SlideShare a Scribd company logo
Joanne Molesky & Barry O’Reilly
@jemolesky #LeanEnterprise @barryoreilly
ENABLING
INNOVATIVE
CULTURE
Right now, your company has
21st century Internet enabled
business processes, mid 20th
century management processes,
all built atop 19th century
management principles.
- Gary Hamel, American Management Expert
MEET THE NEXT GENERATION
$1-2B Valuation $2-5B Valuation $5-40B Valuation $40+B Valuation
Sources: Dow Jones VentureSource and The Wall Street Journal. Valuations as of March 2015.
KEY FINDINGS OF 2014 DevOps Report
•High performance IT doubles your chance to
exceed profitability, market share and
productivity goals.
•DevOps practices strongly correlates with IT
performance
•Culture matters. Collaboration and
experimentation contribute to organizational
performance.
•Job satisfaction is the No. 1 predictor of
performance.
BUSINESS
CEO, COO, CFO, CMO
TECHNOLOGY
CIO, CTO, CDO
(Digtial and/or Data)
SOFTWARE IS EATING THE WORLD
BUSINESS
CEO, COO, CFO, CMO
TECHNOLOGY
CIO, CTO, CDO
(Digtial and/or Data)
SOFTWARE IS EATING THE WORLD
BUSINESS
CEO, COO, CFO, CMO
TECHNOLOGY
CIO, CTO, CDO
(Digtial and/or Data)
SOFTWARE IS EATING THE WORLD
BUSINESS
CEO, COO, CFO, CMO
TECHNOLOGY
CIO, CTO, CDO
(Digtial and/or Data)
SOFTWARE IS EATING THE WORLD
Technology as a strategic capability
Willingness to support experimentation
Iterative, adaptive working processes and practices
Reduce learning anxiety across organization
Ability to innovate at scale
CULTURE OF
EXPERIMENTATION
Theme 1
SHOOK’S VERSION
John Shook, MIT Sloan Management Review
CONTINUOUS IMPROVEMENT
Humble, Molesky, O’Reilly
Lean Enterprise: How High Performance Organizations Innovate At Scale
CONTINUOUS IMPROVEMENT
Humble, Molesky, O’Reilly
Lean Enterprise: How High Performance Organizations Innovate At Scale
PORTFOLIO

MANAGEMENT
Theme 2
DIFFUSION OF INNOVATION
Everett Rogers, Diffusions Of Innovations
CROSSING THE CHASM
Geoffrey Moore, Dealing With Darwin
CONTINUOUS LIFECYCLE OF INNOVATION
Geoffrey Moore, Dealing With Darwin
BUSINESS MODEL STRATEGIES
EXPLORE
• Uncertainty
• Complex
• Emergent
• Experimental
EXPLOIT
•Improved understanding
•Cause and effect
•Accumulated knowledge
•Forecast
INNOVATION PORTFOLIO
explore exploit sustain retire
kill kill kill kill
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
INNOVATION PORTFOLIO
explore exploit sustain retire
kill kill kill kill
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
INNOVATION PORTFOLIO
explore exploit sustain retire
kill kill kill kill
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
INNOVATION PORTFOLIO
explore exploit sustain retire
kill kill kill kill
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
INNOVATION PORTFOLIO
explore exploit sustain retire
kill kill kill kill
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
INNOVATION PORTFOLIO
explore exploit sustain retire
kill kill kill kill
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
INNOVATION PORTFOLIO
explore exploit sustain retire
kill kill kill kill
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
INNOVATION PORTFOLIO
explore exploit sustain retire
kill kill kill kill
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
INNOVATION PORTFOLIO
explore exploit sustain retire
kill kill kill kill
DISRUPT
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
PORTFOLIO MANAGEMENT
TRANSPARENCY AND ALIGNMENT
NOTICE A PATTERN?
NOTICE A PATTERN?
NOTICE A PATTERN?
PROOF OF DISRUPTION
G I G A F A C T O R Y
THE DISRUPTION POINT
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
CREATING
END-TO-END FLOW
Theme 3
The main obstacles to
improved business
responsiveness are slow
decision-making, conflicting
departmental goals and
priorities, risk-averse
cultures and silo-based
information.
Economist Intelligence Unit:

“Organizational agility: How business can survive

and thrive in turbulent times”
COMMAND AND CONTROL
Compliance rules
Risk models
Quality controls
Inspections
Balanced
scorecards
Target
and
incentives
Budget
contracts
Adapted from:http://www.bbrt.org/beyond-budgeting/bb-problem.html
COMMAND AND CONTROL
STRATEGY
EXECUTION
ALIGNMENT
Compliance rules
Risk models
Quality controls
Inspections
Balanced
scorecards
Target
and
incentives
Budget
contracts
Adapted from:http://www.bbrt.org/beyond-budgeting/bb-problem.html
COMMAND AND CONTROL
STRATEGY
EXECUTION
ALIGNMENT
MICRO
MANAGEMENT
CONTROL
ACCOUNTABLE
FOR TARGET

& BUDGET
Compliance rules
Risk models
Quality controls
Inspections
Balanced
scorecards
Target
and
incentives
Budget
contracts
Adapted from:http://www.bbrt.org/beyond-budgeting/bb-problem.html
COMMAND AND CONTROL
STRATEGY
EXECUTION
ALIGNMENT
MICRO
MANAGEMENT
CONTROL
ACCOUNTABLE
FOR TARGET

& BUDGET
Compliance rules
Risk models
Quality controls
Inspections
Balanced
scorecards
Target
and
incentives
Budget
contracts
Adapted from:http://www.bbrt.org/beyond-budgeting/bb-problem.html
THE CONTROL OF BUREAUCRACY
10-20% OF COSTS
TRADITIONAL VIEW
TRADITIONAL VIEW
BUSINESS
Many good ideas, we need money!
TRADITIONAL VIEW
BUSINESS
Many good ideas, we need money!
PROJECTS
We’re working, give us money!
TRADITIONAL VIEW
BUSINESS
Many good ideas, we need money!
PROJECTS
We’re working, give us money!
OPERATIONS
That doesn’t work – need more money!
STOP THE PROCESS MADNESS
Lean Enterprise Loop
Enterprise Loop
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
STOP THE PROCESS MADNESS
Lean Enterprise Loop
Enterprise Loop
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
STOP THE PROCESS MADNESS
Lean Enterprise Loop
Enterprise Loop
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
STOP THE PROCESS MADNESS
Lean Enterprise Loop
Enterprise Loop
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
Adhering to budgeting rules
should not trump good
decision making.
- Emily Oster, American Economist
WHAT COULD POSSIBLY GO WRONG?
!
!!!!
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
WHAT COULD POSSIBLY GO WRONG?
$$ $$
!
!!!!
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
$$
BIG PROJECT!
WHAT COULD POSSIBLY GO WRONG?
$$ $$
!
!!!!
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
$$
BIG PROJECT!NO CHANGE
WHAT COULD POSSIBLY GO WRONG?
$$ $$
!
!!!!
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
$$
BIG PROJECT!NO CHANGE
!
!!!!
WHAT COULD POSSIBLY GO WRONG?
$$ $$
!
!!!!
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
$$
BIG PROJECT!NO CHANGE
!
!!!!
WHAT COULD POSSIBLY GO WRONG?
OPERATION
COSTS
$$ $$
!
!!!!
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
$$
BIG PROJECT!NO CHANGE
!
!!!!
WHAT COULD POSSIBLY GO WRONG?
OPERATION
COSTS
$$
$$ $$
!
!!!!
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
$$
BIG PROJECT!NO CHANGE
!
!!!!
WHAT COULD POSSIBLY GO WRONG?
OPERATION
COSTS
$$
GREAT JOB!
$$ $$
!
!!!!
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
$$
BIG PROJECT!NO CHANGE
!
!!!!
WHAT COULD POSSIBLY GO WRONG?
OPERATION
COSTS
$$
GREAT JOB! WTF?
$$ $$
!
!!!!
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
FROM PROJECTS …
BUSINESS PROJECTS OPERATIONS
Many ‘good’ ideas -
WE NEED $$$!
We’re working -
GIVE US $$$!
That doesn’t work -
NEED MORE $$$!
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
TO PRODUCTS…
PRODUCTS / SERVICES OPERATIONS
Customers
Service DeskOps Management
Cross-Functional

Product Teams
Teams Push

Changes Continuously
Product Teams
for IaaS / PaaS
Infrastructure / 

Platform-As-A-Service
Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale
PERFORMANCE MEASUREMENT
PERFORMANCE MEASUREMENT
MEASURE THINGS THAT MATTER
•Do our customers advocate us to others?
•What is the outcome we achieved?
•Have we reduced complexity of our technology?
•Are we getting better?
TAKE AWAYS
TAKE AWAYS
Think Big, Start Now, Learn Fast
Continuous innovation is a strategic capability
Technology is the business
The Lean Institute:
http://www.lean.org
!
Management Innovation eXchange:
http://www.managementexchange.com/
!
Beyong Budgeting Round Table:
http://www.bbrtna.org/
OTHER RESOURCES
THANK YOU
Joanne Molesky
jmolesky@thoughtwoks.com @jemolesky
!
Barry O’Reilly

boreilly@thoughtworks.com @barryoreilly

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