How do you successfully transform the culture of an organization hesitant to change? What do you do when an organization has decided to change delivery processes and innovate product definition at the same time? Thinking about innovation while undergoing an agile transformation is a daunting challenge for any organization. However, it was a challenge that Acme Corp Information Services decided to take on in 2015. The report describes the journey of Acme Corp Information Services leaders in developing a framework that fosters value delivery.
1. INTRODUCTION
In 2015, Acme Corp Information Services decided to change how it thought about delivering work effectively and efficiently, by embracing agile principles. In 2016, the main goals of strategic agile transformation were about realizing the four dimensions of efficiency gains promised by the Agile/Lean approaches (productivity, predictability, quality, time to market). Further, Acme Corp Information Services decided to marry the agile transformation with conversations concerning delivering better value to customers. Producing desired results with a minimum of effort, expense, or waste was not enough. The point is, without losing sight of the efficiency dimensions, the center of interest shifted to the House of Lean (see Figure 1) and especially the “value” pillar for creation of value for customers.
Figure 1 SAFe House of Lean
The CIO, during an all-hands meeting, requested that every leader in the organization should read the book “The Real Business of IT: How CIOs Create and Communicate Value” by Richard Hunter. Having the CIO repeatedly stating that Acme Corp Information Services must generate “value solutions” that are attractive not only to customers, but also to all stakeholders of the business, was pivotal to get a foothold from which to launch the agile transformation. To build on this momentum, the leaders were moving towards taking operational accountability and were empowered to consider a balanced transformation approach that aimed to deliver value to all stakeholders. Thus, in 2017, Acme Corp Information Services leaders engaged in developing a value delivery-operating model, which incorporated Agile/Lean principles as its foundation, and the Acme Corp Value Delivery Operating Model (VDOM) was born.
2. Background
2.1 Introduction: Understanding Acme Corp
Acme Corp Information Services operates as part of a “spoke and hub” system within Acme Corp. As a member of the hub, Acme Corp Information Services provides enterprise services to its operating companies. Facing challenges in effectively delivering its services, Acme Corp Information Services sought to adopt Agile to refine its operating practices and deliver faster and more efficiently. Prior to launching the broad adoption of Agile, a small group of transformation leaders spent several months defining the scope of the deployment, the way the adoption would be conducted, and how adoption could be scaled for a larger population. Hand in hand with the organization change management (OCM) team, the leaders decided to adopt Lean-Agile principles and established a road map for the Agile journey to empower each business domain to deliver the change in short cycles, enabling experimentation and quick adaptation, taking an MVP type of approach to process creation and adoption.
Known as the Value Delivery Operating Model (VDOM), the framework was designed for the Agile transformation to improve each leader’s ability to understand and create more value in new and existing products and services. As Acme Corp Information Services was moving through the transformation and teams were getting benefits from the Agile practices, the VDOM was the tipping point driving the need for the next level of agility. This next level was about improving and changing the strategic planning, understanding what products and services are adding value, having visibility into the funding process, and integrating all of the above processes with product life cycle delivery. VDOM seeks to identify innovative ideas, provide insights on alternatives/opportunities that may not have appeared obvious, and analyze them as they relate to the benefits and values they can produce. The experience report will focus on how Acme Corp Information Services’ Agile transformation journey evolved from adoption to developing and implementing a value delivery model. The case study will highlight the key components of the VDOM framework. Further, how the Lean/Agile transformation principles enabled us to institute and scale Agile practices at the business architecture and strategic planning levels will be presented.
Moreover, the reporters will clarify the techniques that helped identify value in an attempt to deliver better products and ensure that features are aligned and realized through value delivery. Concrete advice and systematic guidance concerning the “what,” “who,” and “how” questions related to value management will be addressed in this case study review.
Putting it all together, Acme Corp Value Management alignment, as seen in Figure 2, is defined within the context of the business architecture, a maximized Value Delivery Operating Model (VDOM), and a Lean/Agile playbook:
- The Acme Corp business architecture defines the strategic themes, capabilities, and value streams.
- The VDOM defines the sequence of practices, techniques, process, and roles involved in the value management life cycle.
- Lean/Agile transformation defines the principles, the set of scaled practices, the techniques, and the structures to be leveraged in the execution of the VDOM.
Figure 2 Creating Acme Corp Value Management Alignment
The report will explain how Acme Corp brought together disparate practices and disciplines into a clearly defined enterprise framework for guiding the customer value conversation. The case study will detail how the enterprise framework was developed to facilitate the value-driven transformation from the submission of an idea to the value realized.
3. OUR Story
3.1 Acme Corp Agile Journey
The following is a chronological summary of Acme Corp Information Services’ journey into Agile and the noted events that led Acme Corp Information Services leaders to consider “value” as a focal subject for its transformation efforts.
2015 – Acme Corp’s Agile Entry
- Agile transformation was initiated. Leaders were meeting twice a week to review progress and address any challenges.
- Consultants were hired to assess the current situation and deliver a transformation plan.
- Acme Corp Information Services leaders articulated a transformation vision.
- An Agile playbook was developed for teams to use in the course of their system delivery.
- A few teams, with new teams embarking every few months, adopted Agile practices. Each team received intense training and coaching while on the job.
- Automation was initiated, where Version 1 was the selected tool to support work item management, planning, and collaboration.
2016 – Acme Corp Value Framework 1.0 Developed
Acme Corp Information Services leaders, with help from consultants, endeavored to build a model that addressed value delivery and management. As mentioned, the CIO engaged Acme Corp Information Services leaders in discussions about the importance of delivering a better service to the operating companies, but the CIO also wanted the leaders to understand how value could be more prominent in conversations with stakeholders. When developing the framework, two things were taken into consideration:
- Development of the leadership triangle (see Figure 4) to understand who will be held accountable in all areas of the transformation (process, content, architecture), and people needed to assist with the transformation, including the value management team.
- Creation of a platform to support the transformation effort: the Agile Center of Excellence (CoE) was established.
At the end of 2016, the initial framework (see Figure 3), finalized by the consultants, was presented to the leaders. Through some exploration and data gathering, they proposed a few options for how cross-functional teams could come together in a new way to deliver value faster to customers.
Figure 3: Acme Corp Agile Value Management Framework 1.0
Figure 4: Leadership Triangle
The Acme Corp Agile Value Framework 1.0 was seen as an essential supporting structure for how teams would deliver value. In addition to the delivery of the initial value framework, the end of 2016 also saw the following improvements:
- Increased training for project managers to become scrum masters
- Hiring a delivery manager for the Agile CoE
- Additional training delivered to teams
- Increased training teams on Version One
It was the expectation of Acme Corp Information Services leaders to use the initial framework to facilitate value discussions, which led to conversation about the framework and other Agile value concepts such as “BCFH – Better, Cheaper, Faster, and Happier.”
3.2 Acme Corp’s Journey to VDOM 3.0
2017
While value was always a topic of conversation when requests for new work were initiated, either the value was anecdotal or the measures were not sufficiently substantiated. The CIO wanted the Acme Corp Information Services leaders to have thorough conversations with operating company executives about the “what,” “who,” and “how” as it pertained to value across the Acme Corp enterprise.
Furthermore, Acme Corp Information Services leaders attempted to dissect the meaning of the initial model and understand how to align the value life cycle and build value management concepts. As per the model, it was stated that personnel within the portfolio management office administer “value management.”
Acme Corp Information Services leaders established a team to add some context to the model developed by its consulting partners. A senior executive and six managers initially composed the team. The senior executive would serve as the product owner. The cross-functional team of managers was pulled together, representing different areas of the organization, going from enterprise architecture to business to strategic planning. The team is known as the Agile Value Transformation Team (AVT). The Agile CoE lead was acting as a coach. Cherifa Mansoura served as a scrum master and an additional coach. Andre Ferrell joined the team as a business analyst to help refine sprint deliverables. It is important to note that all the members of the AVT were agile novices, so the CoE lead and Cherifa were coaching the entire team about Agile and other value frameworks. The team operated as an agile team with two-week sprints, sprint reviews, and retrospectives, as well as release reviews and retrospectives. The team operated using a Hybrid approach: Scrum and Disciplined Agile. The Agile playbook was leveraged for the adoption of some of the practices. The team started using Version 1 as the planning and work item management tool to support the tracking of features and stories in the backlog.
After two iterations, leaders did not show confidence about how the operating model reflects the reality of the organization and its strategy as it related to the purpose of delivering value. Unable to communicate clearly the purpose to customers and stakeholders, and unable to understand the alignment of the model to aspects of Agile delivery, leaders identified the need to improve the flow.
After considerations, and in retrospective, the reporters believe that the main challenge faced by the leaders in using this framework was its nature of being descriptive and prescriptive at the same time. It is descriptive as it highlights various elements of the organization and provides an overall synopsis of discovery, strategy, and the marketplace of ideas. It is quasi-prescriptive as it shows the various portfolio management elements that would take care of the definition, planning, and measurement of the new ideas.
Leaders decided to work together to define a better version, a version that is meaningful to an Acme Corp context. The challenges and difficulties leaders had in understanding the value life cycle, and how the value flows, motivated this choice.
Following this decision, the AVT planned to start at the ground level and asked themselves some fundamental questions. What is value? What is value management? What is the value life cycle? What do value and value management mean to Acme Corp? These questions were the starting point for the delivery of the VDOM, as they forced everyone in the AVT to have a common understanding of value in the context of Acme Corp Information Services.
- Value was defined as “a desired outcome based upon the customer’s primary goals against resources expended.” This was in line with Mark Schwartz’s quotation in his book “The Art of Business Value”: “Business value is a hypothesis held by the organization’s leadership as to what will best accomplish the organization’s goals or desired outcome.”
- Value Management was defined as “the balance of the desired outcomes with resources.”
- Thus, Acme Corp Value Management was defined as “the shift of viewing work from a feature-cost orientation to a customer-value orientation, thus, driving the best possible outcome for the customer while expending the least amount of resources.”
Armed with an agreed upon definition and understanding of value and value management in the context of Acme Corp Information Services, the AVT worked to develop a descriptive framework that integrated core attributes of the Acme Corp Information Services business architecture discipline and strategic planning while incorporating value as a prominent and integral component to the business model. The framework would be geared towards explaining the “what” and drawing upon conceptualizing the relationship between the various components that would drive “value.” Finally, the new VDOM will provide guidelines for the management of new initiatives and the delivery of those initiatives.
It is important to mention that Acme Corp Information Services did not start with a blank page. Through the eye of the coach, they considered looking at one of the existing frameworks in the industry (SAFe*) but found this framework had serious drawbacks in clearly specifying how the various disciplines work together in the context of Acme Corp. Moreover, it would have required change across many functional and hierarchical levels in the organization. At this stage of the transformation, the organization was looking for a more descriptive model that relates to the context of the organization on how the value would flow from its initial definition to its realization. From a solution delivery perspective, the conversation emerged from transitioning into a bi-model approach (initially, keeping projects and products management under the same umbrella). On another hand, business architecture was leveraged to help transition the organization into a product model. Business architecture was valuable for leadership to understand to develop a blueprint for the way forward using product mapping techniques. At the end of iteration four, the AVT presented to the product owner the Acme Corp Agile Value Delivery Operating Model 1.0 (VDOM), better known as the “Hexagons” (see Figure 4). The birth of the VDOM came from multiple conversations with enterprise architects, business leaders, and other stakeholders about how the business operated currently (project vs. product delivery) and how it should operate in the future (product/service delivery).
The model initially comprised five core components or stages: Discovery, Strategic Scoping, Solutioning, Capacity/Resource Planning, and Delivery. Initially viewed as a vertical process with inputs and outputs at each stage, VDOM 1.0 facilitated conversations about how Acme Corp Information Services delivered work based upon the input and output at each stage. The conversations forced leadership to validate whether inputs and outputs generated the desired results. AVT had to synthesize existing practices with the agile transformation already incorporated throughout the enterprise.
Figure 5 Acme Corp Agile Value Delivery Operating Model 1.0
3.3 Mid-2017
At the end of Release 1, the new version of the framework was delivered (see Figure 6). It is important to mention that the framework evolved from a linear model to a model with three core pathways for idea delivery. Those pathways are different depending upon whether it is a big change or just an enhancement for an existing product.
This new diagram is a lot easier to make sense of because it shows how all the elements inter-relate to realize the value stream. In addition, two more hexagons were born: Triage and Value Harvesting. The VDOM sought to be the catalyst for “ideation.” Triage aimed to empower the innovation process to allow employees to submit new ideas for huge product enhancements or new products.
Using elements from SAFe, the pathways for the framework reflected the three major components within Agile: the epic (big ticket), feature (enhancement of existing product), and story (to be applied to small changes). Ideas would be initially filtered and vetted in the Triage stage and then processed.
Figure 6 Acme Corp Agile Value Delivery Operating Model 2.0
3.4 VDOM Components in Detail
3.5 End of 2017: Release 3 (Figure 7 below)
Release 2 of the VDOM did not roll out yet. Leaders decided to give it another iteration for additional improvement. As the organization was making progress through the agile journey map, an Innovation lab was put in place. This was designed for the organization to become better at driving themselves and their teams to create better solutions, new products and services that would cater to the needs of the customers. It was imperative for the organization to create an environment that would take care of experimentation and research, particularly given the rapid spread of new technologies and tools. Leaders decided that AVT needed more alignment in terms of innovation.
To do so, additional stages and branching were added the VDOM.
The Intake
Intake provides a mechanism for the organization to capture demand on a continuous basis. It puts in a pre-screening front end where the requestor of an idea selects an existing product that may be impacted by the change, or decide this is not a known product. For the latter, when the product is not known, and when the idea seems like a huge initiative that would necessitate funding, this will go to the Triage.
- All the new big requests flowing into Triage are categorized in a way that shows where Innovation is required or not.
- Other smaller ideas may solve a niche problem. They may address a strong need for additional features (business or technical), or enhancement of an existing feature. This category is defined as enhancements of existing products.
- Smaller enhancements are simply added as stories.
The Triage
“Triage” was given a set of new responsibilities and designated to be taken care of strategic decisions related to larger initiatives that may translate into new products or a big change relative to an existing product. In summary, Triage team will make decision and know what constitutes Big Ticket (BT) vs an Idea. The latter will finds its way into the Corporation Innovation lab. The difference between a big ticket and an idea is that the latter requires experimentation, which goes beyond a simpler proof of concept.
The Innovation
The Corp Innovation Lead is part of the Triage team (made up of executive leaders representing IS, Innovation, Product Management, and the Business). As part of the Triage, this role will make the decision to push the idea into the lab backlog for experimentation. The goal for Innovation is twofold:
- Take on expected high-value requests, and perform experimentation with the help of internal or external partners. When this is successful, it goes back to Discovery for an initial business case.
- Make requests for concepts to turn into a new product or feature for existing products (see arrow from Innovation pointing into Product Teams).
Sub-committee Involvement (Branching from Strategic Scoping to Solutioning)
The lack of alignment from a funding point of view would hit the benefits from the VDOM. The creation of the VDOM gave an opportunity for the leaders to think about how they can possibly change the way they are funding projects today to a better way of allocating funds to new ideas and big tickets turning eventually into new products. The Steering and sub-committees are existing decision-making authorities focused on assessing business cases and allocating investment to projects instead of products. It was decided to restructure the decision authority by domain (each related group of products is a separate domain) and moving into managing budgets across products/services in respective programs. The sub-committees and attendees (typically senior product owners and key business sponsors) will meet often to allocate funding to new or existing product and proceed with some prioritization. Their involvement at this stage of the VDOM is an easy way to transition from annual projects budgeting to product funding. Just as an FYI, budgeting principles were reviewed, and some current thoughts are to consider moving to a more dynamic allocation of funds. To be watched!
Figure 7: Acme Corp Agile Value Delivery Operating Model 3.0
3.6 2018
AVT are still working together, on a regular cadence, as an Agile team. The amount of work required was underestimated, and after few struggles, each manager had to rely on his or her teams to bring more employees to the development of the VDOM. Andre is continuously providing help as he transitioned to become the facilitator/scrum master. As of this quarter, it was decided to roll out the Intake and Triage stages first.
Piloting the execution of the VDOM will be done in stages. The staged execution of the VDOM will help create an environment that encourages proactive, feedback-seeking behavior. This is key for the organization to use the framework as a catalyst in enabling cultural change. It took a few iterations and several people to make a decision on the tools to be used for the Intake and the Triage. Two tools were pre-selected, and it was not easy to make a decision between the two. One of them is selected for the pilot and depending on the feedback and result of the pilot, a decision will be made.
Cherifa is working towards helping the organization add more details to the VDOM content to identify areas for improvement and address questions such as, “How would this framework evolve into a scaled prescriptive one?” The backbone of the VDOM focused on three levels of changes (new big ticket, new feature, and new story) will definitely be used to transition easily into a top-down portfolio/program and team delivery.
4. What We Learned
- Delegation of the framework design to external consultants who left the company before the model was disseminated and baselined for execution was not a good idea.
- Using an existing framework or coming up with your own customized one requires vision, collaboration, and patience across the organization.
- Involving leaders from the organization is crucial, and allowing them to own their model is even more important.
- Effort and a commitment to delivery are essential attributes when the team members are not dedicated resources to one product. The team members were managers of teams who had to be agile in developing the VDOM in addition to leading their teams in other activities.
- Team members needed to change their thinking to see that developing the VDOM was not extra work but a part of their daily assignments.
- It is “okay” to customize Agile and other value models to fit your organization. However, it is also “okay” to challenge existing practices and even change practices to become more efficient and effective.
- Executive leadership engagement is critical: leaders need to understand what, why, and how to invest their resources capital.
- A framework developed by the leaders leads to a better result than engaging external consultants who worked in a silo.
- Focusing on value through the entire journey led leaders to realize for themselves the gaps in the VDOM framework and what they would need to change in their teams to support the framework.
- Using Agile practices to facilitate the development in the VDOM challenged the leaders to work together differently and more collaboratively. As a result, the leaders were more engaged in learning and investing in training and education during the transformation.
5. Acknowledgements
We want to recognize everyone in the organization that made this VDOM possible. Great thanks to our shepherd, Nanette Brown, for helping us bring this report to life.
REFERENCES
Scaled Agile Framework (SAFe): https://www.scaledagileframework.com/blog/new-lean-portfolio-management-article-in-safe-4-5/
Biz architecture Guild: businessarchitectureguild.org
Disciplined Agile Delivery: http://www.disciplinedagiledelivery.com/
