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It’s Not About Working Software
First Build the Right Thing
mary@poppendieck.com Mary Poppendieck www.poppendieck.com

2. Gróf András (Andrew Grove)
Business goes on
to new heights
Strategic
Inflection Point
10x change in an element of the business.
What worked before doesn’t work now.
The executives are the last to know.
Business
declines
2 October 10 Copyright©2010 Poppendieck.LLC l e a n
From: Only the Paranoid Survive, by Andy Grove,

3. Is Agile Development
At An Inflection Point?
Version 1.0 – Contract Focus Version 2.0 – Development Focus Version 3.0* - Customer Focus
 Processes and tools  Individuals and  Team vision and
 Comprehensive interactions initiative
documentation  Working software  Validated learning
 Contract negotiation  Customer collaboration  Customer discovery
 Following a plan  Responding to change  Initiating Change
Inflection Point:
Customer Focus
1995 2000 2005 2010
3 October 10 l e a n
*Kent Beck, Startup Lessons Learned – April 23, 2010
Copyright©2010 Poppendieck.LLC http://www.justin.tv/startuplessonslearned/b/262656520

4. Team Vision and Initiative
There is nothing so useless as doing efficiently
that which should not be done at all. – Peter Durcker
Most products failures are caused by
a lack of Customers.
Not this: But this:
P
R
I
O
R
I
T
I
Z
E
D
l e a n
!
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5. Validated Learning
Consider the Entrepreneur – The Objective:
Starts out with no customers Minimum Viable Product
 Does it do the job?
Assembles a business team:  Will customers pay for it?
 Marketing  What do we need to learn next?
 Development Repeat......multiple times
 Quality Assurance  Experiment – Learn – Adjust
 Operations
First be sure that you are
 Support
building the right thing,
 Finance then be sure that you are
 Others? building the thing right.
5 October 10 Copyright©2010 Poppendieck.LLC l e a n

6. Customer Discovery
Ethnography Ideation
Brilliant Systems are the result of a
matching of mental models between
those developing a system and those
who will be using the system.
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7. Initiating Change
WebSphere® Service Registry and Repository
 10 month deadline – didn’t know the details
 Solution: Get customer feedback
 Early Access Program
 Customers download new version each month
 User feedback on discussion forum
 Direct developer-customer interaction
 Changed course midstream
 User feedback beat marketing input
 Phenomenal sales the first day of release
 Customers knew they would get what they needed
 Support Calls down by an order of magnitude
 Mental model of users and developers matched
7 October 10 Copyright©2010 Poppendieck.LLC l e a n

8. Extra Features are the Biggest
Waste in Software Development
Features / Functions Used in a Typical System Cost of Complexity
Often / Always Rarely / Never
Used: 20% Used: 64%
Sometimes Rarely 19%
16%
Cost
Often 13%
Always 7%
Never 45%
Standish Group Study Reported at XP2002 by Jim Johnson, Chairman Time
The Biggest Opportunity to Increase Software
8
Development Productivity is to Write Less Code!
October 10 Copyright©2010 Poppendieck.LLC l e a n

9. Simplify First – Automate Last
Video Cassette Plant – early 1980’s
Pancake
Coat Slit Pancake Wind Package Ship
Pancake
Chemicals Mix
Parts Assemble
Supplies
MRP scheduled all purchases and sent orders to each workstation
 Reliably shipped ~ 60% of weekly plan
 Orders filled in ~ 6 weeks
 A lot of expediting
9 October 10 Copyright©2010 Poppendieck.LLC l e a n
“If only you would try harder to do what the schedule says….”

10. From Push to Pull
Crisis at our Video Cassette Plant
 Competition selling cassettes
for less than we could make them
Our Response
 Statistical Analysis for Quality Immediate Results:
Improvement  95% of weekly plan
 Just-in-Time (Lean) Production  Orders filled in 2 weeks
The Great Coffee Cup Simulation  No expediting
Pancake
Coat Slit Pancake Wind Package Ship
Pancake
Supplies
Chemicals Mix
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Parts
Copyright©2010 Poppendieck.LLC l e a n
Assemble

11. Lessons Learned
1. It’s Not Luck; It’s Hard Work
Years of Quality Improvement
 Statistical Analysis System
 QA moved to the production line
 Stop-the-Line Attitude
Months spent designing the details
 Designed by production workers
 Pre-dated Just-in-Time consultants
 Leadership through all levels of line management
 The design process WAS the training
2. Simplify First, Automate Last.
3. Consider the whole system, not just the software.
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12. Optimize the Whole
Optimizing a part of a system will always
sub-optimize the overall system.
Beware of Layer Teams!
“The” Business
F F F F F
Process e e e e e
a a a a a
Software t t t t t
u u u u u
Operations r r r r r
e e e e e
Support
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13. Case Study: Amazon.com
It’s all about scale.
2000 – Hit the wall
2001 – Started transition to services
 Each Owned by a 2PT
 All functions – including operations!
 Encapsulate data and business logic
 Basic Services and Consolidator Services
2009 – Completed Transition.
Conway’s Law
Organizations which design systems are constrained to produce designs
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which are copies of the communication structures of these organizations.

14. Cost Center Disease
Focus on cost reduction instead of delivering value.
Where is the disease most likely?
 IT departments
 Government Organizations
 Outsourcing Companies
What’s Wrong with Cost Centers?
 No way to focus on superior customer outcomes
 No basis for trade-off decisions
 No engagement
 No passion
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15. Three IT Archetypes
Utility – Provide cost-effective, utility-like
reliability with constantly declining costs.
Supplier – Deliver application projects on time
and on budget, based on operating units’
requirements and priorities.
Partner – Create differentiating, competitive
solutions for the company’s customers,
suppliers, and internal users.
Source: Forrester Research
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16. Product-Centric Development
is a Hot New Trend †
*
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*(develop, operate, and manage your custom applications as ‘commercial’ software products)
†DaveWest & Roy Wildeman – Forrester, Dec. 2009
54% of surveyed companies favor product centric focus.

17. Disruptive Technologies
Stage One – Start-up Stage Four – Disruption
 New technology finds an unmet need  New low end product
Stage Two – Growth  Faster, smaller, cheaper,
 Move up-market for higher margins draws less power, etc.
 But not good enough for
Stage Three – Flattening up-market customers
 The product overshoots market needs  Enters down-market and
finds an unmet need
 Eventually grows up and
takes over the market
“The fact is that because of the cloud,
today a young upstart can take market
share without an incumbent having
time to react.” – Werner Vogles, Amazon.com
17 October 10
Werner Vogels
Amazon.com
Copyright©2010 Poppendieck.LLC l e a n

18. Case Studies
GE Healthcare
“We realized that the biggest
impediment was that we were
selling what we were making
[rather than] making what the
customers here needed.”*
The MAC-i: EKG’s for Rs 9
“Our engineering and marketing teams now interact
closely with the customers here [in India] to understand
their requirements. We look at their work flow, their
environmental limitations, their profitability issues and
The Vscan: $8000 Ultrasound unit other factors and we then price, design and manufacture
the size of a mobile phone. Based
on designs originating in China, it
will revolutionize global healthcare.
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the products accordingly”** **Ashish Shah, general manager,
global technology, GE Healthcare
*V. Raja, president and CEO of GE Healthcare-South Asia.

19. A Tale of Two Terminals
London Heathrow,
Terminal 5
 300,000 sq m
 $8.76 billion
 7 years
 Opened March 27, 2008
Beijing Capital Airport,
Terminal 3
 986,000 sq m ~ 3 times larger
 $3.80 billion ~ Half the cost
 3.75 years ~ Half the time

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Opened March 26, 2008
October 10 Copyright © 2007 Poppendieck.llc l e a n

20. Baggage Handling System
Beijing Capital Airport, Terminal 3 London Heathrow, Terminal 5
 19,200 bags / hour  Baggage handling chaos the first day
 68 km of conveyers  500 flights canceled
 5 min. plane to claim  Up to 4 hour wait to claim baggage
 0.23% handling errors in 2008  28,000 bags piled up the first weekend
Multiple operational test runs (Dec-Jan) Workers warned management that their
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 8,000+ mock passengers
Ran on a trial basis for a month (Feb)
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training was inadequate. But the planned
full scale startup “could not be delayed”.
Copyright © 2007 Poppendieck.llc

21. Social-Technical Systems
Early 1950’s: Mechanization In The English Coal Mines*
 Mechanization broke up tightly knit teams that used to perform
the entire extraction process from blasting to hauling to sorting.
 Different people performed the various steps on different shifts
 Caused coordination problems.
 The equipment was so loud people could not communicate
 Inhibited teamwork.
 People felt alone, isolated, and unappreciated deep in the earth.
 Destroyed pride, satisfaction and belonging.
 Pay system: from group incentive to hourly wage
 Destroyed monetary motivation.
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The overall result: Decreased productivity and labor strife.
* Eric Trist and Fred Emery; Tavistock Institute

22. Principles of
Social-Technical Systems
Technical Social
Includes: Responsible Autonomy
 machinery  Semi-autonomous groups
 processes
 Internal leader
 physical arrangement
Adaptability
Joint optimization:
 Group decides how to respond
 Social and technical systems must
be balanced and integrated. to complexity and uncertainty
Reliable processes: Whole Tasks
 End-to-end responsibility born
 A bad process will defeat a good
person every time. by small cohesive group
Built-in quality: Meaningful Tasks
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 You can’t test quality in!
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 Commitment; not compliance

23. Open Source
A New Social-Technical System?
The Impossible Public Good?
The “Tragedy of the Commons” does not apply
Defies all known social and economic theory
 Incredibly stable  No monetary rewards or sanctions
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 Impossibly complex
October 10 Copyright©2010 Poppendieck.LLC l e a n
 No central authority in the traditional sense

24. Is Open An Inflection
Source Point?
Motivation 2.0 Motivation 3.0
 Extrinsic motivation  Intrinsic motivation
 Pay for time  Treat Workers like Volunteers
Economics 2.0 Economics 3.0
 The key scarcity which  The key scarcity is the time, energy &
drives decisions is capital brainpower of bright, creative people
Coordination 2.0 Coordination 3.0
 Leaders direct followers  Leaders recruit followers
 No option to opt-out  There is always an option to opt-out
Passion 2.0 Passion 3.0
 Winning the Game
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 First of all, I need to know Why?

25. The Future Belongs to You
Motivation 3.0 Economics 3.0
Autonomy The new scarcity:
Mastery The time, energy and brainpower
Purpose of bright, creative people.
Passion 3.0
Coordination 3.0 Start with the Why.
Leaders attract followers. Invest your time and
Wisdom is found at the worksite. energy in your passion.
You are the core of the new economy.
You can change the world.
25 October 10 Copyright©2010 Poppendieck.LLC l e a n

26. lsoftware development
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Thank You!
More Information: www.poppendieck.com
mary@poppendieck.com Mary Poppendieck www.poppendieck.com