Recall that product manager Pete, and Tom, VP engineering, had become disillusioned with the company. Customers were no longer seeing the innovation that first attracted them to AccuWiz. Customers were promised features that didn't show up in releases. Releases were packed with features that didn't appeal to every customer. Even if the release contained features customers wanted, they experienced long delays because of long release cycle times and schedule slips.

The founders certainly didn't achieve the revenue growth or predictability necessary to position the company for a public offering or acquisition. Charles, the COO, responded by increasing his attacks on Tom at the program reviews. In Charles' opinion, everything would be just fine if Tom could just be harder on his engineering teams to make them deliver all the features that have backed up.

Tom approaches Lauren, VP of product management, because he believes they share the same concerns about what has become of AccuWiz. He introduces her to the Investment model. He hopes it will allow his team to go back to real Agile development with variable content and improve collaboration between product management and engineering. Lauren likes the idea of being able to manage the expectations of the sales department instead of being buried under a cascade of features she can never deliver. The positive Investment approach is also more in‐line with her management style.

They decide to make a pitch directly to the founders because they believe Charles is stuck in his big company ways. He's unlikely to support the positive environment they know is necessary to get the most out of the Investment planning method. They both have nothing to lose at this point because they will leave AccuWiz if nothing changes.

15.1 The Founder Meeting

Tom still has a relationship with the founders, Ken and Brett, from the early days, although they have become a bit more distant since Charles came in. Tom calls the founders and asks if they can meet with him and Lauren on the weekend. Tom tells them they have information that may ultimately determine the success or failure of AccuWiz. Ken and Brett agree to meet.

Ken and Brett open the meeting by saying they are open to change. The status quo is not working. Tom and Lauren explain that the organization has fallen into the feature pit. It's not about value. Product management has been relegated to taking feature orders from sales as they chase every opportunity. There is no end to the requests. At this point, there is a backlog of over 200 features. It would take over two years of development to complete them at the current development rate.

Tom says the company has lost the ability to deliver real value for customers. Engineering was closer to customers before the product management department was established. The product managers now create detailed feature requirements, leaving little opportunity for engineering to add value, and there is also a lot of confusion between the roles of product manager and Agile team product owners. Some of the product managers like to wallow in design details, even to the point of creating UI drawings.

Tom and Lauren go over the Investment planning approach at the meeting. Ken and Brett like the visibility and control they would have below the release level, and they like the idea of sales committing to income before risking their money on new product development. Ken and Brett understand how they can increase financial predictability by timeboxing Investments with feature flexibility if income forecasts are maintained.

At this point, the conversation turns to the changes required to successfully implement the Investment model. Investment teams are mini-product teams that need to be empowered to achieve financial targets. Teams must be trusted to achieve their targets without pressure and control from project management. Project management can play an important supporting role, but they are no longer the schedule enforcers.

The meeting ends.

15.2 The Announcement

Charles is not present when Lauren, Tom, and Michelle show up for the next staff meeting. Only the founders are there. They explain that they have asked for Charles' resignation, and he is returning to his old company where he can use his old playbook. They believe his style is not a fit for the entrepreneurial organization they envisioned and built. Lauren, Michelle, and Tom will report to the founders, but their roles will change. They will be supporting empowered virtual product teams created around the Investment model. Michelle is concerned because she's not sure what project management will do. They were Charles' enforcers.

The founders note the concerned look on Michelle's face and explain how project management still plays a significant role. Project management is still responsible for project budgets and schedule predictability, but now for smaller projects at the Investment level. Project management's role is to support empowered teams to achieve Investment schedule and development cost targets.

Project management will use the time they previously spent on tracking and status meetings to break down barriers beyond control of team scrum masters and identify and manage Investment team dependencies. The founders also want them to assist the teams with Investment planning with top‐down software estimation techniques. The founders also want project managers to spend more time on risk management.

Key Performance Indicators (KPIs) are discussed next. The founders like the motivational survey questions used in the Investment Model where people rate the way they feel about their work by choosing “Pressured,” “Frustrated,” “OK,” “Motivated,” or “Excited.” The founders recognize that empowered teams must be motivated by their work to eliminate project tracking. Initial survey results will not look good, but they want to support their executive team to make improvements each quarter until they have at least 70% in the Motivated or Excited categories.

The founders want to add one question to the quarterly survey for the Innovation teams: “Our project manager helps us meet our goals.” They acknowledge that the original scores will be disappointing based on the prior role of project management. It will require that Lauren set up opportunities for positive reinforcement for the alternate desired project manager behaviors, like removing obstacles and performing risk analysis. The founders say they will support Lauren to make gradual improvement in the project management value KPI.

The next step is for Lauren and Tom to do an assessment of the current backlog to determine which features might be formed into Investments with quantifiable value and which still need to be delivered. They will produce an Investment roadmap that can be reviewed with sales and eventually communicated to customers. Tom will have to work with his team to determine which features can be delivered in upcoming releases, taking estimation uncertainty into account. The founders want to go to their customers one time with changes, and expect that Lauren, Tom, and Michelle will put in Investment planning methods to make sure they make commitments they can meet.

15.3 Product Stakeholder Analysis

The product management team goes offsite for a day to identify their product stakeholders and their key values. They think this will give everyone better insight into how to screen for value within the current feature backlog. It turned out to be a great team building event.

Everyone is surprised at how many stakeholders they identified. This was the first time they considered internal organizations like customer support. They acknowledged that customer support has been crucial in retaining customers despite the late releases. Features requested by support never made the roadmap because of the constant flow of feature requests from sales and customers. That needs to change.

They identify the key stakeholders that make or influence purchase decisions (Table 15.1).

Many other stakeholders were identified as users and managers in specific accounting areas. They found that many of their values correlated with how performance was assessed for their roles and generally supported the values of their management. A repository was created with all the stakeholder information available to all Investment teams. Anyone can add stakeholders to the library.

15.4 Creating the Investment Backlog

Lauren and Tom, with the help of some key staff, went through the feature backlog to separate them into Investments. The “Five Whys” method was used to dig down from feature functionality to the value they are expected to provide. For example, would this feature increase customer revenue or increase market share? Why would customers pay for it? What is the approval process and who are the approvers?

They categorized the current backlog features as shown in Table 15.2.

Contingent sales commitments are features promised to customers to close a deal. Sales can't renege on the features, so development effort will be subtracted from the tactical Investment portfolio. Lauren asks for product management volunteers to form Investment teams around categories 2–5. The regulatory mandates are nondiscretionary, so headcount will be reserved and removed from the Investment portfolio allocation. Lauren asks for another volunteer to review the miscellaneous enhancements to determine if any represent significant product stakeholder value worthy of an Investment.

The European Market Investment team finds that the number of required features is so large because sales wants to offer the product to all the countries in the European Union (EU) to increase the chances of gaining traction in any country. This involves development of regulatory features specific to each country. The team estimates a duration of about nine months to complete all the features. They ask sales for the income profile for the first three years. The downloadable Investment Income Profile Calculator spreadsheet is used to determine income required to meet the company's payback period goal. The third‐year income is $1.2M. Cost of Delay (CoD) is estimated at $1.2M/12 = $100K per month using the Third‐Year Income Slope CoD Method. Weighted Shortest Job First (WSJF) is estimated at $100K/9 months cycle time = $11K per month per month of delay.

They understand that Europe is a strategic target for AccuWiz, but they still want to maximize WSJF to obtain as much funding as possible from the tactical portfolio allocation. They determine that Germany, France, Italy, and Spain represent almost 60% of the EU market, but only 20% of the requested regulatory features apply to them. These features could be developed in three months. The CoD would be reduced to $100K × 60% = $60K per month, but the cycle time has been reduced from nine months to two, establishing a WSJF of $60K/2 months = $20K per month per month of delay, almost double the previous value. It places the investment within the one‐year Investment backlog Work in Progress (WIP) limit.

The other Investment teams strive to maximize WSJF for their Investments. The engineering technical owners contribute ideas on how to modify functionality to reduce development effort and reuse existing software. They also identify ways that the Investments could be released as modular packages. There is a lot of recognition among the team for new ideas.

The UI improvements are difficult to associate with increased revenue. The Investment team reviews customer churn rates and doesn't see a significant trend. They find that the inside sales team always records the reason for leaving. There aren't any comments about UI. Most of the churn was caused by undelivered features, late releases, and problems experienced during complex upgrades. The Investment team decides that there are about five UI features that would have the greatest impact on customer satisfaction, down from the original 20. They propose the reduced UI improvements as a strategic Investment with no associated revenue.

In addition to their assigned categories that represent potential Investments, Lauren asks the teams to review the stakeholder value information in the repository to determine how their Investment might relate to the values of key stakeholders. Lauren asks them to consider every stakeholder regardless of the level to determine how they could possibly benefit from their Investment implementations.

Lauren sets up a meeting in two weeks to let each team pitch their proposed Investments. Tom and Michelle are also there to assist with prioritization. It's a very positive meeting where each team is excited to present the ways in which they have been able to increase value and reduce cycle time. The product managers are thrilled with being able to do real product management instead of taking orders for features.

Pete was the product manager who was very disappointed when he just became a cog in the feature factory. He expected that he would be the “voice of the customer” to tell engineering what customers needed. Pete now realizes that this is not his role in the new AccuWiz. He finds that many of the senior engineers have gained amazing customer insights by developing accounting software over the years, and their knowledge has been aggregated from multiple customers. The engineers are quick to point out to Pete things that are often done differently in other countries.

The engineers also have great ideas on how to add value and reduce development effort. Pete now realizes that his role is to allow every member to contribute and to do as much as he can to expose engineers to the market so they can become more effective. He loves his new responsibilities. The engineers love the new insights to the new market. Some have even been able to job shadow accountants in customer organizations. It really opened their eyes.

The teams present their critical assumptions and the validation results to support their Investment proposals. In some cases, the VPs ask for additional validation tests.

Lauren, Tom, and Michelle meet a week later for the review of the initial backlog prioritization (see Table 15.3). The shaded Investments are beyond the one‐year WIP limit.

The Quick Close Investment was proposed with insight into the key product stakeholder values. It maintains the end of quarter financial statements in real time, so everyone knows exactly how they impact current financials. Closing the books at the end of a quarter has been reduced from three weeks to one. The Investment also satisfies the General Manager value for rapid response to potential budget variations. He can now see how any variation will impact the financial reports and take quick action.

The review of the miscellaneous features revealed many reporting enhancements. AccuWiz has its own reporting engine, but adding all the requested features would require significant effort. Someone from engineering suggested that it would be better to provide data connectors for the new data analytics tools on the market. The customers can then drag and drop data to make their own reports and dashboards. They estimate that a connector to support the most popular analytics tools could be sold to customers for about $60K. The Investment team was able to validate the price point with a test of the assumption.

Features necessary to meet regulatory requirements were identified. There are also some technical features required to maintain browser compatibility. These features will be funded out of the support and maintenance portfolio allocation because they are nondiscretionary.

The new Investment backlog, executed in the priority order, will increase revenue and income by about 25% without any additional engineering resources, resulting in a significant improvement in R&D Return on Investment (ROI). The product management team has added additional Investments to the backlog to create a three‐year sales forecast. It wasn't difficult. Product managers came forward with great Investment proposals they had wanted to implement for a long time. However, they never got done because of pressure to add features. They now have an Agile roadmap to maintain expectations among all roadmap stakeholders.

The sales VP has agreed to the new plan and committed to the aggregate three‐year revenue profile. He and Lauren understand that the Investment backlog will now be more dynamic, but changes will be based on new opportunities to improve the forecast. Lauren and Tom assure him that they will be able to meet the baseline three‐year Investment deployment plan by using timeboxing and variable content to stay on target.

The product managers dug into Investment planning with enthusiasm. The one‐year WIP limit gave them time to do a great job of planning for the Investments that can be started this year, and they weren't pestered with whimsical feature requests because they could be evaluated in terms of the increase in backlog Net CoD.

15.5 Customer Management

The next step was to create a road show to introduce the new AccuWiz to their customers. It would involve telling them that some of the features published in prior roadmaps will not be available. Sales felt that based on their recent experiences of late releases and missing features, the roadmap had little credibility anyway. They believe the new plan will be well received because of faster delivery of value customers will recognize. Sales also believes that Quick Close will be a game changer for customers and AccuWiz. Nobody has anything like it.

The meetings went well. The founders attended the meetings with major customers to show their support, and to maintain old business relationships. There were some complaints about missing features at some of the meetings, but they were mostly forgotten when Quick Close was introduced. They saw the same level of innovation they had recognized in AccuWiz when they selected them. The customers were also thrilled that they would be getting smaller release increments with seamless upgrades.

15.6 Investment Development

AccuWiz met the one‐year Investment schedules that had been given to customers. The Investment teams had been sure to reserve contingency because they knew they had to rebuild credibility with customers. The Agile teams were highly motivated by experiencing the frequent positive reinforcement of Agile development. Nobody questioned how hard they were working to meet the Investment goals.

Additional features were requested by sales during development, but product management was able to quickly calculate the Net CoD impact on the Investment backlog to show they had a negative financial impact. The teams were able to accommodate a few feature requests when they were convinced that they would significantly contribute to Investment income. However, they kept the Investment within the timebox by reducing functionality of other features or discarding those rated with the lowest Investment ROI contributions.

These decisions were made in a weekly review where teams presented their feature burndown charts to compare current and planned glidepaths. Teams off their “glidepaths” always included alternatives to get back on track by reducing Investment effort or, in some cases, adding additional staff. Maintaining Investment schedule was the number one objective to prevent cascading schedule delays on the roadmap.

The environment for the Agile teams has completely changed. They are able to choose their own sprint objectives based on their velocity. The teams initially made very conservative estimates because of the history of being called out by project management. They also had a history of work piled on during the sprint, and people being pulled off the team for other priorities. Tom and his management team encouraged the teams to adjust velocity to meet their sprint schedules. They found that the teams were willing to set more aggressive goals after a few weeks of achieving sprint objectives.

Some interesting new dynamics were observed in the teams. Their confidence in achieving schedules had increased. They now acted like a winning team, increasing collaboration and mutual support to achieve the sprint goals. The desire to meet their goals resulted in ground‐up process improvement. All became highly engaged in sprint retrospectives and contributed ways to increase efficiency to achieve their goals.

15.7 Innovation Is Revived

The founders knew that the ability to introduce new technologies like graphical workflow had differentiated AccuWiz from the entrenched competitors. Innovation had disappeared with transition to the high‐pressure, production organization that Charles instituted. Innovation Kanban boards were now implemented at each level of the organization to facilitate positive reinforcement for behaviors that move ideas through to proposals.

A technology roadmap was put together identifying key technologies that they may be able to leverage ahead of their competitors. For example, deep learning looked like something that was maturing to the point where it could have a practical application in accounting. A key technology program was established where volunteers could research technologies in which they were interested. An entire wall visible in a hallway was used for a new technology introduction Kanban board. The founders stood in front of the board every two weeks to reinforce the volunteers for progress. Engineers looked forward to telling them and the other engineers what they had learned or done to move their technologies forward. The Kanban made it clear to everyone that innovation was important, and introduction of new technologies would likely receive positive reinforcement.

15.8 Synopsis

The changes at AccuWiz may seem fantastic to the reader. However, every one of the new behaviors is supported with systematic and frequent positive reinforcement. You can implement systems of positive reinforcement within your own work environment and see the results.

In effect, AccuWiz attained the culture described in the classic management book, The One Minute Manager [1] by Kenneth Blanchard, PhD. The book describes three management techniques to foster employee engagement to achieve goals without the need for management control:

• One Minute Goal Setting
• One Minute Praising
• One Minute Reprimands

Look familiar? The only difference is that the book you are reading recommends that reinforcement systems be established within the work process. If you have ever observed the undeniable power of gamification, you'll understand why. Fortunately for the readers, Agile development as envisioned can create the frequent recognition provided by games.

Reference

1. 1 Blanchard, K. and Johnson, S. (1982). The One‐Minute Manager. William Morrow and Company Inc.