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dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Presenter
David J. Anderson
CEO
Agile Business Conference
London
October 2014
Release 1.0
Fit For Purpose
Resilience & Agility in Modern Business
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
http://lkuk.leankanban.com
America Square Conference Centre
London
Register now!
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Understanding
“fitness for purpose”
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
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)
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
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
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
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!
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Lesson 1
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
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
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
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
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Lesson 2
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Neeta has 2 identities –
Mother and Project Manager
Each of Neeta’s identities
represents a different market
segment for the pizza delivery
service
Traditional demographic &
income group segmentation does
not accurately capture the
context to understand
“fit for purpose”
Nor, for that matter, do
personas. As Neeta represents
two segments not just one
persona
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Defining Fitness Criteria
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Market Adoption Lifecycle Segmentation
Enthusiasts Early
Adopters
Early
Majority
Late
Majority
Laggards
Rate
Of
Market
Adoption
time
Moore’s
Chasm
Little
Chasm
Hip
Cool
Buggy
Community
development
Niche
Market
Features
Good func quality
Adequate non-func
quality
Permission
Giving
Early adopter
Exceptional
func and non-
func quality
Cost
Effective
Broad Features
Exceptional
func and non-
func quality
Low Cost
Easy Access
Forced adoption
Viewed as
taxation
Fit for purpose Fit for purposeChange of time
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Customer Storytelling & Clustering
Tell stories about real
customers, their
motivation, what they
buy and why. Cluster
similar stories
Give each cluster a “nickname”
e.g.
• “All ins”
• “Aspirationals”
• “Bet hedgers”
• “Boy scouts”
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
You can’t just ask!
Neeta, how fast would
you like your pizza
delivered? How
predictable do you need
us to be with our delivery
estimate?
Customers will tend to tell
you they need better service
and more features than they
really need!
Would you pay more for
the things you say you
need and want?
No, probably not!
Believe what customers
actually do, do not believe
what they say they’ll do!
Actually behavior will vary
from declared intent!
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Who knows your customers?
• Front line staff
• Those who take and those
who deliver orders
• Those who provide
“customer care”
• Often the lowest paid staff
in a business
• Often the highest turnover,
shortest tenured positions
• And yet, they have the vital
information that enables the
business to survive, thrive
and compete
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Pizza boy knows Neeta’s Story!
Staff who meet customers
can be trained to learn
what matters to them
and why
Create ways to capture
customer stories or directly
involve customer facing staff
when defining customer
segments fitness criteria
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
GT car manufacturer story
A well known manufacturer
of GT cars determined
customers were prepared to
wait 21 months to take
delivery
They learned this by letting
delivery time slip to 27 months
and receiving cancellations and
customers switching to a rival
manufacturer
Determining fitness
criteria thresholds by
reducing service levels until
customer complaints rise
to dangerous levels isn’t a
“safe to fail” approach!
Damaging your brand,
your reputation and your
profitability is a strange
way to discover how to
be…
“fit for purpose!”
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Retarding customer service until
customers complain vehemently or
take their business elsewhere could
be damaging
• Undermines brand
• Damages reputation
• Loss of market share
• Loss of revenue
Probing for threshold values by
reducing service quality isn’t “safe to
fail”
Is it “safe to fail”?
We need general guidance
that allows us to probe
for fitness criteria
threshold values that is
“safe to fail”
If we can’t ask, and we can’t
allow service to decline until
complaints make the
threshold evident, what can
we do?
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Look for clusters or
patterns of demand, or
similar expectations, or
emerging segments
Probe with classes of service
Create a class of service to
respond to the believed new
segment
• Set service levels at or close to
anticipated threshold levels
Observe take up of class of service
• Is it over-used? (or abused?) If so
tighten qualification criteria
• Is it under-used? Consider removing
it
Fixed delivery date class of
service emerged this way.
Initially abused by
marketing, eligibility
criteria were tightened
up.
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Telecom Equipment Example
A platform maintenance
department at a telecom
equipment manufacturer
receives demand only from
internal application
departments…
… Each request is tagged with the
originating telco operator for
whom the request is being
implemented. Each operator is
given a lane on the kanban board
Imagine 3 American telco operators
with different strategic positions…
• Verizon value quality most
• Sprint value time-to-market
• Voicestream/T-Mobile USA values low
cost
Now design and offer 3
classes of service…
• High quality, tight “done”
criteria for each step
• Short lead time – pull priority,
looser “done” criteria
• Low cost – junior staff, lowest
priority compared to other
work
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Different lanes, different risks
Done
F
E
I
Engin-
eering
Ready
Deploy-
ment
Ready
G
D
GY
PB MN
10 ∞
P1
AB
Ongoing
Development Testing
Done Verification Acceptance
10 10
Verizon 10
10
Sprint
T-Mobile
10
DE
DA
Each lane represents a different
source of demand but also
different fitness criteria and
threshold values
Different classes of service and
different pull criteria policies are
defined for each lane providing
service levels tuned to the “fitness
for purpose” expectations of each
customer
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Lesson 3
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
To have confidence you are
offering a service that is “fit for
purpose”, you must offer different
classes of service
To serve more than one market
segment adequately, you must
offer a selection of classes of
service
Classes of service should align to
market segments and fitness
criteria (or stakeholders needs)
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Service Delivery Kanban
improves business agility
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
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!
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
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
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
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!
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Lesson 4
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Kanban systems decouple
planning, prioritization &
commitment from lead time and
delivery scheduling
Service delivery can be tuned to
the dynamics of the business
environment and evolve to be
“fitter for purpose”
Kanban doesn’t use time-boxed
iterations, or conventional
planning or prioritizaztion
methods
Instead commitment is deferred,
selection is “just-in-time” and
prioritization is dynamic & based
on class of service
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Adapting to deliver better service
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Each service delivery workflow can have its
own kanban system
Demand
Observed
Capability
Demand
Demand
Observed
Capability
Observed
Capability
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Dependencies between systems create
an ecosystem
Demand
Observed
Capability
Demand
Demand
Observed
Capability
Observed
Capability
Looking downstream, you want the
system to help you anticipate and
manage dependenciesLooking upstream, you want the
system to help you anticipate and
manage demand
Combine the two, and across the
organization you smooth flow
end-to-end improving lead times
and predictability
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Feedback is needed at 3 levels
Operations
Review
Service
Delivery
Review
Standup
Meeting
daily
weekly
monthly
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Standup Meeting
Daily
Disciplined conduct and
acts of leadership lead to
improvement
opportunities
Problem solving &
improvement discussions
are taken outside the
meeting
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Service Delivery Review
Weekly
A focused discussion about system capability
Usually in private (often 1-1) between a more senior manager and
individual(s) responsible for the system operation
Review against fitness criteria metrics, e.g. current capability versus lead time
SLA with 60 day, 85% on-time target
Discuss shortfalls against (customer) expectations
Analyze for assignable/special cause versus chance/common cause
Discuss options for risk mitigation & reduction or system design changes to
improve observed capability against expectations
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Buffer dependencies, agree SLAs
5 4 43 2 2
...Input
Queue
Dev
Ready In Prog DoneDoneIn Prog
DevelopmentAnalysis Build
Ready Test
Release
Ready
Waiting on
External Group
Late against SLA
Dots denote clock
ticking on SLA
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Operations Review
Monthly
Disciplined review of
demand and capability for
each kanban system
Provides system of
systems view and
understanding
System changes are
suggested by attendees
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Risks, fitness criteria & classes of service
should be explicit & transparent at all levels
Operations
Review
Service
Delivery
Review
Standup
Meeting
Lead time
Quality
Predictability
Lead time
Quality
Predictability
Lead time
Quality
Predictability
daily
weekly
monthly
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Organizational Improvements Emerge
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Lesson 5
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Adaptation and evolution requires
feedback loops to generate
“mutations” (suggested changes)
Fitness criteria metrics from the
external environment should be
used to evaluate fitness and guide
evolutionary changes regardless of
the level in the organization
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Sensing Changes in Market
Conditions
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
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
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
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?
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
“Fitness For Purpose” Review
Regular recurring meeting
with front-line staff
• Perhaps performed at different
organizational levels to roll-up
information in larger scale
organizations
Review customer stories
• Do they map to existing
clusters?
• Or, do we see emerging new
clusters?
Review Fitness criteria
• Do we perceive customers of a
given cluster/segment are happy
and consider us “fit for purpose”
• What services or product features
or service delivery expectations
have emerged or changed?
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Integration with Net Promoter Score
• NPS should have a 2nd question “Why did you give
this rating?” which has a micro-narrative answer
• Micro-narratives can be clustered with SenseMaker
software. Segments identified and fitness criteria
suggested and tested
Making sense of supplementary
question responses by clustering
& interpreting fitness criteria
makes Net Promoter Score
actionable!
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Lesson 6
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
We need the ability to “sense” or
our ability to “respond” may no
longer be appropriate
Our sensing capability exists with
our staff who interact directly
with customers, we must involve
them directly in our feedback
loops & metrics definition
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Conclusions
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
1. “Fitness for Purpose”
has both a product
component & a service
delivery component
2. Market segmentation
should be done based
on unique fitness
criteria metrics
3. To be confident you are
“fit for purpose” you
must offer a selection of
classes of service
aligned against fitness
criteria metrics
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
4. Kanban decouples
planning, lead time &
delivery activities
increasing business
agility
5. Adaptation requires
feedback loops & these
should be driven by
evaluation against fitness
criteria metrics
6. Without a capability to
“sense” our ability to
“respond” may be
inappropriate. We need a
“sensing” feedback loop
involving customer facing
personnel
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
http://lkuk.leankanban.com
America Square Conference Centre
London
Register now!
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Thank you!
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
David Anderson is an innovator in
the 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 the Modern Management Framework 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 CEO of David J. Anderson & Associates Inc., a
consulting and training firm operating globally offering
management training solutions for 21st Century businesses
where employees make performance defining decisions daily.
About
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
Acknowledgements
Customer storytelling and segmentation by clustering stories will be recognized
by some as a form of Dave Snowden’s Sense Making exercise.
“Safe to fail” is an approach to experimental, evolutionary adaptation to a
complex and changing environment, also advocated by Dave Snowden.
Sense and Respond was inspired by Stephen Parry and his book of the same
title.
dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.

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"Fitness for Purpose" - Resilience & Agility in Modern Business

  • 1. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Presenter David J. Anderson CEO Agile Business Conference London October 2014 Release 1.0 Fit For Purpose Resilience & Agility in Modern Business
  • 2. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. http://lkuk.leankanban.com America Square Conference Centre London Register now!
  • 3. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Understanding “fitness for purpose”
  • 4. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. 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)
  • 5. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. 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
  • 6. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. 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!
  • 7. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Lesson 1
  • 8. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. 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
  • 9. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. 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
  • 10. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Lesson 2
  • 11. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Neeta has 2 identities – Mother and Project Manager Each of Neeta’s identities represents a different market segment for the pizza delivery service Traditional demographic & income group segmentation does not accurately capture the context to understand “fit for purpose” Nor, for that matter, do personas. As Neeta represents two segments not just one persona
  • 12. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Defining Fitness Criteria
  • 13. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Market Adoption Lifecycle Segmentation Enthusiasts Early Adopters Early Majority Late Majority Laggards Rate Of Market Adoption time Moore’s Chasm Little Chasm Hip Cool Buggy Community development Niche Market Features Good func quality Adequate non-func quality Permission Giving Early adopter Exceptional func and non- func quality Cost Effective Broad Features Exceptional func and non- func quality Low Cost Easy Access Forced adoption Viewed as taxation Fit for purpose Fit for purposeChange of time
  • 14. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Customer Storytelling & Clustering Tell stories about real customers, their motivation, what they buy and why. Cluster similar stories Give each cluster a “nickname” e.g. • “All ins” • “Aspirationals” • “Bet hedgers” • “Boy scouts”
  • 15. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. You can’t just ask! Neeta, how fast would you like your pizza delivered? How predictable do you need us to be with our delivery estimate? Customers will tend to tell you they need better service and more features than they really need! Would you pay more for the things you say you need and want? No, probably not! Believe what customers actually do, do not believe what they say they’ll do! Actually behavior will vary from declared intent!
  • 16. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Who knows your customers? • Front line staff • Those who take and those who deliver orders • Those who provide “customer care” • Often the lowest paid staff in a business • Often the highest turnover, shortest tenured positions • And yet, they have the vital information that enables the business to survive, thrive and compete
  • 17. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Pizza boy knows Neeta’s Story! Staff who meet customers can be trained to learn what matters to them and why Create ways to capture customer stories or directly involve customer facing staff when defining customer segments fitness criteria
  • 18. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. GT car manufacturer story A well known manufacturer of GT cars determined customers were prepared to wait 21 months to take delivery They learned this by letting delivery time slip to 27 months and receiving cancellations and customers switching to a rival manufacturer Determining fitness criteria thresholds by reducing service levels until customer complaints rise to dangerous levels isn’t a “safe to fail” approach! Damaging your brand, your reputation and your profitability is a strange way to discover how to be… “fit for purpose!”
  • 19. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Retarding customer service until customers complain vehemently or take their business elsewhere could be damaging • Undermines brand • Damages reputation • Loss of market share • Loss of revenue Probing for threshold values by reducing service quality isn’t “safe to fail” Is it “safe to fail”? We need general guidance that allows us to probe for fitness criteria threshold values that is “safe to fail” If we can’t ask, and we can’t allow service to decline until complaints make the threshold evident, what can we do?
  • 20. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Look for clusters or patterns of demand, or similar expectations, or emerging segments Probe with classes of service Create a class of service to respond to the believed new segment • Set service levels at or close to anticipated threshold levels Observe take up of class of service • Is it over-used? (or abused?) If so tighten qualification criteria • Is it under-used? Consider removing it Fixed delivery date class of service emerged this way. Initially abused by marketing, eligibility criteria were tightened up.
  • 21. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Telecom Equipment Example A platform maintenance department at a telecom equipment manufacturer receives demand only from internal application departments… … Each request is tagged with the originating telco operator for whom the request is being implemented. Each operator is given a lane on the kanban board Imagine 3 American telco operators with different strategic positions… • Verizon value quality most • Sprint value time-to-market • Voicestream/T-Mobile USA values low cost Now design and offer 3 classes of service… • High quality, tight “done” criteria for each step • Short lead time – pull priority, looser “done” criteria • Low cost – junior staff, lowest priority compared to other work
  • 22. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Different lanes, different risks Done F E I Engin- eering Ready Deploy- ment Ready G D GY PB MN 10 ∞ P1 AB Ongoing Development Testing Done Verification Acceptance 10 10 Verizon 10 10 Sprint T-Mobile 10 DE DA Each lane represents a different source of demand but also different fitness criteria and threshold values Different classes of service and different pull criteria policies are defined for each lane providing service levels tuned to the “fitness for purpose” expectations of each customer
  • 23. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Lesson 3
  • 24. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. To have confidence you are offering a service that is “fit for purpose”, you must offer different classes of service To serve more than one market segment adequately, you must offer a selection of classes of service Classes of service should align to market segments and fitness criteria (or stakeholders needs)
  • 25. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Service Delivery Kanban improves business agility
  • 26. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. 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!
  • 27. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. 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
  • 28. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. 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!
  • 29. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Lesson 4
  • 30. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Kanban systems decouple planning, prioritization & commitment from lead time and delivery scheduling Service delivery can be tuned to the dynamics of the business environment and evolve to be “fitter for purpose” Kanban doesn’t use time-boxed iterations, or conventional planning or prioritizaztion methods Instead commitment is deferred, selection is “just-in-time” and prioritization is dynamic & based on class of service
  • 31. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Adapting to deliver better service
  • 32. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Each service delivery workflow can have its own kanban system Demand Observed Capability Demand Demand Observed Capability Observed Capability
  • 33. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Dependencies between systems create an ecosystem Demand Observed Capability Demand Demand Observed Capability Observed Capability Looking downstream, you want the system to help you anticipate and manage dependenciesLooking upstream, you want the system to help you anticipate and manage demand Combine the two, and across the organization you smooth flow end-to-end improving lead times and predictability
  • 34. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Feedback is needed at 3 levels Operations Review Service Delivery Review Standup Meeting daily weekly monthly
  • 35. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Standup Meeting Daily Disciplined conduct and acts of leadership lead to improvement opportunities Problem solving & improvement discussions are taken outside the meeting
  • 36. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Service Delivery Review Weekly A focused discussion about system capability Usually in private (often 1-1) between a more senior manager and individual(s) responsible for the system operation Review against fitness criteria metrics, e.g. current capability versus lead time SLA with 60 day, 85% on-time target Discuss shortfalls against (customer) expectations Analyze for assignable/special cause versus chance/common cause Discuss options for risk mitigation & reduction or system design changes to improve observed capability against expectations
  • 37. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Buffer dependencies, agree SLAs 5 4 43 2 2 ...Input Queue Dev Ready In Prog DoneDoneIn Prog DevelopmentAnalysis Build Ready Test Release Ready Waiting on External Group Late against SLA Dots denote clock ticking on SLA
  • 38. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Operations Review Monthly Disciplined review of demand and capability for each kanban system Provides system of systems view and understanding System changes are suggested by attendees
  • 39. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Risks, fitness criteria & classes of service should be explicit & transparent at all levels Operations Review Service Delivery Review Standup Meeting Lead time Quality Predictability Lead time Quality Predictability Lead time Quality Predictability daily weekly monthly
  • 40. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Organizational Improvements Emerge
  • 41. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Lesson 5
  • 42. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Adaptation and evolution requires feedback loops to generate “mutations” (suggested changes) Fitness criteria metrics from the external environment should be used to evaluate fitness and guide evolutionary changes regardless of the level in the organization
  • 43. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Sensing Changes in Market Conditions
  • 44. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. 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
  • 45. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. 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?
  • 46. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. “Fitness For Purpose” Review Regular recurring meeting with front-line staff • Perhaps performed at different organizational levels to roll-up information in larger scale organizations Review customer stories • Do they map to existing clusters? • Or, do we see emerging new clusters? Review Fitness criteria • Do we perceive customers of a given cluster/segment are happy and consider us “fit for purpose” • What services or product features or service delivery expectations have emerged or changed?
  • 47. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Integration with Net Promoter Score • NPS should have a 2nd question “Why did you give this rating?” which has a micro-narrative answer • Micro-narratives can be clustered with SenseMaker software. Segments identified and fitness criteria suggested and tested Making sense of supplementary question responses by clustering & interpreting fitness criteria makes Net Promoter Score actionable!
  • 48. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Lesson 6
  • 49. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. We need the ability to “sense” or our ability to “respond” may no longer be appropriate Our sensing capability exists with our staff who interact directly with customers, we must involve them directly in our feedback loops & metrics definition
  • 50. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Conclusions
  • 51. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. 1. “Fitness for Purpose” has both a product component & a service delivery component 2. Market segmentation should be done based on unique fitness criteria metrics 3. To be confident you are “fit for purpose” you must offer a selection of classes of service aligned against fitness criteria metrics
  • 52. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. 4. Kanban decouples planning, lead time & delivery activities increasing business agility 5. Adaptation requires feedback loops & these should be driven by evaluation against fitness criteria metrics 6. Without a capability to “sense” our ability to “respond” may be inappropriate. We need a “sensing” feedback loop involving customer facing personnel
  • 53. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. http://lkuk.leankanban.com America Square Conference Centre London Register now!
  • 54. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Thank you!
  • 55. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.
  • 56. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. David Anderson is an innovator in the 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 the Modern Management Framework 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 CEO of David J. Anderson & Associates Inc., a consulting and training firm operating globally offering management training solutions for 21st Century businesses where employees make performance defining decisions daily. About
  • 57. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd. Acknowledgements Customer storytelling and segmentation by clustering stories will be recognized by some as a form of Dave Snowden’s Sense Making exercise. “Safe to fail” is an approach to experimental, evolutionary adaptation to a complex and changing environment, also advocated by Dave Snowden. Sense and Respond was inspired by Stephen Parry and his book of the same title.
  • 58. dja@djaa.com @djaa_dja Copyright David J. Anderson & Associates (UK) Ltd.

Editor's Notes

  1. 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
  2. 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
  3. 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
  4. Delivery frequency also relates to quality. Poor quality will affect the customer willingness to take more frequent delivery
  5. Kanban closes the learning loop using 3 feedback mechanisms: the standup meeting in front of the kanban board the manager to subordinate meetings (both 1-1 and 1-team) the operations review meeting Ironically, these have come to known as the Kanban Kata. Ironic because Lee was opposed to Kata as they normally represent an open loop system without learning.