This chapter covers the topic of delivery beyond software or hardware products. It demonstrates that project management covers all areas of work, including marketing and finance, human capital management, the services industry, and beyond. It covers cultural aspects of project management and organizational change management, leadership, and influence without authority. It also addresses traditional management areas, such as budget management (“beyond budgeting” principle), risk management via impediment resolution, and procurement management.
In Chapter 8, we covered the topic of Agile execution and discussed how incremental delivery reduces risks and enables fast feedback loops from the customers. We also covered how the feedback – internal and external – can be used to refine and enhance execution and shape delivery models. In order to encourage open feedback, we reviewed multiple techniques for conducting Retrospective sessions. We covered Lean concepts of quality and quality-related outcomes. Finally, we reviewed incremental delivery from the product life cycle perspective. Throughout this chapter, we reemphasized Agile culture, that is, team empowerment, accountability, and customer-centricity.
In this chapter, we will review how Agile is used outside of IT – in sales, marketing, HR, finance, and, overall, across the organization. Then, we will talk about an Agile organization overall: organizational change management, leadership, continuous improvement at the organizational level, and the impact of Agile adoption on people, their roles, expectations, communication mechanisms, alignment principles, and leadership paradigm. Finally, we will review how traditional project management areas of knowledge, such as budget management, risk management, and capacity management, apply in Agile.
Agile Beyond IT
The Agile concept of incremental and iterative delivery of value to the customer, internal or external, applies to almost any industry, company, or professional. As a result, Agile and Lean concepts are used in many areas: from executives running their companies to sales, marketing, or human capital organizations, and even in personal life.
The concept of extending Agile implementation beyond IT and engaging the whole organization to be able to quickly and flexibly respond to customer and market needs is known as business agility. Business agility is the ability of organizations to quickly adapt to market changes in a productive, customer-centric, and cost-effective way without compromising the quality delivered to the customer.
Fifty percent of companies that were in the Fortune 500 in 1995 had dropped off the list by 2015.
The average life cycle of a company in the 1960s was 67 years – today, it’s 15 years, and it’s falling [4].
The modern business world has changed. Whether a company considers itself a technology company or not, technology has fundamentally disrupted the business landscape. In order to compete, companies need to innovate and continuously change the way they work.
- 1.
Focus on delivering value by solving customer problems.
- 2.
Team-based work where the unit of delivery is not an individual; it is an empowered team.
- 3.
A short feedback loop that allows for pivoting to better address customer needs.
- 4.
Low risk related to validation of outcomes at regular short intervals.
- 5.
Higher employee engagement because of their ownership of the work performed and related outcomes.
In 2016, the Business Agility Institute (BAI) was formed to address the lack of conferences, resources, and overall awareness of business agility. BAI supports business agility research around the world. In their 2020 Business Agility Report, BAI emphasized the positive impact of business agility during the global pandemic. While some businesses were devastated, some were able to sustain and grow. According to BAI, one characteristic that was common among the latter group was that they benefited from the fact that they were, for the most part, practicing principles of business agility – an obsession with delivering value for customers, drawing on the talents of their staff, and working as networks of competence [1].
- 1.
Relentless improvement: By encouraging a culture of learning and experimentation to thrive, organizations will continuously improve both what they do and, more importantly, how they do it, reducing costs, improving efficiency, and delivering greater value to customers.
- 2.
Funding models: By funding business outcomes, rather than specific work outputs or projects, organizations can quickly and easily invest in new products or services as soon as market opportunities arise and, with the right governance, just as quickly stop or change work that is not delivering the expected business value.
- 3.
Value streams: By designing flexible work processes that are both efficient and customer-centric, organizations can structure teams at all levels in a way that maximizes value creation for the customer.
In 2021, the Business Agility Institute further investigated how organizations adapted to the disruptions of the COVID pandemic and what effect this had on their business agility. They found out that business agility transformations had an overwhelmingly supportive impact on responding to and coping with COVID. Over 87% of organizations reported increases in business agility throughout the COVID disruption. In addition to reporting increases in business agility since March 2020, 82% of participants believed that they would sustain the level of agility developed during the pandemic. For many organizations, their business agility practices were directly credited as the reason why they were still in business. Some respondents indicated that they continually realigned or refocused around their most valuable customer streams. Beyond survival, there was a marked shift to accelerate digital and online activities, including the move to remote working and a substantial change in how products and services are delivered to customers [2].
Resiliency of Agile teams during COVID. Source: Business Agility Institute [2]
Let’s review some of the case studies of Agility within different groups and organizations.
Adoption of business Agility at Moonpig [4]. Moonpig is an Internet-based business whose head offices are situated in London and Guernsey. The company’s business model is mainly selling personalized greeting cards, flowers, and gifts. Having achieved a measure of success adopting Agile practices within their product engineering team, Moonpig’s leadership was keen to see if the rest of the organization could also benefit from Agile adoption.
Business agility at Moonpig started with WHY. It did not start with Scrum practices or Kanban boards. It started with the mindset so that people across the company understood why they were making the changes and what the benefits would be. The goal was to understand that these changes were not introduced by executives; they were driven across the industry and within the company and were underpinned by solid principles and reasoning.
Moonpig started its Agile journey focusing mainly on software development by adopting cross-functional teams, leveraging Agile and DevOps practices to improve delivery capability, and introducing a Lean approach to product development – using data to form hypotheses and test assumptions. This way of working allowed to improve efficiency, deliver better outcomes, and grow the business. In addition, teams leveraging Lean-Agile practices also showed significantly higher levels of engagement.
“Everyone works in silos.”
“There is no communication within teams.”
“We have too many objectives.”
“Lack of trust to let people do their jobs.”
“There’s no collaboration across teams.”
“We have conflicting objectives.”
It manifested in the company having two separate cultures – one in software delivery (collaborative, transparent, customer focused) and one on the business side (siloed, misaligned, and lacking trust).
Topic for a Group DiscussionIn groups, discuss the best way to proceed in this situation, given that the company is still commercially successful. Should they maintain status quo and focus Agile implementation on software delivery? Would it be safe to disrupt the positive software delivery culture to align business and technology in Agile approach? What are the advantages and risks of each of these two major options? If moving forward with business agility, what would be the major barriers? What metrics should be used to measure success?
The decision was made to implement business agility. To do so, the following mission statement was created: “I want to design a tailored system of work that optimizes the entire organization, allowing Moonpig to innovate and move fast at scale, whilst still ensuring it is a place that people love to work.”
Better: Better outcomes leading to increased Return on Investment (RoI)
Faster: Reduced cycle time across all value streams
Happier: Higher employee engagement
They selected the following measurements for these outcomes:
Getting better by
Embedding a customer-focused, data-driven, experimental approach to minimize wasted investment. Understanding where we create value and reduce time wasted on low-value output
Increasing innovation through the collaboration of people with different skills and expertise
Getting faster by
Aligning relevant people around key outcomes and removing conflicting priorities and dependencies
Leveraging Lean working practices – visualizing work, reducing work in progress, and focusing on finishing
Championing a culture of collaboration and cross-functional working where team success comes before individual glory
Embedding a continuous improvement mindset, seeking to constantly optimize our working processes. Empowering and supporting teams to self-organize, removing dependencies and bottlenecks around senior management
Getting happier by
Developing a safe-to-fail environment where people can take risks
Ensuring our teams have clear goals and are supported to achieve them
Creating a culture of autonomy where teams are empowered to use their collective skills to deliver outcomes
Encouraging a growth mindset and making learning a central part of our working life
As the next step, they developed the roadmap, which consisted of four steps:
- 1.
Alignment (reorganizing around clear goals into cross-functional teams by value stream)
- 2.
Working processes (reducing cycle time by embedding the culture of continuous improvement)
- 3.
Experimentation (creating “fail fast” culture by implementing customer-focused, data-driven experimentation)
- 4.
Culture of learning (implementing growth mindset and collaborative learning)
Each of these steps was nontrivial. For example, one of the key challenges in step 1 was resource bottlenecks. Copywriting was one area in particular where they lacked resources. At that point, they had three immediate solutions: accept that delivery will be delayed, hire additional resources, or do fewer things. Another, longer-term, solution was to invest in people and train some of their marketers and UX designers to write the copy themselves. This wouldn’t remove the need for dedicated copywriting experience but would provide flexibility because simpler copy tasks could be handled by other team members. The decision was made to resource the outcomes in the order of their priority, similar to a product backlog in software development. Once capacity is achieved, the rest of the work remains in a backlog. This allowed marketing and commercial teams to generate the most impact fast. The understanding that was formed is that the faster you deliver prioritized outcomes, the faster you get to the next items of the backlog.
Each of the cross-functional teams contained a product function, marketing function, creative function, and engineering function. All together, they worked on new products, marketing campaigns, financing, sales, and so forth. These teams implemented daily standups for collaboration and alignment and biweekly Retrospectives for continuous improvement. They used the Kanban board to align their activities and dashboard to continuously capture metrics in each category. For happiness, they measured “mastery, autonomy, and purpose,” according to Daniel Pink’s findings [5]. A clear purpose lets people know what is expected of them. Autonomy empowers people to achieve the purpose and serves as the antidote to micromanagement. Mastery gives them the necessary skills to achieve that purpose.
In addition to these key principles, leveraging Lean and Agile working practices, which were introduced to increase speed, was also intended to promote a sustainable pace of work and better work-life balance. In addition to improved quality of work experience, it was also hoped that a sustainable pace would provide people with more time to learn. Another opportunity was in developing a clear career progression. To address this, the leaders developed a competency matrix against which they could align roles and provide clear guidance for individuals to develop and progress.
In the first six to eight months, the company was able to achieve success in getting better, faster, and happier across the whole organization. Realigning the teams and bringing agility to the business improved cycle times dramatically in some areas, particularly in the delivery of their marketing content, where they saw cycle times reduced from months to days. People were happier and more engaged, and retention increased. At the same time, the leaders came up with several opportunities for improvement, such as coaching leadership, defining the outcomes early to collaborate with the business, having Agile coaching in place, and relentlessly focusing on prioritized work.
- 1.
Performance management
- 2.
Learning and talent development
- 3.
Compensation
- 4.
Recruiting
Agile for HR looks at how HR can apply an Agile mindset and various working methods within their own teams and products, as well as across the whole organization. Agile for HR has the potential to reinvent human capital organizations’ operational model and modernize HR as a profession. Any organization can realize the benefits by applying some basic concepts in their everyday work.
This includes focus on outcomes vs. processes, focus on the team vs. individuals, and continuous improvement to achieve efficiency and alignment. Agile includes an Agile mindset, Agile ways of working, organizational design of Agile (cross-functional teams), and the establishment of psychologically safe organizations via collaboration and team empowerment.
What does it mean to be an Agile/Lean professional? Rather than looking for people with the words “agile” and “lean” in their titles, the recruiting function needs to look for people with a Lean-Agile mindset. This includes people who are customer oriented and team driven, the ones who have had a chance to work in a similar environment. Too often, the hiring process at any level becomes heavily based on referrals and behavioral interviews to reveal the servant/leader nature of the individual, in addition to job-specific competencies. Within Agile and Lean frameworks, a good topic for a behavioral interview is job dynamics and team-level collaboration. For example: talk about a situation where you disagreed with your team’s decision and whether you ended up following the team or confronting the decision.
What does it mean to be an Agile/Lean HR function? Nowadays, the performance review process morphed into a continuous feedback process. For example, Scrum builds feedback into its cadence. At regular intervals of time, the team meets, and team members provide direct process improvement feedback, resulting in two to three action items they agree to implement within the next iteration. This process is ongoing. Meanwhile, team performance is intentional: driven by Objectives and Key Results, teams self-assess their performance against predefined objectives (quality, productivity, predictability, customer satisfaction, employee happiness); also cascading goals are used, and the results are transparent across the organization. Continuous feedback is the center of the performance review process, with the feedback coming from leaders, peers, and clients.
How does an Agile/Lean organization handle compensation, recognition, and awards? There are two major changes in the Lean-Agile approach to employee recognition: First, recognition comes from peers and customers rather than managers. Second, awards are no longer individual and depend on the team’s success. In his book Managing for Happiness, Jurgen Appelo describes multiple ways of recognition in an Agile environment. An interesting example that he provides is a peer-to-peer bonus system which he calls “merit money,” where team members reward each other with credits (later translated into bonus money) for their collaboration and support. He provides the following example: “Last month on my team, Jennifer gave 15 credits to Lisette ‘for being the backbone of the organization.’ Lisette gave 25 points to Sergey ‘for all the feedback and support.’ Sergey gave ten credits to Chad for his ‘terrific illustrations.’ And Chad gave 20 credits to Hannu for his ‘friendliness and clarity of communication.’ And on and on it went…” [6]. At the same time, in the learning culture, there is no shame for failure – mistakes are seen as a learning opportunity; hence “fail fast, succeed faster” approach to failure is taken. Some companies even establish “failure walls” where employees share their failures to allow others to learn from their mistakes.
How does an Agile/Lean organization implement titles and promotions? Lean-Agile culture requires different thinking about organizational hierarchy and the role of management. Managers are no longer assigning work or evaluating performance; rather, their role is to support employee development and growth and provide tools for issue resolution and team-based delivery. In most instances, midlevel managers are “playing coaches” on their teams. This philosophy goes all the way to C-level management. This principle is sometimes referred to as an “inverted pyramid,” where the role of an executive is to support and enable from the bottom of the inverted pyramid where employees are the ones on top of the pyramid. While the managers no longer assign work to individual team members, this does not mean that there is chaos or anarchy with everyone doing what they like. With a clear definition of the company’s objectives and team’s goals, there is a clear understanding of outcomes, alignment of deliverables, and transparency about the progress.
How to create an HR Ecosystem in an Agile and Lean enterprise? We need to think of HR as the backbone of the Lean and Agile ecosystem – empowering employees and teams and providing all the underlying functions, from employee hiring development to team enablement and recognition, is the key to a Lean enterprise. This is one of the reasons why the success of Lean-Agile transformation for a modern enterprise is measured by two sets of parameters: The first set is in relation to business objectives and product delivery metrics, such as time to market, quality, and customer satisfaction; the second set is employee driven and is represented as “employee happiness,” collaboration within the teams, and employee retention rate. This is also why work-life balance and sustainable pace for teams and individuals have become so important. Especially with the global pandemic affecting all the people and organizations in an unprecedented way, we do not talk about “work-life balance” where there is a 9 AM–5 PM “workday” but rather a “work-life fusion” that allows a person to dedicate time to the family. This can be done with the aid of modern technology and communication, which allows for building high-performance globally distributed teams. See Alberto Silveira’s book, Building and Managing High-Performance Distributed Teams, on excellent tips and guidelines for creating a successful work ecosystem and empowering employees to seek the North Star (5).
Another key item is employee “self-selection” into teams. There are multiple examples of how thoughtful and well-executed self-selection mechanisms take teams to the next level in terms of their productivity and work happiness. In her example of how HBC Universal ran their self-selection campaign, Dana Pylayeva outlines a thoughtful, step-by-step orchestrated process that provided a platform for team self-selection at an organizational level [8].
How to create a culture of continuous learning? Learning and continuous growth when managers become coaches in this process vs. task givers and evaluators are some of the keys to the Agile HR approach to personnel development. AI is being used to customize training to individuals, with gamification based on simulations and experiential learning being at the center. Many companies, such as IBM, make a shift by redesigning all aspects of their people management systems to build a culture of continuous learning, innovation, and agility. They change the nature of HR organizations by incorporating ML/AI and process automation across all offerings, resulting in hundreds of millions of dollars of net benefits. At IBM, Diane Gherson, Head of HR, was the one who championed the company’s global adoption of design thinking and Agile methods at scale [9].
Topic for a Group DiscussionIn groups, discuss the difference between traditional HR functions and Agile HR. What are the benefits of Agile HR? What shift is required to implement Agile HR? Where do you expect resilience? How would you address it?
Organizational Management and Agile Leadership
Business agility demands new ways of organizing businesses – from startups to multithousand-employee corporations. It is imperative for businesses nowadays to be flexible and respond quickly to shifts and changes in the market environment. Agile organizations are able to rapidly change their business processes to satisfy customer needs.
This approach is significantly different from Taylorist organizations as described by an American mechanical engineer, Frederick Taylor, who came up with the concept of scientific management that optimized labor productivity using a scientific approach to effectiveness and efficiency. Taylor believed that it was the role and responsibility of manufacturing plant managers to determine the best way for the worker to do a job and to provide the proper tools and training. This approach supports organizational hierarchy, command-and-control management style, and top-down work allocation [10].
“Quickly evolving environment. All stakeholders’ demand patterns are evolving rapidly: customers, partners, and regulators have pressing needs; investors are demanding growth, which results in acquisitions and restructuring; and competitors and collaborators demand action to accommodate fast-changing priorities.
The constant introduction of disruptive technology. Established businesses and industries are being commoditized or replaced through digitization, bioscience advancements, the innovative use of new models, and automation. Examples include developments such as machine learning, the Internet of things, and robotics.
Accelerating digitization and democratization of information. The increased volume, transparency, and distribution of information require organizations to rapidly engage in multidirectional communication and complex collaboration with customers, partners, and colleagues.
The new war for talent. As creative knowledge- and learning-based tasks become more important, organizations need a distinctive value proposition to acquire – and retain – the best talent, which is often more diverse. These ‘learning workers’ often have more diverse origins, thoughts, composition, and experience and may have different desires (e.g., millennials)” [11].
These trends require new paradigms where organizations are viewed as living organisms. They respond quickly and are nimble and ready to act. In short, they respond like living organisms.
This shift reflects the transition from bureaucracy to focusing on action, from top-down hierarchy to leadership. It shows direction and enables managers to act as coaches and leaders, to move from silos to collaboration, from detailed instruction to building teams around end-to-end predictability. An interesting fact is that when pressure is applied to an Agile organization, it responds even faster and in a nimbler way. This focus on outcomes vs. hierarchies allows the companies to achieve greater customer-centricity, faster time to market, higher revenue growth, lower cost, and a more engaged workforce. There are fewer silos, more collaboration. Less command-and-control managers, more empowered engineers. Less hierarchy and more accountability.
Using Agile in Sales
Agile is broadly used in sales and marketing. Marina Alex is an Agile coach who introduced SWAY (Sales with Agile), her proprietary sales system founded on self-organization, cross-functionality, and value. According to her website [14], the effectiveness of SWAY has been proven in practice. It has been successfully utilized in more than 20 countries around the world. Sales volumes increased primarily due to the effectiveness of the system, creating value for the client, and day-to-day interaction between sales and marketing. SWAY users have observed sales growth from 43% to 127% within a 12-month period.
SWAY is the composite of Scrum, Agile Manifesto values and principles, coaching and leadership, strategies, self-organizations, and sales management. It utilizes an established cycle of receiving feedback from the client, continuous hypothesis testing, cooperation with marketing, short Sprints, and rapid improvement events.
Another great example of a people-centric approach is a company called Menlo Innovations, described by its CEO and Chief Storyteller Richard Sheridan [15].
Agile Finance and Budget Management
The fundamental business question “How much will it cost?” applies equally to Agile or Waterfall project management. However, budget management in Agile is fundamentally different from traditional (Waterfall) project management. In Agile, budgeting is happening in Sprints, either monthly or quarterly. Based on the team composition and compensation by role and location, the cost of each Sprint is calculated per team and multiplied by the number of teams, with all the necessary adjustments: loaded compensations (including benefits and other expenses) as well as other costs, such as hardware, software, licenses, supplies, and anything else required to complete the deliverables.
- 1.
Business or Functional Manager who is responsible for the overall deliverable
- 2.
Product Manager responsible for the product overall, including P&L, in collaboration with the Product Owners for Agile teams who drive prioritization and road mapping
- 3.
Agile Project Manager, a separate role responsible for the project management aspects of Agile delivery, such as external dependency management, coordination, resourcing requests, procurement, and multiple other functions, which may include budget management and dependency management
In Waterfall, a project budget is defined as the total projected costs needed to complete a project over a defined period of time. It’s used to estimate what the costs of the project will be for every phase of the project. The most fundamental difference between Agile and Waterfall is that in Waterfall, the budget is fully allocated at the beginning of a project, and during subsequent delivery, assessments are made whether a project is on budget, is below budget, or exceeds the budget, which requires an immediate course correction. PMBOK defines Project Cost Management as a group of processes involved in planning, estimating, budgeting, and controlling costs so that the project can be completed within the approved budget. According to PMBOK Sixth Edition, “the cost management planning effort occurs early in project planning and sets the framework for each of the cost management processes so that performance of the processes will be efficient and coordinated” [16, p. 236]. In Waterfall, it is hard to estimate whether a project is on budget during the analysis, design, and even coding because none of the features have been tested or delivered to users for their feedback. This is the reason why Waterfall project managers need to add a significant “contingency margin,” usually starting at 20–25% for complex deliverables.
- 1.
High-level estimations from the people doing the work
- 2.
Historical data from similar deliverables/goals
- 3.
Lessons learned from prior initiatives
- 4.
Expert opinion from subject matter experts known within the organization and in the field
- 5.
Baselines – organizational and industry-wise
Agile puts emphasis on decomposing the work to be done into features and performing high-level feature estimations, while Waterfall relies on similar work performed within the organization and the estimations provided by line managers.
In addition, in Agile, the validation of deliverables is performed throughout the process by delivering working software to the customer and replanning based on customer and business feedback. If additional features are requested, the team does a high-level estimation of the work required to deliver these features and provides a cost estimate to the sponsor or requestor. At this post, their sponsor can make an informed decision whether it is worth investing in based on the Sprint cost and duration, or they prefer to descope less important functionality to stay within the originally allocated budget.
- 1.
Stable dedicated Agile teams
- 2.
Timeboxed iterations
- 1.
Employees per Sprint: 10 FTE team members × 4 teams = 40 employees per Sprint
- 2.
Cost per employee per a two-week Sprint: $150/hour × 80 hours = $12,000 (fixed burn rate per person per Sprint)
- 3.
Cost per Sprint: $480,000
- 4.
Cost for 6 Sprints: $480,000 × 6 = $2,880,000
- 5.
Additional costs (licenses, equipment), not including vendor costs: $120,000
- 6.
Total estimated cost: $2,880,000 + $120,000 = $3,000,000
Comparison of Agile and Waterfall cost management
Agile | Waterfall |
|---|---|
Iterative | Full scope |
Top-down | Bottom-up |
Forecast | Commitment |
Flexible | Fixed |
Provided by the team | Provided by managers/Subject Matter Experts (SMEs) |
- 1.
High-quality product backlog reflecting MVP and subsequent feature set
- 2.
Continuous product backlog refinement along with the consistent estimation
- 3.
Short feedback loops via demos to the customers
- 4.
Agile planning to implement the value of iterative delivery
Topic for a Group DiscussionIn groups, discuss the difference between Agile and Waterfall cost management. How do you handle budget overruns in Agile and traditional project management? How would you handle budget estimations in Kanban vs. Scrum?
As an ultimate approach to Agile budgeting in a modern knowledge-oriented world, the principle of “beyond budgeting” has been implemented in some Agile organizations due to its revolutionary nature. This approach represents a new management philosophy that is more Agile and adaptable, aiming at eliminating bureaucracy and rigid control mechanisms, empowering people, and promoting transparency. Instead of focusing on long-term, complex budgets, which become obsolete as soon as they are published, beyond-budgeting organizations focus their budgets on short-term financial performance.
According to the co-creators of this framework, “the traditional annual budgeting process—characterized by fixed targets and performance incentives—is time-consuming, overcentralized, and outdated. Worse, it often causes dysfunctional and unethical managerial behavior. Based on an intensive, international study into pioneering companies, Beyond Budgeting offers an alternative, coherent management model that overcomes the limitations of traditional budgeting. Focused around achieving sustained improvement relative to competitors, it provides a guiding framework for managing in the twenty-first century” [17]. “Beyond budgeting” framework is not in scope of this book; however, it is important to be aware of the fact that more Agile and flexible approaches to budgeting are already in place in modern project management.
Five key questions to review:- 1.
What is the difference between top-down and bottom-up cost estimation?
- 2.
What is the difference between Agile and Waterfall cost management?
- 3.
What is the difference between budget commitment and forecast?
- 4.
What would happen if some of the team members are consultants?
- 5.
What does the “burn rate” mean for a team?
Agile Risk Management
A risk is anything that could prevent or marginalize project success. When a risk materializes, it becomes an issue. Agile practices provide a built-in mechanism to manage a wide range of risks usually encountered in software development.
PMBOK distinguishes between individual project risks (uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives) and overall project risks (the effect of uncertainty on the project as a whole, arising from all sources of uncertainty including individual risks, representing the exposure of stakeholders to the implications of variation in project outcome).
In Agile, risks are not structured the same way: they are built into an execution cadence. As an example, in a daily Scrum meeting, team members have to answer the question “Which impediments am I having?” and the whole team gets engaged in unblocking their peers. In Waterfall projects, team members are mostly focused on their individual tasks, so there are no similar mechanisms to expose the risks daily, triage the risks immediately after they arise, and support team members in resolving them based on severity.
These built-in mechanisms are the reason why most Agile frameworks do not specify how they manage risks. Risks are managed via early feedback, the collaboration between business and technology, test-driven development where quality is “built into” the delivery process, and many other mechanisms that mitigate risks up front.
For external risks and dependencies in Agile, there are still multiple mechanisms and tools available for risk management. Some Agile practitioners still maintain a list of risks for their team, which includes primarily external dependencies, especially ones outside of IT: legal, vendor, compliances, regulatory, licensing, and other risks. For more complex scaled deliverables, some companies hire project coordinators who maintain risk logs and follow up on the status.
In sum, while there is no predefined approach to risk management in Agile, sometimes, traditional risk management tools and techniques are leveraged for high-risk and high-complexity deliverables.
TipIn Waterfall, risk identification usually happens when a project kicks off. In Agile, risk assessment and analysis are continuous and are performed at least once per iteration and updated throughout execution. Risks are identified and logged into Agile tools such as Jira to ensure that the risk is being assessed and actioned upon.
Risk matrix
Risk prioritization sample
Risk ID | Risk Category | Risk Description | Impact (1 lowest to 5 highest) | Probability (1 lowest to 5 highest) | Rating (Sort DESC) |
|---|---|---|---|---|---|
B3 | Budget | Funds are not available | 10 | 8 | 80 |
A2 | Skills | Security engineer SME not available | 5 | 8 | 40 |
A4 | Skills | DevOps engineer not available | 2 | 6 | 12 |
- 1.
Risk avoidance: Eliminating the thread of risk by eliminating the cause
- 2.
Risk mitigation (controlling): Reducing the consequences of risk by reducing its severity of impact or likelihood of occurring
- 3.
Acceptance: Accepting the risk if it occurs
- 4.
Share of transfer (allocation): Assigning the risk to another party by purchasing insurance or subcontracting
To come up with effective mitigation techniques in an Agile environment, it is highly effective to use Agile techniques, such as team-level brainstorming, Retrospectives, daily Scrums, and other forums for discussing the information and aligning on dependencies and next steps.
- 1.
Transparency via Kanban board
- 2.
Effective prioritization via product backlog
- 3.
Daily alignment via Scrum meetings
Topic for a Group DiscussionReview 12 Agile principles. Which of these principles address risk mitigation and in what way?
Criteria for selecting risk management strategy
Select Traditional Risk Management | Focus on Agile Built-In Risk Management |
|---|---|
A large scope new product or feature | Continuous feature release of an existing product |
Highly scaled long-term deliverable (e.g., seven to nine or more teams for more than six Sprints) | Smaller-scale deliverable (less than seven teams for less than six Sprints) |
Compliance and other regulatory requirements | No specific compliance or regulatory requirements outside of the organization’s environment |
Procurement Management in an Agile Organization
The final area of traditional project management that we are discussing from an Agile point of view is procurement management. According to PMBOK, project procurement management includes the processes required to purchase or acquire the products, services, or results needed from outside the project team to perform the work [16]. There are usually multiple processes involved in procurement management: request for proposals coordination, vendor interviews, negotiations, legal and contract considerations, execution, payments, and so forth. This is a complex endeavor, and it needs to be thoroughly coordinated in any environment, Agile or not.
One of the values of the Agile Manifesto is “customer collaboration over contract negotiation.” This does not mean that Agile does not take procurement management very seriously; rather, it pays special attention to the collaborative nature of this process. Vendors and contractors are part of the Agile delivery ecosystem and the contract services as a guide for value delivery. The positive value-driven nature of contract negotiations is the most important part of Agile delivery.
From the procurement activities perspective, though, there is not much difference between the traditional project management’s procurement and Agile procurement. There is still a need to plan purchases for products and services, then select the right vendor, negotiate, contract, and, finally, execute the contracts and close them once complete.
- 1.
Identify the need. This includes making “build vs. buy” decisions, considering multiple options, existing products, and a flexible approach to problem-solving.
- 2.
Perform a comparative analysis of the available options in the market and make the vendor selection.
- 3.
Negotiate with the vendor for pricing, timelines, deliverables, and delivery frameworks. While it is possible to work with a non-Agile vendor, the preference is always for the vendor who practices Agile delivery. Usually, Vendor Management, Legal, and other relevant company functions are involved.
- 4.
Vendor selection. In Agile, this happens early in project delivery so that the vendor can co-create the product together with the Agile team(s). They get involved in early discovery, MVP definition, and scope brainstorming sessions as relevant.
- 5.
Collaboration with the vendor is an important part of the Agile delivery process. No matter what the procurement is for, it is important to ensure that the vendor understands the product objectives, customer needs, and the value of the product being created. This will provide motivation and alignment opportunities, and ensure that the relationship with the vendor is mutually beneficial and positive.
- 1.
A firm fixed price (fixed price, fixed date, and fixed specification)
- 2.
Target price (fixed specification, fixed date, and target price)
- 3.
Cost-plus (target specification, target date, the customer pays the supplier’s cost plus profit margin)
- 4.
Time and materials (no complete specification, price based on rate)
Neither of them fully addresses the flexibility of Agile delivery. For example, a fixed price presents a risk to the supplier in case the deliverable is more complex than originally envisioned. The Time and Materials type is more Agile, but it presents a risk to a customer in case the value is not delivered as fast as expected.
Optimize delivery against value, not the time or the original scope.
Provide flexibility in response to newly validated requirements.
Provide transparency to the supplier into the funding pipeline.
Motivate both supplier and customer to build the best solution to address customer problems within agreed-upon constraints established at negotiation.
Topic for a Group DiscussionWhat are the benefits of Agile procurement management? How to make it mutually beneficial to customers and suppliers?
Five key questions to review:- 1.
What is procurement?
- 2.
How is Agile procurement similar to the traditional one?
- 3.
How is Agile procurement different from the traditional one?
- 4.
Why is it so important to build Agile procurement around value delivery vs. “the iron triangle”?
- 5.
What are the ways of making the procurement relationship collaborative in Agile?
Quality Management in Agile
Quality management in Agile and Waterfall is equally important. In Agile, however, quality control and quality management are an inherent part of product delivery. As stated in Lean manufacturing, quality is “built-in” since Agile teams have a focus on early and ongoing testing throughout the sprint, followed by integration testing either in the end of each sprint or at equal iterations. It is no longer a group of testers who are responsible for quality in Agile. The whole team is responsible for high quality and for ensuring the needs of the customer are being met with high quality and high customer satisfaction levels. Technical excellence and test automation are important proactive ways of ensuring high quality of deliverables.
Communications Management in Agile
Communications management is also important in Agile as well as Waterfall. However, Agile has communication mechanisms built into its cadence – from daily standup and planning sessions between team members to demos to the customers. Immediate, transparent, and honest communication is the key to Agile success. A significant difference from Waterfall communications is stated in the Agile Manifesto. Agile puts less emphasis on detailed documentation and communication in favor of immediate face-to-face communication. Agile advocates for co-locating team members, whenever feasible.
To summarize this chapter, it is as important to manage budgets, risks, vendors, quality, and communication in Agile as in Waterfall. However, the nature of those activities differs – it is built on collaboration, teamwork, value delivery, and continuous improvement.
Key Points
- 1.
The Agile concept of incremental and iterative delivery of value to the customer, internal or external, applies to almost any industry, company, or professional. As a result, Agile and Lean concepts are used in many areas: from executives running their companies to sales, marketing, or human capital organizations, and even in personal life.
- 2.
Agile for HR looks at how Human Resource professionals can apply an Agile mindset and various working methods within their own teams and products, as well as across the whole organization. Agile for HR has the potential to reinvent human capital organizations’ operational model and modernize HR as a profession. Any organization can realize the benefits of applying some basic concepts in their everyday work. This includes focus on outcomes vs. processes, focus on the team vs. individuals, and continuous improvement to achieve efficiency and alignment. Agile includes Agile mindset, Agile ways of working, organizational design of Agile (cross-functional teams), and the establishment of psychologically safe organizations via collaboration and team empowerment.
- 3.
The recruiting function needs to look for people with a Lean-Agile mindset – the ones who are customer oriented and team driven, the ones who have had a chance to work in a similar environment. Too often, the hiring process at any level becomes heavily based on referrals and behavioral interviews to reveal the servant/leader nature of the individual, in addition to job-specific competencies. Within the Agile and Lean framework, a good topic for a behavioral interview is job dynamics and team-level collaboration.
- 4.
There are two fundamental changes in the Lean-Agile approach to employee recognition: First, recognition comes from peers and customers rather than managers. Second, awards are no longer individual and depend on the team’s success.
- 5.
In the learning culture, there is no shame for failure – mistakes are seen as a learning opportunity; hence, “fail fast, succeed faster” approach to failure is taken. Some companies even establish “failure walls” where employees share their failures to allow others to learn from their mistakes.
- 6.
Lean-Agile culture requires different thinking about organization hierarchy and the role of management. Managers are no longer assigning work or evaluating performance; rather, their role is to support employee development and growth and provide tools for issue resolution and team-based delivery. In most instances, midlevel managers are “playing coaches” on their teams. This philosophy goes all the way to C-level management.
- 7.
HR is the backbone of the Lean and Agile ecosystem – empowering employees and teams and providing all the underlying functions, from employee hiring development to team enablement and recognition, is the key to a Lean enterprise. This is one of the reasons why the success of Lean-Agile transformation for a modern enterprise is measured by two sets of parameters: The first set is in relation to business objectives and product delivery metrics, such as time to market, quality, and customer satisfaction; the second set is employee driven and is represented as “employee happiness,” collaboration within the teams, and employee retention rate.
- 8.
Business Agility demands new ways of organizing businesses – from startups to multithousand-employee corporations. It is imperative for businesses nowadays to be flexible and respond quickly to shifts and changes in the market environment. Agile organizations are able to rapidly change their business processes to satisfy customer needs.
- 9.
Budget, risk, and procurement management apply to the Agile environment as well as the traditional project management. However, these areas in Agile are fundamentally different from the traditional (Waterfall) project management.
- 10.
The major difference between traditional and Agile cost, risk, or procurement management is that in traditional project management, these parameters are fixed while in Agile, any change is welcome.