Lean Enterprise Portfolio Management

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1 Lean Enterprise Portfolio Management Lean at the Enterprise Matt Anderson, PMP Director, Program Management September 28, 2011

2 Objectives! Provide strategies to implement Lean for enterprise-level portfolio management! Address challenges to lean adoption and ideas to overcoming! Develop a roadmap for you to implement 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 1

3 Agenda! Introduction to Lean! Principles versus Practice! Applying Lean! Additional Topics 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 2

4 Introduction to Lean Agile, Lean and Toyota

5 Agile Manifesto We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value: Individuals and interactions over processes and tools Working software over comprehensive documentation Client collaboration over contract negotiation Responding to change over following a plan That is, while there is value in the items on the right, we value the items on the left more Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 4

6 12 Agile Principles 1. Our highest priority is to satisfy the client through early and continuous delivery of valuable software. 2. Welcome changing requirements, even late in development. Agile processes harness change for the client's competitive advantage. 3. Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale. 4. Business people and developers must work together daily throughout the project. 5. Build projects around motivated individuals. Give them the environment and support they need, and trust them to get the job done. 6. The most efficient and effective method of conveying information to and within a development team is face-to-face conversation Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 5

7 12 Agile Principles 7. Working software is the primary measure of progress. 8. Agile processes promote sustainable development. The sponsors, developers, and users should be able to maintain a constant pace indefinitely. 9. Continuous attention to technical excellence and good design enhances agility. 10. Simplicity--the art of maximizing the amount of work not done-- is essential. 11. The best architectures, requirements, and designs emerge from self-organizing teams. 12. At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 6

8 Toyota Motor Company! Quick Facts! Started in 1928 as a textile loom manufacturer! Automotive division in 1933 with first vehicle built in 1935! World War II altered economy and forced major change! 2008 became world s largest automobile manufacturer! Toyota Production System (aka TPS or The Toyota Way)! Developed by Taichii Ohno, Shigeo Shingo and Eiji Toyoda! Influenced by W. Edwards Deming and writings of Henry Ford! Introduced Lean Manufacturing and concepts such as Just-In-Time Brilliant process management is our strategy. We get brilliant results from average people managing brilliant processes. Our competitors get average results from brilliant people working around broken processes. When they get in trouble they hire even more brilliant people. Fujio Cho Chairman of the board, former President, Toyota Motor Corporation 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 7

9 The Toyota Way 1. Base your management decisions on a Long-Term Philosophy, even at the Expense of Short-Term Financial Goals 2. Create Continuous Process Flow to Bring Problems to the Surface 3. Use Pull Systems to Avoid Overproduction 4. Level Out the Workload (Heijunka) 5. Build a Culture of Stopping to Fix Problems, to Get Quality Right the First Time 6. Standardized Tasks are the Foundation for Continuous Improvement and Employee Empowerment 7. Use Visual Controls so No Problems are Hidden 8. Use Only Reliable, Thoroughly Tested Technology that Serves Your People and Processes 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 8

10 The Toyota Way 9. Grow Leaders Who Thoroughly Understand the Work, Live the Philosophy, and Teach It to Others 10. Develop Exceptional People and Teams Who Follow Your Company s Philosophy 11. Respect Your Extended Network of Partners and Suppliers by Challenging Them and Helping Them Improve 12. Go and See for Yourself to Thoroughly Understand the Situation (Genchi Genbutsu) 13. Make Decisions Slowly by Consensus, Thoroughly Considering All Options; Implement Decisions Rapidly 14. Become a Learning Organization through Relentless Reflection (Hansei) and Continuous Improvement (Kaizen) 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 9

11 Principles versus Practice Common challenges and strategies to resolve them

12 Activity Brainstorm Lean Challenges Ideas for Consideration Business Processes Corporate Environment Development Practices Client Expectations Market Constraints! Each group/table! Generate list of challenges for your business climates! Identify true challenges from false positives! 2-3 groups will present 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 11

13 Common Challenges! Overcoming culture and politics! Managing annual planning cycles! Competing priorities! Finding the balance! Hitting market windows! Change tolerance! Dealing with fires! Micro management! Global footprint! Creating Flow! Getting started! Priming the pump! Scaling! Reporting! Team/Associate assignment 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 12

14 When push comes to shove, culture eats strategy for lunch No company can sustain high productivity without culture change Jack Welch Former GE CEO Named Manager of the Century in 1999 by Forbes Magazine

15 Changing the Culture! Focus on key business results with Lean principles! Build on the past! Evolution not revolution Kaikaku still possible if needed! Focus on the Connectors and Mavens *! Mavens are the experts that everyone in the organization turns to solve the hard problems. They love the details! Connectors have wide networks that link the organization together! Champion profile! Grassroots connections! Executive level credibility! Can be a composite if single associate doesn t fit * - see The Tipping Point by Malcolm Gladwell 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 14

16 Challenge Annual Planning Cycles! Common side effects! Significant time spent developing business cases based mainly on wishful thinking! Large number of business cases never approved! Increase in the politics between areas competing for similar resources! General feeling of if it doesn t get approved now, it never will! Recommendations! Create approvals based on slices of the pie as opposed to individual proposals 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 15

17 Challenge Micro Management! Scenario! Leader wants to stay involved at the low level details! Common side effects! Slow decision making process frequently gated by availability! Minimal empowerment of team members! Strategy! Trust = Commitment + Delivery! Share Servant Leader principles! Provide macro management alternatives 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 16

18 Challenges! Complete slides for each challenge 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 17

19 Cerner Experience Investment Process! Initial State! All business cases reviewed by group of senior executive leaders on a quarterly basis to determine if we would invest in it! 500+ business cases submitted per quarter with > 20% approval rate! 2 week planned approval process that was frequently extended if a key leader was unavailable! Portfolio blend too heavy on support or maintenance! Large amount of projects live at only a handful of client sites as opposed to general adoption across the client base! Too many requirements fully met, but not what was intended client projects! Engineering teams concerned with hitting code complete deadlines and not always on actually delivering value 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 18

20 Cerner Experience Investment Process! Plan! Create a structure that supports better alignment to market and client demands! Macro decision making investment board with accountability at the line of business layer! Implement Lean thinking to eliminate waste and create incremental process improvement! Introduce Agile development principles and methodologies 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 19

21 Cerner Experience Investment Model 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 20

22 Cerner Experience Investment Process! Initial Roll-out (Jan 2010)! 6 month planning windows with macro allocations for budget! 50% reduction in business cases submitted from previous model Individual project approval still retained but with a significantly smaller set of executives! Improved client feedback loops! Restructured engineering and business organizations into Agile Business Units (ABUs)! Agile (mainly Scrum) roll-out started across entire development organization (~1600 associates)! Team composition determined by project needs 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 21

23 Cerner Experience - Macro Allocations Example Line of Business Budget ABU H 20% Support 20% Maintenance 25% Innovation 55% ABU A 21% ABU G 8% ABU F 7% ABU E 5% ABU B 12% ABU D 19% 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. ABU C 8% 22

24 Cerner Experience Investment Process! What has changed (2 years later)! Macro allocations extended to each ABU/line of business! Transitioned from 6 month approval cycles to a yearly macro allocation! Business cases approved at the ABU level with Lean portfolio to meet allocation ~100 business cases submitted to start Lean process with 80% approval! Lean introduced for teams where Scrum was not a fit! Significantly improved client interaction with focus on adoption, not code complete essentially eliminating historical adoption issues! Kanban board to display all investments in-flight with monthly senior executive reviews to manage changes 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 23

25 Applying Lean Tools and Techniques

26 Every project/game has two goals: Win the current game (deliver working software that solves the business problem) and Set up for the next game (just enough preparation/residual so that the team can win the next game too) Alistair Cockburn (paraphrased)

27 Winning the Game! Business Objectives! Return on Investment (ROI)! Speed to Market! Culture of Innovation 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 26

28 Lean Portfolio Management! Lean Principles apply, but not all Lean Manufacturing practices! Focus on delivering VALUE to the customer rapidly! Make improvements by focusing on the Value Stream! Principles! Eliminate Waste! Create Knowledge! Decide as Late as Possible! Deliver as Fast as Possible! Empower the Team! Build Quality In! Improve the System See the Whole! Core Processes! Visualize the Process! Limit Work In Process (WIP)! Measure and Optimize Flow 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 27

29 Value Stream Mapping End to End Delivery To Do: update diagram with different example than Henrik Kniberg s Game backlog Design-ready games Production-ready games Draft Concept Pres. Assign Team Graphics Design Sound Design Dev Integr. & Deploy 2d 1m 6m 1w 6m 6m 2h 4h 1d 1m 3w 3m (1m+2m) 3w 3 m value added time 25 m cycle time = 12% Process cycle efficiency 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 28

30 Activity Model Enterprise Value Stream Ideas for Consideration Value is subjective Identify hidden queues Use average times not best or worst case Process Cycle Efficiency = Value Add Time / Non-Value Add Time! Each group/table! Define Value for your business! Create a Value Stream Map from end to end! Add Value and Non-Value added timings! Calculate Process Cycle Efficiency 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 29

31 Sample Kanban Board! Visualize the Workflow! Limit WIP! Measure and Optimize Flow Order Point Maximum Capacity Buffer Queue FLOW Swim Lanes WIP Limit (10) Don t build features that nobody needs right now. Don t write more specs than you can code. Don t write more code than you can test. Don t test more code than you can deploy Corey Ladas 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 30

32 Product Decomposition Funding Level Investment Goal Goal Goal Release Level Capability Capability Capability User Story 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 31

33 Kanban Scenario Defect in Current Story! Scenario! A defect found later in the value stream that needs to be corrected prior to release In Lean, priority is given to items as the end of the value stream over newer items with one exception (expedited request)! Solution! Mark item as blocked (pink ticket) and create new work item that is expedited to the appropriate location for correction! If necessary, mark which WIP item will be put on hold while expedited item is corrected Item On Hold New Defect Item Defect Found 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 32

34 Kanban Scenario Concurrent Tasks! Scenario! Tasks within the overall workflow can be done concurrently! Solution! Option 1 Kanban Cards represent high level work item Task cards do not count against capacity! Option 2 Put tasks as checklist items on the work item card that are checked when completed (or other similar idea) Work Item Card Kanban Card Task Cards Prototype User interface Business Data access Exploratory testing Etc 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 33

35 Kanban Scenario Divided Allocation! Scenario! Leadership wants overall development split 70% Innovation / 30% Support! Solution! Create swim lanes for each division and set WIP limit for each swim lane based on desired % of total WIP! WIP limits for swim lanes must equal WIP limit for full system WIP Limit (10) Innovation WIP Limit Support (10) 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 34

36 Kanban Scenario Service Class and/or Size! Scenario! Need to show difference between priority/size of items as want to have different SLAs based on type! Solution! Create swim lanes and/or card color for different priorities and sizes! Have simple rules for SLAs for each type! Limit number to 6 maximum; fewer is better WIP Limit (10) High WIP Limit Standard (10) 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 35

37 Kanban Scenario Expedite! Scenario! New high priority item comes in that must be done now and is more important than any other work in process! Solution! Create Expedite swim lane that is used only for this purpose! Temporarily allow for WIP to be exceeded but mark which items in process will be stopped when expedited item gets to that point in the system Expedite Lane Service Class WIP Limit (10 + 1) Items to be held for Expedite 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 36

38 Combining Scrum and Kanban Boards Cards are Stories or Capabilities Cards are Tasks! Use Kanban for end to end workflow! Use Scrum (or other Agile methodology) for development team 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 37

39 Activity - Create Your Kanban Ideas for Consideration Card and Board tell the whole story Leverage Value Stream map Determine start and stop point for the board Start simple and expect to refactor! Design your Kanban card! Design your Kanban board! Create board layout! Create simple rules for each column! Create initial WIP limits! Determine board management strategy 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 38

40 Cerner Investment Kanban Card 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 39

41 Cerner Kanban To Do: update with current board 2011 Cerner Corporation. All rights reserved. This document contains Cerner confidential and/or proprietary information which may not be reproduced or transmitted without the express written consent of Cerner. 40

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