Concept to Cash - Energized Work Presentation
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Software isn't the product. The product is the experience generated by the customer's interaction with the software running on some hardware. Viewing product development as a system, this session explores how we use short learning loops to test business assumptions, delight customers, drive profit for the business, and continuously improve how we work. It includes a look at how we create software from the outside in and test-drive operational aspects of the product such as environment management, monitoring and failover.
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Concept to Cash - Energized Work Presentation
- 1. CONCEPT TO CASH Presented by Simon Baker and Gus Power 16-May-2010
- 2. simon baker gus power twitter @energizr twitter @guspower skype simon.energizr skype gus.j.power simon@energizedwork.com gus@energizedwork.com © 2010 Energized Work 2
- 3. twitter #concept2cash #spa2010 © 2010 Energized Work 3
- 4. session stuff at http://www.energizedwork.com/ sessions/concepttocash © 2010 Energized Work 4
- 5. delight customers © 2010 Energized Work 5
- 6. follow the money © 2010 Energized Work 6
- 7. © 2010 Energized Work 7
- 8. who knows? © 2010 Energized Work 8
- 9. feedback © 2010 Energized Work 9
- 10. measurement ‘a system is no better than its sensory organs’ - systemantics, gall © 2010 Energized Work 10
- 11. insight ‘the purpose of analysis is to give us insight’ - understanding variation, wheeler © 2010 Energized Work 11
- 12. information decays distance time © 2010 Energized Work 12
- 13. experiments are learning cycles © 2010 Energized Work 13
- 14. concrete experience active reflective experimentation observation abstract conceptualization - learning styles model, kolb © 2010 Energized Work 14
- 15. investment plan release act do story slice check pomodoro © 2010 Energized Work 15
- 16. are we building the right thing? © 2010 Energized Work 16
- 17. are we building the thing right? © 2010 Energized Work 17
- 18. are we building the right thing? investment charter invest delivery <= 3 months assess © 2010 Energized Work 18
- 19. are we building the right thing? investment | profit and loss Energized Work © 2010 Energized Work 19
- 20. are we building the right thing? investment | fund incrementally © 2010 Energized Work 20
- 21. are we building the thing right? investment charter invest delivery <= 3 months assess © 2010 Energized Work 21
- 22. are we building the thing right? investment | product stream © 2010 Energized Work 22
- 23. are we building the thing right? investment | operational performance © 2010 Energized Work 23
- 24. are we building the right thing? release prepare / prioritize release play 1 week show © 2010 Energized Work 24
- 25. PM CTO Editors Sponsor Channels 23/10 30/10 © 2010 Energized Work 06/11 13/11 20/11 27/11 04/12 11/12 18/12 24/12 08/01 15/01 22/01 29/01 05/02 12/02 19/02 26/02 04/03 release | mood Positive 11/03 18/03 25 Meh 25/03 01/04 Mood of the Customers 08/04 15/04 Mood of the Business 22/04 Negative 29/04 06/05 13/05 are we building the right thing? 20/05 27/05 03/06 10/06 17/06 24/06 01/07 08/07 15/07 22/07 29/07 05/08 12/08 19/08 26/08 02/09
- 26. Stories 100 120 20 40 60 80 0 23/10 30/10 06/11 © 2010 Energized Work 13/11 20/11 27/11 04/12 11/12 18/12 25/12 01/01 08/01 15/01 22/01 29/01 05/02 12/02 19/02 26/02 04/03 11/03 18/03 25/03 26 01/04 08/04 15/04 Throughput [ Per Week ] 22/04 29/04 06/05 13/05 20/05 are we building the right thing? 27/05 03/06 10/06 17/06 24/06 01/07 08/07 release | sustain throughput 15/07 22/07 29/07 05/08 12/08 19/08 26/08 02/09
- 27. are we building the right thing? release | profit, revenue and cost [ Accumulated ] Profit, Revenue and Capacity Cost 5,000,000 4,000,000 3,000,000 £ 2,000,000 1,000,000 0 -1,000,000 Capacity Cost Profit Revenue © 2010 Energized Work 27
- 28. £ 50,000 0 100,000 150,000 200,000 250,000 300,000 350,000 23/10 © 2010 Energized Work 30/10 06/11 13/11 20/11 27/11 04/12 11/12 18/12 24/12 08/01 15/01 22/01 29/01 Inventory 05/02 12/02 19/02 26/02 04/03 11/03 Started WIP 18/03 25/03 28 01/04 Total Sleeping Money 08/04 15/04 22/04 Ready to Start WIP 29/04 06/05 13/05 20/05 are we building the right thing? 27/05 03/06 10/06 Prepared WIP release | sleeping money 17/06 24/06 01/07 08/07 15/07 22/07 29/07 05/08 12/08 19/08 26/08 02/09
- 29. are we building the thing right? release prepare / prioritize release play 1 week show © 2010 Energized Work 29
- 30. are we building the thing right? release | effectiveness Effectiveness [ Per Week ] 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 10 Rework [ Per Week ] 5 0 -5 -10 -15 -20 -25 Repaid Debt Fixed Defects Debt Defects © 2010 Energized Work 30
- 31. Stories 100 120 140 20 40 60 80 0 23/10 30/10 06/11 © 2010 Energized Work 13/11 20/11 27/11 04/12 11/12 18/12 24/12 08/01 15/01 22/01 THROUGHPUT 29/01 05/02 12/02 19/02 26/02 INVENTORY 04/03 11/03 18/03 25/03 STARTED 31 01/04 08/04 15/04 Flow [ Per Week ] 22/04 29/04 06/05 13/05 READY TO START 20/05 27/05 are we building the right thing? 03/06 10/06 release | work in process PREPARED 17/06 24/06 01/07 08/07 15/07 22/07 29/07 05/08 12/08 19/08 26/08 02/09
- 32. are we building the thing right? release | software isn’t the product © 2010 Energized Work 32
- 33. are we building the thing right? release | make time for innovation © 2010 Energized Work 33
- 34. are we building the right thing? story pull queue for implement ~ 2 days release done? © 2010 Energized Work 34
- 35. are we building the right thing? story | iterating functional depth - jeff patton © 2010 Energized Work 35
- 36. are we building the thing right? story pull queue for implement ~ 2 days release done? © 2010 Energized Work 36
- 37. are we building the thing right? story | rolling ownership Day 1 Owner Day 2 Owner Morning Kris Pirate Rob Kev Odette After lunch Odette Kris Gus Kev © 2010 Energized Work 37
- 38. are we building the thing right? story | generalizing specialists ‘for there can be no mind so inept, that after devoting itself to one single thing and doing it constantly, it should fail to do it well’ - da vinci © 2010 Energized Work 38
- 39. are we building the right thing? slice agree new slice adjust implement ~ 2 hours feedback © 2010 Energized Work 39
- 40. are we building the right thing? slice | opportunities for feedback © 2010 Energized Work 40
- 41. are we building the thing right? slice agree new slice adjust implement ~ 3 hours feedback © 2010 Energized Work 41
- 42. are we building the thing right? slice | work from the outside in © 2010 Energized Work 42
- 43. are we building the thing right? slice | broken builds are annoying © 2010 Energized Work 43
- 44. are we building the right thing? pomodoro select most relevant task work refocus 25 minutes on task review progress © 2010 Energized Work 44
- 45. are we building the thing right? pomodoro select most relevant task work refocus 25 minutes on task review progress © 2010 Energized Work 45
- 46. are we building the thing right? pomodoro | test-driven development © 2010 Energized Work 46
- 47. don’t aim at targets ‘measures should reflect the true purpose of the people doing the work’ - freedom from command and control, john seddon © 2010 Energized Work 47
- 48. small is beautiful © 2010 Energized Work 48
- 49. understand why customers business product investment re-invest economics release stand-up showcase release features product champion pull a new story story accepts story is done get feedback exploratory testing pair swap slice identify slice finish pomodoro set discuss acceptance criteria pull in updates from other pairs pomodoro start first pomodoro weeds time © 2010 Energized Work 49
- 50. listen © 2010 Energized Work 50
- 51. attitude willingness to change + awareness understanding context © 2010 Energized Work 51
- 52. concept to cash include customers measure success in terms of customer satisfaction and profit © 2010 Energized Work 52
- 53. concept to cash use insight and feedback to learn and improve tie every action to the big picture © 2010 Energized Work 53
- 54. concept to cash make decisions at the coalface make economics part of every decision © 2010 Energized Work 54
- 55. #concept2cash twitter #spa2010 http://www.energizedwork.com/ sessions/concepttocash © 2010 Energized Work 55
- 56. License This presentation is provided under the Creative Commons Attribution Share Alike 3.0 Unported License. You are free: To share – to copy, distribute and transmit the work To remix – to adapt the work Under the following conditions: Attribution – You must attribute the work in the manner specified by Energized Work (but not in any way that suggests that Energized Work endorse you or your use of the work). Share Alike – If you alter, transform, or build upon this work, you may distribute the resulting work only under the same or similar license to this one. © 2010 Energized Work 56
Editor's Notes
- 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- We work at a product development studio called Energized Work 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- If you’re tweeting, these are the twitter tags for the session 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- We’ll surface everything on this session at this url 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] Product development should deliver products that delight customers Delighted customers become loyal customers They give us repeat business + they do our marketing for us They tell their friends + family who then give us their business 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] We also want products to be profitable so we need to pursue features that generate revenue 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] Customer satisfaction and profit are 2 measures of a successful product To be successful we must balance what customers want against what the business needs The product has its own needs too And we must always be mindful of the economics 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- 80% of the risk is delivering the wrong product Does the business really know what’s best for customers? Do customers even know what they want? We also don’t know the most effective way to deliver whatever’s needed We face significant uncertainty The product is a moving target 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- To cope with uncertainty we must learn and adapt quickly Otherwise we carry on doing the same thing + run the risk of going out of business Agile brought adaptability to our attention. But the movement focuses primarily on technical practices + team dynamics What’s needed is agility in the entire product development effort Product development is still viewed as a one-way producer-consumer model but actually there’s flow in two directions Features flow to customers. Information flows back into product development from the customers, directly and indirectly To maximize our learning we need short cycles that provide rapid feedback 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] Organization structures make it difficult for people to see connections between their world + the customer, business + economic views of the product Consequently we see products that don’t solve customer problems Or they don’t fit with the business strategy Or they don’t make money Or maybe they’re just useless because their quality is so bad We view product development as a system that includes customers We use measurements that tell us how we’re doing + how well we’re working in terms of delighting customers + realizing profit 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] When we analyze these measurements over time we gain valuable insight into how the system behaves 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- If we sit on insight we gain nothing We need to act on feedback while our insight is still relevant But information doesn’t just decay with time it decays with distance The further away from the coalface we are the less context we have + the less likely we are to make good decisions Not only do we need to act quickly + be responsive We must also do it close to where the action is 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- With fresh insight and new ideas, we run experiments to validate our thinking on how to improve the way we work Using Deming’s PDCA cycle, product development becomes a test-driven delivery system We use it to drive product development + tackle the uncertainty of building the wrong thing While learning to build it in the most effective way to compete on the basis of speed 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- The PDCA cycle reflects experiential learning theory Individuals have a concrete experience followed by a period of reflective observation They develop an abstract model of the forces at play + use it as a basis for experimentation The product development environment is conducive to this style of learning 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- We use PDCA as a learning cycle at 5 different levels in product development 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] So how we use PDCA to help us build the right thing? And … 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] How we use PDCA to help us build the thing right? 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] Business cases + product ideas are hypotheses that need to be proven We use PDCA as an investment cycle to fund product development incrementally We create a charter that sets the direction for the investment period. And a high-level plan maps out a rough course for the product using post-it notes The product is delivered iteratively over 3 months And at the end we assess how it has performed in the market + decide whether to reinvest If we do reinvest, a new charter incorporates what we’ve learned + sets the direction for the next investment period 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] We use a simplified P/L to manage product development by cash flow rather than by balance sheet What this means is that every cost is a direct cost There are no assets; only the cost of capacity This doesn’t replace the usual accounting that happens that includes OPEX, CAPEX, depreciation etc 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] Short investment cycles prevent over-commitment to long-term plans They help maintain investment options across a portfolio of products (back the winners) They also allow budgets to be used more effectively to respond to changing markets And the feedback injects reality into the budgeting process 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] In driving profit our primary aim is to increase revenue But to maximize return in the investment cycle we must reduce operational costs without reducing capacity We don’t want to just cut costs so we use PDCA helps find + remove the causes of costs Cutting capacity to cut costs is the last resort 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] Our setup is simple + organized around products Everyone involved in the product sits together in the same room, including the business And is 100% focused on the product We remove dependencies + we control all the environments This compresses the value stream + eliminates endemic waste + removes many sources of special cause variation Allows us to operate freely + act on learning We call it a product stream + you can think of it as a small business with the attitude, behaviors + drive of a start-up 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- Once a product stream is operational we want to know how the product is performing Given performance we want to understand what investment options exist to grow the product Analyzing the utilization, hygiene and availability measurements we can determine how to scale the product to serve more customers reliably 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- We have a weekly release cadence The product champion distils the high-level plan into stories to balance customer, business + product needs As empty slots appear in the backlog, the product champion prioritizes stories based on feedback + insight from the latest measurements We hold a showcase at the same time every week to demonstrate features that will be released 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- The showcase provides a regular opportunity to check in with the business + gauge their mood We get feedback about how they perceive the product + where they think it’s going The showcase is a PR event for the product We rehearse before it starts because it influences the next investment cycle We run usability labs as often as possible to check the product with customers We also do A/B testing + surveys 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] We must sustain throughput to get feedback from customers To drive profit we must release features regularly that satisfy value demand 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] To help us understand if we’re prioritizing the right things we watch the financials to see if successive releases are generating revenue 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] We also watch inventory levels Inventory is completed stories that haven’t been released yet (red areas) Like finished goods on a shelf, inventory stories cost us money + because they can’t generate revenue we also incur a cost of delay Our aim is to run with zero inventory week to week 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- We reserve capacity to address the product’s health needs We undertake technical work every week to maximize our effectiveness Including managing technical debt + improving automation Spikes are used to explore the feasibility of different options 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] Effectiveness is a measure of a product stream’s ability to sustain throughput + minimize failure demand Failure demand is rework, including technical debt + defects We fix defects immediately; it’s a stop-the-line event We don’t want to get bogged down in technical debt so we manage it carefully Debt from a hack is irresponsible. It’s avoidable rework. Debt that surfaces because the product is maturing is inevitable rework It's necessary to do this rework regularly to keep everything healthy + cheap to change We call timeouts + do weekly retrospectives to study measurements, root cause problems + formulate ways to improve how we work 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] To maintain steady flow we limit the amount of work-in-process The different colors correspond to different states on the Kanban board Prepared Waiting to start Started Ready to release Released When cards are blocked we work on removing the obstacles as a priority 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- To support weekly releases we maintain a repeatable one-click deployment Configuration is separated from software to avoid environment-specific binaries Environments are scaled replicas of production + include load balancing, monitoring + network layout We support all the environments ourselves, including production This stops us shipping crap + helps us learn how the product behaves in the wild We can take full advantage of the environments with aspects such as monitoring, alerting + reporting built into the stories 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- We make time for innovation Every Friday afternoon people get to work on what they want It’s about technical + business innovation to explore ideas that could improve the product 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- Iteration techniques keep us receptive to discovery We deliver a minimal feature as early as possible And we revisit the feature over time in response to customer feedback, iterating the functionality with subsequent stories This way we invest more wisely to deliver what customers want + not what we think they want 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] Stories take, on average, 2 days to complete We plan stories just in time This defers discussions about a story until we have the capacity to build it 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] We use rolling ownership to get as many people as possible involved in delivering a story This helps spread knowledge of the product around the team We have 2 stand-ups every day In the morning, when a new story is pulled into play, someone owns it + someone pairs in They work on the story until lunchtime After lunch the pairs swap The owners move on, pass ownership to the morning partners + others pair in 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- People acquire competence in disciplines they don’t specialize in 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] We develop stories in demonstrable slices that satisfy 1 or more acceptance criteria Acceptance criteria capture the ‘what’ in language customers understand + we code them using BDD When a pair completes a slice they get feedback to check they’re building the right thing They adjust their plan for the next slice, if necessary 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] Slicing creates recurring opportunities for feedback as stories are being built, which helps people understand the big picture When a slice is started a red dot is stuck on the card Feedback from testers gets a blue dot Yellow for designers, information architects or other UX people Orange for the product champion + customers if they’re accessible A completed story ready for release gets a green dot Released stories go in a separate column on our Kanban board Collaboration with specialists isn’t limited to dot conversations People with different specialties pair up to build usability, SEO into the product slice by slice 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- People check in before going to far to quickly confirm what they’ve done works 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- We develop stories in vertical slices working inwards from the users’ experience Working this way helps us avoid getting lost in the detail We don’t jump straight into ‘unit land’ because trying to connect all the pieces at the end doesn’t produce the best results By traversing all layers of the system in every slice we realize better design Before implementing a slice the pair discuss acceptance criteria with a tester giving him a heads-up on what’s coming next 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- The build is the focal point of the team As each slice is checked in, the continuous integration system builds, deploys + automatically tests the product on virtualized environments to verify it works from end to end If the build fails the CI system displays a red screen + makes an annoying noise A pair stops what they’re doing + fix the build They wear silly hats to let others know they're on the case Nobody checks in until the build works A tester then deploys the product to his test environment + performs exploratory testing 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- Pomodoro technique is a personal effectiveness approach that employs 25min time-boxes We plan + prioritize the tasks we need to do + work on the most important 1 for a pomodoro Taking a few minutes off + letting our minds wander away from the subject encourages reflection, helps us see new connections, keeps us energized Then we assess how we've done with regard to the big picture Are we any closer to the right thing? Should we change direction? What did we learn? 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- We use the pomodoro technique to continuously assess whether we are building the thing in the right way It stops us getting lost in the weeds It allows us to take baby steps + reverse if we take a wrong turn 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- Consider test-driven development There are 2 reinforcing feedback cycles Plan what's next - work for a pomodoro - come up for air – reassess and go again Write the test (i.e. plan what the product should do) - run it - check the outcome (red / green) - act on it (implement / refactor) We write tests for the functional, environmental and operational aspects of the product Including monitoring, failover, deployment, backup, performance tests 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- [S] If we measure the wrong things we may make decisions that oppose what we’re trying to achieve Measuring customer satisfaction + profit helps us pursue revenue generation Obsessing about costs to come in on budget doesn’t Measuring throughput + failure demand helps us deliver more effectively Treating velocity as a productivity target doesn’t It’s the difference between targets to control performance + measurements that drive improvement 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- Big system scaled from a small working system won’t produce bigger results It’s a different system and it won’t behave in the same ways Complex systems generate their own data The bigger they get the more noise they generate We lose the signal and we can’t hear the voice of the customer Worse still, we can’t adapt because the system is too busy supporting itself Big systems breed specialization, which comes at the cost of organization complexity and all its constraints – dependencies, bottlenecks, handovers 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- Operating at different levels + thinking about the product from different perspectives gives us different contexts Trick is combining feedback from these contexts to gain insight into the system as a whole To get a feel for how this thing hangs together And a lot of the things we do help us achieve this 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- The problem with feedback is that many people don’t want it It’s ignored You can get feedback from the customers, the business, the product and the bottom line But if you don’t use it to improve you risk losing customers and declining profit 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- By demonstrating a willingness to act upon feedback in the context of the system You can determine what the next experiment should be 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- Our efforts here attempt to bring it all together to achieve more effective product development Include its customers Measures success in terms customer satisfaction and profit 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- Uses insight and feedback to learn + improve Tie every action to the big picture 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- Make decisions at the coalface Make economics part of every decision 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- Thank you 16/05/10 © Energized Work Limited 2010 Spa 2010 - Concept to Cash
- Spa 2010 - Concept to Cash 16/05/10 © Energized Work Limited 2010