dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Presents
Presenter
David J. Anderson
Ltd WIP Society
Munich
June 201...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Blizzard Skis
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Mittersil, Austria
Blizzard
Factory
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Blizzard is the largest private sector
employer in the Pengau Alps r...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
• Since 1945
• Hand-made by craftsman
• Innovator
• Award winner
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
In 2007, Blizzard, effectively
bankrupt, faced closure from parent
c...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
What went wrong at Blizzard, a
proud & leading brand in alpine ski
e...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Orders & Deliveries of Skis
2006 winter
skis delivered
to dealers
Ti...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
2006 was a warm winter and poor
snow conditions badly affected the s...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Effects of climate change in the Alps
Glacier
recession is
clearly v...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
2007 was also a warm winter as
climate change began to seriously
aff...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
In 2006 business risks appear to be low
2006 winter
skis delivered
t...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Previously lead time for delivery is 12 months
2006 winter
skis deli...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
By 2007 the risk profile has changed dramatically
2006 winter
skis d...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Tecnica Group & Blizzard managers
turn to their business school educ...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Cutting costs will not make Blizzard
“fit for purpose” !!!
What is r...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
By 2010 the market has a new equilibrium
2010 winter
skis delivered
...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
In 2010 a Lean initiative was started
in the factory. This was follo...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Meanwhile, Major Ski Resorts Deploy Snow
Cannon to Reduce Risk for W...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Lesson 1
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Blizzard initially made a bad decision
because they didn’t understan...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Understanding
“fitness for purpose”
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
What makes a pizza delivery service
“fit for purpose” ?
• Fitness cr...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Meet Neeta - a project manager
• Neeta’s team are working
late (agai...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Neeta is also a working mom!
• Neeta gets home late.
Her kids are re...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Lesson 2
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
To be “fit for purpose” there is a
product component & a service
del...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Modern creative & knowledge
worker businesses often obsess
with prod...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Lesson 3
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Neeta has 2 identities –
Mother and Project Manager
Each of Neeta’s ...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
We need a different set of
thresholds for our fitness criteria
for e...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Our pizza delivery service can be
“fitter for purpose”
by offering d...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Understanding & improving service
delivery capability with Kanban
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Test
Ready
F
F
FF
F
F F
Commitment Frequency
E
I
G
D
Replenishment
D...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Test
Ready
F
F
FF
F
F F
Defining Kanban System Lead Time
E
I
G
D
Pul...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Test
Ready
F
F
FF
F
F F
Delivery Frequency
E
I
G
D
Delivery
Discarde...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Service Delivery Agility
Service Agility
Commitment
frequency
Lead T...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Guiding Evolutionary Change
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Start with what you do now
• With Kanban you start with what you do ...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Fitness criteria are metrics that measure
observable external outcom...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Evolutionary change works when fitness is
continually evaluated
Evol...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Fitness
Time
Evolutionary improvement should result in
gradually ris...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Which system is fitter?
We don’t know!
System B is faster but withou...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Measuring delivery against expectation
0
2
4
6
8
10
12
14
Lead Time ...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
0
2
4
6
8
10
12
14
Lead Time (Days)
System A
Frequency
0
2
4
6
8
10
...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
0
2
4
6
8
10
12
14
Lead Time (Days)
System A
Frequency
0
2
4
6
8
10
...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Business Risks, Fitness Criteria & Classes of
Service should all ali...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Know why you are using a metric!
• Is your metric a fitness criteria...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
0
2
4
6
8
10
12
14
Lead Time (Days)
System A
Frequency
0
2
4
6
8
10
...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
0
2
4
6
8
10
12
14
Lead Time (Days)
System A
Frequency
0
2
4
6
8
10
...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Aligning goals with capability
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Go on, you can lift it!
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Kanban system
dynamics
Shelf-life
(of business opportunities)
Is you...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Lesson 6
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Improve your capabilities before
pursuing market segments or
strateg...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Conclusions
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
1. Understand your external
environment before deciding what
to chan...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
4. Fitness for purpose & whether
improvement is needed can only be
m...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
Thank you!
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
About
David Anderson is a thought leader
in managing effective 21st ...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
I’d like to thank Eric-Jan Kaak and the staff at Blizzard for provid...
dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.
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Fitness For Purpose

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Fitness for purpose, aligning capability to customer expectations. How evolutionary processes reveal that the fitness for purpose of a business has both a product/service component and a service delivery component. Kanban systems have been shown to help improve service delivery. This presentation shows how to derive and use the correct metrics to guide process improvements and steer service delivery methods to be fitter for purpose

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  • Fitness criteria are metrics that measure things customer or other external stakeholders value such as delivery time, quality, predictability, conformance to regulatory requirements or metrics that value actual outcomes such as customer satisfaction or employee satisfaction
  • Fitness criteria are metrics that measure things customer or other external stakeholders value such as delivery time, quality, predictability, conformance to regulatory requirements or metrics that value actual outcomes such as customer satisfaction or employee satisfaction
  • Fitness criteria are metrics that measure things customer or other external stakeholders value such as delivery time, quality, predictability, conformance to regulatory requirements or metrics that value actual outcomes such as customer satisfaction or employee satisfaction
  • Delivery frequency also relates to quality. Poor quality will affect the customer willingness to take more frequent delivery
  • The Kanban Method evolved with this principle in mind. That we must discover a way that enabled change while avoiding invoking sources of resistance - even better if we could motivate the people involved to advocate for the changes required.
    With Kanban you start with what you do now, and "kanbanize" it, catalyzing the evolutionary process into action. Changes to processes in use will occur and evaluating whether a change is truly an improvement can be done using fitness criteria that evaluate the external outcome.
  • Fitness criteria are metrics that measure things customer or other external stakeholders value such as delivery time, quality, predictability, conformance to regulatory requirements or metrics that value actual outcomes such as customer satisfaction or employee satisfaction
  • Traditional change is an A to B process. A is where you are now. B is a destination. B is either defined (from a methodology definition) or designed (by tailoring a framework).
    To get from A to B, a change agency* will guide a transition initiative to install destination B into the organization.
    *either an internal SEPG or external consultants
  • Fitness For Purpose

    1. 1. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Presents Presenter David J. Anderson Ltd WIP Society Munich June 2014 Release 1.0 Fitness for Purpose matching capability to customer expectations
    2. 2. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Blizzard Skis
    3. 3. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Mittersil, Austria Blizzard Factory
    4. 4. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Blizzard is the largest private sector employer in the Pengau Alps region of Salzburgerland, AustriaMittersil is a factory town with over 400 people relying on the factory either directly or indirectly for employment
    5. 5. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. • Since 1945 • Hand-made by craftsman • Innovator • Award winner
    6. 6. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. In 2007, Blizzard, effectively bankrupt, faced closure from parent company, Tecnica in ItalyToday Blizzard is the most effective & efficient ski manufacturer in the world!
    7. 7. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. What went wrong at Blizzard, a proud & leading brand in alpine ski equipment?And what enabled a remarkable turnaround, from the brink of extinction to a return to innovation & profitability?
    8. 8. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Orders & Deliveries of Skis 2006 winter skis delivered to dealers Timeline for manufacturing, delivery and order placement for ski industry in northern hemisphere prior to 2007 timeNov Dec Jan 2006 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2007 Feb Mar Apr Start manufacturing 2007 skis 2007 winter skis delivered to dealers Start manufacturing 2008 skis Orders placed for 2007 winter
    9. 9. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. 2006 was a warm winter and poor snow conditions badly affected the ski industry as people stayed home and didn’t buy new equipment Blizzard dealers were left holding a lot of 2006 inventory that they would hold & later discount during the 2007 winter
    10. 10. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Effects of climate change in the Alps Glacier recession is clearly visible 1912 1933 2003
    11. 11. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. 2007 was also a warm winter as climate change began to seriously affect the Alps Gun shy from 2 bad winters, Blizzard dealers delayed commitment on 2008 orders until May after the ski season had finished
    12. 12. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. In 2006 business risks appear to be low 2006 winter skis delivered to dealers Changing climate conditions and its affect on ski dealers dramatically shifts the risk profile of ski manufacturing timeNov Dec Jan 2006 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2007 Feb Mar Apr Start manufacturing 2007 skis 2007 winter skis delivered to dealers Start manufacturing 2008 skis Orders placed for 2007 winter
    13. 13. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Previously lead time for delivery is 12 months 2006 winter skis delivered to dealers Traditionally manufacturers have had a full year to make the skis for the following winter timeNov Dec Jan 2006 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2007 Feb Mar Apr Start manufacturing 2007 skis 2007 winter skis delivered to dealers Start manufacturing 2008 skis Orders placed for 2007 winter Lead Time to manufacture 2007 deliveries
    14. 14. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. By 2007 the risk profile has changed dramatically 2006 winter skis delivered to dealers Dealers still holding 2006 & 2007 inventory decide to wait until the end of the 2007 season to place reduced orders for 2008 timeNov Dec Jan 2006 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2007 Feb Mar Apr Start manufacturing 2007 skis 2007 winter skis delivered to dealers Start manufacturing 2008 skis Orders placed for 2007 winter Orders placed for 2008 winter Volume is low due to over-stocking of older models The period of speculative manufacturing grows from 2 months to 6 months Time period of building to forecast rather than against customer orders Blizzard fail to anticipate falling demand and over-produce 2008 skis. Bankruptcy is a serious possibility!
    15. 15. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Tecnica Group & Blizzard managers turn to their business school education and seek to cut costs by consolidation & centralization Centralizing all order processing through Tecnica HQ adds 1 month to order times, increasing speculative build-to-forecast. As a result costs go up!
    16. 16. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Cutting costs will not make Blizzard “fit for purpose” !!! What is required to be “fit for purpose” in a period of climate change, is to defer manufacturing until firm orders are placed! Blizzard need to cut the lead time to build skis!
    17. 17. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. By 2010 the market has a new equilibrium 2010 winter skis delivered to dealers Traditionally manufacturers have had a full year to make the skis for the following winter timeNov Dec Jan 2010 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2011 Feb Mar Apr Start manufacturing 2011 skis 2011 winter skis delivered to dealers Start manufacturing 2012 skis Orders placed for 2011 winter Orders placed for 2012 winter Volume is low due to over-stocking of older models Lead Time to manufacture 2011 deliveries Lead time to manufacture skis to order is now 6 months. No speculative build-to-forecast To have a viable business Blizzard need a capability to make skis twice as fast as before!
    18. 18. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. In 2010 a Lean initiative was started in the factory. This was followed later with a Kanban initiative in IT and Quality Assurance Blizzard becomes the first Lean ski manufacturer in the world! CIO, Eric-Jan Kaak wins Austrian CIO of the Year 2013 and is promoted within Tecnica Group
    19. 19. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Meanwhile, Major Ski Resorts Deploy Snow Cannon to Reduce Risk for Warm Winters
    20. 20. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Lesson 1
    21. 21. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Blizzard initially made a bad decision because they didn’t understand the dynamics of their external environment Once they realized that only manufacturing skis faster & deferred commitment would make them “fit for purpose” did they focus improvement efforts where they could be most effective Ski craftsmen are now “idle” for 6 months per year. They use this time to improve the factory processes
    22. 22. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Understanding “fitness for purpose”
    23. 23. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. What makes a pizza delivery service “fit for purpose” ? • Fitness criteria are metrics that measure things customers value when selecting a service again & again • Delivery time • Quality • Predictability • Safety (or conformance to regulatory requirements)
    24. 24. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Meet Neeta - a project manager • Neeta’s team are working late (again) • Neeta needs to feed them with pizza • What attributes do her team care about in a pizza delivery service? • Delivery time = approximately 1 hour • Non-functional quality = tasty & hot • Functional quality (order accuracy) = doesn’t matter if small mistakes are made, geeks will eat any flavor of pizza • Predictability = +/- 30 minutes is acceptable • Safety = so long as health & safety in food preparation is good, it’s fine
    25. 25. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Neeta is also a working mom! • Neeta gets home late. Her kids are really hungry and even though she shouldn’t she decides to order pizza for them • What makes a pizza delivery service acceptable to her kids age 4, 6, 9 & 11 years? • Delivery time = 20 minutes • Non-functional quality = doesn’t matter too much, it’s pizza!!! • Functional quality (order accuracy) = it must be cheese pizza! No other flavor is acceptable! (even if you take the pepperoni off) • Predictability = +/- 5 minutes maximum!!! • Safety = only mommy worries about that stuff!
    26. 26. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Lesson 2
    27. 27. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. To be “fit for purpose” there is a product component & a service delivery component We need to offer a selection of different recipes which are tasty & popular. However, we must also deliver with speed & predictability
    28. 28. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Modern creative & knowledge worker businesses often obsess with product definition & strategy Operational excellence and service delivery excellence are often overlooked or treated as inferior management skills
    29. 29. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Lesson 3
    30. 30. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Neeta has 2 identities – Mother and Project Manager Each of Neeta’s identities represents a different market segment for the pizza delivery service
    31. 31. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. We need a different set of thresholds for our fitness criteria for each market segment Our business needs the ability to “sense” changing customer tastes. As time goes by the criteria & thresholds for a given market segment may change
    32. 32. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Our pizza delivery service can be “fitter for purpose” by offering different classes of service for each market segmentBut, do we have the capability to deliver on customer expectations?
    33. 33. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Understanding & improving service delivery capability with Kanban
    34. 34. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Test Ready F F FF F F F Commitment Frequency E I G D Replenishment Discarded I Pull Ideas Dev Ready 5 Ongoing Development Testing Done 3 35 UAT Release Ready ∞ ∞ The frequency of system replenishment should reflect arrival rate of new information and the transaction & coordination costs of holding a meeting Frequent replenishment & commitment is more agile. On-demand commitment is most agile!
    35. 35. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Test Ready F F FF F F F Defining Kanban System Lead Time E I G D Pull System Lead Time Discarded I Ideas Dev Ready 5 Ongoing Development Testing Done 3 35 UAT Release Ready ∞ ∞ The clock starts ticking when we accept the customers order, not when it is placed! Until then customer orders are merely available options Kanban system lead time ends when the item reaches the first ∞ queue
    36. 36. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Test Ready F F FF F F F Delivery Frequency E I G D Delivery Discarded I Pull The frequency of delivery should reflect the transaction & coordination costs of deployment plus costs & tolerance of customer to take delivery Ideas Dev Ready 5 Ongoing Development Testing Done 3 35 UAT Release Ready ∞ ∞ Frequent delivery is more agile. On-demand delivery is most agile!
    37. 37. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Service Delivery Agility Service Agility Commitment frequency Lead Time Delivery Frequency LeadTime Short Long Delivery Service Agility Commitment Frequent Seldom Frequent Seldom More Agile Less Agile Kanban system dynamics
    38. 38. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Guiding Evolutionary Change
    39. 39. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Start with what you do now • With Kanban you start with what you do now, and "kanbanize" it, catalyzing the evolutionary process into action. Changes to processes in use will occur • Evaluating whether a change is truly an improvement is done using fitness criteria metrics that evaluate an external outcome
    40. 40. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Fitness criteria are metrics that measure observable external outcomes • Fitness criteria are metrics that measure things customers or other external stakeholders value • Delivery time • Quality • Predictability • Safety (conformance to regulatory requirements) • or metrics that qualitatively assess actual outcomes such as • customer satisfaction • employee satisfaction
    41. 41. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Evolutionary change works when fitness is continually evaluated Evolving Process Roll forward Roll back Initial Process Future process is emergent Evaluate Fitness Evaluate Fitness Evaluate Fitness Evaluate Fitness Evalua Fitnes
    42. 42. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Fitness Time Evolutionary improvement should result in gradually rising fitness for purpose
    43. 43. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Which system is fitter? We don’t know! System B is faster but without understanding customer expectations, both may be fit enough 0 2 4 6 8 10 12 14 Lead Time (Days) System A Frequency 0 5 10 15 20 25 30 5 10 15 20 25 30 More Lead Time in Days System B Frequency Mean 17 days Mean 12 days
    44. 44. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Measuring delivery against expectation 0 2 4 6 8 10 12 14 Lead Time (Days) System A Frequency 0 2 4 6 8 10 12 Lead Time Expectation Spread (Days) System A Frequency 0 5 10 15 20 25 30 5 10 15 20 25 30 More Lead Time in Days System B Frequency 0 5 10 15 20 25 30 35 40 45 -15 -10 -5 0 5 10 15 20 More Lead Time Expectation Spread (Days) System B Frequency Mean 17 days Mean 12 days System B is clearly fitter! System B delivers 5/7 within expectations System A only delivers 3/7 within expectations
    45. 45. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. 0 2 4 6 8 10 12 14 Lead Time (Days) System A Frequency 0 2 4 6 8 10 12 Lead Time Expectation Spread (Days) System A Frequency 0 5 10 15 20 25 30 5 10 15 20 25 30 More Lead Time in Days System B Frequency 0 5 10 15 20 25 30 35 40 45 -15 -10 -5 0 5 10 15 20 More Lead Time Expectation Spread (Days) System B Frequency Mean 17 days Mean 12 days Lesson 4
    46. 46. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. 0 2 4 6 8 10 12 14 Lead Time (Days) System A Frequency 0 2 4 6 8 10 12 Lead Time Expectation Spread (Days) System A Frequency 0 5 10 15 20 25 30 5 10 15 20 25 30 More Lead Time in Days System B Frequency 0 5 10 15 20 25 30 35 40 45 -15 -10 -5 0 5 10 15 20 More Lead Time Expectation Spread (Days) System B Frequency Mean 17 days Mean 12 days With coaching & incremental If we don’t know what the customer values we will struggle to be “fit for purpose” Fitness for purpose can only be assessed relative to established customer-valued fitness criteria
    47. 47. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Business Risks, Fitness Criteria & Classes of Service should all align • If your kanban system is designed properly the classes of service you are offering should align with the true business risks in the domain • The metrics being used to evaluate system capability should be fitness criteria that are derived from the business risk being managed • For example, cost of delay requires us to measure lead time and understand sensitivity to delivery times
    48. 48. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Know why you are using a metric! • Is your metric a fitness criteria that assesses system capability and indicates fitness for purpose and likelihood of surviving and thriving by satisfying customers? • Or, is your metric evaluating and guiding a specific change to improve fitness of the system? • If neither, you don’t need it!
    49. 49. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. 0 2 4 6 8 10 12 14 Lead Time (Days) System A Frequency 0 2 4 6 8 10 12 Lead Time Expectation Spread (Days) System A Frequency 0 5 10 15 20 25 30 5 10 15 20 25 30 More Lead Time in Days System B Frequency 0 5 10 15 20 25 30 35 40 45 -15 -10 -5 0 5 10 15 20 More Lead Time Expectation Spread (Days) System B Frequency Mean 17 days Mean 12 days Lesson 5
    50. 50. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. 0 2 4 6 8 10 12 14 Lead Time (Days) System A Frequency 0 2 4 6 8 10 12 Lead Time Expectation Spread (Days) System A Frequency 0 5 10 15 20 25 30 5 10 15 20 25 30 More Lead Time in Days System B Frequency 0 5 10 15 20 25 30 35 40 45 -15 -10 -5 0 5 10 15 20 More Lead Time Expectation Spread (Days) System B Frequency Mean 17 days Mean 12 days There are only two types of metrics that matter: fitness criteria; and metrics guiding improvements! Metrics for improvements should be temporary and removed when the change is completed unless there is a risk of regression
    51. 51. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Aligning goals with capability
    52. 52. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Go on, you can lift it!
    53. 53. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Kanban system dynamics Shelf-life (of business opportunities) Is your service delivery fit for purpose? Short (days, weeks, months) Medium (months, quarters, 1-2 years) Long (years, decades) LeadTime Short Long Delivery Service Delivery Agility Replenishment Frequent Seldom Frequent Seldom Predictability High Low Is your service delivery predictability & agility fit enough for your business strategy? If you plan to pursue short shelf-life opportunities, you must measure predictability, lead time, replenishment & delivery frequency as fitness criteria. Does the capability exist to pursue the chosen strategy effectively?
    54. 54. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Lesson 6
    55. 55. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Improve your capabilities before pursuing market segments or strategies that require levels of service delivery beyond your reach With coaching & incremental development a child can grow to dead lift a large bar bell. Impatience & over-reaching is likely to end in tears! With patience, education and a focus on evolutionary change, your organization can grow its service delivery capability
    56. 56. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Conclusions
    57. 57. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. 1. Understand your external environment before deciding what to change 2. “Fitness for Purpose” has both a product component & a service delivery component 3. Each market segment will have its own fitness criteria and threshold values
    58. 58. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. 4. Fitness for purpose & whether improvement is needed can only be measured relative to customer- oriented fitness criteria 5. Metrics should be fitness criteria or guiding specific improvements in which case their use is temporary until the improvement is completed 6. Improve your capabilities before pursuing market segments or strategies that require service delivery you currently cannot achieve
    59. 59. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. Thank you!
    60. 60. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. About David Anderson is a thought leader in managing effective 21st Century businesses that employ creative people who “think for a living” . He leads a training, consulting, publishing and event planning business dedicated to developing, promoting and implementing new management thinking & methods… He has 30 years experience in the high technology industry starting with computer games in the early 1980’s. He has led software teams delivering superior productivity and quality using innovative agile methods at large companies such as Sprint and Motorola. David is the pioneer of the Kanban Method an agile and evolutionary approach to change. His latest book, published in June 2012, is, Lessons in Agile Management – On the Road to Kanban. David is a founder of the Lean Kanban Inc., a business dedicated to assuring quality of training in the Lean Kanban Method for managers of those who must “think for a living.”
    61. 61. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc. I’d like to thank Eric-Jan Kaak and the staff at Blizzard for providing access to produce the story of their Lean transformation. System maintenance lead time data courtesy of CME Group. Acknowledgements
    62. 62. dja@leankanban.com @lkuceo Copyright Lean Kanban Inc.

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