Extending the Mindset and Principles to the Enterprise

Extending the Lean-Agile mindset to the entire enterprise forms the cornerstone of a new management approach and results in an enhanced company culture that enables business agility. It provides leaders and practitioners throughout the enterprise with the thinking tools and behaviors needed to drive a successful SAFe transformation, helping individuals and the entire enterprise achieve their goals.

The Lean-Agile mindset establishes the right thinking, but as presented in Chapter 4, SAFe Principles, it’s the ten underlying principles that guide effective roles, practices, and behaviors. These principles are fundamental to organizational agility and the Lean-thinking people and Agile teams who enable it. Everyone in the enterprise can apply these principles to their daily work, and thereby become part of the leaner, and more Agile, operating system.

Agile Technical Teams

As described in Chapter 6, Team and Technical Agility, the adoption of Agile development within software development is fairly advanced and well understood. Now, with the advent of the DevSecOps movement, IT operations and security are also rapidly adopting Agile. It’s also making its way to other technical domains, such as networking, operations, hardware, electronics, and more. After all, Agile technical teams typically achieve a degree of unprecedented performance and personal satisfaction with their work. Who doesn’t want to be on a high-performing Agile team?

Agile Business Teams

Once the business understands this new way of working, it begins to recognize that the same benefits apply and typically starts creating cross-functional Agile business teams. These teams may be involved in any of the functions necessary to support developing and delivering business solutions, including the following:

• Sales, product marketing, and corporate marketing

• Sourcing and supply chain management

• Operations, legal, contracts, finance, and compliance

• People (HR), training, and facilities

• Receiving, production, fulfillment, and shipping

• Customer service, support, and maintenance

We’ve often observed a ‘three-step maturity cycle’ which illustrates how Agile business teams typically form and mature (Figure 10-3).

Agile People Operations

All this new agility puts substantial pressure on how new employees are recruited and on changing policies and procedures for managing compensation and career growth. But addressing the needs of knowledge workers challenges many traditional human resources (HR) practices. In their place, ‘Agile HR’ brings the Lean-Agile mindset, values, and principles to hiring, engaging, and retaining people. Six themes for modernizing people operations are summarized here:³

• Embrace the new talent contract. This agreement recognizes the unique needs of knowledge workers and provides the engagement, empowerment, and autonomy they require to reach their full potential.

• Foster continuous engagement. Continuous employee engagement occurs when everyone in the enterprise understands the business mission, is engaged in meaningful work, and is fully empowered to do their part.

• Hire for attitude and cultural fit. Identify, attract, hire, and retain people who will be most successful in the dynamic team environment of an Agile culture.

• Move to iterative performance flow. Many Lean enterprises have eliminated the annual performance review. Instead, leaders and managers offer fast, continuous feedback and also solicit and receive feedback in return.

• Take the issue of money off the table. Replacing traditional, individual incentives with the right shared incentives helps tailor compensation and motivation to the differing needs of individuals in the next-generation workforce.

• Support impactful learning and growth. Modern careers are fueled more by personal choices and meaningful growth than by climbing a hierarchical ladder. Successful employers need to respond by providing rewarding work, more fluid roles, and individual growth paths.

3. https://www.scaledagileframework.com/wp-content/uploads/delightful-downloads/2017/09/Agile-HR-with-SAFe.pdf

Agile Working Environments

In addition to more contemporary HR practices, experience and research have shown that working environments and physical spaces are vital to highly productive Agile teams.⁴

4. Jorgen Hesselberg. Unlocking Agility: An Insider’s Guide to Agile Enterprise Transformation, Kindle edition (Pearson, 2018).

For example, Figure 10-4 illustrates an Agile working environment for teams. In this design, individual teams work in a ‘pod’ of semi-private cubicles. Walls within the pod are low, allowing for informal discussions. Their personal focus space is inside their cubicle, yet it allows informal communication and knowledge sharing within the team. However, the higher outside walls of the pod prevent distractions from the noise and conversations of other teams or people who pass by. In addition, the gathering spaces in the middle provide an area for hoteling team members, spontaneous pairing, and quick, informal sessions. The pod is supported by whiteboards, a large monitor for video conferencing, and solution and process information radiators.

Ideally, there’s a dedicated meeting room nearby that provides space for the team to post their information on the walls and collaborate with remote team members and other teams. Where feasible, a few private phone cubicles support the need for individual privacy.

PI Planning and ART Collaboration Space

PI planning is the most critical event in SAFe. As such, a semi-dedicated physical space for planning is a wise investment that will pay for itself over time. In addition to the physical space, adequate communication channels must be established for attendees who cannot be present in person. For many enterprises, room for a single ART or two is about all that can be allocated permanently. Figure 10-5 provides a typical room layout for a PI planning event.

In larger enterprises with multiple ARTs, it may be impractical to provide a dedicated space for all the ARTs. In this case, a single on-site ART planning location becomes the centerpiece, but other internal or external venues may be needed. Of course, this space won’t be used just for the regular PI planning schedule. It will also host the system demo and the I&A, as well as additional team-sharing spaces during the PI. A permanent location adds predictability, minimizes uncertainty, and reduces the transaction cost of organizing these events. In our experience, this space adds to the collaborative workspace strategy that benefits the Agile enterprise.

Visualizing Work

Frequently, during various SAFe training forums, attendees ask, “But if I was to leave here and do only one thing to start implementing Lean-Agile development at scale, what would it be?” Our answer is always the same: visualize the work. That is why when you visit an Agile enterprise, you see work everywhere—on walls, whiteboards, monitors, hallways, and wherever you look. Visualization converts the abstract to tangible; flushes out unnecessary, unplanned, unapproved, or duplicate work; and aligns everyone to the actual current state.

The common thread across all these approaches is that the information is always available: no effort is needed to go and discover it. Based on our experiences, we’ve recommended some starting points:

• Visualize customers. Agile teams use personas to bring the customer to life and post their representations on the walls of their team area, so they are always top of mind.

• Visualize the flow of work. Making the current work visible using Kanban systems exposes the amount of Work In Process (WIP), bottlenecks, and what people are really doing as opposed to what others think they are doing.

• Visualize solution health. Customer support teams have long seen the value in displaying the number of waiting calls, daily closed and open tickets, and current Service Level Agreements performance prominently on monitors close to the teams who rely on that information. This approach has been adopted by Agile teams to include metrics on the state of the current solution.

• Visualize strategy. Another example of visualizing work is an ‘investment corridor’ (Figure 10-6) that identifies all current and potential epics in flight at one large enterprise. Rather than confining the portfolio visualizations to a room, information in the corridor is outside, making it easy for people to walk up and add their thoughts and suggestions.

Tooling and Automation

Lean-thinking people and Agile teams have specific training and insights on how work flows through the system. They understand that optimizing one activity does not optimize the whole, and that delays in the process (see the ‘Mapping Value Streams’ section) exert more influence throughout than the efficiency of any one step. To combat this, they implement the tooling necessary to see the work as it flows through the system to identify bottlenecks and opportunities for improvement. This tooling typically includes the following:

• Application lifecycle management (ALM) tools demonstrate and connect the various backlogs and Kanban systems that teams use to manage their local work and provide enterprise-wide visibility.

• Integrated development environments provide the tools developers need to author, edit, compile, and debug software.

• Continuous delivery pipeline tools support the large number of artifacts— primarily code, tests, scripts, metadata—and provide the automation needed to efficiently integrate, test, build, and deploy the solution.

• Collaboration tools support local and distributed development and the intense degree of interaction required.

• Systems engineering tools support the modeling and requirements of large systems and establish traceability across the elements, administering quality assurance and compliance.

Most of these tools are available in both open source and commercial products at a relatively advanced and mature state. Applying them comprehensively is yet another critical factor in achieving business agility.

Mapping Value Streams

Identifying operational and development value streams is a critical task for every Lean enterprise. Once identified, value stream mapping⁶ is used to analyze and improve business operations. Figure 10-8 illustrates a simplified example of value stream mapping, which, in this case, shows a few of the steps in a marketing campaign launch.

6. Karen Martin, Value Stream Mapping: How to Visualize Work and Align Leadership for Organizational Transformation, Kindle edition (McGraw-Hill Education, 2013).

Teams look for the opportunity to improve the efficiency of each step, consequently reducing the total lead time. This includes reducing process time, as well as improving the quality of each step measured by the percent complete and accurate.⁷

7. The percent complete and accurate represents the percentage of work that the next step can process without it needing to go back for rework.

As is the case in Figure 10-8, the delay time (the waiting time between steps) is often the biggest source of waste. If the team above wanted to deliver a marketing campaign faster, they would need to reduce the delay times, as the processing steps are only a small part of the total lead time. Reducing delays is typically the fastest and easiest way to shorten the total lead time and improve time to market.

Implementing Flow

In addition to mapping the value stream, the entire process can then be visualized with a Kanban system as a means to continuously improve performance and identify bottlenecks. SAFe Principle #6, Visualize and limit Work In Process (WIP), reduce batch sizes, and manage queue lengths, is then applied to optimize flow. Figure 10-9 illustrates a simplified Kanban system for a set of marketing campaigns associated with a major product launch.

Each marketing campaign, represented by a card, works its way through the system from the backlog to done. WIP limits (the numbers in parentheses in Figure 10-9) help control the amount of work in the system.

Market Sensing

Market sensing represents the culture and practice of understanding changing market dynamics based on the following:

• Market research

• Analysis of quantitative and qualitative data

• Direct and indirect customer feedback

• Direct observation of the customers in the marketplace

Savvy, Lean-thinking leaders ‘go see’ and spend significant time in the place where the customer’s work is actually performed. They return with current, relevant, and specific information about the realities of their products and services, instead of opinions filtered through other perspectives.

Innovating Like a Lean Startup

After sensing opportunities, the Lean enterprise visualizes and manages the flow of new initiatives and investment by adopting a ‘build-measure-learn’ Lean startup cycle (Chapter 9). These are often new business solutions, but they may also be new business processes and capabilities that use existing solutions. Testing the outcome hypothesis with a Minimum Viable Product (MVP) before committing to a more significant investment reduces risk while generating fast and useful feedback.

Implementing Changes in Strategy

Identifying and defining a new strategy is only the first step. Once determined, the strategy must be communicated to all stakeholders in a new vision and roadmap and then, of course, be implemented. After all, significant changes to strategy often affect multiple solutions in the portfolio and require coordination and alignment. Consequently, most large strategy changes require new epics to implement the change across value streams.

Figure 10-11 illustrates how new epics go through the various Kanban systems and backlogs that manage the flow of work. During the normal course of work all backlogs are continuously reprioritized. Kanban systems help changes in strategy move quickly across value streams to the teams who do the implementation. This way, execution is aligned—and constantly realigned—to the evolving business strategy.

However, other smaller, local changes may require only new stories or features and will go directly in the team or program backlogs.

Innovation Accounting

It can take a long time to evaluate the benefits of a change in strategy. Traditional financial and accounting metrics Profit and Loss (P&L) and Return On Investment (ROI) are lagging economic indicators that occur too late in the life cycle to inform the evolving strategy. In their place, innovation accounting (see Applied Innovation Accounting on the SAFe website⁸) applies leading indicators—actionable metrics focused on measuring specific early outcomes using objective data. They are an essential part of the economic framework that drives business agility.

8. https://www.scaledagileframework.com/guidance-applied-innovation-accounting-in-safe/

Ignoring Sunk Costs

A key factor in strategy agility is ignoring sunk costs, the expenses that have already occurred in the course of solution development. Sunk costs cannot be recovered or changed and are independent of any future costs a company may incur.⁹ Because strategic decision-making affects only the future course of business, sunk costs are absolutely irrelevant when evaluating a change in strategy. Instead, decision-makers should base all strategy decisions solely on the future costs of the initiatives necessary to achieve the change. When stakeholders do not have to waste energy to defend past spending, the organization can pivot more quickly to a new strategy.

9. https://www.investopedia.com/ask/answers/042115/why-should-sunk-costs-be-ignored-future-decision-making.asp

Organizing and Reorganizing Around Value

Finally, SAFe Principle #10, organize around value, guides enterprises to align their development efforts around the full, end-to-end flow of value. This principle highlights the ‘dual operating system,’ one that leverages the benefits of the existing hierarchy but also creates a value stream network. This network assembles the people who need to work together, aligns them to the needs of the business and customer, minimizes delays and handoffs, and increases quality.

But as strategy moves, future value moves with it; new people and resources must be applied. In other words, some degree of reorganization is required. Indeed, in some cases, this will require entirely new value streams be formed to develop and maintain new solutions. Other value streams may need to be adjusted, and some will be eliminated entirely as solutions are decommissioned. Fortunately, the people and teams of an increasingly Agile enterprise see those changes coming through the portfolio. They can then use their new knowledge and skills to reorganize Agile teams and ARTs around value whenever it makes sense.

Agile Contracts

No portfolio is an island. Instead, each typically depends on other portfolios, suppliers, partners, operational support, and more, all of which require implicit or explicit contracts for the value to be delivered. Traditionally, these contracts are based on the assumption that requirements, deliverables, and service levels are known up front and will remain stable. We know from experience that is just not true. As strategy changes, these traditional contracts can become enormous impediments that lock the business into assumptions of a former strategy. Although the business would like to change strategy, it is blocked by existing contracts.

Achieving business agility requires a more flexible approach to all types of contracts. How this is achieved depends on the nature and type of contract, but each must be considered in terms of the adaptability that may be required as strategy evolves. Contracts for suppliers that provide components, subsystems, or services for enterprise solutions are particularly critical as they may tend to lock solution elements into requirements that were fixed long before. The ‘SAFe managed-investment contract’ describes an Agile approach to contracts and can be found on the SAFe website.¹⁰

10. https://www.scaledagileframework.com/agile-contracts/