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Creating Robust, Resilient & Antifragile Organizations (using Kanban)

  1. Copyright Lean Kanban @lki_dja Creating Robust, Resilient & Antifragile Organizations What does it take to be… …“built to last”? Presenter: David J. Anderson Lean Kanban North America San Diego May 2016
  2. Copyright Lean Kanban @lki_dja Emotional Motivation for Change
  3. Copyright Lean Kanban @lki_dja Nobody wants to lead the next Nokia! From $56 to $2!
  4. Copyright Lean Kanban @lki_dja Motivation for adoption? Kanban has agendas Managerial Motivator • Senior-level • Lead the business (strategy and positioning) • Confidence they can deliver on strategic goals • Legacy (long term survival) • Mid-level • Up-managing – answer the hard questions with confidence • Down-managing – make difficult decisions with confidence • Line-level & Individual Contributors • Relief from abusive environment • Overburdened • Quality suffers • Low job satisfaction Kanban Agenda • Survivability • Service-orientation (and customer focus) • Sustainability
  5. Copyright Lean Kanban @lki_dja What are they afraid of? Manager • Senior-level • Mid-level • Line-level & Individual Contributors Fear • Mid-level managers lie to me. There is no transparency. Bad news arrives late. Too late to intervene • Business failure • Senior leaders over-react. I don’t trust them with information • Line managers & workers can’t be trusted to deliver on their promises • Our bosses constantly set us up for failure • Burn out
  6. Copyright Lean Kanban @lki_dja Taleb’s Model for Organizations
  7. Copyright Lean Kanban @lki_dja A new way to look at organizations • Fragile • Resilient • Robust • Antifragile • At risk of total failure / financial ruin • Takes damage, avoids total failure, recovers • Absorbs uncertainty, repels blows, avoids damage • responds to stress by mutating, maintains fitness for purpose • purpose and identity can change entirely
  8. Copyright Lean Kanban @lki_dja Fragile
  9. Copyright Lean Kanban @lki_dja Resilient
  10. Copyright Lean Kanban @lki_dja Robust
  11. Copyright Lean Kanban @lki_dja Antifragile
  12. Copyright Lean Kanban @lki_dja Moneyball highlights fragile, resilient & robust
  13. Copyright Lean Kanban @lki_dja Fragile
  14. Copyright Lean Kanban @lki_dja Fragile lead time distribution Weibull, k=0.8
  15. Copyright Lean Kanban @lki_dja More Robust Lead Time
  16. Copyright Lean Kanban @lki_dja Examples of Lead Time Distributions
  17. Copyright Lean Kanban @lki_dja Kanban mitigates risk of fragility Kanban systems limit WIP and improve flow efficiency Lead time distributions are much thinner tailed from full kanban systems with WIP limits and pull fully implemented In general, the Kanban Method contributes significantly to trimming the tail, reducing risk and improving resilience, robustness & antifragility
  18. Copyright Lean Kanban @lki_dja Examples of fragile entities Monocultures are fragile Highly cohesive social groups are fragile Monopolies are fragile Firms with a dominant market position coupled to complacency or hubris are fragile Single class of service kanban systems are fragile
  19. Copyright Lean Kanban @lki_dja the Greenland Norse were fragile
  20. Copyright Lean Kanban @lki_dja Monopoly skischool franchises didn’t survive deregulation in the 1990s
  21. Copyright Lean Kanban @lki_dja Squeezes
  22. Copyright Lean Kanban @lki_dja Deadlines create squeezes How to deal with a squeeze  Contingency (start early, buffer time)  Liquidity – more capacity (people, resources, money)  Demand shaping – divert demand • Defer quality problems, non-functional requirements, or features for some niches/market segments until later
  23. Copyright Lean Kanban @lki_dja Dealing with squeezes Contingency is expensive but can be robust Liquidity can be expensive but can be robust  Kanban & Enterprise Services Planning provide some relatively cheap ways of improving liquidity Deferring quality problems is cheap but inherently fragile! Heroic effort appears cheap but is inherently fragile!  And often expensive to maintain, e.g. recruitment cost of replacing burned out people, or inflated cost of “hero”
  24. Copyright Lean Kanban @lki_dja A better way to deal with squeezes Hedge risk of a squeeze with optionality  Sequencing which maximizes optionality (commit early because you know why – low uncertainty)  Capacity allocation  Discretionary (or refutable) demand  Smart portfolio & product mix selection Optionality is not free but it is often (much) cheaper than contingency
  25. Copyright Lean Kanban @lki_dja Resilient
  26. Copyright Lean Kanban @lki_dja Resilient organizations avoid catastrophic failure Likelihood = Probability of x Impact = f(x) Probability of short or long landing = 1/14 million  fat tail problem  black swan event
  27. Copyright Lean Kanban @lki_dja Impact function matter more than likelihood Examples of 2 short landings in last 3 years. Likelihood 1 in 14 million flights Impact - SFO Asiana Boeing 777. July 2013. Aircraft is written off, no loss of life - 2 crew severely injured. 3 teenage passengers die after incident, killed by emergency vehicles attending the scene Impact - Rostov-on-Don Russia. FZ981 Boeing 737. March 2016. Total loss of aircraft, passengers and crew. 62 deaths
  28. Copyright Lean Kanban @lki_dja Resilient organizations avoid catastrophic failure F(x) - the potential impact - always overrides probability of x - the likelihood. The two parameters cannot be multiplied together to prioritize risk management. Risk mitigation - reducing the impact - is more important than risk reduction - reducing the likelihood When there is a risk of total ruin, however unlikely, we need to pay attention to it and manage it. Probability of delay versus impact of delay Class of service reduces probability of delay, x, for items with a large impact (f(x)) of delay
  29. Copyright Lean Kanban @lki_dja Blocker Clustering helps with resilience Identify Risks Identify Likelihood & Impact Reveals probability of delay versus impact of delay Root Cause Analysis Reduction & Mitigation actions
  30. Copyright Lean Kanban @lki_dja Resilient organizations use classes of service Class of service reduces probability of delay, x, for items with a large impact (f(x)) of delay
  31. Copyright Lean Kanban @lki_dja Resilient organizations use experiments Resilient organizations use experiments but control the financial risk Avoid risk of ruin from overbetting on too many experiments Portfolio management with “Kelly betting”  If you have 60% confidence in payoff bet up to 20% of what you can afford to lose “bet size” includes option development experiment and cost of exercising the option, designing & building production version and bringing it to market
  32. Copyright Lean Kanban @lki_dja Resilience requires a reason to pick yourself up and try again Resilient organizations have a strong sense of purpose Resilient organizations have unity and alignment behind that sense of purpose Resilient organizations have “Einheit” Purpose can be values based such as “superior customer service” – Virgin Group
  33. Copyright Lean Kanban @lki_dja Purpose or values weigh more strongly than identity with resilient organizations Unity and social cohesion comes from a strong sense of purpose or a set of shared values
  34. Copyright Lean Kanban @lki_dja Feedback loops for tactical concerns Immediate service delivery Selecting the right things, framed in the right way Responsiveness to tactical opportunities
  35. Copyright Lean Kanban @lki_dja Robust
  36. Copyright Lean Kanban @lki_dja Robust organizations… Are risk hedged Have optionality Have liquidity Have strong capability with low variability  Flight to quality (in uncertain times)
  37. Copyright Lean Kanban @lki_dja Feedback loops for operational concerns Do we have enough capacity to cope with volumes of demand over time? How do we hedge risk? Do we have the correct risk assessment framework to analyze demand? Are we collecting the right metrics? Are we managing risk quantitatively?
  38. Copyright Lean Kanban @lki_dja Leveraging an understanding of fragility, resilience & robustness
  39. Copyright Lean Kanban @lki_dja Volatility & Turbulence Risk is manageable in conditions of stable volatility, i.e. where there is no/very little turbulence. Turbulence implies unmanageable risk Ergo, turbulent systems are fragile systems
  40. Copyright Lean Kanban @lki_dja Kano Analysis, Strategy & Risk Performance Customer satisfaction Investment (time, money) linear exciter dissatisfier Fragile Robust Antifragile Call quality as a function of radio spectrum is hard to replicate. Some radio spectrum is therefore worth a lot more than other bandwidths. Correctly aligning marketing strategy - sell quality, signal robustness, call integrity - with decision to purchase expensive radio spectrum provides a robust differentiated position
  41. Copyright Lean Kanban @lki_dja Entropy
  42. Copyright Lean Kanban @lki_dja Entropy in a housing neighborhood
  43. Copyright Lean Kanban @lki_dja Entropy in a housing neighborhood
  44. Copyright Lean Kanban @lki_dja Entropy in a housing neighborhood
  45. Copyright Lean Kanban @lki_dja Diversity of housing makes a robust neighborhood
  46. Copyright Lean Kanban @lki_dja Without restriction entropy will continue
  47. Copyright Lean Kanban @lki_dja Left unchecked a new monoculture develops
  48. Copyright Lean Kanban @lki_dja Eventually maximum entropy occurs
  49. Copyright Lean Kanban @lki_dja Robustness is fragile – a philosophical dilemma Fragile systems are often stable  Perhaps maximum entropy has already been reached? Like a well stirred Campari orange Robust systems exist in a fragile state vulnerable to entropy Explicit policy is required for diversity or organized inequality to enable robustness Low trust environments subject to corruption will entropy from one fragile condition to another. Robustness cannot be sustained in low social capital environments
  50. Copyright Lean Kanban @lki_dja Singapore is Robust
  51. Copyright Lean Kanban @lki_dja Antifragile
  52. Copyright Lean Kanban @lki_dja 3M – Minnesota Mutation Machine* 3M has innovation built into its DNA However, 3M doesn’t seem to have been capable of developing products that require long periods of investment and large sums of capital  E.g. in comparison, IBM invested in speech recognition for 50+ years  We don’t fly in 3M planes, get our power from 3M generators or use 3M smartphones, telecoms networks or computers * Collins & Porras, Built to Last
  53. Copyright Lean Kanban @lki_dja IBM has a long history of identity change 1911, CTR = The Tabulating Machine Company, the International Time Recording Company, the Computing Scale Company and the Bundy Manufacturing Company 1924 CTR becomes International Business Machines 1964 System/360 Mainframe family launched 1981 PC launched 1991 Sold Lexmark 2002 acquires PWC Consulting 2005 Sold PC business to Lenovo 2016 Announced exit of mainframe business Now, primarily a professional services firm! What will its next identity be? Does IBM have antifragility built into its DNA? Can it keep reinventing itself?
  54. Copyright Lean Kanban @lki_dja John Menzies founded in 1833 as a newsagent in Edinburgh. Identity change in 1998 to distribution & airport baggage handler
  55. Copyright Lean Kanban @lki_dja Microsoft is robust rather than antifragile Robustness comes from lack of complacency or hubris. Bill Gates’ “be paranoid” Shift perception to collective tribal insecurity Deep pockets. Lots of optionality Cooperative effort to strengthen the tribe Personal Sacrifice Symbols are more important Common enemy Rituals practiced “Be Paranoid”
  56. Copyright Lean Kanban @lki_dja Microsoft is robust rather than antifragile Acquisition of Minecraft maker is entirely consistent with identity as a developer tools company Promotion of Sateya Nadella head of developer tools is entirely consistent with core identity
  57. Copyright Lean Kanban @lki_dja Identities that are looser, wider, broader umbrellas are robust and enable antifragility
  58. Copyright Lean Kanban @lki_dja Virgin are robust and may be antifragile so long as they survive the transition from Sir Richard Branson as their leader
  59. Copyright Lean Kanban @lki_dja What is Virgin Group’s Identity ? Not a record label but they are Not a retailer but they are Not a travel company but they are Not a communications company but they are Not a media company but they are Not a fitness company but they are
  60. Copyright Lean Kanban @lki_dja Virgin’s brand Virgin’s brand is fun, irreverent, associated with superior customer service and “cool” things people need and use regularly  Except Virgin Galactic which is just “cool” and Richard wants it
  61. Copyright Lean Kanban @lki_dja Feedback loops for strategy A learning organization that can ultimately learn to reinvent itself Antifragile organizations have feedback loops for strategy including regularly assessing  purpose  capability alignment with purpose  whether they are “fit for purpose”  Identity Antifragile companies can shed core businesses while embracing new ones
  62. Copyright Lean Kanban @lki_dja The Organizational Dilemma
  63. Copyright Lean Kanban @lki_dja Organizational Dilemma Loose social cohesion encourages the behaviors required for antifragility  Loose attachment to identity  Liberal experimentation High social cohesion enable resilience & robustness  Unity and alignment High trust & high social capital are required for antifragility Designed & controlled inequality is required for robustness  Social mobility within organized inequality creates antifragility Utopian societies are fragile  Communism & anarchy  E.g. Anti-utopian novels such as Brave New World, The Beach
  64. Copyright Lean Kanban @lki_dja Kanban & Resilience, Robustness & Antifragility
  65. Copyright Lean Kanban @lki_dja Capability OptionalityAdaptability Agility Survivability Out-maneuvered Unfit for purpose Kanban enables Antifragility Antifragility
  66. Copyright Lean Kanban @lki_dja The Kanban Method General Practices 1. Visualize (with a kanban board 看板) 2. Limit work-in-progress (with kanban かんばん) 3. Manage flow 4. Make policies explicit 5. Implement feedback loops 6. Improve collaboratively, evolve experimentally (using models & the scientific method)
  67. Copyright Lean Kanban @lki_dja Strategy Review Risk Review Monthly Service Delivery Review Bi-WeeklyQuarterly Kanban Meeting Daily Operations Review Monthly Replenishment & Commitment Meeting Weekly Delivery Planning Meeting Per delivery cadence change change change change change change change change change info info info info info info info info info change info Kanban Cadences
  68. Copyright Lean Kanban @lki_dja Change Requests 3 1 Prod. Defects Maintenance Usability Improvement 2 1 Kanban helps with “einheit” (unity & alignment) Teams F E Engin- eering Ready G D GY PB DE MN 2 P1 AB Ongoing Analysis Testing Done Verification Acceptance 3 3 Ongoing Development Done 3 Joe Peter Steven Joann David Rhonda Brian Ashok
  69. Copyright Lean Kanban @lki_dja Kanban enables resilience, robustness & antifragility Resilience  Thin-tailed lead time distributions – predictable  Einheit – unity & alignment Robustness  Explicit policies  Capacity allocation  Classes of service  Greater optionality Antifragility  Kanban cadences provide feedback loops at tactical, operational and strategic levels
  70. Copyright Lean Kanban @lki_dja Thank you!
  71. Copyright Lean Kanban @lki_dja About David Anderson is an innovator in management of 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 organizations delivering superior productivity and quality using innovative methods at large companies such as Sprint and Motorola. David defined Enterprise Services Planning and originated Kanban Method an adaptive approach to improved service delivery. His latest book, published in June 2012, is, Lessons in Agile Management – On the Road to Kanban. David is Chairman & CEO of Lean Kanban Inc., a business operating globally, dedicated to providing quality training & events to bring Kanban and Enterprise Services Planning to businesses who employ those who must “think for a living.”
  72. Copyright Lean Kanban @lki_dja This presentation was inspired by the work of Nassim Taleb on Fragility, Resilience, Robustness & Antifragility in Risk Management and by his 5-day Real World Risk class in New York City, February 2016. None of the content of this talk is taken directly from Taleb nor is it meant to represent (or misrepresent) his work in shape or fashion. Cover images courtesy of John Menzies PLC, the Scotsman newspaper and the BBC. Lead time distribution courtesy Andreas Bartel Volatility & Turbulence data courtesy of Digite, Raymond Keating / CME Group, Andreas Bartel Acknowledgements
  73. Copyright Lean Kanban @lki_dja Appendices
  74. Copyright Lean Kanban @lki_dja Books
  75. Copyright Lean Kanban @lki_dja 2010 – Kanban “blue book”
  76. Copyright Lean Kanban @lki_dja 2012 Lessons in Agile Management The heavily under-rated book that underpins the Kanban Coaching Masterclass and most of the theory behind the Kanban Method
  77. Copyright Lean Kanban @lki_dja 2014 Kanban from the Inside
  78. Copyright Lean Kanban @lki_dja Player Stats
  79. Copyright Lean Kanban @lki_dja Buster Posey San Francisco Giants Salary $17.3M Ryan Howard Philadelphia Phillies Salary $25M Salvador Perez Kansas City Royals Salary $1.85M Average OBP 0.318 Fairly Robust 0.350 – 0.400 Left skewed (no upside) Average OBP 0.277 Fragile mostly 0.250 – 0.300 Left skewed (many 0’fers) Average OBP 0.280 Very Robust above 0.250 Right skewed (some hot days)
  80. Copyright Lean Kanban @lki_dja
  81. Copyright Lean Kanban @lki_dja

Editor's Notes

  1. Blocker Clustering was pioneered by Klaus Leopold. It assumes blocker tickets record the number of days blocked as well as information about the source of the delay.
  2. There are 6 General Practices in the Kanban Method. [Walk briefly through each of the 6 Practices. See David Anderson’s blog at if you want help with how to explain]
  3. One service practice of the Kanban Method is to build an information flow via formal reviews and meetings. This improves collaboration and agility.