Talk given at Lean Kanban Central Europe 2016 Update 23/12/2016: This updated version of the presentation corrects an error on the summary slide, which should have read: "Staff liquidity – allocate high skilled, multi-skilled staff after less flexible staff"

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Irrefutable Demand
When and why to say “no!”
Andy Carmichael PHD FBCS
@andycarmich ac@openxprocess.com
Twitter: #LKCE16
@andycarmich

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Southern Rail – the problems with
“irrefutable demand”
Sources of variation
• Driver Shortage
• Rolling Stock issues
• London Bridge expansion
• Ongoing signalling Issues
• Reactionary delay
• Dwell time
• Guards dispute
Pedantic of Purley. 2016. "Meltdown Monday: How Southern’s Problems Run Deeper Than
Disputes." July 10. http://www.londonreconnections.com/2016/railway-roulette/ (August 29,
2016).

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What is “irrefutable” demand?
Request for services that cannot be denied or refused
“we’ve already committed to do it”
“the boss wants it”
“there’s no one else that knows how to do it”
“it’s a legal requirement”
“the customer needs it”

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Kanban Values
Demand
Capability

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Demandfor theseservices
is morethanwe canfulfil
Thenyou mustincrease
capacity
But we can’tincrease
capacity?
Thenyou mustreduce
demand
Thenyou mustincrease
capacity
But . . .
But we can’treduce
demand?

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In the short term you never can
change the infrastructure or
resources…
However changing policies, and
shaping demand are tools you can
(and must) use immediately

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Irrefutable demand…
isn’t!

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kanban systems & the Kanban Method
• kanban systems provide a mechanism to ensure accepted
demand does not exceed capacity (WiP limits)… within the
system
• the Kanban Method provides principles and general practices
to balance demand and capability across an ecosystem of
interdependent systems

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Demand and capability must balance…
• Ignoring imbalance will turn a “flow” system into a “blocked” system
• Several important concepts in Kanban address the issue:
• Deferred Commitment
• Limiting WiP
• Managing Flow
• Elevating the constraint
• Classes of Service – Cost of Delay.
• Feedback loops – Cadences
• Resource Management – Staff Liquidity
Let’s look first at a single overloaded service…

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Kanban controls flow in an overloaded system…

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Work in
Progress
System Lead Time
Delivery Rate
Step 1: define the scope of the kanban system

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Step 2: Limit WiP to achieve flow
Deferred commitment and
limited WiP are cornerstones of
effective demand management

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Step 3: Manage Flow to maximise flow of value
Expedite
Elevatethe
constraint
Standard
Fixed Date
Intangible

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Classes of Service:
not all items are created equal (value and urgency)
• Classes of Service define different handling
policies for different category of item
• Examples:
• Emergency lane on motrways
• First class / second class postage
• Priority lane at airport security
• Expedite lane on a Kanban board
• Motivations may vary:
• Safety
• Differential pricing
• Background tasks to address long-lived
intractable problems

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Kanban suggests 4 archetypes for categorizing
items by Delay Cost profile
• Expedite: Very high urgency – no end point in sight
• Fixed Date: One off impact on fixed date
• Standard: Regular urgency; may tail off as value is lost
• Intangible: Low urgency, may be followed by high urgency
DelayCost/Impact($)
Delay (time)
Intangible
DelayCost/Impact($)
Delay (time)
Standard
DelayCost/Impact($)
Delay (time)
Fixed Date
DelayCost/Impact($)
Delay (time)
Expedite
We can define different
“Classes of Service” for
these archetypes

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Step 4: Increasing capacity takes more time
1510 10

18. Requests Selected Development Acceptance Complete
Discarded
Commitment
Ongoing Ready
4 6 4
Delivery
System Lead Time
Importance of Customer Lead Time
Released
Receipt
Customer Lead Time
Request

19. Requests Selected Development Acceptance Complete
Item per
time period
Discarded
Commitment
Ongoing Ready
4 6 4
System Lead Time
Released
Receipt
Customer Lead Time
Accepted
Request Delivery
Regular cadence
Sync’d System and Customer Lead Time

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Sushi Restaurant versus Staff Service Restaurant
Importance of deferred
commitment with
visible Qs, predictable
Customer Lead Time

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Kanban systems can create “irrefutable
demand” as they scale
• Chains of services
(widening your scope of view)
• Hierarchies of services
(higher level systems making commitments
than team-level services must deliver)
• Networks of services
(blockers in one system are demand in
another)
Systems
Thinking
Service
Service
• optimise the whole not the parts
• plan as a whole, balance demand
• make queues visible
• flexible resources

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A chain of services (e.g. the life of a “story”)
In Progress
wmww
wmww
wmww
Done
wmww
wmww
Sprint BL
wmww
Ready
wmww
Preparing
wmww
wmww
wmww
Selected
wmww
wmww
Pool of ideas
wmww
wmww
wmww
UAT
wmww
Released
wmww
wmww
wmww
Deployed
wmww
Customer
wmww
wmww
Consider this
process…What happens
before it?
What happens
after?
Don’t just optimise this!
Selection:
Now? Never?
Later?

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A chain of services anti-pattern
W A T E R S c r um F A L L
Commitment Delivery
Irrefutable
Demand

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A hierarchy of services (e.g. multi-team epics)
• Use feedback loops
• Plan work across teams
• Examine the constraints
• Don’t overload!
• 50% guideline
Team A
Team B
Team C
X

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Epic Planning
• Product to Team levels
• Using Theory of Constraints thinking to load services
• Reserve capacity to sync work
• Maintaining a low utilisation to maximise flow efficiency and ensure
Epic completion
• Elevate the constraint

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A network of services (e.g. dependent services)
• Fulfilling system commitments
depends on timely delivery
from other services
• Same principles apply within a
network of interdependent
services as for one
• “Scale by applying Kanban in a
context of greater scale”
• Use feedback loops
• Make the queues visible to give
the “customer” options

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The Operations Review
Example implementation of
the 7 Cadences

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Resource Management and Staff Liquidity
• Staff liquidity relates to the ease of
matching a job to a skill.
• Large jobs (and multi-skill jobs like software
development) are inherently harder to
match quickly – this is one reason why we
need to lower the pre-allocation of staff in
order to improve Lead Times
• Kanban System Liquidity is a related concept
which is measurable afterwards from the
frequency of “pulls” in the system
Chris Matts. ‘Introducing Staff Liquidity (1 of N).’ The IT Risk
Manager. https://theitriskmanager.wordpress.com/ 2013/11/
24/introducing-staff-liquidity-1-of-n/ (March 1, 2016).
Anderson, David J. "Thoughts on the value of liquidity as
a metric." 27 November 2012 http://www.djaa.com/
thoughts-value-liquidity-metric
Name Skill A Skill B Skill C
Joe 3 3 3
Anna 1 0 3
Baz 2 0 1
Jay 2 0 3

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Supply-focused approaches to overload
• Resource pulling
• Move resources to service requests with a higher cost
of delay
• Ensure some “intangible” work is always selected in
normal periods
• Don’t fully load services with planned work
• T-shaped people
• Flexibility provided by cross-training and cross-assigning
• Skill overlap
• Identify skill shortages
• Never assign “the only person who can do this” on their own
• Flexible experts
• Never assign the most flexible resources at all!
• Use them as coaches, reviewers, improvement thinkers… and only
very occasionally “firefighters”

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Manage Flow:
Utilisation, Delivery Rate and Lead Time
• Capacity is finite (and lower than you
think!
• Increasing utilisation increases LT (not
much at first)
• Increasing utilisation increases DR (at
first)
• At a certain point flow is destroyed. DR
collapses. LT tends to infinity!
• Near the critical point, flow is fragile.
Perturbations have severe,
unpredictable and long-lasting effects.
• The critical point depends on variability

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Resource Efficiency or Flow Efficiency
First focus on flow…
then efficiency
“What is Lean” – Niklas
Modig and Par Ahlstrom

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valuetrumps …
flowtrumps …
waste eliminationtrumps …
economies of scale .
The “Lean Decision Filter” - after Mehta, Anderson, Raffo, 2008.

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Irrefutable Demand- you have more options
than you think
• Ensure you:
• use feedback from services to ensure variation in demand does not cause
“congestion collapse”
• use a holistic approach to managing the network of interconnected services
• decision-making is informed and effective in periods of high demand
• management of “uncommitted options” is returned to the customer
• Strategies:
• Deferred commitment negotiated and agreed with customer
• Classes of Service – maximise flow of value – build flexibility to handle variation
• Operations Review cadence to balance demand
• Staff liquidity – allocate less flexible staff before highly skilled, multi-skilled staff
• Examine the constraint in multiple teams – elevate the constraint
• Limit capacity / utilisation (e.g. to 50% for planned work)
• Reduce work in progress
• Manage flow!

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34Visit leankanban.com/guide for free download.

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Questions and
Discussion

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References
Pedantic of Purley. 2016a. "Meltdown Monday: How Southern’s Problems Run Deeper Than Disputes." July 10.
http://www.londonreconnections.com/2016/railway-roulette/ (August 29, 2016).
Anderson, David J. 2015. Enterprise services planning scaling the benefits of Kanban.
http://2015.agileworld.de/system/files/vortrag/15-06-29%20EnterpriseServicesPlanning_david%20 anderson_0.pdf
(accessed September 8, 2016).
Anderson, David J. 2012. "Thoughts on the value of liquidity as a metric." November 27.
http://www.djaa.com/thoughts-value-liquidity-metric (September 5, 2016).
Anderson, David J. 2014. "Kanban litmus test." July 23. http://www.djaa.com/kanban-litmus-test (September 7,
2016).
BBC. “London to Brighton in Four Minutes”. YouTube.
Gordon, Jay. 2013. “London in motion”. YouTube. https://www.youtube.com/watch?v=4FrnF2HlBGg (accessed
October 19, 2016).
Matts, Chris. 2013. "Introducing staff liquidity (1 of n)." November 24. https://theitriskmanager.wordpress.com/
2013/11/24/introducing-staff-liquidity-1-of-n/ (March 1, 2016).
Modig, Niklas and Pär Åhlström. This Is Lean: Resolving the Efficiency Paradox. 1st ed. Stockholm: Rheologica
Publishing.
Reinertsen, Donald G. 2009. The principles of product development flow: second generation lean product
development. Redondo Beach, CA: Celeritas Publishing.
Wikipedia. 2016b. Brighton main line. Wikimedia Foundation. https://en.wikipedia.org/wiki/Brighton_Main_ Line
(accessed September 2, 2016).