Complexity Costs – Embracing the Agile Manifesto (16 April 2014)

Simplicity is the ultimate sophistication.”
Steve Jobs (Apple) in Wired, 19.12.2012, pg 233

Yes, and simple is not easy.

In fact it’s very hard to do and even an excruciatingly painful exercise in some organizations. Culture eats process for breakfast, lunch and dinner. Legacy and traditions are the twin bulldozers pushing culture forward. It doesn’t take any special skill set to make things more complex than they already are. Anyone can do that. Warren Buffet observed, however, that:

”The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.”

Spot on – simple is more effective.

But, simplification is both art and science. It goes beyond doing some business process reengineering exercises or workshops and then calling it ”good enough.” It requires experience, battle scars and team members that have ”been-there-done-that” and that have demonstrated the ability to simplify. It takes time. A lot of time. Most companies really are not prepared for the amount of time needed to make the changes.

So, is simplification really valuable to the enterprise? Yes! A thunderous, resounding YES!

For example, with one client we were able to reduce the lead time for creating requirements from an 18 month cycle for three of their teams down to three (3) months and for one of the teams we reduced the lead time by a whopping factor of 18:1 (down to one month) by applying Agile/Scrum/Lean to just that portion of the process. How much was that worth? These team members were paid slightly higher, on the average, due to seniority, etc., but here’s how the numbers worked out:

  • 3 teams
  • 7 people, average per team
  • 21 team members
  • $120.000 average annual cost to company per team member
  • 12 months per year
  • $10 000 per month per team member
  • $210.000 per month for all 3 teams
  • 15 month reduction/savings in the process
  • USD $3.150.000 total savings to the organization

Not only were there It’s significant cost savings, but this customer was positioned to be able to bring new product/features to the market almost a year earlier than before.  But, this company had been paying at least USD $3.15 million MORE than needed because they had over-complicated their requirements gathering process and were releasing product later than they wanted.

For another client, the productivity of the teams was more than doubled during a 2.5 year period of time so that they teams were able to effectively complete twice the amount of work as compared to when we started the process, without adding any additional resources to the teams. What did complexity cost that company? Somewhere in the the neighborhood of USD $ 12.5 – 13 million per year. Since they delayed going Agile by five (5) years, it easily cost them upwards of USD 65 million to have delayed going Agile.

Complexity costs. Not doing anything about it costs even more. Ignoring the problem doesn’t magically make it go away.

The value-add of simplifying is stunning.

It’s puzzling to me that any organization would not immediately recognize the return on the investment to simplify and start on the journey of simplifying everything they do at every level in the enterprise. One of the principles behind the Agile Manifesto is:

Simplicity–the art of maximizing the amount of work not done–is essential.”

This is perhaps the most important of all 12 principles behind the manifesto. As organizations begin to scale agile, there is a risk that they overlay solutions that are too complex and then kill the goose that’s laying golden eggs. There are so few people that have successfully scaled Agile for this very reason. They force feed the goose with complexity and inadvertently kill it. Oops!

The more complex the organization is, the more opportunity exists to simplify. It’s starts with cascading Vision from the very top of the organization on downwards and then linking back up from each level so that there is a feedback loop that helps adjust and shape the big Vision over time.

Cascading Vision and VSPT

As I (Andrew) shared in my Keynote here in Stockholm on Thursday, 10 April, 2014, VSPT is Vision, Strategy, People and Tasks. The red line in between the VS and PT represents the disconnect that exists in every organization between the VS level and the PT level. Our version of VSPT is an Agile modification of the military version that uses Vision, Strategy, Projects and Tactics (instead) as it’s leadership framework. Either way, it is a simple and powerful method to link and align all teams and people to the overall Vision of the organization.

It is the iterative link back up (left side of the figure above) that is the most powerful part of Cascading Vision and leading the Vision Flow. Done properly, it provides the vital feedback loop back up the food chain so that the organization can adapt and adjust to the rapidly changing marketplace battle field. Without the feedback loop it risks being nothing more that business as usual with top management micromanaging the teams.

There is no worse mistake that an enterprise can make than to give too much ”direction” (i.e. legacy command & control) from the top. That creates an atmosphere that will smother any attempt at going Agile in a heartbeat. The first step in making any change is to understand that a change needs to be made. The enterprise needs to have a clear Vision when going Agile.

”Most companies under communicate their visions for change by at least a factor of 10.”
Dr. John Kotter, Harvard Business School

Vision needs to be communicated way more often that we think or realize. It needs to be central to everything that the teams are doing. It needs to be checked daily, if not continuously.

“If you are not led by Vision, you will be driven by Circumstance”
The PMO Brothers

Vision, implemented correctly, simplifies everything. Everything that is important is measured against it. Everything else is waste and can be eliminated. It crystalizes the focus of the enterprise with laser-like precision and unnecessary or unneeded features are eliminated and never see the light of day.

Complexity costs. Start simplifying with Vision today!

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