Tuesday, August 25, 2009

Agile 2009 Slides Now Available

I’ve made my slides for Agile 2009 available in the document archive of agilemanagement.net for everyone who attended or not to use. The great news is that Ryan Martens is interested in applying these ideas at Rally Development already.

I should also mention that my 3rd technique in these slides is similar to Todd Little’s model which appeared in the recent book, Stand Back and Deliver! The model uses four classifications of projects that Todd calls Sheep Dogs, Colts, Bulls and Cows. The Cows are analogous to my Cash Cows, Bulls to Major Growth Market and Colts to Innovative/New. If there is a difference it’s that my model is entirely market driven / external while Todd considers a complexity a dimension in the classification. These models are so similar that I will consider merging mine with Todd’s with full attribution.

Chris Matts’ believes that my first technique, previously published here in 2005 is similar to but less useful than Neil Nickolaisen’s model also published in the recent book, Stand Back and Deliver! Neil’s model maps projects at a portfolio level into 4 categories via a 2x2 matrix or dimensional assessment of market differentiation and alignment with corporate mission. He calls the segments: Don’t Care; Partner; Differentiating; Parity. While this model is certainly compatible with my model they are not the same. Neil’s model works at the project and portfolio level and assumes that the corporate mission is somehow correctly aligned with a strategic position and the market demands. My model works at the individual feature level and is again directly market facing insuring that the feature mix chosen for a project or iteration are aligned with the strategic positioning of the business and the allocation of types is aligned with the propensity for risk in the business plan or prospectus. Neil’s model is certainly compatible with mine. If for example, a project initiative assessed as “Parity” but the product owner was picking a lot of “Differentiator” class features for the product mix then there is clearly a miss match. So I believe that Neil’s model could be added as a fourth technique to the three presented here.

However, it’s worth noting that these are tools that can be used as choices and are not necessarily all designed to be used together. My 3rd technique, like Todd’s and Neil’s are designed to allocate resources to control commitment to projects across a portfolio. To spread risk effectively. It may not make sense to use more than one of these techniques at any one company or division. Choose the one that resonates best with your organization. Technorati tag: David+Anderson, Agile+Management, Agile, Lean, Kanban, Software+Engineering, Project+Management, Risk+Management, Risk, Portfolio+Management, Program+Management

Agile 2009 - New Approaches to Risk

I’ve uploaded a PDF of my slides for Agile 2009.

Download New Approaches to Risk Management PDF

Here is the original session submission…

Presenter: David J. Anderson

Title: New Approaches to Risk Management

Background

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For almost a decade the agile community has claimed that agile development is a risk-driven approach. Yet there is very little published material on agile risk management. A survey of the transactions of the Agile conference over 4 years reveals no explicit presentation on risk management. An online search reveals a number of blog entries and articles on agile risk management(of which more later.)

Traditional risk management (defined in the PMBoK, Prince II, CMMI and other frameworks) takes an event driven approach to risk. It seeks to model external variations that affect schedule, budget and scope on projects. Traditional risk management focuses on what Walter Shewhart called “assignable cause” variation [Deming renamed this “special cause”.] The model is simple: try to build a list of external events that might occur; assess the impact and likelihood of occurrence; assess the cost of mitigation options; decide whether to mitigate (reduce chance of occurence) or create a contingency plan (to recover in the event of occurence.)

Most of the agile risk management articles surveyed look at how to implement traditional risk management in a more agile way. They address how to fit risk management into iterative, incremental development and how to assess and manage risks in a collaborative, transparent manner. There appears to be no literature that discusses how to apply agile and lean ideas that revolutionize risk management.

Meanwhile, traditional (non-agile) project scheduling techniques treat all tasks homogeneously from a risk management perspective. Elementary scheduling techniques do not account for variance in task completions, e.g. the Gantt chart technique. More advanced techniques (PERT, Critical Chain, Last Planner) account for variation and provide some risk mitigation against chance (or common) cause variation through time buffering. However, these techniques still tend to treat all tasks homogeneously from a risk perspective.

Project risk management literature does not appear to have advanced much in the last 30 years.

New Approaches

———————

The application of Lean pull systems (kanban) and Real Options Theory in agile methods is providing new sophisticated means to manage overall business risk in technology projects and software delivery.

This tutorial will describe in detail 3 techniques that have evolved in the kanban community that provide improved project flexibility and business agility together with increased sophistication in risk management.

(1) Using classes of service based on cost of delay/failure functions

Classifying customer-valued deliverables according to the cost of delay (or failure) function allows for different prioritization policies to be implemented on the fly by self-organizing teams significantly reducing the business risks of late delivery. This scheme classifies customer deliverables such as user stories heterogeneously according to the loss incurred due to late delivery. Assigning different colored sticky notes, or index cards according to the classification allows team members to quickly assess risk and pull the most important item through the system in a self-organizing manner

Four example classes of service will be discussed along with their related pull system policies (for prioritization and scheduling) will be presented. The examples are: expedite; fixed delivery date (unit step cost of delay function); quantitative value delivery; and qualitative value delivery. Other classification schemes are possible and would be domain specific.

(2) Iteration Backlog selection based on market risk

This scheme allows for classification of customer-valued deliverables into 4 categories that are aligned with strategic planning and marketing objectives, namely: commodity (or table stakes); differentiator; spoiler; and cost saver. Features or user stories in each category exhibit different risk of change (deletion from scope, or change in definition) due to market conditions during the lifetime of the project, prior to release. The variance in market risk can be used to quickly prioritize iteration backlogs and target backlog items for iterations within an overall project schedule. The scheme mitigates the risk of rework (or waste) caused by changes in scope associated with changing market and business conditions.

(3) Risk-based Portfolio Management

This scheme allows the balance of resources and funding across a portfolio of projects or business initiatives based on the alignment of a project or development initiative with the strategic positioning of the business and its desired risk exposure.

Projects can be classified in to 3 categories: cash cow; mainstream developing market; and emerging market. Portfolio management is conducted similar to investment portfolio management by balancing investments and risk according to the risk preference of the investor. Hence, cash cow is analogous to bonds in an investment portfolio, mainstream developing market, is analogous to large cap stocks, and emerging market to small cap stocks. Resources and funding are allocated according to desired risk profile and kanban systems established for each line of business (or business initiative). Market releases (or projects) are defined to release value optimally based on transaction and coordination costs of making such a release.

Summary

———-

These three techniques combine elements of Lean Thinking and Edwards Deming’s New Economics (cost of delay/failure functions, waste (transation and coordination costs, rework or scrap)), Real Option Theory and Decision Tree analysis to provide methods that enable simple, fast, and often self-organizing approaches to maximize business value and manage risk throughout a portfolio and the project lifecycle.

Notes

——-

Most of this material has been previously presented anecdotally as part of presentations on kanban. Some of it has been documented at agilemanagement.net as blog posts. However, this tutorial will pull it all together, formalize it as a risk management approach and refine and develop some of the ideas.

The material is therefore new in this format but based on work and presentations given over the last 2 years.

The presentation will likely be trialed at various smaller venues prior to Agile 2009. In the first instance at the kanban conference in Miami in February 2009 to an audience of perhaps 50 people. Other opportunities of rehearsal performances will be available at local events such as the San Diego XP Users Group in May 2009.

I intend to submit a formal paper for the transations.

Reference Material

—————————

Survey of online articles on agile risk management

Appelo, Jurgen, http://www.noop.nl/2008/06/agile-risk-management.html

Cottmeyer, Mike, http://blog.versionone.net/blog/2008/05/agile-risk-mana.html

Cottmeyer, Mike, http://blog.versionone.net/blog/2008/05/agile-risk-ma-1.html

Cottmeyer, Mike, http://leadinganswers.typepad.com/leading_answers/2007/09/agile-risk-mana.html

Fitzgerald, Donna, http://www.cutter.com/research/2006/edge060711.html

Griffiths, Mike, http://leadinganswers.typepad.com/leading_answers/2007/09/agile-risk-mana.html

Rangaswami, JP, http://confusedofcalcutta.com/2007/07/06/how-risk-management-affects-agile-approaches/

Smith, Preston and Roman Pichler, http://www.ddj.com/architect/184415308

Thomas, Steven, http://www.itsadeliverything.com/articles/agile_risk_management.htm

Sunday, August 16, 2009

Get Your Ltd WIP Merchandise

Over in Kanbanland we’ve been working hard to help you show your affinity for a new approach to managing work, change and organizational culture. You can now get your Limited WIP Society t-shirts, tank tops, mugs, mouse mats, clocks and notebooks from our Ltd WIP Society store at Cafe Press. The Limited WIP Society logo and the “Yes We Kanban” poster motif are available in several styles and two colors (black and white). Why not buy some for everyone on your team? Technorati tag: Agile, Lean, Kanban

Saturday, August 01, 2009

Kanban Blogosphere Roundup August 1st

The guys at Silverstripe in India have their own version of how to migrate from Scrum to Kanban.

Customer demand is finally driving the major tools vendors to respond and supply Kanban features in their product. Here David Laribee demonstrates on video, the shiny new Kanban features in the VersionOne product. This is very significant. It’s the first tool that allows a company to manage Kanban initiatives within a portfolio that includes other Agile projects using methods like Scrum and XP. Apparently, customers are tell the folks at VersionOne that they want to use Kanban for product maintenance and upgrade releases with Scrum for new green-field projects. If this is true then, due to the fact that around 80% of all software development is maintenance and product upgrades, we should see significantly more adoption of Kanban over the next 10 years.

Stephan Schmidt has released a thin eBook that is available as a free download - 12 Things You can do do to shorten Lead Time and Time to Market in Software Development. It doesn’t explicitly mention Kanban but does talk about visualizing and managing flow. Much of sentiment of the message is encapsulated in what we know as Kanban.

Stefan Rusek has announced a Kanban plug-in for FogBugz! Woohoo! FogBugz is a popular work tracking tool and now you Joel Spolsky fans can Kanban too. Yes you kan!

Mike Suarez is introducing Kanban at his workplace. He refers to it on his blog as the Coolban process. One of the rules is that no one is allowed to talk about Kanban I love this! Introduce process changes because you need them and they will help. No need to label them. I have to label Kanban so you can all follow it and learn it but no need to label it when introducing it on your team. Just do it!

Coolban Part 1 - Enter Kanban
Coolban Part 2 - Meet the Column
Coolban Part 3 - Welcome to Coolban!

And finally, Jim Benson is still advancing the Person Kanban meme…

Post 15: Visualizing the Flow - Polar State Based Personal Kanban with Habit Trackers
Post 14: Personal Kanban and Existential Overhead
Post 13: The MAN THAT WAS AWFUL approach to Personal Kanban

I suspect that this will become the topic for Jim’s second book when he finishes his current manuscript on social media, Instant Karma! Technorati tag: David+Anderson, Agile+Management, Agile, Lean, Kanban, Software+Engineering, Project+Management

Kanban Class in Frankfurt, Germany Oct 5/6

With my partner in Germany IT-Agile I’ll be offering an open Kanban class in Frankfurt this fall, October 5th and 6th. All the details are here on the IT-Agile site. Technorati tag: David+Anderson, Agile+Management, Agile, Lean, Kanban