Creang Robust, Resilient & Anfragile Organizaons

Copyright Lean Kanban Inc. Email:[email protected]:@lki_dja

Crea8ngRobust,Resilient&An8fragileOrganiza8onsWhatdoesittaketobe…

…“builttolast”?

Presenter: David J. Anderson

Lean Kanban Benelux

Heeze, NL November 2016


BuilttoLast-1994

3M–theMinnesotaMuta4onMachine

AnExampleofa

Resilient,Robust&An4fragile

organiza4on


Emo8onalMo8va8onforChange


NobodywantstoleadthenextNokia!

From$56to$2!


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


Taleb’sModelforOrganiza8ons


Anewwaytolookatorganiza8ons•  Fragile

•  Resilient

•  Robust

•  An8fragile

•  Atriskoftotalfailure/financialruin

•  Takesdamage,avoidstotalfailure,recovers

•  Absorbsuncertainty,repelsblows,avoidsdamage

•  respondstostressbymuta4ng,maintainsfitnessforpurpose

•  purposeandiden4tycanchangeen4rely


Fragile


Resilient


Robust


An8fragile


Fragile


Fragilelead8medistribu8on

Weibull,k=0.8


MoreRobustLeadTime


ExamplesofLeadTimeDistribu8ons


Kanbanmi8gatesriskoffragility

KanbansystemslimitWIPandimproveflowefficiencyLead4medistribu4onsaremuchthinnertailedfromfullkanbansystemswithWIPlimitsandpullfullyimplementedIngeneral,theKanbanMethodcontributessignificantlytotrimmingthetail,reducingriskandimprovingresilience,robustness&an4fragility


Examplesoffragileen88es

MonoculturesarefragileHighlycohesivesocialgroupsarefragileMonopoliesarefragileFirmswithadominantmarketposi4oncoupledtocomplacencyorhubrisarefragile

Singleclassofservicekanbansystemsarefragile


theGreenlandNorsewerefragile


Monopolyskischoolfranchisesdidn’tsurvivederegula8oninthe1990s


Squeezes


Vola8lity&Turbulence

Riskismanageableincondi4onsofstablevola4lity,i.e.wherethereisno/verylifleturbulence.TurbulenceimpliesunmanageableriskErgo,turbulentsystemsarefragilesystems


Deadlinescreatesqueezes

Deadlinesandsqueezescreateturbulence§  Inherentlyfragile§  Impossibletoforecastreliably

Howtodealwithasqueeze§  Con4ngency(startearly,buffer4me)§  Liquidity–morecapacity(people,resources,money)§  Demandshaping–divertdemand

•  Deferqualityproblems,non-func4onalrequirements,orfeaturesforsomeniches/marketsegmentsun4llater


Dealingwithsqueezes

Con4ngencyisexpensivebutcanberobustLiquiditycanbeexpensivebutcanberobust§  Kanban&EnterpriseServicesPlanningprovidesomerela4velycheapwaysofimprovingliquidity

Deferringqualityproblemsischeapbutinherentlyfragile!Heroiceffortappearscheapbutisinherentlyfragile!§  Andogenexpensivetomaintain,e.g.recruitmentcostofreplacingburnedoutpeople,orinflatedcostof“hero”


Abe4erwaytodealwithsqueezes

Hedgeriskofasqueezewithop4onality§  Sequencingwhichmaximizesop4onality(commitearlybecauseyouknowwhy–lowuncertainty)

§  Capacityalloca4on§  Discre4onary(orrefutable)demand§  Smartporjolio&productmixselec4on

Op4onalityisnotfreebutitisogen(much)cheaperthancon4ngency


Resilient


Resilientorganiza8onsavoidcatastrophicfailure

Likelihood=ProbabilityofxImpact=f(x)

Probabilityofshortorlonglanding=1/14million§  fattailproblem§  blackswanevent


Impactfunc8onma4ermorethanlikelihood

Examplesof2shortlandingsinlast3years.Likelihood1in14millionflightsImpact-SFOAsianaBoeing777.July2013.Aircragiswrifenoff,nolossoflife-2crewseverelyinjured.3teenagepassengersdieagerincident,killedbyemergencyvehiclesafendingthesceneImpact-Rostov-on-DonRussia.FZ981Boeing737.March2016.Totallossofaircrag,passengersandcrew.62deaths


Resilientorganiza8onsavoidcatastrophicfailure

F(x)-thepoten4alimpact-alwaysoverridesprobabilityofx-thelikelihood.Thetwoparameterscannotbemul4pliedtogethertopriori4zeriskmanagement.

Riskmi4ga4on-reducingtheimpact-ismoreimportantthanriskreduc4on-reducingthelikelihood

Whenthereisariskoftotalruin,howeverunlikely,weneedtopayafen4ontoitandmanageit.

Probabilityofdelayversusimpactofdelay

Classofservicereducesprobabilityofdelay,x,foritemswithalargeimpact(f(x))ofdelay


BlockerClusteringhelpswithresilience

Iden4fyRisksIden4fyLikelihood&ImpactRevealsprobabilityofdelayversusimpactofdelayRootCauseAnalysisReduc4on&Mi4ga4onac4ons

hfp://www.klausleopold.com/2013/09/blocker-clusters-problems-are-not.html


Resilientorganiza8onsuseclassesofservice

Classofservicereducesprobabilityofdelay,x,foritemswithalargeimpact(f(x))ofdelay


Resilientorganiza8onsuseexperiments

Resilientorganiza4onsuseexperimentsbutcontrolthefinancialriskAvoidriskofruinfromoverbesngontoomanyexperimentsPorjoliomanagementwith“Kellybesng”§  Ifyouhave60%confidenceinpayoffbetupto20%ofwhatyoucanaffordtolose

“betsize”includesop4ondevelopmentexperimentandcostofexercisingtheop4on,designing&buildingproduc4onversionandbringingittomarket


Resiliencerequiresareasontopickyourselfupandtryagain

Resilientorganiza4onshaveastrongsenseofpurposeResilientorganiza4onshaveunityandalignmentbehindthatsenseofpurposeResilientorganiza4onshave“Einheit”Purposecanbevaluesbasedsuchas“superiorcustomerservice”–VirginGroup


Purposeorvaluesweighmorestronglythaniden8tywithresilientorganiza8ons

Unityandsocialcohesioncomesfromastrongsenseofpurposeorasetofsharedvalues


Feedbackloopsfortac8calconcerns

ImmediateservicedeliverySelec4ngtherightthings,framedintherightwayResponsivenesstotac4calopportuni4es


Robust


Robustorganiza8ons…

AreriskhedgedHaveop4onalityHaveliquidityHavestrongcapabilitywithlowvariability§  Flighttoquality(inuncertain4mes)


Feedbackloopsforopera8onalconcerns

Dowehaveenoughcapacitytocopewithvolumesofdemandover4me?Howdowehedgerisk?Dowehavethecorrectriskassessmentframeworktoanalyzedemand?Arewecollec4ngtherightmetrics?Arewemanagingriskquan4ta4vely?


Entropy


Entropyinahousingneighborhood






Diversityofhousingmakesarobustneighborhood


Withoutrestric8onentropywillcon8nue


Leùncheckedanewmonoculturedevelops


Eventuallymaximumentropyoccurs


Robustnessisfragile–aphilosophicaldilemma

Fragilesystemsareogenstable§  Perhapsmaximumentropyhasalreadybeenreached?Likeawells4rredCampariorange

RobustsystemsexistinafragilestatevulnerabletoentropyExplicitpolicyisrequiredfordiversityororganizedinequalitytoenablerobustnessLowtrustenvironmentssubjecttocorrup4onwillentropyfromonefragilecondi4ontoanother.Robustnesscannotbesustainedinlowsocialcapitalenvironments


SingaporeisRobust


An8fragile


3M–MinnesotaMuta8onMachine*

3Mhasinnova4onbuiltintoitsDNA

However,3Mdoesn’tseemtohavebeencapableofdevelopingproductsthatrequirelongperiodsofinvestmentandlargesumsofcapital§  E.g.incomparison,IBMinvestedinspeechrecogni4onfor50+years

§  Wedon’tflyin3Mplanes,getourpowerfrom3Mgeneratorsoruse3Msmartphones,telecomsnetworksorcomputers

*Collins&Porras,BuilttoLast


IBMhasalonghistoryofiden8tychange

1911,CTR=TheTabula4ngMachineCompany,theInterna4onalTimeRecordingCompany,theCompu4ngScaleCompanyandtheBundyManufacturingCompany1924CTRbecomesInterna4onalBusinessMachines1964System/360Mainframefamilylaunched1981PClaunched1991SoldLexmark2002acquiresPWCConsul4ng2005SoldPCbusinesstoLenovo2016AnnouncedexitofmainframebusinessNow,primarilyaprofessionalservicesfirm!Whatwillitsnextiden4tybe?DoesIBMhavean4fragilitybuiltintoitsDNA?Canitkeepreinven4ngitself?


JohnMenziesfoundedin1833asanewsagentinEdinburgh.Iden8tychangein1998todistribu8on

&airportbaggagehandler


Microsoìsrobustratherthanan8fragile

Robustnesscomesfromlackofcomplacencyorhubris.BillGates’“beparanoid”Shigpercep4ontocollec4vetribalinsecurityDeeppockets.Lotsofop4onality

Coopera4veefforttostrengthenthetribePersonalSacrificeSymbolsaremoreimportantCommonenemyRitualsprac4ced

“BeParanoid”


Microsoìsrobustratherthanan8fragile

Acquisi4onofMinecragmakerisen4relyconsistentwithiden4tyasadevelopertoolscompanyPromo4onofSateyaNadellaheadofdevelopertoolsisen4relyconsistentwithcoreiden4ty


Iden88esthatarelooser,wider,broaderumbrellasarerobustandenablean8fragility


Virginarerobustandmaybean8fragilesolongastheysurvivethetransi8onfromSirRichard

Bransonastheirleader


WhatisVirginGroup’sIden8ty?

NotarecordlabelbuttheyareNotaretailerbuttheyareNotatravelcompanybuttheyareNotacommunica4onscompanybuttheyareNotamediacompanybuttheyareNotafitnesscompanybuttheyare


Virgin’sbrand

Virgin’sbrandisfun,irreverent,associatedwithsuperiorcustomerserviceand“cool”thingspeopleneedanduseregularly§  ExceptVirginGalac4cwhichisjust“cool”andRichardwantsit


Feedbackloopsforstrategy

Alearningorganiza4onthatcanul4matelylearntoreinventitselfAn4fragileorganiza4onshavefeedbackloopsforstrategyincludingregularlyassessing§  purpose§  capabilityalignmentwithpurpose§  whethertheyare“fitforpurpose”§  Iden4tyAn4fragilecompaniescanshedcorebusinesseswhileembracingnewones


TheOrganiza8onalDilemma


Organiza8onalDilemma

Loosesocialcohesionencouragesthebehaviorsrequiredforan4fragility§  Looseafachmenttoiden4ty§  Liberalexperimenta4onHighsocialcohesionenableresilience&robustness§  UnityandalignmentHightrust&highsocialcapitalarerequiredforan4fragilityDesigned&controlledinequalityisrequiredforrobustness§  Socialmobilitywithinorganizedinequalitycreatesan4fragilityUtopiansocie4esarefragile§  Communism&anarchy§  E.g.An4-utopiannovelssuchasBraveNewWorld,TheBeach§  Designedinequalityisrobust§  Cons4tu4onalMonarchiesaremorerobustthanrepublicsandtendto

outperformthemeconomically.Counterintui4vely,designedinequalityleadstohighertrust,highersocialcapitalsocie4es


Kanban&Resilience,Robustness&An8fragility


Capability

Op4onalityAdaptability

Agility

Survivability

Out-maneuvered

Unfitforpurpose

KanbanenablesAn8fragility

An4fragility


TheKanbanMethod

GeneralPrac8ces1.  Visualize(withakanbanboard看板)

2.  Limitwork-in-progress(withkanbanかんばん)

3.  Manageflow4.  Makepoliciesexplicit5.  Implementfeedbackloops6.  Improvecollabora4vely,evolveexperimentally

(usingmodels&thescien4ficmethod)


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


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


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


Thankyou!


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.”


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


Appendices


Books


2010–Kanban“bluebook”


2012LessonsinAgileManagement

The heavily under-rated book that underpins the Kanban Coaching Masterclass and most of the theory behind the Kanban Method


2014KanbanfromtheInside


Documents

Creang Robust, Resilient & Anfragile Organizaons