By Haydn Shaughnessy, Fin Goulding and Mik Kersten
Traditional companies are at high risk of disruption, and many companies are deploying an organization-wide agile transformation of one kind or another in an attempt to compete in today’s digital marketplace.
However, these transformations are expensive and fail at an alarming rate. If your company is like so many others, efforts are complicated by the difficulty in seeing the end-to-end flow of work, diagnosing bottlenecks, and measuring the true value of work.
As companies search for the elusive silver bullet, one realization becomes crystal clear: Most applications of agile frameworks and methodologies are missing a fundamental prerequisite to support their success.
“Flow,” defined as the movement of business value from customer insight to product delivery, is an alternative framework to illustrate the challenges faced by companies. Surfacing and visualizing the end-to-end workflow is a foundational requirement for enabling companies to master software-based solutions at scale.
Traditionally, “end-to-end” has been interpreted as from requirement specification to software delivery, but in Flow, we believe the mission begins much further upstream. How we understand and interpret changes in market conditions and how products find a place in the value stream are critical to success. Without those steps, companies will continue to do good execution on bad projects.
To take agile forward, you first need visibility into flow with the incorporation of:
- Flow metrics to improve data-driven decisions
- A focus on value-based agility through upstream analytics
The Efficiency Problem
Many companies have made great strides in the delivery end of the software lifecycle. DevOps and continuous integration have resulted in companies delivering value to customers quickly and often.
However, these companies invest substantially in optimizing this small portion of the software delivery lifecycle during transformations, neglecting to optimize the entire end-to-end flow and increasing total lag time between idea and implementation.
Agility as a concept refers to the ability to adapt and pivot work and processes. But so often, companies focus only on speed or velocity. This loss of focus on adaptability is an unfortunate reality that can hasten decline in the digital age.
The Value Problem
To maintain competitive advantage in an increasingly uncertain and disrupted digital marketplace, successful companies continually refine their strategy and embrace uncovered opportunities. Companies lacking insight into their value chain increase their risk of being digitally disrupted because they are unable to properly strategize.
Without a strategic framework for assessing value, product managers struggle to know when to turn away work. The resulting clogged funnels and backlogs obscure work of value and drag the entire end-to-end flow of work into the mire.
Flow as a Value Discovery Method
Value discovery techniques are underdeveloped in many instances and are not focused on customer outcomes. Being customer-centric is a starting point for modern value discovery.
Value discovery in lean agile is more of an accounting technique. What the minimum viable product and lean iterations give us is an estimate of value, but that is not a discovery process. In fact, it has led to a very “unlean,” promiscuous form of innovation. Companies are encouraged to give things a try and find out if an idea has value downstream, rather than exploring value upstream.
An essential part of the value discovery process is to be able to spot emergent needs. Many startups are excellent at this for several potential reasons:
- Often the entrepreneur comes from a large company where they and their colleagues have been arguing the case for new products to serve uncovered segments for a long time
- Based on personal experience, an entrepreneur just knows there is an opportunity in front of them
- Entrepreneurs know by how they use technology that they can adapt it to serve the needs of new markets
This is how disruption happens, according to the late Clayton Christensen. A good value-discovery mechanism will also help companies discover potential disruptors early, before they get into the hands of a startup, and to be able to respond with new value propositions.
Flow uses deep market segmentation to get at emerging customer needs. You emphasize interpreting customer success factors in those segments, an idea borrowed from SaaS.
You also assess existing software, talent, and the IP asset base to ask if you need to build, innovate, or adapt existing assets. There are serious resource consequences when you choose to build or innovate as opposed to adapt.
Finally, we believe in highly targeted innovation that uses these assets for precise needs, addressing clear customer success factors. That way we keep pressure off the backlog.
Value discovery should contribute to a range of goals:
- Become a source of ideas that are highly relevant to existing customers or promote the acquisition of new customers
- Enable insight into what would make the customers more successful
- Decrease speculative projects and reduce pressure on the backlog
- State clear value that teams can leverage to pivot or cancel when the feature is unlikely to deliver
- Serve as frontline defence against other companies getting hold of that value sooner
Flow frameworks can help restore meaning to managing the full spectrum of product and software delivery in order to measure and optimize the flow of business value and provide a focus on outcome-based performance.
Specific tools can surface core flow metrics, like flow efficiency, that can provide insights to steer data-driven continuous improvement efforts within organizations. Data such as this can equip teams and leaders to make better decisions as they seek to transform their way of working and circumvent a flow efficiency nightmare. But the key is to align this information with strong upstream value discovery.
Uncover Valuable Metrics in Flow
Being value-driven and surfacing the end-to-end flow of business value are vital prerequisites for any agile transformation. Attempting to transform methodologies and frameworks without knowing how value flows from idea to implementation is a guessing game.
In a world where most transformations fail to deliver the expected value, the tools and metrics that are emerging in flow can help companies to deliver measurable and meaningful results fast.
Haydn Shaughnessy is a business economist and innovation expert who has consulted to some of the world’s leading organisations helping senior executives to plan the next-generation enterprise.
Fin Goulding is a world-class CTO/CIO who in the past five years has transformed into a business agility expert having worked for organisations like Visa, RBS, HSBC and digital startups such as lastminute.com and paddypower.com. Fin also coaches executives through the challenges of transformation.
Dr. Mik Kersten is the bestselling author of Project To Product: How to Survive and Thrive in the Age of Digital Disruption with the Flow Framework. Mik started his career as a Research Scientist at Xerox PARC where he built the first aspect-oriented development environment. He then pioneered the integration of development environments with Agile and DevOps tools during his Computer Science PhD at the University of British Columbia. Founding Tasktop out of that research, Mik has written over one million lines of open-source code that are still in use today, and has brought seven successful open-source and commercial products to market. Mik’s experiences working with some of the largest digital transformations in the world has led him to identify the critical gap between business leaders and technologists, resulting in his creation of the Flow Framework™ to connect strategy to delivery.