Lean Flow to Enterprise Agility Transforming the World of Work by Creating an Adaptive Organization

3/21/2019 Word Art

Lean Flow to Enterprise Agility Transforming the world of work by creating an adaptive organization

1/1 Lean Flow to Enterprise Agility | Contents

The age of disruption 4 Customer-centricity 5

Agile as the “silver bullet” 6 The six crucial pivots 8 The Lean Flow Ecosystem 10 Product plus platform operating model 11 Product experimentation 12 Minimum viable product agile plus DevOps delivery 13 Deep systems 14 Lean portfolio management 14

Benefits of Lean Flow 16 Organizational benefits 17 Operational benefits 17 Behavioral benefits 17

Our approach 18 Mobilize: Build the foundation 18 Experiment: Start small and grow big 18 Adapt: Make change happen 19 Evolve: Embrace agility to continuously improve 20

Conclusion 21 About the authors 22

Endnotes 23

3 Lean Flow to Enterprise Agility | The age of disruption Lean Flow to Enterprise Agility | The age of disruption

The age of disruption Competitive advantage is primarily generated by a company’s ability to create customer No industry or company, large or small, is immune to the value. It is only limited by its inability to disruptive forces present in our global economy. harness technology and push innovation out to the market, forcing disruption. “Disrupt before you become disrupted,” is the mantra that rings true in every industry and sector today. Leaders are realizing that being disrupted can quite possibly adversely affect their market position and competitive advantage. In 2017 Chapter 11 filings increased by 6 percent and affected industries as diverse as retail, energy, telecom, banking, and technology. Common themes in these filings included an inability to deliver products in a timely manner, failure to recognize changing customer trends, recognition that technology strategies were out-of- date, and defending market share against global competition. Business leaders unable to alter their ways of organizing, operating, and behaving in response to increasing rates of change in today’s global economy will almost certainly fail.

Customer-centricity After all, companies are in business to technology to reach global markets that As a leader, you have an opportunity to direct or redirect your organization One answer? Customer-centricity! Putting make a profit by fulfilling the unmet wants, have opened up through the use of to become acutely focused on your customers. One top priority should the customer first to become intensely needs, and desires of their customer base. technology and the Internet of Things (IoT). be to build enterprise-wide innovation and value-delivery ecosystems focused on producing products that deliver Ultimately, the benefits of such a relentless that adjust quickly to ever-changing customer expectations and unmet customer-centric value should become focus on the delivery of customer value can In today’s global marketplace, business and wants, needs, and desires. Embracing enterprise agility can enable the No. 1 priority for everyone in your be higher profits and greater shareholder technology leaders must recognize that your organization to respond rapidly to changing conditions, internal organization. Leaders should change from value, which represents a win-win situation all companies are essentially technology being focused on what is important to for both your company and customers. companies. A holistic approach must as well as external. You will be better prepared to find opportunities in them—an inside-out approach—to taking an be taken to increase your customer disruptive change to create customer, stakeholder, and company value. outside-in view that shifts to what is relevant It sounds simple and intuitive, but take base. Competitive advantage is primarily and produces value for your customers. a look at the saga of Blockbuster. Once generated by a company’s ability to create Achieving enterprise agility is the name of the game in today’s global economy. heralded as a disruptor of traditional customer value. It is only limited by a failure Organizations should recognize and heed the urgency to instigate change The traditional inside-out approach that movie distribution and the epitome of to harness technology and push innovation now, before it is too late and the possibility of corporate extinction becomes dominated corporate strategy in the late retail success, its leaders completely out to the market, forcing disruption. 20th century focused on cost-cutting ignored the disruption that was on their a reality. According to CSO Insights, an independent research firm within the measures or inorganic growth through doorstep. The rise of the Internet in Defining or redefining your organization to Miller Heiman Group, “[B]uyers’ behaviors are constantly changing, faster mergers and acquisitions (M&A), which the 1990s brought a whole new form of recognize these forces can unleash growth than ever before. Adapting to the rising and changing of buyer behaviors as may not be sustainable today. At some competition to the entertainment market. potential by embracing digital technologies, quickly as possible is not a luxury—it’s mandatory for corporate survival.” point, to stay competitive in the age of Online competition from Netflix didn’t improving the customer experience, and Industry disruptors such as Amazon, Google, Yahoo, and others have disruption, it is necessary to pivot and shift faze Blockbuster’s leadership team at all. increasing an organization’s brand value. mastered agility by creating innovation and value delivery ecosystems that to a strategy of organic revenue generation Before they knew it, this online competitor This approach can result in delivering more instead. This calls for paying attention to invaded their market space and stole revenue to the bottom line. By continuously build agility into the entire enterprise, from ideation to product development, your customer and delivering products that market share. Unfortunately, Blockbuster feeding customer data and product all the way through to release and support. The result? Their products offer value from their perspective. Those never recovered and has vanished analytics back into the process with each reach the customer within hours, days, or weeks instead of months or that have not made this shift could end up entirely from the global marketplace. release, you can deliver increased value and years, swallowing up market share and running their competition right out being disrupted by competitors who have. pivot more quickly, informed by changing of business. Those that are finding it hard to adapt to this new business Permanence in the marketplace arises from Ignoring your customer is no longer a customer demands and market trends. climate and rate of change may be scrambling to figure out how and delivering what the customer wants, and choice. Disruption is here, and savvy in turn, increasing corporate revenue. business leaders adjust and exploit what to change, leaving them asking, “What must we do to survive?”

4 5 Lean Flow to Enterprise Agility | Agile as the “silver bullet” Lean Flow to Enterprise Agility | Agile as the “silver bullet”

Agile as the “silver bullet”

Many leaders have come to realize that Agile methods alone are not the silver bullet they throughout the organization. And yes, and responsiveness that can be achieved. In implementing Agile methods in your other words, strategy and execution must were once believed to be. technology organization is important, but be unified. it is only one piece of the puzzle. It is a beginning, and not a means to an end. Many leaders have come to realize that Agile methods alone are not the silver bullet they In an attempt to build innovation and value Agile work here?” Actually, the opposite is line, across many complex products and One problem is that many efforts focus on were once believed to be, which can leave delivery ecosystems, many companies true—it does work. The problem may be in capabilities in an uncertain and volatile improving how development teams work. them asking, “What more should I do to have embraced and implemented Agile the way it is implemented. world. Developing products with small This is vertical scaling, often with little achieve and embrace the ability to rapidly Development methods. Millions of dollars teams can reduce the complexity, the risk, regard to integrating other parts of the respond to changing market conditions, to have been spent on converting technology At the center of Agile, the focus has always and the uncertainty of value delivery within organization into the effort. Teaching the remain relevant and stay competitive in the organizations from traditional “waterfall,” been on developing products in a research product lines, often more effectively than product development teams the “scrum face of continuous, massive disruption?” or linear and sequential, to these methods. and development (R&D) environment. when large numbers of teams are involved. framework,” a flexible, holistic product Some find that it really hasn’t made much of However, the way Agile methods have been development strategy where a team works a difference for them. implemented around a project paradigm However, many business leaders believe as a unit to reach a common goal, only goes at the team level does not scale to the Agile is something that only affects the so far. If the business is not engaged in the Those for whom the anticipated benefits enterprise level, where hundreds of teams technology side of their organizations. process and the teams are not supported have not materialized may ask, “Why doesn’t must work together within a product Agile is a mindset that should be embraced by an enterprise ecosystem that enables the fast, flexible flow of turning ideas into products that can be quickly released to the market, you are only tackling a small portion of the problem.

Attaining the agility needed to respond to changing market conditions in hours and days, versus weeks and months, happens only through vertical scaling coupled with the horizontal flow of work across the entire enterprise value chain. To fully achieve agility, behavioral change must support and sustain these new ways of working (see figure 1). It is through a three-dimensional Enterprise approach that leaders can completely

vertical scaling scale, transform, and change the entire Product organization in order to respond quickly and efficiently to changing market conditions, embracing agility and fostering innovation to Program become disruptors in their markets. Organize Team You can achieve some success through Figure 1. vertical scaling alone. But until the Levels of agility horizontal flow of work is coupled with The evolution of behaviors drives Behave Operate (horizontal ﬂow of work) organizational behavioral change that ties increasingly higher levels of agility product ideation to product delivery, you and customer value. may only realize a small part of the benefits

6 7 Leadership Engagement

Deep ystems

MVP agile Product Platform Devops Delivery Operating Model Lean Flow to Enterprise Agility | The six crucial pivots Lean Flow to Enterprise Agility | The six crucial pivots

Experimentation The six crucial pivots

To be able to answer these pressing questions, leaders need to pivot or change direction from what isn’t working, to new ways of organizing, operating, and behaving that address the challenges facing 21st-century organizations in their attempt to Leadership survive disruption and fight off corporate extinction. engagement

Six crucial pivots (see figure 2) can be This new operating model cannot be As a leader, you should understand Customercentric made to successfully embrace enterprise expected to function properly if it is this concept applies to creating nimble Deep systems value agility and respond to disruption. These supported by outdated corporate and responsive organizations as well. Customer include changing old behaviors by placing ecosystems that were built for traditional In our experience, failing to view your the customer at the front of the product waterfall organizations. To instill greater organization as a cohesive unit is likely to focused experimentation process and building enterprise agility, concurrent change must be a barrier to lean and agile scaling and and releasing products that deliver take place in the way supporting units, transformational, behavioral change efforts. enterprise meaningful customer-centric value. collectively known as “deep systems,” Leaders must be at the front in encouraging such as finance, legal, human resources, nimbleness and responsiveness and agility It means changing old ways of organizing procurement, and so on, operate. lead change against efforts to cling to and operating—pivoting to an operating old ways of organizing, operating, and model focused on products, not Simply introducing “sprint,” the basic behaving that stifle and kill innovation. MVP agile and Product and platform projects, managed through the use unit of the scrum framework, to your DevOps delivery operating model of lean portfolio management (LPM) technology teams, without changing the Finally, an Agile DevOps delivery engine techniques that allow business leaders to relevant platforms and deep systems that extends into the cloud should be built respond to changing customer demands that support them, is like having a fancy to speed the development of minimum and market conditions quickly. sports car that has no engine. It looks viable product (MVP) feature sets that great, but “it’s all show and no go!” To take exploit automation and feedback loops. Figure 2. The six crucial pivots Experimentation These shifts can often be addressed advantage of all the beauty, speed, and When released to the market, they should in hours, days, or weeks, rather power the car has to offer requires all of not only meet, but exceed customer than months or years under more its parts to act as one cohesive unit. expectations and drive value delivery. Taking traditional waterfall methods. the approach of building just enough of your customer and Apple, contributing to its Both of these examples clearly depict of achieving the six crucial pivots, the product to offer value to your customers in market share and customer loyalty. the strategy of building an MVP that organic nature and importance of small increments can capture market share provides just enough functionality these organizational, operational, and earlier and generate revenue that you can Amazon’s growth over the past 24 years to collect customer feedback, as well behavioral changes will become apparent, use as you move your product forward. followed a similar path. When Jeff Bezos, as provide a revenue stream that manifesting themselves in a new form founder and CEO of Amazon formed would not exist using more traditional of innovation and value delivery. This Two examples of implementing this type the company, he knew he wanted it product development methods. is the Lean Flow Ecosystem that is built of strategy are the Apple iPhone and to be an “everything store.” However, through conscious and controlled lean Amazon.com. When the iPhone was first when Amazon.com launched in 1995, Overall, leaders should become and agile vertical scaling, horizontal released, it was a basic phone that—in its main goal was to compete with brick- minimalists when building products, transformation, and behavioral change. shape, form, and functionality—was very and-mortar bookstores like Borders by thinking small with contained, simple, with a couple of apps. However, and Barnes & Noble, using only a digital decentralized teams and units of work. Apple generated value and market share online presence. As the company grew, Embracing agility and using new delivery that still remains relevant years later, in Amazon expanded its market share methods and support systems means part because they were first to market. by adding more and more products creating an aligned, holistic organization Subsequent iPhones were released until today, you can buy just about that harnesses change as the key to over time with many more features anything from the online retail giant. success. As you address the complexities that have generated value for both the

8 9 Lean Flow to Enterprise Agility | The Lean Flow Ecosystem Lean Flow to Enterprise Agility | The Lean Flow Ecosystem

The Lean Flow Ecosystem

Lean Flow is an end-to-end innovation and value delivery ecosystem focused on creating organization to focus on unmet customer conditions, all skills and expertise required The consequences of this cycle, if it is Enterprise Agility throughout the organization, allowing it to rapidly identify and develop wants, needs, and desires in short, iterative, to develop the products are located allowed to happen frequently over time, are and incremental development cycles that within the portfolio, including vendors and likely to be lost market share and a waning small minimum viable products, known as MVPs. quickly respond to and adjust for changing suppliers. These portfolios are bundled with customer base, which can potentially set customer demands. It is a holistic approach the systems or platforms that support and the organization on the road to extinction. that requires business and technology maintain the common components across When released out to the market in an track of all ideas generated, but not ready (DevOps) that live in the cloud, and when leaders to work together to define and build the product line, as depicted in figure 4. In a product plus platform operating model, iterative and incremental fashion, they for product development) to revisit at finished, it is pushed out to the market What unmet customer Does it create value How can we tie When will we How should we Are we ready to What should we do viable products. The model is supported requirements are jointly written by business result in rapidneeds a rvaluee out th ecreationre? andfor odeliveryur custome rs? ast laterrategy ttime.o execu Iftio itn? is provendeli vtoer itbe? viable, deliver it? in there lformease? of an MVP featurebetter ne xset.t time ? by operations that fully embrace agility To maintain order and provide oversight, and technology, through a customer- for both the IcustomerDEATIO and company.ITA KE it isE droppedVISIOI into the intakePLAI funnel and EECTIO LEAI in the pursuit of creating and delivering all portfolios have a strategic product centric lens. Ensuing products or ideas are Also, they allow for and encourage rapid reviewed for strategic fit, and an initial It is the responsibility of the development customer, company, and stakeholder value. roadmap and are managed through the vetted and prioritized through an intake n

customeri feedback and product analytics prioritization is determined in relation to team to ensure that any issues are promptly

a Product use of a portfolio backlog that tracks process coordinated by a product portfolio Analyze Exploratory that can be used to improve the product, all otheroad itemsmap in the productPrioritization backlog. addressed and corrected. Following release, C h dea Design Testing Product Canvas progress through a queuing system or management function that controls the during eachu ilsubsequentd Customer release. MVP customer feedback and product analytics The product plus platform lu e elease Plan eﬁnement Development Analytics Kanban board, based on LPM techniques. flow of work through a centralized product

a Estimation Prototype V If the ideaolu tision approved and deemed worthy are collected and fedn sbackpect A intodapt/ the system operating model Learn Fund cheduling e Approve Deﬁnition Test etrospective backlog. If scope changes arise due to s Measure To achieve Lean Flow, the organization

The r i success of this ecosystem depends of investment dollars, the product manager to ensure it is continuously improved upon, Pivoting to this type of operating model shifting market conditions or an alteration in Enterprise Product print Minimum Viable mprovement should first be broken down into smaller, uponer p putting the customer at the develops or updates the product’s vision, throughout the life of the product. The t Portfolio acklog acklog acklog Products MVPs acklog changes the way a company organizes strategic vision or objectives, adjustments n forefrontE and understandingdeation and mission, and value proposition. Using the product portfolio manager tracks exactly product-focused units, known as product acklog and operates; shifting the emphasis from can be evaluated and prioritized, based addressing theirLean St aunmetrtup wants, Pneeds,ortfolio M anagement researchProd ofuct the Mana productgement experimentationAgile DevOps D elivery where the idea is inL ethearnin developmentg Analytics portfolios. These portfolios are built by managing projects, to developing and on all other work items in the backlog, and desires through incremental product team, management prioritizes it and process, through the use of a queuing identifying how your customers interact delivering value-producing MVP feature sets. in a timely manner. If it is urgent that a development and iterative release. determines placement on the product system, as it moves across the Lean product with your organization through the products new feature or piece of functionality be roadmap. It then moves to the product portfolio Kanban board (see figure 3). you develop and sell. Armed with this For years, project management developed, it can be defined, estimated, The process begins when a new idea is portfolio backlog to await development. information, leaders should then redesign professionals have acted as the conduits developed, and released in days or weeks, fed into the product experimentation Once capacity frees up, it goes through The success of this ecosystem is heavily the enterprise operating model so that it is between the business and technology not months or years using this process. process. The product experimentation release planning and is placed on the MVP dependent on the use of a customer-centric, centered on producing products that meet by managing the requirements definition team models or builds prototypes of the release plan, which determines when product-focused operating model with customer demand for that market segment. process. Unfortunately, more often than However, working in this manner requires idea, until it is either proven to be viable and how it will be developed by the Agile the ability to quickly respond to changing These product portfolios are the heart of is desirable, only a brief conversation discipline and focus. It requires the ability or not. If it is not viable at this time, it DevOps delivery engine. Finally, it is built market conditions, by enabling fast, flexible this ecosystem and function on a product with the business stakeholders takes to understand what you should be working is placed into the “ideation backlog” (a and tested, using componentization, workflow across the entire enterprise. plus platform operating model (see figure 4). place before a requirements document on at the right time, focusing on the things low-cost holding mechanism to keep microservices, and automated processes This operating model should enable the is written and thrown over the fence to that actually add value and generate This model creates a holistic business, technology for development, with little revenue. What good is it to maintain high technology, and operations approach. discussion or collaboration. In the absence productivity and utilization levels within What unmet customer Does it create value How can we tie When will we Are we ready What should we do Value can be achieved by ensuring that only needs are out there? for our customers? strategy to execution? deliver it? to release? better next time? of collaboration, the technology teams are your organization if, in fact, what you’re those products and product capabilities IDEATIO ITAKE EVISIOI PLAI EECTIO LEAI left to fend for themselves to figure out working on adds no value whatsoever to that align to an organization’s mission, exactly what the business side really wanted. your bottom line? Being “really busy” on the Customer vision, and value proposition, and are tied wrong products is a mistake you cannot dea Product to its strategic objectives or themes, are Analyze Because mind readers exist only on the afford to make in today’s competitive roadmap Prioritization Design Exploratory considered for development. They are uild testing Product canvas MVP screen or stage, six, nine, or even twelve business climate, and is one that is likely Reﬁnement Development typically organized by product lines or release plan Analytics months later they’ll come up with a product made every day by companies worldwide. Prototype Estimation capabilities into portfolios by either business Learn olution Fund cheduling Test nspect adapt/ that might completely miss the mark or Measure deﬁnition retrospective unit or geographic location, forming the Approve launch into a market opportunity that Overall, the beauty of working within this foundation of the operating model. has evaporated, or worse yet, has been operating model is that you are able to Enterprise roduct print Minimum viable mprovement deation Enterprise value chain portfolio backlog backlog backlog products s backlog addressed, developed, and released by track product revenue based on effort backlog To eliminate product development Lean startup Portfolio management Product management Agile DevOps delivery Learning analytics a competitor—making the old saying, “A expended—one of the greatest advantages dependencies and support rapid decision day late and a dollar short,” a reality. of embracing Lean Flow. Efforts expended making in response to changing market Figure 3. The Lean Flow innovation and value delivery ecosystem

10 11 Lean Flow to Enterprise Agility | The Lean Flow Ecosystem Lean Flow to Enterprise Agility | The Lean Flow Ecosystem

not work, as they iterate through the cycle and increase quality. DevOps automating as many manual IT processes usiness capability process. Through this experimentation expands the power of Lean Flow. It is a as possible. The results can be a dramatic Lodging management enior product manager cycle, the team either proves its viability way of thinking and acting that builds increase in speed to market, improved Capability portfolio mgmt CPM nvestment strategy funding capability backlog and reporting or returns it to the ideation backlog. on Lean thinking and Agile methods quality and operational stability, and Portfolio manager to enable faster time to market, with optimized value and productivity. If moved forward, the product manager greater stability, quality, and security. Net promoter Customer Customer Earnings per Value metrics develops the product’s vision, mission, value After release, the customer data collected score NP acquisition retention share EP proposition, KPI, and analytics, then works When implemented and deployed, DevOps are analyzed and fed back into the engine with the portfolio manager to determine can cut the development cycle down from to incrementally improve the product its strategic product fit. The product and years or months to weeks, days, hours, or during the next release. This enables hop re At the Between Product portfolio and book arrival hotel visits portfolio managers develop a sizing and even minutes. It also enables instantaneous organizations to rapidly bring new, higher- Product manager cost estimate, and then evaluate it in the collection of customer feedback and quality features and products to market context of everything else underway for analytics that can be flowed back into with greater levels of customer satisfaction. Product portfolio mgmt Intake and Intake and Intake and Intake and that particular product line, to determine the product development cycle. It breaks The measurement process allows you product backlog product backlog product backlog product backlog its relevance and initial prioritization. When down the traditional barriers between to determine if you are really hitting the Portfolio analyst approved, it is then placed on the product development teams and operations, by mark with your customers, which removes Product owner line’s MVP release plan, where it will await providing a natural handshake between the guesswork that existed in the past. / designers its turn to move to the technology teams, as the two, through continuous integration development capacity becomes available. points and continuous delivery. Establishing KPIs and metrics that matter s d Developers t e up front during the ideation process is xp . m p ee d e The systems development life cycle crucial. Keep in mind they must be realistic s o MVP agile plus DevOps delivery n r s

/ Product teams e e p

ay (SDLC) has changed by shifting many and measured effectively after the MVP is

r d The MVP agile plus DevOps delivery engine e t n l t e r e a l s h e r a c r - a

e tasks that traditionally occurred later in your customers’ hands. Learning where c e i r i (see figure 6) is the heart of the product a v r ch as e p v y v a p r a r e a in the cycle to earlier in the cycle. This you are going next with what you have e rr i w portfolio. It represents the back-end product u r t ha r e e ns p on A S D S S Co m p P A Tr a S P I development engine, which is connected is called a “shift left” mindset. Speed is built is the part of your feedback loop to the front-end product experimentation the essence of DevOps and the ability to you cannot know until you know where process through the product portfolio increase that speed is provided through you have come from. Use objective, data- eservations system Platform teams management function. Its sole purpose is to quickly build and deliver MVPs that generate trategy both value and rapid customer feedback. Does it match rioritie nsights and analytics our Technical manager It is a closed-loop system that repeats on a Experiment vision and reﬁne uild/measure/ hich is more regular cadence, as product development Figure 4. Product plus platform operating model learn. inse valuable This one teams iterate through each release. The and repeat No, that one product manager ignites the engine by on innovation produce outcomes that Establishing whether a feature or product Ecosystem, product ideas are generated working with the product owners from can be tracked and quantified. Through is a success or failure, from a quantitative and vetted using product experimentation each team to plan the next product release, the use of lean accounting methods, perspective, is easy to determine. methods, such as lean startups’ build- refining the portfolio backlog and updating rilliant Create and a cost is established for each feature measure-learn loop (see figure 5). Customer usiness Capability the MVP release plan, based on the strategic idea release an Lodging Management enior Product Manager developed. When it is released, it generates This is powerful and empowering for a product roadmap. The ideas slated for the To create e dont want to Capability Portfolio Mgmt CPM something create the entire productInves insightstment St randateg yanalytics, Funding ,all Ca thepab ility Backlog, product eport imanagerng as he or she makes New ideas are generated from a variety of next release are then moved to the product focused Portfolio Manager of value kitchen sink way through to revenue recognition on decisions about what should and should not sources, such as customer focus groups, backlog so that the teams can conduct aN ecompany’st Promoter incomeCus tstatement.omer Customer beEa includedrnings Per and developed for a product market observations, and technology core NP Acquisition etention hare EP Value Metrics further refinement during release planning. or product line. In the end, your company teams, to name a few. The product manager Guessing return on investment (ROI) no longer wastes its time on being “really determines which ideas will be moved Shop Pre- At-the- Between Product Portfolio The teams work closely with the product disappears because of feedback loops busy,” with little to show for your efforts. forward to the product ideation teams to Book Arrival otel Visits owners during development, to ensure each Product Manager inherently built into Lean Flow that It’s all there in black or red for you, with test their viability, which may be built out idea is being properly developed to meet mplement Let your measure key performance indicators the customer beingPro theduc tultimate Portfoli ojudge Mgm t as a proof of concept (POC), depending improvements customers Intake Intake Intake Intake Product customer expectations, as defined during ather (KPI)Produ establishedct Backlog Pduringroduct Bac theklog ideationProduc t Backlog of whatBacklo producesg and delivers value. on the level of complexity and risk. use it Portfolio Analyst the product experimentation process. customer process. Product managers receive When complete, it is then exposed to ut seriously...let Product Owner feedback them use it direct confirmation of value before the / Designers actual customers, and feedback data The good, the bad, d s During the development process, t Product experimentation e Developers and the ugly product is fully developed, instead of s are collected and measured to ensure xp . s e m p Another key component of Lean Flow microservices, componentization, and E l e t l r ee d e h o r r e a e a n c r y a after the feature or product is released. a the team is learning what does and does v v r / ay e a P

p is the ideation loop. In a Lean Flow automation are used to speed up the Figure 5. The build/measure/learn loop p

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Insights Analytics Technical Manager PLAI EECTIO LEAI

Exploratory Prioritization Design Testing efinement Development Analytics nspect cheduling Test Adapt/etros Enterprise Funding Ideation Funnel eject Product Allocation acklog print Minimum Viable mprovement acklog Products MVPs acklog ew Product Lean Flow to Enterprise Agility | The Lean Flow Ecosystem Ideas (20) deas Lean FlowAcce ptot Enterprise Agility | The Lean Flow Ecosystem Agile DevOps Delivery Learning Analytics deas Portfolio Portfolio Director deas trategic Effort Council Framework Estimate Enhancements Portfolio Customer (30) dea Backlog Maintenance/ (Epics) Operations (50) trategic udget PLAI EECTIO LEAI mechanism by funding stable teams for In Leano aFlow,dmap organizations assign a a fixed duration that work on variable budget to each product, which is managed Enterprise Portfolio Epic Kanban scope. And, through demand management, by the product manager. He or she has the LPM function ensures that product responsibility for the product’s budget, development teams are working on the right which increases empowerment, reduces ideas at the right time, guarding against overhead, and shifts the focus from Prioritization Design Exploratory testing bottlenecks and monitoring flow through controlling costs to generating revenue. the product portfolio’s Kanban system. This corresponds to the process of Refinement Development Analytics continuous investment that must be present The Kanban system tracks metrics and within technology to staff the product nspect and adapt/ cheduling Test retrospective provides essential reporting functions teams, ensuring the right resources are so that product managers understand, available when needed through sound at any given time, exactly where new resource and capacity management. roduct print Minimum viable mprovement product ideas are within the ecosystem. backlog backlog products s backlog Also, the funding method must support funding products, not projects.

Agile plus DevOps delivery Learning and analytics

Figure 6. The MVP agile plus DevOps delivery engine

Ideation funnel eject driven decision making through customer Transforming to a Lean Flow Ecosystem The main goal of LPM is to link your strategy 50 and product analytics to determine if you requires that you have enterprise-wide to execution, by actually developing and 20 should pursue the same course, make support systems that push agility into delivering customer and company value. deas Accept minor changes, or pivot completely. every corner of the organization. Deep Enterprise deas Portfolio funding council systems are the oil that helps the MVP This may sound like a no-brainer. deas trategic Eﬀort Portfolio director allocation framework estimate Deep systems Agile plus DevOps delivery engine run However, a lack of portfolio management To do In progress Testing Done Transforming the deep systems functions of smoothly, without experiencing major discipline, from the product to the breakdowns across the enterprise. enterprise level, is a failing that must an organization is foundational to achieving 30 deas Lean Flow. These units or divisions include, be addressed and reconciled. Customer but are not necessarily limited to, finance Lean portfolio management New product ideas Portfolio Enterprise Portfolio LPM processes and procedures, like backlog Epic Kanban trategic and accounting, legal, procurement, security LPM is the glue that holds the Lean Flow Enhancements udget Epics strategic alignment, investment strategy, roadmap and reliability, workforce management, Ecosystem together. It is essential in Maintenance/operations corporate marketing, and continuous ensuring new ideas are flowing across the funding allocations, intake and demand improvement. Horizontal transformation enterprise. If it is not present, there is no management, and metrics and reporting of these functions coupled with LPM guarantee that you are actually achieving are paramount to the healthy functioning of product portfolios (see figure 7). They represent changes that an organization both the fast, flexible flow of work and Lodging management Housekeeping roperty management needs to adopt to implement new value delivery. LPM focuses on linking must also evolve to support this new organizational form up to the enterprise Net Promoter Customer Customer Earnings Per Net Promoter Customer Customer Earnings Per Net Promoter Customer Customer Earnings Per ways of operating in this ecosystem. everything you do to both corporate core NP Acquisition etention hare EP core NP Acquisition etention hare EP core NP Acquisition etention hare EP strategic objectives and the product’s level. Strategic alignment ensures corporate All too often, organizations only focus on mission, vision, and value proposition. and product goals and objectives are vertical scaling of the product development aligned so that value is actually being teams, paying little to no attention to Many organizations spend massive amounts created and delivered. It can provide the corporate infrastructure that must of time on vertical scaling efforts that only improved ROI and generate better results be horizontally transformed across the tackle part of this issue. Their focus is on in terms of speed to market, degree enterprise. In addition, the behavioral increasing the speed of delivery and quality, of innovation, and business results. changes that must take place to maintain with little thought as to whether or not the and sustain the change may be overlooked. right ideas are even being developed in After all, value delivery is essential. This is much like focusing on countless the first place. As stated previously, being Leaders should focus on facilitating both numbers of innovative interior features “really busy” and delivering “really fast” do development excellence and product Figure 7. The lean portfolio management (LPM) process while building a new home on quicksand. not guarantee success in the marketplace. innovation through a continuous investment

14 15 Lean Flow to Enterprise Agility | Benefits of Lean Flow Lean Flow to Enterprise Agility | Benefits of Lean Flow

Benefits of Lean Flow

The Lean Flow Ecosystem unlocks the potential of enterprise agility by organizing and Organizational benefits Structure—optimizes the shape and size of your organization to remain Lean and be focusing the entire organization around the customer, product demand, and the needs responsive to change, from the team to the leadership level. of the market, and by exploiting fast feedback loops. Customer-focused product portfolios—builds portfolios around products, focused on exceeding unmet customer wants, needs, and desires to deliver and maximize both Obtaining fast feedback from your keep the customer at the forefront, diligently what your customers want, need, and customer and company value. customers takes place through a process maintaining a holistic enterprise perspective desire. The main benefit of Lean Flow is the Workforce alignment—aligns staffing to the amount of work, putting more “hands on of continuously delivering products to the across the organization. evolution of the entire organization, not keyboards” and eliminating redundant roles. Staffing is predictive and periodically adjusted, market for consumption and use. However, just the business, technology, or operations based on workload and team capacity. Roles and responsibilities are clearly defined, and all it is not sufficient to simply implement The benefits of Lean Flow materialize separately. The result is creation of a holistic staff understand how they contribute to the production and delivery value. a continuous delivery method, without when you open the channels of customer organization focused on accomplishing one having all the major players involved. That collaboration into your organization. Inviting goal—delivering customer-centric value. Operational benefits is, the business, technology, and operations your customers into your world so that you By embracing Lean Flow, leaders can reap Outside-in customer perspective—ensures the customer stays at the forefront of the units must all work together. To obtain the can learn about theirs provides a gateway organizational, operational, and behavioral decision-making process and promotes a focus on generating value that produces revenue, benefits of Lean Flow, you must constantly to continuously building and producing benefits. For example: instead of cutting costs.

Funding and financial management—places the responsibility for value creation and delivery at the product portfolio level, aligning funding based on the product roadmap to determine staffing levels based on required capacity to complete the scope of work.

Strategic product prioritization—aligns strategic objectives with product priorities to ensure the organization is working on the right products at the right time to meet market demand, ensuring wise investment decisions.

MVP plus Agile delivery—builds agility into the process by focusing on releasing MVPs to the market that deliver the highest possible value, in the shortest amount of time, through the implementation of Agile development methods.

Continuous integration and delivery—provides a mechanism to enable faster time to market, with greater stability, quality, and security by automating the product development process, as well as rationalizing and componentizing as much of the architecture and infrastructure as possible using DevOps tools, techniques, and best practices.

Analytics and KPIs—provides the ability to create and measure the right things, from a customer and business perspective, ensuring products are meeting customer expectations, as well as maximizing productivity and value.

Behavioral benefits Leadership agility—develops leaders who can respond quickly to changing market conditions, exploit new opportunities, and seize and maintain competitive advantages.

Culture of agility—builds agility into the DNA of the organization so that nimbleness and responsiveness to change are encouraged and supported from vertical, horizontal, and behavioral perspectives.

Performance management—restructures and aligns teams around shared goals in lieu of peer-to-peer ratings, changing the focus to team versus individual performance recognition, incentives, and pay.

16 17 Lean Flow to Enterprise Agility | Our approach Lean Flow to Enterprise Agility | Our approach

Our approach

Changing the way a company organizes, operates, and behaves requires a disciplined (see figure 8). First, the organization Decision making must be as close to and structured approach that is iterative and incremental. mobilizes to prepare for changes in the where the work is performed as possible. way it organizes, operates, and behaves. The days when the workforce must Next, the approach is refined systematically run issues up a hierarchy to someone through experimentation. The next phase who is isolated from the problem will Change incorporates feedback and and adopting Lean and Agile ways of In order to create unencumbered flow, we creates the adaptive organization by scaling be history. To embrace agility and analytics from each phase into the next working. Once installed, the organization need to understand how work currently and transforming the innovation and value exploit the competitive advantages and to ensure you are learning and adapting can evolve to higher levels of agility to gets done from ideation through release. delivery ecosystem using a practical and opportunities that arise from it, leaders to your unique situation, environment, create, maintain, and sustain lasting change. With a clear grasp of processes, we can tested Lean, Agile, and DevOps approach. need to empower their workforce to and circumstances. The journey to agility Lean it out and create the ability for ideas to The final phase introduces processes to make decisions based on the strategic is not a one-size-fits-all process. As you move through each level you can become products in hours, days, or weeks continuously evolve and optimize the way intent of the product under development. acquire the building blocks to advance rather than months or years. That is the you organize, operate, and behave to ensure Respect, trust, and transparency must Our Enterprise Agility Framework is just to the next level, providing a seamless true power of achieving enterprise agility— the changes are maintained and sustained. exist at all levels within the organization. that, iterative and incremental. It consists transition from one phase to the next. Like the ability to bring products to market of four phases focused on creating and a great book, each chapter builds upon at the peak of customer and consumer These changes require careful planning, The shift from projects to products takes enabling enterprise agility through the the prior ones to tell your organizational, demand; making your organization a nimble orchestration, and execution. It is a place in this phase. The new product implementation of the Lean Flow Ecosystem operational, and behavioral change story. disruptor, instead of being disrupted. symphony of moving parts in an iterative plus platform operating model and the (see figure 8). First, the organization approach. Your organization moves LPM functions we install change the way mobilizes to prepare for changes in the Mobilize: Build the foundation Experiment: Start small and gradually through mobilizing, experimenting, the organization operates horizontally. way it organizes, operates, and behaves. The mobilize phase is the first step on your grow big and adopting Lean and Agile ways of Customer-centric, product-focused E2E flow Next, the approach is refined systematically journey to agility. The goal of this phase is to The goal of this phase is to experiment with working. Once installed, the organization of work supports unencumbered flow. The through experimentation. The next phase define your Lean Flow vision and develop an the future state and to refine it before it can evolve to higher levels of agility to key to unencumbered flow is to ensure your creates the adaptive organization by scaling implementation strategy with a roadmap. is implemented across the organization. create, maintain, and sustain lasting change. products are considered valuable to your and transforming the innovation and value To accomplish this, we need to understand customers up front instead of waiting until delivery ecosystem using a practical and the organization’s current level of agility Change incorporates feedback and As you move through each level you can the product is almost done, as is common tested Lean, Agile, and DevOps approach. and learn how Lean and Agile you want the analytics from each phase into the next acquire the building blocks to advance in many companies, by investing in the The final phase introduces processes to organization to become. We’ll work with to ensure you are learning and adapting to the next level, providing a seamless time and analytics required to define their continuously evolve and optimize the way you to map the current state and define a to your unique situation, environment, transition from one phase to the next. Like vision, mission, and value proposition before you organize, operate, and behave to ensure future goal, perform a gap analysis to devise and circumstances. The journey to agility a great book, each chapter builds upon release. Creating the strategic roadmap as the changes are maintained and sustained. a strategy, and finally develop the roadmap is not a one-size-fits-all process. the prior ones to tell your organizational, you move through the customer-centric that will iteratively and incrementally operational, and behavioral change story. ideation process and feedback loops is table These changes require careful planning, result in increasing levels of agility. Our Enterprise Agility Framework is just stakes so that you know you are developing orchestration, and execution. It is a that, iterative and incremental. It consists Adapt: Make change happen the right products at the right time. symphony of moving parts in an iterative An important step during this phase is to of four phases focused on creating and Adapt is the heavy-lifting phase when approach. Your organization moves baseline the current End-to-End (E2E) flow enabling enterprise agility through the our focus is on vertical scaling, horizontal Being incredibly busy and running at full gradually through mobilizing, experimenting, of work processes across the organization. implementation of the Lean Flow Ecosystem transformation, and the introduction of utilization is a waste if your products do not behavioral changes to create a Lean Agile fulfill an unmet customer want, need, organization that embraces enterprise or desire. Figure 8. The Lean Flow Ecosystem approach agility. During the vertical scaling activities, we address the organizational model Installing and coordinating product and reporting structure to support and ideation, intake and demand management, Phase 1: Phase 2: Phase 3: Phase 4: encourage new and more agile ways resource and capacity control, reporting Mobilize Experiment Adapt Evolve of working. The focus is on breaking and metrics, Agile development, DevOps, down old ways of organizing that were and cloud capabilities enable the command-and-control structures, which organization to accomplish flow. Also, do not support the decentralized decision- deep systems are converted to support making processes required for agility. these new Lean and agile ways of working.

18 19 Lean Flow to Enterprise Agility | Our approach Lean Flow to Enterprise Agility | Conclusion

Conclusion

Funding, investment, procurement, legal, lasting behavioral change. Ask yourself, Lean Flow is about embracing agility across the enterprise supply chain, and human resources “Why should we do all of this work if the processes must be modified to ensure people closest to the work are not going to create responsive organizations that can quickly adjust they support an agile organization. to support the change?” Forcing change to and exploit changing market conditions. down people’s throats is a fast track Without accomplishing this crucial step you to failure. Change cannot be done “to” will build an incredibly fast product ideation people. It needs to be done “with” them It is urgent that leaders drive change so that their organizations can solve and development engine that is strapped to garner their support and buy-in. As a business problems and produce products that generate customer, business, to and weighed down by slow and outdated leader, do not shortcut the need for change and stakeholder value. However, putting the customer first requires leaders processes wedded to traditional project management, and communicate frequently and program management methods. As with your workforce. You are spending a to make a commitment to substantially change how their companies organize, Albert Einstein is reported to have said, “The lot of money to effect change. Show your operate, and behave. definition of insanity is doing the same thing support by leading the change process. over and over again and expecting different In today’s competitive global economy and disruptive business climate, successful results!” This step cannot be missed if Evolve: Embrace agility to leaders will shift their thinking from an inside-out to an outside-in perspective. It is you intend to support rapid development continuously improve no longer about what the company wants and is willing to produce and deliver to of breakthrough products that disrupt Continuous evolution is a must! Learning its customer base. The focus has shifted to identifying, producing, and releasing your competition and establish you as an never ends. Keep in mind the statistics products that address customer wants, needs, and desires. innovator within your global marketplace. that were quoted in the beginning of this report concerning companies that Finally, a rigorous and comprehensive chose to try to maintain control over Organizations are faced with the enormous challenge of how to tackle this organizational change management (OCM) change. Nothing is constant but change new, nimble way of working. Deloitte’s Lean Flow innovation and value delivery and communications campaign should itself. So, please do not ignore this fact. ecosystem can help you exploit disruptive change for competitive advantage and be launched to support and sustain provide your organization the opportunity to preserve and grow your relevance in The evolve phase never ends, because agility the marketplace. is a journey, not a destination. As a leader of your organization, commit to continuously evolving, integrating, and extending the Deloitte’s Enterprise Agility Framework guides your organization through this ways you organize, operate, and behave journey, incrementally. When organization-wide, wholesale change is undertaken, across the enterprise to remain relevant some inside the organization may feel like this change is being done “to” them, not and competitive. You should continue to “with” them. Our framework emphasizes validating a sense of urgency by putting refine and optimize your E2E workflow by your company’s fate squarely in your hands and those of the people closest to establishing a process excellence (PEX) team dedicated to continuous improvement. the work. You and your workforce become change agents. Your organizational Your workforce needs ongoing training, leadership will be supported by our “true north” guidance. Change will be coaching, and mentoring to sustain change happening everywhere, in small, manageable increments that iteratively take you over time. And above all, you must keep your through a logical sequence of learning and adjustment through experimentation technical capabilities fresh and up to date and feedback. through rationalization, componentization, refactoring your architecture, and constantly dealing with, instead of ignoring, Achieving enterprise agility by building and implementing the Lean Flow technical debt. To survive and thrive in a Ecosystem has a beginning, but no end. It is a never-ending journey that becomes global 21st-century economy, commit to a way of being. It integrates learning and feedback into the continuous evolution continuous evolution to remain relevant to of your company, its products, and workforce to create greater and greater levels your customers and your marketplace. of value—for your customers, the company, and its stakeholders alike.

20 21 Lean Flow to Enterprise Agility | About the Authors Lean Flow to Enterprise Agility | Endnotes

About the authors Endnotes

Jean Dahl, Lean Flow Practice Lead, Enterprise Agility Practice, 1. Roy Terry, “Commercial bankruptcy filings increase in 2017: Are more bankruptcies ahead?” JDSupra, January 25, 2018, Deloitte Consulting LLP https://www.jdsupra.com/legalnews/commercial-bankruptcy-filings-increase-75314/. Jean Dahl is the Lean Flow practice lead and creator of the Lean Flow Ecosystem and 2. Tamara Schenk, “Adapting to customers’ changing needs: Learning from world-class performers,” LinkedIn, September 20, 2016, Enterprise Agility Framework. She is an innovative enterprise Lean Flow leader and https://www.linkedin.com/pulse/adapting-customers-changing-needs-learning-from-tamara-schenk/. transformational change agent, with over two decades of diverse experience transforming 3. Alan Atlas, “Scrum at Amazon,” The Agile Executive, July 20, 2009, https://theagileexecutive.com/2009/07/20/scrum-at-amazon-guest-post-by-alan-atlas/.

organizations at all levels. A thought leader, published author, and speaker in Lean, Agile, 4. Steve Yegge, “Good agile, bad agile,” blog, September 27, 2006. Scaled Agile Framework® (SAFe®), and Lean startup methods, she designs, develops, and 5. Peter Shmula, “Scrum at Yahoo!” blog, July 25, 2006, https://www.shmula.com/scrum-at-yahoo/159/. implements custom Lean Agile at scale operating models and frameworks for her clients. She possesses extensive experience in building and managing multimillion-dollar global 6. Greg Satell, “A look back at why Blockbuster really failed and why it didn’t have to,” Forbes, September 5, 2014, portfolios and Lean Portfolio Management (LPM) capabilities for Fortune 100 companies, https://www.forbes.com/sites/gregsatell/2014/09/05/a-look-back-at-why-blockbuster-really-failed-and-why-it-didnt-have-to/#4fc1d5e71d64. as well as leading multiproduct and enterprise-level portfolios and multi-team (200+) Lean 7. Farhad Manjoo, “It smelled something like pizza,” Slate, September 10, 2012, Agile at scale transformations. She is very active in the Lean and Agile communities and has https://slate.com/technology/2012/09/iphone-design-documents-from-the-samsung-trial-reveal-more-than-ever-about-apples-secretive-design-process.html. chaired various forums and conference tracks for the Agile Alliance and the Lean Startup 8. Avery Hartmans, “15 fascinating facts you probably didn’t know about Amazon,” BusinessInsider, August 23, 2018, Week. If you would like to learn more about how you can achieve enterprise agility through https://www.businessinsider.com/jeff-bezos-amazon-history-facts-2017-4. the implementation of the Lean Flow Ecosystem, please contact her at [email protected] 9. Manjoo, “It smelled something like pizza.” to discuss how you can create fast, flexible flow throughout your organization.

Karen Favia – Senior Consultant, Enterprise Agility Practice Karen has experience that includes Agile coaching, training, and transformation. Karen is also a Certified Scrum Master and SAFe® program consultant. Her Agile experience is across multiple industries and she brings many different approaches to the challenges that are faced in today’s IT project space. She relates Agile processes effectively to a team’s own development scenarios to work toward early acceptance and success. She excels in identifying areas of organizational improvement and supports organizations in the adoption of those opportunities. Karen always encourages collaboration, teamwork, and thoughtful dialogue, and provides a positive working environment where new ideas are always welcome. Karen can be contacted at [email protected].

Additional collaboration and support were provided by the following Deloitte personnel: Nathalie Brochstein, Michael Dorn, Julie Fouts, Summer Smith, and Ray Taylor.

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