Wednesday, November 23, 2005

Smokin Rope

Today I had one of those little pieces of good news that make life worth living. The XIT Sustained Engineering team - the subject of my TOCICO case study - hit zero backlog of change requests. For those who viewed the slides or read the paper, you’ll realize that no pending work means that they’d depleted the rope (both the buffer and the WIP). They had turned around an upward trending backlog of more than 80 with a lead time upwardly trending beyond 155 days. After 12 months, it is now a zero backlog and a lead time under 14 days. Congratulations guys! Outstanding job!

Yes, folks - that means we paid people to be idle today.

But not tomorrow - some new work arrived. Phew!

Imagine the panic. Like a bell tolling through the ranks of management. Zero backlog! No work. People are idle! People are idle? Correct! Yes! They have nothing to do! And we are paying them for this? Yes! What?

At this point management could do two things,

(a) the dumb thing - let’s cut back on headcount, clearly we have too many people in there. We can save money. Reduce costs.
(b) the right thing - so, we’ve fixed that problem let’s go after the next one, there is so much to do. Maybe by pushing more work through this SE team, we can fix some problem somewhere else? Onward! Let’s not let inertia or hubris get in the way.

When your constraint moves out into the market, look inward for the answer to bring it back inside. A constraint in the market is a good problem to have! It’s an opportunity.

[What a great little post-conference footnote to end this month. Happy Thanksgiving!]

Tuesday, November 22, 2005

Thoughts on TOCICO

I’d thought I’d post a few reflective thoughts on last week’s TOCICO conference held in Barcelona and the development of the TOCICO as an organization.

The conference format is 4 days. The first two days are actually a pre-conference tutorial from Eli Goldratt by invitation only. In practice, this means that about 90% of the attendees attend all 4 days. The audience on the first two days are considered knowledgeable about TOC and many have Jonah qualifications or are certified by the TOCICO. This year Eli’s presentation on Viable Vision was more developed and more articulate though the material hadn’t developed terribly much. The essence of Viable Vision is to bring an industrial scale to TOC adoption and by necessity the consulting and knowledge transfer to deliver massive adoption. Eli has opted to publish templates (we’d call them patterns) for Viable Visions. There are currently 8 of them and they have names like Rapid Replenishment, VMI, Pay Per Click, Distribution and so forth. These patterns are very powerful. They bring together go-to-market offers from the constraints marketing work first presented in It’s Not Luck and match them to underlying operational improvements from TOC implementations like Drum-Buffer-Rope or Critical Chain. A pattern is selected based on a set of sufficient conditions and the assumptions which underpin them. These patterns therefore select a business model, go-to-market strategy, sales offer and operational plan together for a specific business in a defined market. These enable a business to turn its current gross revenue number into its net profit number within 4 years. Typically, the operational plan takes 9 to 12 months to implement, then the new offer is taken to market. It can take up to 12 months to gain traction in the market, leaving 2 years to make sufficient money to realize the promise of the viable vision. The interesting thing is that with many of the schemes, there is huge buffer to spare. Taking a $50M revenue company with $10M in profits up to $50M in profits over 4 years is theoretically very easy given the right circumstances. The current constraint appears to be the ability of existing sales teams to sell these unrefusable offers (UROs as they are known in TOC-speak). Hence, Goldratt Consulting are currently hiring sales force specialists who teach the clients’ sales teams how to sell the offers.

All well and good and very interesting from an intellectual point of view, but really these first two days primarily benefit consultants trying to sell and implement Viable Visions throughout the world. For the rest of us it was of limited usefulness. However, a session with Eli is not without its nuggets of wisdom and I took two away. The first is that people find it hard to follow patterns. In the worked example that he had us all try on the 2nd morning, most of the audience failed to follow the sufficient conditions and assumptions for the templates and came to the wrong answer - advising their clients to implement the wrong offer, one which would lead to the wrong strategic reaction from their competitors. Patterns are hard to follow and apply properly. We’ve known this for 10 years in the software business.

The second nugget is more useful. “Subordination happens first!” In the 5 focusing steps, the third step is to subordinate the rest of the system to the decision made in step 2 to fully exploit the capacity constrained resource. I had observed in my work with the XIT Sustained Engineering group (the subject of my paper for the conference), that the subordination actions always had to happen first before the constraint could be fully exploited. However, this is counter-intuitive given the order of the steps. As Eli reminded the audience, step 2 is “Decide what (and how) to exploit.” This then leads to a set of subordination decisions which make exploitation possible. Subordination always happens first.

The 3rd and 4th days are the actual conference proper. These 2 days consist of a 2 hour keynote speech from, guess who? Yep, Eli again! Then a series of presentations of 45 minutes each separated into two tracks. There were also front and back end keynote speeches presenting sizable case studies from industry including a job shop making pumps for the oil industry, a major manufacturer of heavy industrial equipment including earth movers and oil drilling rigs, and a logging and wood products company. Throughout the event there were frequent coffee breaks for networking and catching up on email. For the non-consultants these latter two days were much more interesting. Here we could see the diversity of the TOC community and have a collection of our fellow practitioners present their work extending the state-of-the-art or validating the current knowledge with case studies.

One of the last orders of business was the TOCICO Annual General Meeting of members. This included the election of new board members. The voting had taken place the day before.

Overall, I like the trend that I see in the TOCICO. It is gradually losing its Eli Goldratt focus. In fact, there are only 3 Goldratt Consulting people on the 10 person board following the latest round of elections. Many of the new board members are academics and this reflects the growing maturity of the body of knowledge and its adoption in academic curricula. It was Eli’s intention that the TOCICO would grow to be independent and that TOC would grow and live without his direct involvement. He might be the strong tribal leader but he wants the tribe to have a future without him. I see this coming true though perhaps not fast enough for some members.

So what should the conference look like next year. Well we already know that it will be in Miami in November. The conference is returning to the 2004 venue. I’d personally like to see some changes. The value for me in attending the conference is in the opportunity to network and interact with the other thought leaders in the community. It’s that once in a year opportunity to try and push the envelope and develop new knowledge from the intersection of others ideas with mine. However, I see some famous names in the space missing - published authors. In fact, I bought two books from the bookstore this year. Neither author was present at the conference. What a pity! So next year, I’d like to see a more interactive conference - less Eli, more community interaction. There was a suggestion for an “open space” event. I think that’s a splendid idea. Perhaps a whole afternoon could be dedicated to open space. I’d also like to see more formal tracks organized by domain e.g. manufacturing, distribution, finance (throughput accounting), and so forth. This might relegate my work in software to a miscellaneous track but I can live with that. I’d also like to see a formal dinner with an awards presentation. This year we awarded Oded Cohen the life membership in recognition of his long service to the TOC community and body of knowledge but the award was tacked on to the end of one of Eli’s sessions. It wasn’t tribal enough. The awards need to be stronger. The Agile Alliance gets this. At the Agile Conference dinner, there was the Gordon Pask Award. The prize was $10,000. Both the award and the ceremony to present it showed how strongly the agile tribe valued its emerging leaders. The TOCICO could learn some lessons from this.

And finally, some soothsaying read from my crystal ball. Eli has let the patterns genie out of the bottle. Expect a plethora of TOC and Viable Vision patterns to be published in the next few years. Expect half the paper submissions for the 2007 conference to contain the word “template” in the title. Expect confusion from all of these patterns. And then let me be the first to start the post-patterns movement in TOC with a return to the basics and the 5 focusing steps. And for those with a headache, just take two Thinking Processes and see me again in the morning…

[Pictures: Top Right - Eli Goldratt; Top Left - Eli Schragenheim (contributed the Foreword to my book); Bottom Right - Gerry Kendall (author of Viable Vision, Advanced Portfolio Management, and Securing the Future); Justin Roff-Marsh - revolutionizing sales management with his paradigm shifting ideas based on TOC; more pictures another day]

Thursday, November 17, 2005

Management Science for Software Engineering

What does it mean - “Management science for software engineering”? Why do I say that on this site?

I’m not making it up. What are we saying when we say we are doing science? Science is the idea that we can predict the outcome of events given our understanding of how things work. Our understanding is typically expressed using a model. Sometimes those models are expressed as mathematical equations but often times they are simple visual models or sets of rules or abstractions that appear to be true for a given problem domain. These models can be used to predict a cause and effect relationship and the effect can be measured. If it concurs with the predict results based on the model then the model is believed to be true.

I genuinely believe that we can build these models for the management of software engineering and this week I published a paper that proves this point. My paper from the TOCICO Barcelona conference, shows that using the Theory of Constraints 5 focusing steps and the drum-buffer-rope solution for production flow problems, it was possible to increase the productivity of a sustained engineering department by more than 200%. In the final, quarter of the study period, a 25% increase (elevation) of the capacity constrained resource, produced a 25% increase in overall system throughput - just as the theory and model would predict. In the previous quarter, a subordination and elevation step which involved moving resources from a non-constraint to the capacity constrained resource, produced a 25% improvement. In this case, the resource increase was 33% but it was implemented 1/3rd into the quarter and therefore an actual 25% increase in real resources produced a 25% increase in overall system output. This shows a correlation between cause and effect based on the model of the 5 focusing steps of The Theory of Constraints.

It is this case study that inspired my Stop Estimating blog and contributed to my view that all estimates are muda.

This paper proves that a management science approach to software development can be made to work even in very uncontrolled circumstances of sustained engineering, break-fix and incremental upgrades of IT applications. With no changes to the way software development or testing were conducted, and with no more than changes explained through the Exploit and Subordinate steps of TOC, it was possible to produce a 155% productivity improvement with significant drop in lead time and improvement in due date performance.

TOCICO Barcelona

From Worst to Best in 9 Months - Implementing Drum-Buffer-Rope in Microsoft’s IT Department

Abstract

This is a case study about implementing common sense changes where they were needed. It’s a story not about the brilliance of the Theory of Constraints (TOC) but rather TOC playing a role as permission giver, reinforcing the beliefs of a manager and encouraging him to do the right thing. It’s also a story about simplicity – making just a few simple changes, collecting less data, spending less time on overhead and bureaucracy and more on productive tasks.

The XIT Sustained Engineering team is part of one of Microsoft’s eight IT groups. The department maintains over 80 applications for internal use worldwide by Microsoft employees. The team completes small change requests (often bug fixes) involving less than 120 hours of development work. The team was considered the worst performing in its business unit at the start of the 2005 fiscal year (July 2004). The backlog of work was exceeding capacity 5 times and it was growing every month. The lead time for a change request was typically 5 months. The due date performance was almost zero. The customers were unhappy. A new program manager stepped in to coordinate the efforts of XIT Sustained Engineering. He wanted to make some changes but was unclear whether they were the right changes and how effective they might be. By performing an analysis using the 5 focusing steps of TOC, David Anderson helped him to understand how his proposals fitted with a drum-buffer-rope and Throughput Accounting implementation. With no new resources, no changes to how the team performed software engineering tasks like design, coding and testing, the changes to how the work was queued and estimated resulted in a 155% productivity gain in 9 months. The lead time was reduced to a maximum of 5 weeks – typically 14 days. Due date performance improved to greater than 90%. The backlog was worked off and the department is no longer seen as an organizational constraint. Customers are delighted.

This study will show that TOC’s fundamental 5 focusing steps [Goldratt 1984] and the production flow solution, Drum-Buffer-Rope [Goldratt 1984], show significant value in information technology, software development, without a need to resort to more elaborate TOC solutions such as Critical Chain project scheduling or The Thinking Processes.

Download the paper in PDF, From Worst to Best in 9 Months - Implementing Drum-Buffer-Rope in Microsoft’s IT Department
Download the presentation slides in PDF (special download version without custom animation)

[TOCICO members or Microsoft employees who would like the original Powerpoint presentation should email me for a copy.]

Wednesday, November 09, 2005

Staff Ride

4 years ago tonight, I was sleeping out under 19th century canvas with the rest of the Sprintpcs.com leadership team, in the cold, damp, gloom of the western Arkansas hills. Why on earth? We were on a Staff Ride! [No! Put your dirty thoughts away. It’s not what you think, despite what you may have heard about comings and goings in the .com building]

A Staff Ride is leadership training normally given to US military officers. The “ride” refers to touring a battlefield on horseback. The “staff” are a leadership group. Nowadays internal combustion is used to power the “ride”. There were no horses involved. The battlefields we toured and the battles we relived were both from the American Civil War - the Battle of Wilson’s Creek and the Battle of Pea Ridge. Each member of the ride gets to role play an officer from one of the two sides in the battle. These were chosen at random the evening before. Some of us were generals. I got to play lower ranking leaders including a battery commander.

The Civil War was in its own way an information age war. The battle records written up by each officer after combat serve as a record to this day of who did what and when. It’s possible to stand on the exact site and pretend to aim the cannon at the enemy marching over the hillside opposite. Remarkable after 140 years. The battlefields are preserved by the Federal Government - lest we all forget. An appropriate sentiment as we approach 11/11 - Armistice Day as we Brits call it.

The staff ride training was the brainchild of Chris Tabor (a regular reader so I hope he contributes some comments). Chris had served in the military in both the Gulf War and later in Somalia. If you’ve seen Black Hawk Down then you know what he went through. In more pleasant times he served in London. He worked for my boss in a sort of adjutant role. Chris ran our monthly operations review about which I wrote chapter 14 of my book. The ride was organized by MPRI and was conducted by 3 colonels who had also served in the Gulf War.

If ever I had any doubt that military officers “get” management and leadership then it ended with this outing in the hills. This was by far the best training event I’ve ever participated in. I learned such a lot. For example, you’ve heard the term “death march” perhaps you’ve even read Ed Yourdon’s book about it. But have you ever seen one - truly. Can you imagine the general who marched his troops around the back of the mountain in middle of the night in the dead of winter and then expected them to attack the fresh and rested enemy from the flank first thing after dawn? When you stand on the site where the soldiers fell, you learn the meaning of death march. It’s not pleasant.

I also learned how military command and control works. How to separate out strategic intent from operational missions and tactical battlefield events. I learned how the delegation rules work and how the rules of engagement are written based on whether something is tactical, “Lieutenant, we need to eliminate the gun emplacement at the top of this hill so that we can move our support forces through the valley below, take your platoon and eliminate it for us. Signal me when you have control of the location.” What the lieutenant does after that is tactical and under his control. Operational level rules might involve commands such as, “General, march your division through Missouri and take control of the Kansas river, engage the enemy on discovery and eliminate them.” A strategic level decision might involve rules like, “We want to deny supplies of food and other material to the enemy. Supplies are transported on the Mississippi-Missouri river. Therefore, we must take control of the river and prevent the enemy from using it.” This three level separation of strategy, from operations from tactics gives you the three basic layers of control and delegation for any corporation. The top sets the strategy, the middle executes on the operational plan, and the lowest levels act tactical in response to local conditions.

Do not confuse military leadership with Henri Fayol style command and control within the industrial setting. They are not the same. Just because the military expects soldiers to follow orders, doesn’t mean that they aren’t expected to think for themselves and to act locally based on immediate feedback. As managers seeking to lead agile teams, we can learn a lot from military officers.

There is a lot more I could write about these 3 days, 2 nights in Arkansas in 2001 but my memory fades. The picture shows the commemorative ship’s compass that was given to each of us as a memento of the occasion. It sits on my desk to this day. The inscription reads, “Leadership is the art of accomplishing more than the science of management says is possible,” Colin Powell.