How	
  and	
  Why	
  Agile	
  Works:	
  	
  

Benefits,	
  Challenges	
  and	
  Strategies	
  for	
  Senior	
  
Management	...
This	
  material	
  is	
  Copyright	
  
Protected	
  under	
  the	
  following	
  
Crea4ve	
  Commons	
  License:	
  
	
  ...
Stacey	
  	
  Complexity	
  Matrix	
  

REQUIREMENTS	
  
STABILITY	
  –	
  A	
  
shared	
  
understanding	
  of	
  
what	
...
 

Plan-­‐Driven	
  Project	
  Management	
  in	
  a	
  non-­‐simple	
  domain

Copyright	
  ©	
  2013	
  AgileInnova4on	
...
Process	
  Control	
  and	
  Complexity	
  
OPEN-LOOP
Deterministic- Predictive
Set	
  Target	
  
&	
  Plan	
  

Execute	
...
3	
  Perspec4ves	
  
People	
  &	
  
Mo4va4on	
  
Systems	
  
Thinking	
  

Project	
  
Economics	
  

Lean/Agile	
  in	
 ...
Theory	
  without	
  pracEce	
  is	
  
useless.	
  PracEce	
  without	
  
theory	
  is	
  expensive –	
  Ed	
  Deming	
  
...
Agile	
  PerspecEves	
  

SYSTEMS	
  THINKING	
  
So^ware	
  Development	
  as	
  a	
  System	
  
Big	
  Projects,	
  Phases	
  
Features	
  

Look	
  for	
  
Economies	
  ...
Sub-­‐OpNmizaNon	
  Principle:	
  
“If	
  each	
  sub-­‐system,	
  regarded	
  separately,	
  is	
  
made	
  to	
  operate...
Are	
  your	
  Development	
  Teams	
  Fully	
  UNlised?	
  
60%?	
   75%?	
   90%?	
   98%?	
   100%?	
  

In	
  a	
  sto...
You	
  get	
  back	
  to	
  that	
  
goddamn	
  cubicle	
  
and	
  start	
  thinking	
  
outside	
  the	
  box!	
  

Agile...
Learning	
  in	
  Complex	
  Environments	
  
The	
  ScienNfic	
  Method	
  
•  Plan	
  –	
  Small,	
  Single	
  Factor	
  ...
Experimenta4on	
  Design	
  for	
  Maximum	
  
Learning	
  
•  IteraNons:	
  Buy	
  High-­‐Value	
  
Knowledge,	
  Early,	...
Crea4vity	
  &	
  Innova4on	
  
are	
  maximised	
  when:	
  
•  We	
  work	
  in	
  Small	
  Groups	
  
–  Self-­‐Contain...
Agile	
  PerspecEves	
  

ECONOMIES	
  
OF	
  SPEED	
  
Investment	
  Curve	
  
Investment	
  
Period	
  

Payback	
  
Period	
  

Profit	
  Period	
  

Cash	
  

Cumulated	
  
Pr...
Sample	
  Project	
  
Max	
  
Cash	
  
Invest
ed	
  

Pay-­‐
back	
  
Month	
  

RoI	
  	
  
3	
  yrs	
  

NPV	
  

Single...
Sample	
  Project	
  
-­‐	
  the	
  Business	
  Case	
  
Max	
  
Cash	
  
Invest
ed	
  
Plan-­‐Driven	
  

Pay-­‐
back	
  ...
ECONOMIES
OF SPEED

€	
  Earlier	
  Benefit	
  Accumula4on	
  €	
  
Earlier	
  
€	
  Less	
  ‘Just	
  In	
  Case’	
  Demand...
Advantage	
  of	
  Early	
  Delivery	
  
14	
  month	
  Product	
  Growth	
  Phase	
  	
  
€	
  Earlier	
  Benefit	
  Accum...
Sample	
  Project	
  

Earlier	
  Delivery	
  to	
  Market	
  –
Months	
  4,	
  5	
  and	
  6;	
  Stage	
  
Payments	
  &	...
Sample	
  Project	
  

Fewer	
  Features	
  than	
  Planned	
  were	
  
built	
  as	
  they	
  weren’t	
  really	
  necess...
Sample	
  Project	
  

10% Less Development & 50%
Less Support Costs finding/
tracking/fixing bugs and
reworking features	
 ...
Sample	
  Project	
  

Some Benefits hard to
quantify…	
  

Summary	
  
Max	
  
Cash	
  
Invest
ed	
  

Pay-­‐
back	
  
Mon...
Cost	
  of	
  Capacity	
  vs.	
  Cost	
  of	
  Delay	
  
Its	
  Easy	
  to	
  
Measure	
  
this	
  

Total	
  Cost	
  of	
...
Agile	
  –	
  AdopEon	
  

MOVING	
  TO	
  AGILE	
  
Good	
  Judgment	
  comes	
  from	
  Experience.	
  
Experience	
  co...
Copyright	
  ©	
  2013	
  AgileInnova4on	
  
AdopNon	
  

•  Shu – embracing the kata
•  Ha – diverging from the kata

•  Ri – discarding the kata
TransformaNon	
  
Co...
FricEon	
  Points	
  –	
  Plan-­‐Driven	
  vs.	
  Agile	
  
•  Agile	
  is	
  an	
  IT	
  thing	
  –	
  Senior	
  Mgt	
  d...
BBC	
  Worldwide	
  -­‐	
  Kanban	
  
The	
  evidence	
  shows	
  that	
  over	
  the	
  12-­‐month	
  
period:	
  
•  lea...
Lightweight,	
  Emergent	
  Methods	
  
“Simple,	
  clear	
  purpose	
  and	
  
principles	
  give	
  rise	
  to	
  comple...
Lean	
  Compe44veness	
  Fund	
  
Enterprise	
  Ireland	
  
	
  
Up	
  to	
  50%	
  Funding	
  Support	
  
for	
  SMEs	
  ...
This	
  material	
  is	
  Copyright	
  
Protected	
  under	
  the	
  following	
  
Crea4ve	
  Commons	
  License:	
  
	
  ...
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Agile from 3 perspectives agile tour2013 distributable

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Agile from 3 perspectives agile tour2013 distributable

  1. 1. How  and  Why  Agile  Works:     Benefits,  Challenges  and  Strategies  for  Senior   Management     Colm  O’hEocha  –  AgileInnova4on   Slow  Down  to  Speed  Up   Copyright  ©  2013  AgileInnova4on   1  
  2. 2. This  material  is  Copyright   Protected  under  the  following   Crea4ve  Commons  License:     AGribu4on-­‐ShareAlike  3.0     Please  use  this  material  freely   and  derive  further  work  from  it.   BUT,  aGribu4on  must  be  given   to  the  original  author,  and   these  same  rights  must  govern   all  derived  works.     Please  use  the  following   aGribu4on:   “Colm  O’hEocha,   AgileInnova4on  Ltd.  2013:   www.agileinnova4on.eu”    
  3. 3. Stacey    Complexity  Matrix   REQUIREMENTS   STABILITY  –  A   shared   understanding  of   what  we  need  to   build   SOLUTION  CLARITY  –  A  shared   understanding  of  how  to  build  it   Copyright  ©  2013  AgileInnova4on  
  4. 4.   Plan-­‐Driven  Project  Management  in  a  non-­‐simple  domain Copyright  ©  2013  AgileInnova4on  
  5. 5. Process  Control  and  Complexity   OPEN-LOOP Deterministic- Predictive Set  Target   &  Plan   Execute   CLOSED-LOOP Empirical - Adaptive Set  Ini4al   Target  &   Plan   Adapt   Execute   Inspect   AIM  &  FIRE   FIRE  &  AIM   Copyright  ©  2010  AgileInnova4on  
  6. 6. 3  Perspec4ves   People  &   Mo4va4on   Systems   Thinking   Project   Economics   Lean/Agile  in   IT   Copyright  ©  2013  AgileInnova4on  
  7. 7. Theory  without  pracEce  is   useless.  PracEce  without   theory  is  expensive –  Ed  Deming     Copyright  ©  2010  AgileInnova4on  
  8. 8. Agile  PerspecEves   SYSTEMS  THINKING  
  9. 9. So^ware  Development  as  a  System   Big  Projects,  Phases   Features   Look  for   Economies  of  Scale   Requirements   not  fully   understood   (Accepted)   Demand   Exceeds   Capacity   Unrealis4c   Plans   Keep  Costs  Down   Changing  Requirements   &  Scope  Creep   Late  Projects   Schedule  Pressure   Long  Hours   Debugging   (unpredictable  &   unplanned)   Lost   Business   Mistakes   Copyright  ©  2011  AgileInnova4on   Missed  Customer   Expecta4ons   Testers   Busy   Poor   Quality   Delays   Tes4ng   Slow   Feedback  
  10. 10. Sub-­‐OpNmizaNon  Principle:   “If  each  sub-­‐system,  regarded  separately,  is   made  to  operate  with  maximum  efficiency,  the   system  as  a  whole  will  not  operate  with  utmost   efficiency”    –  Lars  SkyGner,  General  Systems  Theory     •  Converse:  Op4mizing  the  System  may  mean  sub-­‐op4mizing  sub-­‐systems   •  Increasing  Capacity  at  the  BoGleneck  increases  System  Capacity   •  Increasing  it  elsewhere  can  lead  to  longer  cycle  4mes  &  waste   •  Op4mize  the  Whole  -­‐  Consider  the  Whole  Value  Stream  –  Concept  to  Cash   Copyright  ©  2012  AgileInnova4on  
  11. 11. Are  your  Development  Teams  Fully  UNlised?   60%?   75%?   90%?   98%?   100%?   In  a  stochas4c  system,  maximising  u4lisa4on  does  not   maximise  throughput   Copyright  ©  2012  AgileInnova4on     11  
  12. 12. You  get  back  to  that   goddamn  cubicle   and  start  thinking   outside  the  box!   Agile  PerspecEves   AGILE  &     INNOVATION  
  13. 13. Learning  in  Complex  Environments   The  ScienNfic  Method   •  Plan  –  Small,  Single  Factor  Experiments   •  Do  –  Run  the  Experiment   •  Check  –  Look  at  the  Data,  What  Happened   •  Act  –  Apply  what  you’ve  Learnt     Non n  op t  an   ot  a s  no n e  is   Non  i ailur ova If  f  inn then n   pNo o Copyright  ©  2010  AgileInnova4on  
  14. 14. Experimenta4on  Design  for  Maximum   Learning   •  IteraNons:  Buy  High-­‐Value   Knowledge,  Early,  at  Low  Cost   •  Make  it  ‘Safe  to  Fail’   Informa4on     Genera4on   100%  Chance   of  Success   Copyright  ©  2011  AgileInnova4on   100%  Chance   of  Failure  
  15. 15. Crea4vity  &  Innova4on   are  maximised  when:   •  We  work  in  Small  Groups   –  Self-­‐Contained,  Self-­‐Organising,  Common   Objec4ve   •  We  can  Focus   –  Low  Distrac4on  Level,  Low  Churn  in  Objec4ves   –  Specific,  Closed  Problems  to  Solve   •  We  are  Mo4vated  By  Importance  of  the  Work   –  Feedback:  Fast,  High  Fidelity,  Rich   Derived  from  Amibile  et  al,  1996   Copyright  ©  2013  AgileInnova4on  
  16. 16. Agile  PerspecEves   ECONOMIES   OF  SPEED  
  17. 17. Investment  Curve   Investment   Period   Payback   Period   Profit  Period   Cash   Cumulated   Profits   Max.  Cash   Consumed   Break-­‐Even   Point   Self-­‐Funding   Point   Time   NPV:  Net  Present  Value  –   amount  we  would  gain/loose   (in  todays  money)  by   invesEng  in  the  project   Copyright  ©  2012  AgileInnova4on   17  
  18. 18. Sample  Project   Max   Cash   Invest ed   Pay-­‐ back   Month   RoI     3  yrs   NPV   Single  Release   Team%Size Average%Fully%Loaded%Salary Annual%Cost%of%Capital Monthly%rate%of%transaction%growth%(8%months) Maintenance%Costs%%%of%Transaction%Revenue Year Month Not%Discounted Discounted Not%Discounted Discounted Not%Discounted %Discounted 9 110000 6% 30% 10% 1 1 5 6 7 8 9 €82,500 €0 €82,500 €500 €82,500 €650 €82,500 €1,245 €1,719 €2,234 €2,904 €3,776 €4,908 €6,381 T€24,750 T€24,900 T€24,945 T€516 T€670 T€871 T€1,133 T€1,472 T€1,914 T€8,250 T€8,250 T€8,250 T€25,124 €0 T€8,250 €49,850 €49,955 €198,350 €248,305 €48,865 €48,725 €195,893 €244,617 €50,372 €298,677 €48,886 €293,504 €1,203 €299,879 €1,162 €294,665 €1,564 €301,443 €1,503 €296,168 €2,033 €303,476 €1,944 €298,112 €2,643 €306,119 €2,514 €300,626 €3,436 €309,555 €3,252 €303,878 €4,466 €314,021 €4,207 €308,085 €6,500 €80,000 €12,450 €30,000 €17,185 €22,341 €29,043 €37,755 €49,082 €63,807 €0 €0 €0 €0 €105,000 €6,500 €105,000 €111,500 €102,926 €6,340 €102,926 €109,266 €92,450 €203,950 €89,724 €198,990 €47,185 €251,135 €45,566 €244,556 €22,341 €273,476 €21,467 €266,023 €29,043 €302,518 €27,768 €293,791 €37,755 €340,274 €35,919 €329,709 €49,082 €389,356 €46,462 €376,171 €63,807 €453,162 €60,100 €436,271 T€49,500 T€49,500 T€99,000 T€148,500 T€49,009 T€48,765 T€98,262 T€147,027 €55,150 T€43,455 T€93,350 T€136,805 €54,061 T€42,385 T€92,967 T€135,351 €42,079 T€94,727 €40,838 T€94,513 €45,982 T€48,744 €44,404 T€50,109 €20,777 T€27,968 €19,964 T€30,145 €27,010 T€958 €25,824 T€4,321 €35,113 €34,154 €33,404 €29,083 €45,646 €79,801 €43,209 €72,293 €59,340 €139,141 €55,893 €128,186 T64% T33% T19% T1% 23% 10 54% 11 94% 12 T€8,250 T€8,250 €49,500 €49,500 €49,254 €49,254 €49,500 €49,500 €99,000 €148,500 €49,009 €48,765 €98,262 €147,027 €100,000 €5,000 €0 €0 €0 €0 Net%Benefit%Flow Cumulative%Net%Benefit%Flow Net%Benefit%Flow%(Discounted%Cash%Flow) Cumulative%Net%Benefit%Flow%(Rolling%NPV) Payback%Month 3%Year%RoI NPV 4 T€24,750 T€24,750 Benefits Revenue%on%Feature%Delivery Revenue%on%Transaction%fees Adjustment%for%Prioritised%Delivery Adjustment%for%Innovation%10%%more%Benefit Adjustment%for%Motivation%T%10%%more%Value%by%the%Team Benefits%Realised Cumulative,Benefits,Realised Benefits%Realised Cumulative,Benefits,Realised Max%Invested Rolling%RoI 3 €82,500 €82,500 €0 €0 Costs Development%Costs Maintenance/Support%Costs Adjustment%for%Reduced%Variability%T%50%%Less%Change%Mgt Adjt%for%Reduced%Demand%T%30%%Dev%and%Maintenance%Costs Adjustment%for%Reduced%Risk%T%50%%Chance%Technology%Failure Adjustment%for%Better%Quality%T%10%%less%development%cost Adjustment%for%Less%Overhead%T%5%%Development%Costs%Saved Costs%Incurred Cumulative,Costs,Incurred Costs%Incurred Cumulative,Costs,Incurred 2 T€49,500 T€49,500 T€49,254 T€49,254 €0 €0 €0 €0 10 11 12 T€148,500 T100% T100% T100% T63% T92% 10 0% €0 18   Copyright  ©  2012  AgileInnova4on  
  19. 19. Sample  Project   -­‐  the  Business  Case   Max   Cash   Invest ed   Plan-­‐Driven   Pay-­‐ back   Month   440K   20   RoI     3  yrs   FP/FS  Single  Delivery   a^er  6  months   NPV   Single  Release   95%   347K   €1,200,000   €1,000,000   €800,000   €600,000   €400,000   Max  Cash   Invested   €200,000   €0   -­‐€200,000   1   7   13   19   25   31   -­‐€400,000   -­‐€600,000   Self-­‐Funding   Point   Break-­‐Even   Point   19   Copyright  ©  2012  AgileInnova4on  
  20. 20. ECONOMIES OF SPEED €  Earlier  Benefit  Accumula4on  €   Earlier   €  Less  ‘Just  In  Case’  Demand   €   Less   €  Improved  Quality   €   Improved   REDUCE   COST   Reduced  Risk   INCREASE   REVENUE   More  Innova4on   Less  Management  Overhead   More  Mo4va4on   Improved  Business  Agility   Copyright  ©  2012  AgileInnova4on   20  
  21. 21. Advantage  of  Early  Delivery   14  month  Product  Growth  Phase     €  Earlier  Benefit  Accumula4on  €   Geeng  to   Market  2  months   Earlier  ≈     +€0.7M  (87%)   60000   Extra  Sales   Original  Xac4on  Revenue   50000   40000   30000   20000   10000   0   1   7   13   19   25   31   Copyright  ©  2012  AgileInnova4on  
  22. 22. Sample  Project   Earlier  Delivery  to  Market  – Months  4,  5  and  6;  Stage   Payments  &   Increased  Transac4on  Revenue   €  Earlier  Benefit  Accumula4on  €   Max   Cash   Invest ed   Pay-­‐ back   Month   RoI     3  yrs   NPV   Plan-­‐Driven   440K   20   95%   347K   Increased   Sales   307K   17   286%   753K   Single  Delivery   Extra  Sales   €1,200,000   €1,000,000   €800,000   €600,000   €400,000   €200,000   €0   1   7   13   19   25   31   -­‐€200,000   -­‐€400,000   -­‐€600,000   22   Copyright  ©  2012  AgileInnova4on  
  23. 23. Sample  Project   Fewer  Features  than  Planned  were   built  as  they  weren’t  really  necessary   -­‐  saves  Dev  Team  30%  costs   €  Less  ‘Just  In  Case’  Demand  €   Max   Cash   Invest ed   Pay-­‐ back   Month   RoI     3  yrs   NPV   Plan-­‐Driven   440K   20   95%   347K   €1,200,000   Increased   Sales   307K   17   286%   753K   €1,000,000   Less  Demand   182K   13   609%   977K   Single  Delivery   Less  Demand   Previous   €800,000   €600,000   €400,000   €200,000   €0   1   7   13   19   25   31   -­‐€200,000   -­‐€400,000   -­‐€600,000   Copyright  ©  2012  AgileInnova4on   23  
  24. 24. Sample  Project   10% Less Development & 50% Less Support Costs finding/ tracking/fixing bugs and reworking features   €  Improved  Quality  €   Max   Cash   Invest ed   Pay-­‐ back   Month   RoI     3  yrs   NPV   Plan-­‐Driven   440K   20   95%   347K   €1,200,000   Increased   Sales   307K   17   286%   753K   €1,000,000   Less  Demand   182K   13   609%   977K   Improved   Quality   148K   12   851%   1.1M   Single  Delivery   Improved  Quality   Previous   €800,000   €600,000   €400,000   €200,000   €0   1   7   13   19   25   31   -­‐€200,000   -­‐€400,000   -­‐€600,000   Copyright  ©  2012  AgileInnova4on   24  
  25. 25. Sample  Project   Some Benefits hard to quantify…   Summary   Max   Cash   Invest ed   Pay-­‐ back   Month   RoI     3  yrs   NPV   Plan-­‐Driven   440K   20   95%   347K   €1,200,000   Increased   Sales   307K   17   286%   753K   €1,000,000   Less  Demand   182K   13   609%   977K   Improved   Quality   148K   12   851%   1.1M   Increased   InnovaNon   -­‐   -­‐   -­‐   -­‐   Improved   MoNvaNon   -­‐   Less  Risk   -­‐   -­‐   -­‐   -­‐   ….   -­‐   -­‐   -­‐   -­‐   Single  Delivery   Improved  Quality   €800,000   -­‐   -­‐   -­‐   €600,000   €400,000   €200,000   €0   -­‐€200,000   -­‐€400,000   •  Payback  Period  reduces  from  20  to  12   months   13   1   7   19   25   31   •  Max  Cash  Funding  from  404K  to  148K   •  Year  3  RoI  improves  from  95%  to  851%   -­‐€600,000   •  è  NPV  from  347K  to  1118K§     §(Assumed  Discount  Rate  6%)   Copyright  ©  2012  AgileInnova4on   25  
  26. 26. Cost  of  Capacity  vs.  Cost  of  Delay   Its  Easy  to   Measure   this   Total  Cost  of  a  Process   Cost  of  Process   Capacity   We  are   Usually   Blind  to  this   Cost  of  Delay  in  the   Process   Copyright  ©  2013  AgileInnova4on  
  27. 27. Agile  –  AdopEon   MOVING  TO  AGILE   Good  Judgment  comes  from  Experience.   Experience  comes  from  Bad  Judgment.  
  28. 28. Copyright  ©  2013  AgileInnova4on  
  29. 29. AdopNon   •  Shu – embracing the kata •  Ha – diverging from the kata •  Ri – discarding the kata TransformaNon   Copyright  ©  2010  AgileInnova4on  
  30. 30. FricEon  Points  –  Plan-­‐Driven  vs.  Agile   •  Agile  is  an  IT  thing  –  Senior  Mgt  don’t  need  to  be  involved   •  Our  Technology/Customer  Base/EcoSystem  are  too  Complex   for  Agile      through •  We  Work  in  a  Fixed  Price/Scope/Date  ed be  workEnvironment   to   barriers  rganizaEon  snt).     e   •  FuncEonally  demarcated  os  Improveme tructure    them   These  ar 4nuou g moun4n ur (Co n •  Fear  of  Transparency  (criEcism,  anicro-­‐management)   ng   md  s kli s  are  tac y  day   n •  Mistrust/Fear  4o Self-­‐OrganisaEon  (they’ll  ease-­‐off,  run  amok)   rganiza of   ever O •  A  lot  of  ‘Legacy’  and  ‘Technical  Debt’   •  Agile  can’t  work  in  a  Highly  Regulated  Context   •  Regular  Access  to  Customers  or  Users  impossible   •  We’re  rewarded  as  Individuals,  not  as  a  Team   Copyright  ©  2013  AgileInnova4on   30  
  31. 31. BBC  Worldwide  -­‐  Kanban   The  evidence  shows  that  over  the  12-­‐month   period:   •  lead  Nme  to  deliver   sooware  improved   by  37%   •  consistency  of   delivery  rose  by   47%   •  defects  reported  by   customers  fell  24%   Copyright  ©  2012  AgileInnova4on   -­‐  Middleton,  Joyce  2010  
  32. 32. Lightweight,  Emergent  Methods   “Simple,  clear  purpose  and   principles  give  rise  to  complex  and   intelligent  behavior.  Complex  rules   and  regulaNons  give  rise  to  simple   and  stupid  behavior.”   Dee  Hock,  CEO  Emeritus  VISA  Interna4onal   Copyright  ©  2012  AgileInnova4on     32  
  33. 33. Lean  Compe44veness  Fund   Enterprise  Ireland     Up  to  50%  Funding  Support   for  SMEs   Training,  Consul4ng,   Coaching  in  Lean     Colm  O’hEocha   AgileInnova4on  Limited     www.agileinnova4on.ie   Colm@agileinnova4on.ie   Q&A   Training  &  Coaching   Agile/Lean  for  Execs  (½d)   Agile/Scrum  for  Teams  (2d)   Gewng  Lean  with  Kanban  (2d)   Bringing  Agile  to  the  Next  Level   –  Op4mising  and  Scaling  (2d)   Professional  ScrumMaster  (2d)   (cer4fied)   PMI  –  Agile  Cer4fied  Prac4toner   (2d)  (cer4fied)   Product  Owner  (1d  or  2d)   User  Stories  and  Es4ma4on  (1d)   Effec4ve  Agile  Tes4ng  (2d)   Copyright  ©  2012  AgileInnova4on  &   InspireQS  
  34. 34. This  material  is  Copyright   Protected  under  the  following   Crea4ve  Commons  License:     AGribu4on-­‐ShareAlike  3.0     Please  use  this  material  freely   and  derive  further  work  from  it.   BUT,  aGribu4on  must  be  given   to  the  original  author,  and   these  same  rights  must  govern   all  derived  works.     Please  use  the  following   aGribu4on:   “Colm  O’hEocha,   AgileInnova4on  Ltd.  2013:   www.agileinnova4on.eu”    
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