We are able to offer advanced courses that our clients request as the course contents have already been prepared at the global level. Many of the MIF‘s interaction skills courses and others courses are inherent add-ons to basics of Scrum.

Example Driven Development

Example driven development is the best name to cover acceptance test driven development, behavior driven development and specification by example approaches. The concepts of acceptance test, testing and a tester have been defined long ago. I have found that changing their meaning is difficult. Even when we talk about test driven development we have to spend a lot of effort to explain that it is not done after programming and not by the separate testers.The same happens if we talk about specifications.

The old school uses user stories as a new way of writing specifications, which could be then send to a separate development team. Collaborative design is not happening as it should. Though I like the idea of programming with natural languages, I think that they are too abstract and too prone to interpretations. Examples are a good way to explain things unambiguously and in a way that both the users and programmers see useful.

Behavior is something that programmers talk about, but for users that might not be as clear as examples. With example driven development I want to emphasize collaborative design where users and developers work together using examples to clarify how users interact with computer programs to achieve business benefits that pay the return on investment.

Traditionally we have specifications, tests and code written to different purposes. They should not just be consistent but the same. In agile tests are specifications and in behavior driven development code is moving closer to the tests. The ultimate goal might be that we have only one description of the program that can be understood by both the users and the compilers. That is one goal of visual programming.

The lack of programmers has been tried to be solved by moving the work to users. This approach has not been very successful because building large programs requires a lot of logical thinking and solutions to huge amounts of details. Software designers are not endangered species but programmers might be if the abstraction level of programming goes up.