creang robust, resilient & anfragile organizaons
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Crea8ngRobust,Resilient&An8fragileOrganiza8onsWhatdoesittaketobe…
…“builttolast”?
Presenter: David J. Anderson
Lean Kanban Benelux
Heeze, NL November 2016
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BuilttoLast-1994
3M–theMinnesotaMuta4onMachine
AnExampleofa
Resilient,Robust&An4fragile
organiza4on
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Emo8onalMo8va8onforChange
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NobodywantstoleadthenextNokia!
From$56to$2!
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Mo8va8onforadop8on?Kanbanhasagendas
ManagerialMo8vator
• Senior-level• Leadthebusiness(strategyand
posi4oning)• Confidencetheycandeliveronstrategic
goals• Legacy(longtermsurvival)
• Mid-level• Up-managing–answerthehardques4ons
withconfidence• Down-managing–makedifficultdecisions
withconfidence
• Line-level&IndividualContributors
• Relieffromabusiveenvironment• Overburdened• Qualitysuffers• Lowjobsa4sfac4on
KanbanAgenda
• Survivability
• Service-orienta8on(andcustomerfocus)
• Sustainability
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Taleb’sModelforOrganiza8ons
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Anewwaytolookatorganiza8ons• Fragile
• Resilient
• Robust
• An8fragile
• Atriskoftotalfailure/financialruin
• Takesdamage,avoidstotalfailure,recovers
• Absorbsuncertainty,repelsblows,avoidsdamage
• respondstostressbymuta4ng,maintainsfitnessforpurpose
• purposeandiden4tycanchangeen4rely
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Fragile
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Resilient
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Robust
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An8fragile
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Fragile
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Fragilelead8medistribu8on
Weibull,k=0.8
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MoreRobustLeadTime
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ExamplesofLeadTimeDistribu8ons
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Kanbanmi8gatesriskoffragility
KanbansystemslimitWIPandimproveflowefficiencyLead4medistribu4onsaremuchthinnertailedfromfullkanbansystemswithWIPlimitsandpullfullyimplementedIngeneral,theKanbanMethodcontributessignificantlytotrimmingthetail,reducingriskandimprovingresilience,robustness&an4fragility
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Examplesoffragileen88es
MonoculturesarefragileHighlycohesivesocialgroupsarefragileMonopoliesarefragileFirmswithadominantmarketposi4oncoupledtocomplacencyorhubrisarefragile
Singleclassofservicekanbansystemsarefragile
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theGreenlandNorsewerefragile
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Monopolyskischoolfranchisesdidn’tsurvivederegula8oninthe1990s
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Squeezes
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Vola8lity&Turbulence
Riskismanageableincondi4onsofstablevola4lity,i.e.wherethereisno/verylifleturbulence.TurbulenceimpliesunmanageableriskErgo,turbulentsystemsarefragilesystems
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Deadlinescreatesqueezes
Deadlinesandsqueezescreateturbulence§ Inherentlyfragile§ Impossibletoforecastreliably
Howtodealwithasqueeze§ Con4ngency(startearly,buffer4me)§ Liquidity–morecapacity(people,resources,money)§ Demandshaping–divertdemand
• Deferqualityproblems,non-func4onalrequirements,orfeaturesforsomeniches/marketsegmentsun4llater
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Dealingwithsqueezes
Con4ngencyisexpensivebutcanberobustLiquiditycanbeexpensivebutcanberobust§ Kanban&EnterpriseServicesPlanningprovidesomerela4velycheapwaysofimprovingliquidity
Deferringqualityproblemsischeapbutinherentlyfragile!Heroiceffortappearscheapbutisinherentlyfragile!§ Andogenexpensivetomaintain,e.g.recruitmentcostofreplacingburnedoutpeople,orinflatedcostof“hero”
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Abe4erwaytodealwithsqueezes
Hedgeriskofasqueezewithop4onality§ Sequencingwhichmaximizesop4onality(commitearlybecauseyouknowwhy–lowuncertainty)
§ Capacityalloca4on§ Discre4onary(orrefutable)demand§ Smartporjolio&productmixselec4on
Op4onalityisnotfreebutitisogen(much)cheaperthancon4ngency
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Resilient
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Resilientorganiza8onsavoidcatastrophicfailure
Likelihood=ProbabilityofxImpact=f(x)
Probabilityofshortorlonglanding=1/14million§ fattailproblem§ blackswanevent
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Impactfunc8onma4ermorethanlikelihood
Examplesof2shortlandingsinlast3years.Likelihood1in14millionflightsImpact-SFOAsianaBoeing777.July2013.Aircragiswrifenoff,nolossoflife-2crewseverelyinjured.3teenagepassengersdieagerincident,killedbyemergencyvehiclesafendingthesceneImpact-Rostov-on-DonRussia.FZ981Boeing737.March2016.Totallossofaircrag,passengersandcrew.62deaths
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Resilientorganiza8onsavoidcatastrophicfailure
F(x)-thepoten4alimpact-alwaysoverridesprobabilityofx-thelikelihood.Thetwoparameterscannotbemul4pliedtogethertopriori4zeriskmanagement.
Riskmi4ga4on-reducingtheimpact-ismoreimportantthanriskreduc4on-reducingthelikelihood
Whenthereisariskoftotalruin,howeverunlikely,weneedtopayafen4ontoitandmanageit.
Probabilityofdelayversusimpactofdelay
Classofservicereducesprobabilityofdelay,x,foritemswithalargeimpact(f(x))ofdelay
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BlockerClusteringhelpswithresilience
Iden4fyRisksIden4fyLikelihood&ImpactRevealsprobabilityofdelayversusimpactofdelayRootCauseAnalysisReduc4on&Mi4ga4onac4ons
hfp://www.klausleopold.com/2013/09/blocker-clusters-problems-are-not.html
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Resilientorganiza8onsuseclassesofservice
Classofservicereducesprobabilityofdelay,x,foritemswithalargeimpact(f(x))ofdelay
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Resilientorganiza8onsuseexperiments
Resilientorganiza4onsuseexperimentsbutcontrolthefinancialriskAvoidriskofruinfromoverbesngontoomanyexperimentsPorjoliomanagementwith“Kellybesng”§ Ifyouhave60%confidenceinpayoffbetupto20%ofwhatyoucanaffordtolose
“betsize”includesop4ondevelopmentexperimentandcostofexercisingtheop4on,designing&buildingproduc4onversionandbringingittomarket
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Resiliencerequiresareasontopickyourselfupandtryagain
Resilientorganiza4onshaveastrongsenseofpurposeResilientorganiza4onshaveunityandalignmentbehindthatsenseofpurposeResilientorganiza4onshave“Einheit”Purposecanbevaluesbasedsuchas“superiorcustomerservice”–VirginGroup
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Purposeorvaluesweighmorestronglythaniden8tywithresilientorganiza8ons
Unityandsocialcohesioncomesfromastrongsenseofpurposeorasetofsharedvalues
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Feedbackloopsfortac8calconcerns
ImmediateservicedeliverySelec4ngtherightthings,framedintherightwayResponsivenesstotac4calopportuni4es
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Robust
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Robustorganiza8ons…
AreriskhedgedHaveop4onalityHaveliquidityHavestrongcapabilitywithlowvariability§ Flighttoquality(inuncertain4mes)
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Feedbackloopsforopera8onalconcerns
Dowehaveenoughcapacitytocopewithvolumesofdemandover4me?Howdowehedgerisk?Dowehavethecorrectriskassessmentframeworktoanalyzedemand?Arewecollec4ngtherightmetrics?Arewemanagingriskquan4ta4vely?
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Entropy
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Entropyinahousingneighborhood
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Entropyinahousingneighborhood
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Entropyinahousingneighborhood
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Diversityofhousingmakesarobustneighborhood
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Withoutrestric8onentropywillcon8nue
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Le`uncheckedanewmonoculturedevelops
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Eventuallymaximumentropyoccurs
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Robustnessisfragile–aphilosophicaldilemma
Fragilesystemsareogenstable§ Perhapsmaximumentropyhasalreadybeenreached?Likeawells4rredCampariorange
RobustsystemsexistinafragilestatevulnerabletoentropyExplicitpolicyisrequiredfordiversityororganizedinequalitytoenablerobustnessLowtrustenvironmentssubjecttocorrup4onwillentropyfromonefragilecondi4ontoanother.Robustnesscannotbesustainedinlowsocialcapitalenvironments
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SingaporeisRobust
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An8fragile
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3M–MinnesotaMuta8onMachine*
3Mhasinnova4onbuiltintoitsDNA
However,3Mdoesn’tseemtohavebeencapableofdevelopingproductsthatrequirelongperiodsofinvestmentandlargesumsofcapital§ E.g.incomparison,IBMinvestedinspeechrecogni4onfor50+years
§ Wedon’tflyin3Mplanes,getourpowerfrom3Mgeneratorsoruse3Msmartphones,telecomsnetworksorcomputers
*Collins&Porras,BuilttoLast
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IBMhasalonghistoryofiden8tychange
1911,CTR=TheTabula4ngMachineCompany,theInterna4onalTimeRecordingCompany,theCompu4ngScaleCompanyandtheBundyManufacturingCompany1924CTRbecomesInterna4onalBusinessMachines1964System/360Mainframefamilylaunched1981PClaunched1991SoldLexmark2002acquiresPWCConsul4ng2005SoldPCbusinesstoLenovo2016AnnouncedexitofmainframebusinessNow,primarilyaprofessionalservicesfirm!Whatwillitsnextiden4tybe?DoesIBMhavean4fragilitybuiltintoitsDNA?Canitkeepreinven4ngitself?
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JohnMenziesfoundedin1833asanewsagentinEdinburgh.Iden8tychangein1998todistribu8on
&airportbaggagehandler
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Microso`isrobustratherthanan8fragile
Robustnesscomesfromlackofcomplacencyorhubris.BillGates’“beparanoid”Shigpercep4ontocollec4vetribalinsecurityDeeppockets.Lotsofop4onality
Coopera4veefforttostrengthenthetribePersonalSacrificeSymbolsaremoreimportantCommonenemyRitualsprac4ced
“BeParanoid”
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Microso`isrobustratherthanan8fragile
Acquisi4onofMinecragmakerisen4relyconsistentwithiden4tyasadevelopertoolscompanyPromo4onofSateyaNadellaheadofdevelopertoolsisen4relyconsistentwithcoreiden4ty
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Iden88esthatarelooser,wider,broaderumbrellasarerobustandenablean8fragility
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Virginarerobustandmaybean8fragilesolongastheysurvivethetransi8onfromSirRichard
Bransonastheirleader
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WhatisVirginGroup’sIden8ty?
NotarecordlabelbuttheyareNotaretailerbuttheyareNotatravelcompanybuttheyareNotacommunica4onscompanybuttheyareNotamediacompanybuttheyareNotafitnesscompanybuttheyare
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Virgin’sbrand
Virgin’sbrandisfun,irreverent,associatedwithsuperiorcustomerserviceand“cool”thingspeopleneedanduseregularly§ ExceptVirginGalac4cwhichisjust“cool”andRichardwantsit
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Feedbackloopsforstrategy
Alearningorganiza4onthatcanul4matelylearntoreinventitselfAn4fragileorganiza4onshavefeedbackloopsforstrategyincludingregularlyassessing§ purpose§ capabilityalignmentwithpurpose§ whethertheyare“fitforpurpose”§ Iden4tyAn4fragilecompaniescanshedcorebusinesseswhileembracingnewones
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TheOrganiza8onalDilemma
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Organiza8onalDilemma
Loosesocialcohesionencouragesthebehaviorsrequiredforan4fragility§ Looseafachmenttoiden4ty§ Liberalexperimenta4onHighsocialcohesionenableresilience&robustness§ UnityandalignmentHightrust&highsocialcapitalarerequiredforan4fragilityDesigned&controlledinequalityisrequiredforrobustness§ Socialmobilitywithinorganizedinequalitycreatesan4fragilityUtopiansocie4esarefragile§ Communism&anarchy§ E.g.An4-utopiannovelssuchasBraveNewWorld,TheBeach§ Designedinequalityisrobust§ Cons4tu4onalMonarchiesaremorerobustthanrepublicsandtendto
outperformthemeconomically.Counterintui4vely,designedinequalityleadstohighertrust,highersocialcapitalsocie4es
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Kanban&Resilience,Robustness&An8fragility
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Capability
Op4onalityAdaptability
Agility
Survivability
Out-maneuvered
Unfitforpurpose
KanbanenablesAn8fragility
An4fragility
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TheKanbanMethod
GeneralPrac8ces1. Visualize(withakanbanboard看板)
2. Limitwork-in-progress(withkanbanかんばん)
3. Manageflow4. Makepoliciesexplicit5. Implementfeedbackloops6. Improvecollabora4vely,evolveexperimentally
(usingmodels&thescien4ficmethod)
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Strategy Review
Risk Review
Monthly
Service Delivery Review
Bi-WeeklyQuarterly
Kanban Meeting
Daily
Operations Review
Monthly
Replenishment & Commitment
Meeting
Weekly
Delivery Planning Meeting
Perdeliverycadence
change change
change
change
change
change
change change
change
info
info
info
info
info
infoinfo
info
info
change info
KanbanCadences
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Change Requests 3
1
Prod. Defects
Maintenance
Usability Improvement
2
1
Kanbanhelpswith“einheit”(unity&alignment)
Teams
F
H
E
C A
Engin- eering Ready
G
D
GY
PB DE
MN
2
P1
AB
Ongoing
Analysis Testing
Done Verification Acceptance 3 3 Ongoing
Development
Done 3
Joe
Peter
Steven
Joann
David
Rhonda
Brian
Ashok
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Kanbanenablesresilience,robustness&an8fragility
Resilience§ Thin-tailedlead4medistribu4ons–predictable§ Einheit–unity&alignment–senseofpurposeRobustness§ Transparency&visualiza4on–highertrust§ Greatercollabora4on–highertrust§ Explicitpolicies–highertrust§ Capacityalloca4on–riskhedging,avoidingruin§ Classesofservice–fiferforpurpose§ Greaterop4onality–hedgedagainstuncertaintyAn4fragility§ Kanbancadencesprovidefeedbackloopsattac4cal,opera4onalandstrategiclevels
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Thankyou!
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About
David Anderson is an innovator in management of 21st Century businesses that employ creative people who “think for a living” . He leads a training, consulting, publishing and event planning business dedicated to developing, promoting and implementing new management thinking & methods…
He has 30+ years experience in the high technology industry starting with computer games in the early 1980’s. He has led software organizations delivering superior productivity and quality using innovative methods at large companies such as Sprint and Motorola.
David defined Enterprise Services Planning and originated Kanban Method an adaptive approach to improved service delivery. His latest book, published in June 2012, is, Lessons in Agile Management – On the Road to Kanban.
David is Chairman & CEO of Lean Kanban Inc., a business operating globally, dedicated to providing quality training & events to bring Kanban and Enterprise Services Planning to businesses who employ those who must “think for a living.”
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This presentation was inspired by the work of Nassim Taleb on Fragility, Resilience, Robustness & Antifragility in Risk Management and by his 5-day Real World Risk class in New York City, February 2016. None of the content of this talk is taken directly from Taleb nor is it meant to represent (or misrepresent) his work in shape or fashion. Cover images courtesy of John Menzies PLC, the Scotsman newspaper and the BBC. Lead time distribution courtesy Andreas Bartel Volatility & Turbulence data courtesy of Digite, Raymond Keating / CME Group, Andreas Bartel
Acknowledgements
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Appendices
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Books
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2010–Kanban“bluebook”
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2012LessonsinAgileManagement
The heavily under-rated book that underpins the Kanban Coaching Masterclass and most of the theory behind the Kanban Method
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2014KanbanfromtheInside
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