This post demonstrates what measurable results you can achieve with your team / company. The results of the 6 months demonstrated are the outcome of continuous development. You will see that measurable improvements already start to take place after the first month.
Each and every transformation shall have a single objective, which needs to be constantly measured: to increase the ability to create business value. It is this deep-rooted idea that leads to the improvements that can also be felt on the surface: customer satisfaction, business performance and profit growth, quality improvement, sustainable workloads, team satisfaction and positive changes in morale…
We are exceptionally fortunate because the management of Progen Kft. does not believe in pretty words, but only in measured results. This is demonstrated by every single part of this post. If you wish, I would be glad to arrange a personal meeting with the sponsor of the transformation.
Of course, the past six months were not without conflicts and challenges. Claiming such a thing would be a lie. 😊 But if you are genuinely committed to agile transformation and you are steadfast in overcoming the obstacles you encounter, the rewards will also be there all along.
From the perspective of transformation results, it is irrelevant what products/services Progen has on the market. What does matter, however, is how the management and the owner relate to the ambitions of the transformation team. The first two preparatory months were focused on this question. The owner had to make some difficult decisions and the consequences had to be smoothed out. It is only then that substantial work could start. We will now present the results of these 6 months. And everything you will see is still changing and evolving today. The work is far from finished. With the owner and management, the balagile.com team foresees at least another year of development potential at a similar level. We won’t let these just lie around! And what other opportunities does the future hold in the meantime? Well, that’s another story.
But now, in light of the above, let’s get to the point:
The owner holds a briefing every month to report on developments, changes and results to everyone, in a blunt and unvarnished manner. All three Progen divisions had been performing ahead of plan already in March, and consistently ever since. The overall result is actually 17% above the already ambitious target. This information has been provided by the Finance department down to the last cent. That’s it.
Management, hierarchy, information and decisions
Transformation is a continuous work and shall happen in parallel and in a coordinated way at all planning and strategic levels. Otherwise we would only see a set of local optimizations, and not a system-level improvement, which could generate profits over the long term and in a self-correcting manner.
The starting point
Centralized management and decision-making. One person (position) took over the organizational hierarchy. Each area reported to this person, who made the decisions, as well as checked and approved the decisions of the others.
Coordination between the different areas was occasional, and the degree and intensity was dependent on the one-person management.
Downside: slow decision-making. The coordination of the many parameters and coefficients is occasional. Synergies are filtered by personal preferences. The development of personal dependencies makes it difficult to deal with problems consciously and intensively.
This was the first strategic-level structure that had to be dismantled. The focused operation of agile transformation has generated the following situation:
Result of the transformation
We broke down the ownership vision into strategic dimensions using the Balanced Scorecard, and then built a tactical-level breakdown based on this. We kept the elements of the tactical-level breakdown and its self-explanatory tasks on a management-level kanban board. To do this, a management forum had to be established that is able and willing to communicate and actively take on tasks from this kanban board. Thereby, communication and information flow is fully transparent, where the leaders of the different areas consult each other continuously, facilitated by a Scrum Master, on the substantive tasks as well as the results achieved, and jointly overcome any obstacles that arise in the meantime.
Of course, the team has a leader. However, this person is an enlightened, outstanding leader from an agile methodological perspective… and not a “boss”.
Estimates and completed tasks
We compared the same period of the current year and of the year before the agile transformation. The essence of change was the constant search for and uncompromising adherence to development focuses, and the use of increasingly sophisticated Product Owner preparatory work and artifacts.
Scrum Masters sought to continuously align realities and expectations through measurements. This was a prominent factor in the psychological dimension.
It shall be noted that the composition of the initial team and the team achieving the transformation results is the same, i.e. 😊 there weren’t any “tricks” on the resource side.
The starting point
The teams were constantly in a state of underestimation. This resulted in unpredictable delivery and completion dates as well as unpredictable expected final costs too. 15-50% errors were found even in the monthly cumulative measurements. The negative impact of this was noticeable also in morale.
Result of the transformation
Predictability and increasingly realistic estimates and deliverables have not only boosted morale, but (see above), supported by the agile processes applied, have also allowed actual measured effectiveness to increase steadily. The team has continued this trend ever since. ATTENTION! There is NO expectation defined for the team to produce a particular trend or number. The Scrum Master does not allow such pressure into the system. This, in turn, allows us to interpret the analysis of the resulting effectiveness as a KPI, which facilitates information provision to the management, the transformation team and the developers. This KPI shows how effective joint endeavors are.
The reason for the inaccuracy of the June 2021 estimate is well known: it was the month when the development teams and the architect board jointly tested the concept and tool of “stabilization sprint” for the first time. As with so many things, of course, there is room for improvement here as well… and there will be!
Focus and evolution of business value creation
It is one of the biggest mistakes when an organization, in its focus on increasing efficiency, loses meaningful connection with the market and produces an incredible amount of waste with incredible efficiency. This may sound funny, but it is also a fairly common phenomenon.
All right. The purpose of a well-directed transformation is to increase efficiency, BUT in parallel with effectiveness.
This is what this chapter is about.
And now let me apologize in advance for the complexity of the following: It is not the volume of activity and the utilization of experts that determines market performance. It is rather the percentage of the resources at our disposal that can be translated into real business value in market terms. Like everything else in the world of organizational development, this is a multi-stakeholder and multi-dimensional subject.
The essence, however, is what the Product Owners (POs) prepare for the teams. POs are responsible for ensuring that the increasingly efficient teams are also increasingly effective.
The starting point
Utilization is at around 120%. Yes. A significant number of people work a lot of overtime. However, this is a consequence of task-oriented allocation-collection management techniques.
Initial measurements put the rate of available developer resources “translated into new business value” at between 8-13%. In other words, nearly 90% of the available resources could not be leveraged in the market within the given timeframe. This, from a strict lean approach, falls into the category of “waste”.
Let me note that this high utilization and low new business value ratio is fully in line with market experience. At least as far as the knowledge-based economic operators are concerned. That is, Progen delivered the same average at the start as everyone else. Although it may seem weak, it does not necessarily mean lagging behind the competitors.
Result of the transformation
The Scrum Master works with the team. And senior transformation colleagues work with the Product Owners and the management. And of course, all of this is coordinated at a weekly level. The establishment and development of portfolio management necessary for Product Owners and the management of their operations is progressing at a steady pace. However, the results achieved so far speak for themselves: Progen has consistently ranked in the 35-40% range in measuring the time spent on creating new business value from the available development resources. This represents a 300% improvement in terms of business effectiveness compared to the starting point.
ATTENTION! This does not indicate an increase in the code kg/m3 indicator. The number of people has not changed. The amount of code developed has not changed… what has changed is the focus that brings the market closer to development.
And this also includes a decline in June. This is natural. We held a stabilization sprint in June, when we accepted a task with zero market value. The stabilization sprint itself is incredibly valuable from the perspective of Progen and its products, but strictly speaking, it is not meaningful from a market perspective. And that’s fine. The trend will still be upwards. And yes: the more good (!) stabilization sprints you hold, the more this will be true.
The key to self-organization in organizational development: Retrospectives
The transformation team performs best when it “only” provides directions. What the organization and its various levels and groups are actually able/willing to perform is often another matter. Among other things, we like using the retrospective agile event to clarify this.
Retrospectives can and should be used at all organizational levels and at different stages of the value chain.
A retrospective is successful if participants identify “actionable items” that the members of the organization believe can actually be implemented in the next few weeks. The result is the deep change that improves the organizational culture from within, based on the guidance of the agile coach. This reduces resistance to change.
Actionable items dropped from retrospectives often provide work and challenge not for teams, but for the management and the transformation team. That’s fine. The aim is to enable all levels of the organization to work together and rely on each other to deliver these results.
ATTENTION! While a retrospective is the engine of an organization’s sustainable development, under pressure, it is usually the first agile element to be put aside. This is a huge mistake, because the retrospective is the best suited to analyze stressful situations, supported by methodological elements, so that they do not occur in the future or occur with a much more limited impact.
Of course, a retrospective is not necessarily the answer to each and every situation.
The starting point
In one-on-one conversations, ventilation can take place with the leader. However, there is no measurable impact from these discussions. Most commonly, the management gets responses like “Everything is very good. I don’t know how it could be better.” Meaningful feedbacks are mostly overlooked. Even if there is a result, its communication is not detectable.
Result of the transformation
Retrospective events have become an integral part of team and strategic organizational levels. 63 proposals for improvement have been made in 6 months. These are already in the category of “actionable items” (i.e. not just a wishlist!).
With the active support of Scrum Masters and their measurements, both the management and the owner are in constant dialogue with the teams on the status of each proposal. This includes in which status the responsible persons are in terms of implementation and who need support to get it done AND also to be able to measure its impact.
5 of the 63 items were rejected by the management. They have every right to do so, and there is nothing wrong with that. Not all ideas can be aligned with the strategic or tactical levels, or even with the limits set by the methodology. These should be set aside (but not thrown out…).
35 improvement items have been implemented, and work is ongoing, even if at different levels, for a further 16 items. The remaining 9 items are waiting to start by priority.
This is the key distinction between organizations that follow a culture of continuous improvement and all others.
Organizational image under the Agile Manifesto
As a good agile coach, one of the most important benchmarks (also) throughout the entire transformation process is honest and blunt criticism according to the 12 principles of the Agile Manifesto (agilemanifesto.org).
I assessed the manifesto principles one by one on a scale of 1 to 4. 1 = “I found no sign of conscious development when we started working”; 4 = “they are so good at it that they could even teach it”.
Looking at the principles one by one and communicating the results is an excellent opportunity to explain/remind colleagues of what ideas we are striving to bring closer to each other. Of course, we also communicate the next steps for each point. These mostly involve giving work and tasks to the management/owner.
For any transformation to take place, it is essential for everyone to see that the management is also committed to be bound by their tasks and responsibilities. It is this exemplary behavior, transparency and accountability that makes the results of changes sustainable and allows any further efforts to be credible. Why is this particularly important? No one likes to fight against the wind. Organizational and cultural resistance always undermines strategic ambitions. Through this approach, however, the former is less and less present and less and less able to impede progress.
The analysis of the 12 points will be presented in a new blog post due to its length. Coming soon 😊
How to ensure your SME is number one?
Currently, the correct application of Lean and Agile methodologies is the best way to beat the market. Agile methodologies are the best tool for organizations in the knowledge-based economy to increase both customer and employee satisfaction.