Friday, December 14, 2012
Lean Kanban Nordic Program Announced
The next Lean Kanban conference will be in Stockholm in March. I love the venue - the Hilton Slussen. It is my favorite hotel in Stockholm. This week, the organizers announced the program. I’m giving the opening key note where I will be providing an update on my risk management techniques and how to use them with Kanban. I’ll be adding to the theme of my Vienna and Utrecht talks from October with new concepts and reports of how these ideas are being used in the field. Don’t miss out, mark the date in your schedule and register now!
Posted by david on 12/14 at 04:04 AM
Tuesday, November 27, 2012
Thoughts on the Value of Liquidity as a Metric
For those who attended Lean Kanban Central Europe in Vienna, or Lean Kanban Netherlands in Utrecht last month, or those who’ve been following me recently, you will already have seen my key note speech where I introduced the concept of measuring “real liquidity” for kanban systems as a mechanism for evaluating the trustworthiness of a system or comparing 2 or more kanban systems (or services being delivered using a kanban system). Some of you may have seen Zsolt Fabok’s blog post explaining liquidity and evaluating it against his former organization in Budapest. This blog post seeks to explain how I envisage such a metric or indicator being used.
Lead Time Distribution is Most Important
Firstly, it is important to realize that I don’t envisage a measure of liquidity to be used in isolation. It would be wrong to suggest that I am proposing this as the one single metric you need to track for a Kanban implementation. I am not! It is still important to track lead time distributions as the primary measure of a kanban system’s capability. It is ironic that most Kanban software tools do not offer this report or have only recently added it. While cumulative flow diagrams are important as a means for assessing historical capability and for visually inspecting delivery rate and smoothness of flow, lead time distribution is by far the most useful and important metric. Given that a kanban system has a fixed WIP, knowing the mean lead time allows us to calculate the anticipated delivery rate (or throughput or velocity). Hence, long term planning and expectation setting are fundamentally based upon a measure of average lead time and an understanding of the distribution of lead times observed through the system.
Lead Time is a Lagging Indicator
However, lead time is a lagging indicator and a historical average observed over a longer period of time may not accurately reflect current lead time. If we simply seek to measure lead time, we need to wait until items complete before we have information needed to take action. For this reason, cumulative flow diagrams still serve a useful purpose. As a leading indicator, a CFD can help us predict the currently expected average lead (mean) time.
Averages can be misleading
However, the mean lead time is just that - an arithmetic average of all the data points in a given time period. It tells us nothing about the spread of variation or the consistency within the system. Understanding the historical spread of variation can help us understand how many data points we’d need in order to make a reasonably accurate projection, into the future, using the currently (or historically) observed mean. A lot of real data I’ve seen suggests that we need at least 20 data points to get the spread of variation from the mean down to < +/-15%, allowing us to make an acceptable projection. So projecting out the currently observed mean across the next 20 items delivered should get us within 10-15% accuracy in terms of the precise delivery date, or the number of items delivered against a fixed delivery date.
Liquidity is about Understanding Consistency
Liquidity, as I described it in the key note, is a leading indicator. If our current liquidity is observed to be similar to historical liquidity when lead time data was observed then we might expect similar results. If liquidity dramatically changes, then it should be an indicator to us that projections made based on historical lead time data, cannot be relied upon. Hence, liquidity can be used as a leading indicator for schedule projection risk management.
We would also expect certain levels of liquidity to correlate with certain lead time distribution curve shapes and spreads of variation. This is where we need to collect field data. We’d also like to consider how many work item types and classes of service are processed through the system, and at what level of due date performance. We like to correlate levels of liquidity against these dynamics that represent the breadth and depth of the kanban system as a market for processing work item requests.
We might expect systems that process greater numbers of types of work or offer more classes of service to exhibit lower levels of liquidity. This may eventually lead us to develop a framework (or matrix) for assessing variety of work processed (breadth and depth of the market) against expected liquidity levels. And from this, we’d have a mechanism for assessing capability across different kanban systems. If this works correctly, the assessment framework would be agnostic to type, size, complexity and risk of the work involved.
So what now?
What is needed now is to collect data. Not just liquidity data but the associated lead time distribution and cumulative flow data as well as context defining the breadth and depth of the system in terms of work item types processed and classes of service offered. Once, we have data we’ll start crunching numbers and see if the results are useful and repeatable. When all that is done, we’ll either have established “real liquidity” as a useful method that should be incorporated as a standard report in Kanban tools, or we’ll abandon the idea.
I am collaborating with Raymond Keating, a manager with CME Group, in the United States. Raymond and I will be looking at data from teams using Kanban at CME Group. We hope to report these results at Lean Kanban North America in Chicago next May. Meanwhile, I would encourage you to look at your own data as Zsolt has done and to publish your own results or experiences.
Posted by david on 11/27 at 12:22 PM
Monday, November 05, 2012
What can we expect at the Kanban Leadership Retreat in San Diego this month?
The Kanban Leadership Retreat consultants’ camp format unconference is coming up in San Diego later this month. What topics can we expect on the program and amongst those hotly debated by Kanban consultants, trainers and corporate change agents?...
My feeling is transitions from Scrum will have a much bigger
part to play as the American market adoption seems heavily skewed to adding
Kanban to challenged Scrum implementations.
Here is a list of things I think will be on the program…
Current areas of innovation in Kanbanland include
Depth of Kanban
I expect to see some debate over the absolute assessment of practice adoption
(begins to look like a CMMI style appraisal) for organizational comparison
versus the relative assessment for driving
improvement and kaizen (as posted by Pawel Brodzinski, for example)
It was obvious at Lean Kanban Central Europe that Hakan Forss has
stirred things up with his interpretation of Toyota Kata. I’d like
to see more discussion about it. Personally, I believe it takes us
Lean Risk Management
My two key notes in Vienna and Utrecht and recent speeches in Berlin
and Munich have given this topic momentum. People are ready for more
risk dimensions than just cost of delay. Classes of service is a deep
topic. Alumni of my 3-day coaching workshop have already had exposure
to this stuff
Unfortunately Troy Magennis can’t make it for family reasons but I expect Monte
Carlo simulation to be a big topic and perhaps we’ll see some live sessions
Coaching Role Transitions
It’s emerging that changing the self-image and social group fabric is the means
to insure institutionalization of changes. Hence, Kanban’s “start with what you
do now” and “initially, respect roles, responsibilities and job titles” means
that much of Kanban coaching is about support during personal J-curves - role
transitions - as people find their role changing - from Scrummaster or PO to
Risk Manager or Risk Management Facilitator, for example.
Virginia Satir’s material finally finds its way into Kanbanland.
What else do you expect to see on the program in San Diego? Perhaps the Dave Snowden fans will flood the program with discussions on application of Kanban to complex domain problems? Cynefin seems perennially popular with our community but is it making its way into pragmatic solutions actually used in the field?
If you’d like to be part of this event and contribute to the state-of-the-art in Kanban then register now. It’s a great venue and a great all inclusive price!
Posted by david on 11/05 at 06:30 PM
Wednesday, October 10, 2012
What People Are Saying About My 3-day Advanced Masterclass
Alumni of my coaching and leadership masterclass for advanced Kanban practitioners have taken the time to tell us why they valued the experience and what it means for them and their clients…
Jeff Anderson of Deloitte in Toronto said
The instruction and coaching I received as part of the Kanban leadership class has added foundational thinking tools to effect organizational change. As the lead for Deloitte LEAN, a service offering dedicated to helping technology workers excel in their craft, I can speak first hand to the influence David’s class has had on how I have conducted numerous large scale organizational transformation initiatives.
I’m very delighted I participated in this Kanban masterclass, with trainer and author David Andersson and a group of very experienced agile coaches. The class gave me lots of hands on advice and new insights about change management, process evolution and communication in different levels of organizations, with techies as well as executives.
After this class I can understand more about what’s happening at my workplace and how I can address serious issues in agile transitions or taking the next step in mature organizations and teams.
I also learned about implementing change in small steps and how Kanban differs from some other common agile approaches.
I highly recommend this class for anyone interested in change management and work processes in IT heavy organizations. Also for you who believe you already know everything about Kanban & Lean - there is always much more too learn.”
Ulrika Park, Stockholm
The distinctive blend of content and culture that characterizes this community continues to draw me and more importantly others in our organization back for more. Through his work (grounded in the work of Donald Reinertsen), we have learned how to make a start at organically transforming our organization. We have learned from Books, Blogs, Videos, Conferences LSSC et. al., introductory training, advanced training, leadership retreats. We have learned about culture. We have seen healthy culture. We look forward to learning more.
The Advanced training is an opportunity to hear DJA’s latest thinking and experience reports from the field.
You will get a chance to meet others working some of the same problems in their places of work.
Gary Perkerwicz, Minneapolis
As a process consultant, I found the three day class to be an excellent investment. By the end of the workshop, I was much more confident in my ability to assist clients in implementing the Kanban method in their organizations. The knowledge I gained allowed me to be to be more productive and in the end, more valuable to my clients. Because of this additional value I was able to provide, I was quickly able to recoup my investment.
Steve Porter, Canada
Since LeanKit makes Kanban products for knowledge workers, David Anderson’s books literally created the market that we serve. So we naturally have the highest gratitude and respect for him as a trailblazer and thought leader. But, authors and thought leaders can sometimes be, well, academic - their advice not practical when it comes time to implement. That’s not at all the case with David. Several of us have attended his classes and Kanban Leadership Retreats and we plan to send more of our team in the future. His teaching style is engaging and practical. His material is rich with real world examples. And the caliber of fellow attendees, and the conversation that engenders, is phenomenal. David and his team are on the elite short list of Lean-Kanban trainers around the globe
Jon Terry, LeanKit Kanban, Nashville
I attended the 3-day coaching and leadership class ran by David Anderson of David J Anderson and associates. I found this class very interesting and useful, the interactive nature and the depth of knowledge and stories that David brought to the class brought the concepts that are covered in his book Kanban: Successful Evolutionary Change for Your Technology Business to life.
I found this class valuable and would recommend it to anyone who is interested in deeper understanding of the Kanban method.
Nader Talai, London
This Kanban masterclass has helped me to deeply understand the Kanban method, with a more organizational and management point of view.
Advanced topics such as change and risks management, and other models have been covered, which makes it complementary to David’s Kanban training class.
The workshop format allows great conversations with other Kanban practitioners with different contexts, and different implementations, leads by David, which brings the real richness of this class.
Laurent Morriseau, France
We had the pleasure of attending the Kanban Leadership Workshop in Vienna 2011.
The format was very open and flexible and this allowed us to elaborate and dig down into details to a level that you normally doesn’t do in other, normal training. So if you want to go beyond the normal skill and really master Kanban, this is the one training you should attend!
The workshop gave us an extra dimension to Kanban where the bits and pieces come to place.
The Workshop also gave us the opportunity to discuss Kanban from our reality.
It was also great to get the opportunity to discuss things like leadership, management issues and risk handling.
So from our point of view it was very well spent days, which gave us the extra understanding that was needed in order to be able to have a good Kanban implementation in our company and to be able to act as good coaches for Kanban.
Petra Hallin, Asa Zetterlund, Anders Jonsson, Volvo IT, Gothernburg, Sweden
I referred to David’s coaching and leadership class a “master class” with good reason. As a musician, I’ve been to many master classes where you are able to spend focused time on specific challenges with the best of the best. That is what David’s coaching and leadership class felt like - rewarding time with other accomplished professionals and “the masters.” That is a rare opportunity in today’s professional training environment.
Michael Robillard, McKesson, Colorado
I attended David Anderson’s 3-day Kanban Leadership Workshop in January 2012.
The workshop combined in depth discussion, interactive workshop activities, and
a Kanban game experience in a fluid, small class environment. My keen interests
in exploring specific topics—including upstream Kanban, change management,
Kanban design, pull criteria, metrics, and more—were thoroughly satisfied.
A chief benefit of attending is that the master in Kanban for software products,
David Anderson, delivers this course. I found the ability to dive deep, test out ideas
for handling issues for specific projects, interact with other experienced lean and
Kanban experts, and learning from “the master” to be a rich, intense, and rewarding
I was fortunate to be able to take David Anderson’s Kanban Leadership Class. If I base my understanding of Kanban only on books and discussion groups and blogs it remains flat and lifeless. The guided interactions with David and the rest of the class brought Kanban to life for me. The experience enabled me to view Kanban with the passion and depth that are necessary when working with those that are new to it. I’m glad I took the course and I hope to take it again.
The Kanban Coaching class provided by David J Anderson was of tremendous value to me and my organization. Through the training I gained a deeper understanding of the principles that are the foundation of the Kanban method and of approaches to applying those principles in various situations. Another benefit was learning the value of trading the many times hostile and defensive relationship we have with other internal organizations and with customers, to one of humility, open collaboration and partnership. That alone yielded immediate benefits upon my return from the training by improving the conversations and reducing impedance.
Miguel O Alvarez
Posted by david on 10/10 at 04:01 AM
Thursday, October 04, 2012
Calculating PPP Adjustments for Lean-Kanban University Pricing
I thought I’d share some of the internal workings of Lean-Kanban University. More and more, I find that my day job is becoming the CEO of Lean-Kanban University and less and less it is about delivering Kanban training to clients and attendees of open classes. LKU is growing into a global training business and some aspects of its operations and business model are quite novel. For example, were you aware that LKU adjusts its pricing for purchasing power parity in many countries of the world? This means that member companies operating in countries with lower cost economies can price their training accordingly and pay fees to LKU in accordance with what they can afford. Today, I was asked to calculate a PPP adjustment for Romania. This is how it was done…
Background on PPP
Purchasing Power Parity (PPP) is a trick used by economists to normalize the value and costs of goods and services across different economies. It is accepted practice to report Gross Domestic Product (GDP) in PPP adjusted US Dollar equivalent. This enables the economy of one country to be more accurately compared to that of another. Various methods of calculating PPP have been devised. Perhaps the best known is the Big Mac Index which looks at the true cost of buying a Big Mac in different countries. However, the Big Mac index is notoriously inaccurate. For example, McDonald’s in America is a low cost restaurant chain offering burgers to the masses at low prices. In some developing nations, however, McDonald’s is positioned as a premium brand for rich upper-middle class knowledge workers and the restaurants are placed in flashy shopping malls. As a result, a burger is unusually expensive in these countries. For Lean-Kanban University we have needed to research a more reliable and fairer mechanism for calculating PPP adjustments.
We use a number of data points to validate our PPP adjustments. The first is actual experience from visiting these countries. Generally, I get to visit the countries of LKU member firms every year or two, perhaps several times per year. So far there isn’t a member in a country that I haven’t visited in recent memory. This may change soon though. When I’m visiting I look at the cost of basic goods and services and I also speak with people at client firms and get an understanding of their lifestyle and often their pay and how it relates to levels in the United States. This led to a more rigorous approach…
The Development Manager Index
We now research the gross salary levels for a software development manager with around 15 years industry experience and 2 or more years of experience managing a department of 15 to 30 people. Often salaries are expressed as net amounts of take home pay per month, so we have to research the tax deductions and extrapolate an annual gross amount. We also normalize for big cities. So we don’t compare a rural area or small town salary with a big city in the United States or vice-versa.
My research today taught me that Romania and Bulgaria have similar economies with some minor differences. For PPP purposes they can be treated as similar. This was convenient as my Kanban book is now available in Bulgarian and there will be Kanban promotional events and classes offered in Bulgaria in 2013. So I got two PPP adjustment factors for the price of a single research effort. First I contacted some Romanians that I know in the industry. I was in luck. A good friend who had spent many years living in Italy recently returned to Romania where he works as the enterprise architect for the offshore arm of an American media company. He gave me some excellent salary information. It seems the net monthly salary expressed in Euros is in the range 2000-2200. This grosses up to 3600-4000 per month. Expressed in US Dollars this is 4680 to 5200. If we take the mid-point of this we get $59,280 as an annual gross salary.
Cost of Living Adjustment
However, we also have to examine the cost of living in Romania compared to a large American or Central European city. There are various data available for this but I chose this one which uses basket of goods and services and normalizes for $1.00. The result is $0.70.
If we then divide the gross salary by this fraction, we get an idea of the buying power of the salary in Romania compared to an average for the EU. This gives us approximately $85,000 USD per year.
Comparing to US Levels
While salaries vary across the US and from one metropolitan area to another and we could access professional tools such as IEEE Salary Survey to get precise data, we work with information from our knowledge of the Seattle market. We would expect a Development Manager role to pay across a range with perhaps a median point of around $140,000. If we then compare this to a cost of living adjusted $85,000 in Romania, we get a ratio of approximate 0.6
Comparing our Dev Mgr Index with the Big Mac Index
One mechanism for establishing a Big Mac Index PPP adjustment is to look at how long a worker in a McDonald’s has to work in order to earn enough to buy a Big Mac in that country. If we look at this evidence, it shows us that the Romanian and Bulgarian economies are similar. It also shows us that there is a 6x difference between the United States and Romania in terms of the true cost of a Big Mac. This would suggest a PPP adjustment ratio of 0.16. This is a significantly different result to our 0.6 calculated using the Development Manager Index. So far our research has shown, in countries such as Chile, that the Development Manager Index is proving a much fairer method to calculate PPP and adjust Lean-Kanban University fees for local markets.
Lean-Kanban University now has a PPP adjustment ratio of 0.6 for Romania and Bulgaria. This means any firms joining LKU in these countries, or consultants applying for the KCP designation, or member firms requesting the issuing of certificates to trainees will pay 0.6x the US level fees. It is through mechanisms like this that Lean-Kanban University is able to grow the Kanban training business globally. By making the pricing fair and affordable for emerging markets and economies, membership and grow and high quality Kanban training can be made available at fair and affordable prices throughout the world.
Posted by david on 10/04 at 06:23 PM