Innovating at Internet Speed: How to balance speed and efficiency in the digital age

Alan W. Brown Professor of Entrepreneurship and Innovation

Surrey Business School University of Surrey, UK

alan.w.brown@surrey.ac.uk

11th December 2013

1

Agenda

• Motivation

• The Nature of Innovation

• Keys to an Agile Organization

• Summary

2

Quiz

• According to several sources, what was the only business book that Steve Jobs had on his bookshelf?

– “How to get rich fast”?

– “20 ways to boost your stock price”?

– “Who says elephants can’t dance”?

– ???

3

The Innovator’s Dilemma

One of The Economist’s “Top 6 Business Books of All Time”

See: http://businessofsoftware.org/2011/07/the-six-greatest-business-books-of-all-time-according-to-the-economist-what-is-yours/ 4

The World in a Minute…..

5

• Mobile digital world is upon us

• Gen Ys = the masters of the medium

• Integrate and analyze social, internet

and mobile to drive insights

Here come the Gen Ys

360 degree surround vision

Intelligent navigation

Hybrid and electric vehicle control

Driver assistance safety alarms

Adaptive cruise control

Emergency services, vehicle diagnostics, and GPS /

location services

Fleet and traffic management

systems

Smart grid hybrid / electric

vehicle recharging

System of Systems

Systems Engineering

Integration of vehicle subsystems into a functioning

automobile

Collaboration and visibility across diverse teams

and disciplines

Software-intensive

Subsystems

Predictive collision avoidance

Smarter Products Require Innovative Systems Global interconnection across products, systems, applications and networks

7 Source: IBM

Software Development Sits Within A Complex Delivery Process!

Write new software!!

8 8

9

A new project to deliver business critical software product release within 12 months

ESTIMATE 11 Months

BUSINESS NEED

SCHEDU

LE 6 12 18

SCHEDULE

See: Brown, Ambler, Royce, “Agile at Scale: Economic Governance, Measured Improvement, and Disciplined Delivery”, ICSE, May 2013

Late Scrap and Rework

ACTUAL DELIVERY

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Traditional outcome… REALITY

PLANNED TARGET

100%

0%

6 12 18

DESIGN REVIEW

PR

OG

RE

SS

SCHEDULE

Integration Begins

Program parameters are delivery predictions Cost, schedule, effort, quality, …

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INSIGHT P

RO

BA

BIL

ITY

SCHEDULE

6 12 18

Mean estimate =

11MONTHS

Area under curve =

Probability of delivering in

11 to 12 MONTHS

12

There is roughly a 50% chance of making the date COIN FLIP

PR

OB

AB

ILIT

Y

SCHEDULE

6 12 18

52%

PR

OB

AB

ILIT

Y

SCHEDULE

6 12 18

13

Move out the date to improve likelihood of shipping? OPTION 1

95%

14

Decrease time estimate by Sacrificing quality or content? OPTION 2

PR

OB

AB

ILIT

Y

SCHEDULE

6 12 18

95%

Reduce the variance Improve likelihood of shipping

15

OPTIMIZE P

RO

BA

BIL

ITY

SCHEDULE

6 12 18

90%

Uncertainty in stakeholder satisfaction

Uncertainty in Plans, Scope and Design

MINIMUM VIABLE PRODUCT

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Measure validated learning Reduce the variance

ORIGINAL PLAN

INITIAL TARGET

OPTIMIZE

Synchronization

Skills

Experience

Motivation

TEAMWORK

Steering

Good practices

Maturity

Domain knowledge

PROCESS Quality/Performance

Integration first

Manage scope

Asset-based reuse

VOLUME OF CODE

Resources = Complexity Agility Collaboration * Automation *

Process enactment

Measurement

Instrumentation

Manage complexity

TOOLING

Improving Software Economics INSIGHT

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Complexity Agility Collaboration * Automation * Complexity Agility Collaboration * Automation * Complexity Agility Collaboration * Automation * Add

Automation

Individual

Productivity:

5-25% Timeframe is Weeks

Cost to Implement:

<5% Very predictable

Reduce Complexity

Organization

Productivity:

2x – 10x Timeframe is Years

Cost to Implement:

25%-50% Much culture change

Improve Collaboration

Increase Agility

Team Project

Productivity:

15-35% Timeframe is Months

Cost to Implement:

5%-10% Predictable

Productivity:

25-100% Timeframe is Quarters

Cost to Implement:

10%-35% Some culture change

Economic

Impacts

Productivity Improvement Leverage

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Critical aspects of measurement Measures

Measure Business-Related Team-Related

Cycle-time reduction

Time from initiation to delivery of first increment Time from initiation to project closure

Build/release cycle time Sprint velocity Blocking work items Requirements tests Change costs over time

Quality Production defects per 100 function points

Defect trends Change trends Integration trends

Continuous optimization

Process maturity level Practice adoption Variance in cost to complete

Productivity Function points per man-year Sprint burndown chart Release burndown chart

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Why is Scaling Agile So Hard?

Experience from many large-scale agile projects shows a similar failure pattern:

– The people break

– The tools break

– The governance breaks

– The customer breaks

– The financial controls break

– The organization breaks

20 See: www.RichardDurnall.com

Open

Collaborative

Multi-disciplinary

Global

The Changing Nature and Scope of Innovation

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What is Digital Transformation?

• On Being Digital

– Vision, principles, strategy, roadmap

• The 4 layers of a Digital Transformation

– Infrastructure and technology

– Platforms and interfaces

– Organization and delivery

– People, communities, and clients

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Enablement

Ecosystem

Execution

Expectations

Accelerates Time-to-Value Recognizes individual achievement

within the team

Agile Change Management – Accelerates time-to-value

Enables better understanding of—and rapid response to—the client-defined value proposition for a solution

Organizes work efforts according to the principles of time-based competition

Adds a management system focused on delivery acceleration

Open Collaboration – Increases collaboration while recognizing

individual achievement Enables practitioners to build their reputations

Moves focus beyond utilization

Increases visibility of individual achievement

Leverages the value driven by external input and open collaboration

How are Organizations Responding? A focus on agile change management and collaboration on a platform-based architecture

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Accelerates Time-to-Value Recognizes individual achievement

within the team

Platform-based Architectures – Encourages flexibility in design

and delivery Allows evolution of the architecture based on service-oriented view

Supports an eco-system of provides around a core set of capabilities

Opens up access to a broad community through standard APIs

Why Agile? The Move to a Delivery Focus

Traditional Project View

Distinct design/build/delivery phases Distinct handoff to maintenance

Requirements-design-code-test sequence

Phase and role specific tools Collocated teams Standard engineering governance

Engineering practitioner led Hierarchical top-down decision making

Agile Delivery View

Continuously evolving systems No distinct boundary between development,

maintenance and deployment Sequence of released capabilities

with ever increasing value Common platform integrated process / tools Distributed, web based collaboration Economic governance tailored

to risk / reward profiles Business value and outcome led Team-based decisions and meritocricies

Drivers

Customers Experience

Higher Quality

Faster Time to Value

Technology Exploitation

Operational Efficiency

Sourcing Economics

Main Drivers

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25

What are the Characteristics of Effective Agile Teams? Lessons from Software Development and Delivery

1. Produce a working system on a regular basis (for example every 30 days)

2. Work closely with stakeholders, ideally on a daily basis

3. Consistently deliver the highest possible business value on a regular basis

4. Create self-organizing, and disciplined teams working within an appropriate governance framework

5. Perform continuous regression testing, and use a Test-Driven Delivery approach

6. Regularly reflect, and measure, how teams work together and then act on these findings to improve in a timely manner

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• Radical Management

• Co-created Value through Global Networks

• Rapid Decision Making Based on Analytics

• Real-time Feedback into Delivery

• Globally Collaborative Teaming

The Agile Organization

N=1 Personalize

d co-created experience

R=G Global access

to resources and talent

Technical Architecture

Social Architecture

Business Processes

Business Analytics

Adapted from Prahalad and Krishnan, “The New Age of Innovation”, McGraw Hill, 2008

Why the Lean Startup Changes Everything!

Agile Lean Startup

Recognize we don’t know solution ….don’t even know the problem

Increment in weeks Increment in hours

Continuous integration Continuous deployment

Test in mock prod environment Test in production

Deliver value monthly (2-3 sprints) Deliver value daily

Done = Software ready to deploy Done = Validated learning

Customer feedback Customer validation

Certified scrum master Customer success manager

See Steve Blank, “Why the lean startup changes everything”, HBR 2013

See http://www.forbes.com/sites/stevedenning/

Moving to a New Management Approach

Traditional management Radical management

Delight clients

(& stakeholders)

Purpose of

the firm Produce goods and services

How

managers

communicat

e

Top-down: Tell people

what to do

Interactive: stories, questions, conversations

How work is

structured Bureaucracy & hierarchy Self-organizing teams

Impact on

employees Only 20% fully engaged

THINGS

High productivity & continuous

innovation

PEOPLE

How work

is

organized

Single big plan Client-driven iterations

Transparency Tell people what they need

to know Radical transparency

Innovation Needs a Radical Management Approach

People Make the Difference

• In an environment of on-going change, agility is by far the greater driver of performance than effort or responsiveness

• This is reinforced by many studies… – e.g., Dan Pink´s work on “What

Motivates People?” • Autonomy

• Mastery

• Purpose

See: CIO Executive Board, Building the Change-Ready Organization, Sept 2012. 30

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Community-based Innovation is key to an Open Strategy

• Community-driven approach to problem solving

• People working across geographical and organizational boundaries to confront today's most pressing challenges

• Enabled by: –Open standards

–New intellectual property practices

–The Internet and collaborative tools

• It unites perspectives from a host of disciplines to: –Rapidly solve business issues

–Accelerate technological advancements

–Stimulate economic growth

–Enable new business models

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Organizations use both Open and Commercially Sourced Solutions

Commercially Sourced

Open Sourced

Creating systems that are commercially

sourced and innovative - intended to

differentiate the vendor and deliver value to

the solution end users

Creating, maintaining, and enhancing

software through open, collaborative

communities driving evolution of standards

and innovation of services delivered

We are experiencing a new equilibrium

Innovation in Product Delivery Agility - Architecture

• Architecture = Big Up-Front Design

• Architecture = massive documentation

• Role of architect(s)

• Low perceived or visible value of architecture

Adaptation versus Anticipation

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Context Impacts Architectural practices

1. Size

2. Criticality

3. Age of system

4. Rate of change

5. Business model

6. Structural stability

7. Team distribution

8. Governance

Context

Size

Criticality

Business model

Structural Stability

Team Distribution

Governance

Rate of change

Age of System

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Toward Platform-based Architectures

• User-centric contribution and collaboration

• Use of social media and digital media

• Transparency in processes, practices, policies

• Lightweight web development practices

• Cloud computing architecture

• These are key elements of a Platform-based architecture

35 See Tim O’Reilly, “Government as a Platform”, June 2009, http://www.slideshare.net/timoreilly/government-as-platform

Lessons from Successful Digital Technology Platforms

• Embrace open standards: they encourage innovation and grow the market

• Build a simple system - let it evolve

• Design for participation

• Learn from your users, especially ones who do what you don’t expect

• Lower the Barriers to Experimentation

• Build a culture of measurement

• Celebrate Your Developers

36 See Tim O’Reilly, “Government as a Platform”, June 2009, http://www.slideshare.net/timoreilly/government-as-platform

Summary

• How do you focus in a world of fast-paced change being faced by all organizations?

• Innovating at Internet speed requires

– Agile change management

– Open collaboration

– Platform-based architectures

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