Tool Error Rates & Production
If an individual makes a mistake at a production line, the entire team has to work longer to produce the target volumes. The result is overtime, frustration, stress for line managers, but also higher cost and lower productivity.
There is a variety of cultures, ethnics, races, with various educations, social backgrounds, motivations and fears. People are treated by their supervisors and managers badly. One can feel stress and hear yelling all the time. High turnover rates are perceived to be inevitable. The tasks performed by the workers are very simple, however. How is it possible that in spite of the simplicity of the tasks, the workers do not cooperate, they make mistakes, cause material losses, if they consequently work overtime and complicate life for themselves, their colleagues and their managers? Together with Phil Abernathy, we scan the existing environment, recommend and execute the changes, so that the ratio between error rate and production volumes is improved, and work environment feels significantly better.
Most of the time, it is not a matter of process, but a matter of attitudes, relationships, environment and feelings. We know how to resolve the catch 22 situation, where workers blame the supervisors and supervisors blame the workers, and create an environment which will feel safer, and in which the employees are more engaged and will focus on fulfilling the goals and not making mistakes.
We can do it by applying psychology and small structural changes. As a consequence, we improve failure rates and production unit volumes which will save costs even after the cost of the structural changes, and our fees.
As a side-effect, we improve the integration of foreigners and decrease the number and intensity of conflicts, inefficiencies, and workers’ unpredictability. Integration is crucial for productivity, error rate, conflict management and predictability (workers will be less comfortable with quitting their jobs without prior warning).
Phil Abernathy on Agile Governance and Suncorp's Agile Transition
source interview at https://www.infoq.com/articles/phil-abernathy-governance.
InfoQ's Shane Hastie had the chance to talk with Philip Abernathy about the organization wide Agile transition at Suncorp in Australia. Phil is a key member of the core team who led the Agile transformation transition of a 20000 person financial institution with over 4000 Information Technology staff. Agile has become “the way we work here” with multi-million dollar measurable benefits and hugely reduced time to market for new initiatives. Organizational change on this scale requires significant investment and commitment from the top down. Phil has been part of the change leadership team from the inception in 2007. He was also instrumental in the formation of the Agile Academy, formed to share the learning from Suncorp with other organizations in Australia and New Zealand.
Thank you for taking this time, I most sincerely appreciate your being prepared to come and talk to us. Just to start off would you mind telling our audience "who is Phil Abernathy/" - a little bit of your background and journey getting to Suncorp.
As you can see I'm silver haired as a result of 29 years in IT. I started off as a Programmer with Shell and rose up the ranks there, you know, programming, analysis, design, architecture, consultancy and finally ended up as the CIO for Shell in Oman. Then I left Shell after 15 years with them in various locations from Brunei, Malasia, UK and a few others, and started my own company in Holland - an IT company specializing in Agile software development. That's way back in ‘95/'96. The company grew to approximately 120 people providing services in the US and Holland with a software factory in India doing Agile across the spectrum, and that was for 12 years.
Then for personal reasons I moved across to Australia. Sold my business in Holland and moved. I worked with Thoughtworks in Australia as director of their Agile University. I was to set that up as a global business for them, but they then decided to pursue other business opportunities at which point I decided to leave and start my own consultancy. I was then hired in by the Suncorp team to help them with their Agile journey.
That Suncorp journey, there's been a fair amount in the news recently about what Suncorp are doing here in Australia. Would you mind explaining what the Suncorp Agile Journey is?
Jeff Smith joined Suncorp in the early part of 2007 as the CIO and having looked at the situation there I think the key thing that was apparent was that Suncorp needed to do more with less. There was a huge integration project ahead of them in 2007 because Suncorp had just merged with Promina. They had gone from a 10,000 to a 20,000 person company, approximately doubled in size; IT had also doubled in size and there was a massive amount of integration work and the risk needed to be managed. So increased business value, faster time to market and risk mitigation - these were the key drivers at that point, and all the time doing more with less, of course.
Jeff knew from his previous experience that Agile was the only way to deliver on this requirement. So he started the Agile initiative there and then. The first question that came up was "what is Agile?" because, as you know, if you talk to 5 Agile gurus you'll get 6 opinions. So I joined the team at that time with Katrina Rowett who was in charge of the entire change program. Jeff handled it as a major change initiative, not as a small "let's do Agile" trial. Agile was positioned as a new way of working, not just a software development methodology and given the support it needed for corporate rollout.
So it was Agile from top to bottom and the business bits that interfaced with IT. It included governance, infrastructure, maintenance and support, production support, telephony and the entire software delivery process as well.
Agile from the top down and all the way across the organization?
And how's that gone?
Well it was a massive undertaking to start with and we initially estimated it to be a 3 to 5 year journey. We look back about 24 months down the line and we see ourselves to be about half way through this journey. There is still a long way to go but we have achieved tremendous benefits.
Suncorp has saved millions with this initiative and the entire integration project has been delivered on time within budget. These are hard numbers that have been baked into the Profit and Loss Account. So they're not, you know, flimsy benefits that cant be measured. They've been quantified and reduced from the next year's budget and these have been all achieved in many cases with the help of Agile and in many cases just by looking at things from a continuous improvement perspective.
So in terms of the Agile successes, they have been tremendous successes that have made the entire IT Executive Management Team, the CEO, the Managing Director and the Board of Suncorp absolutely certain that this is the right way. So we have got top level commitment through proof of actual numbers on the ground. Millions have been saved through cost avoidance, through faster time to market and through just thinking in a fast Agile way.
So it's been a great journey, however, having said that, the resistance to change has also been considerable and it's been a hard slog to change mindsets. It's a cultural change that is needed to implement Agile and making this cultural change is a slow journey, so people have to be taken on the journey. Some will be there already, some are going through the process and some still need to be convinced and that is what the Agile change management program that supports this entire journey is all about - supporting that transition.
You mentioned measurable benefits - are you able to share some of these with us or is that confidential?
Well I can't give you details without divulging confidential information but I can give you some rough indicators.
In every large company you will see projects that have been running for a year+ in feasibility study phase. On Agile adoption a number of projects have been stopped or considerably amended with just two weeks of Agile work, with savings and cost avoidance running in the millions.
Other examples of going Agile: Large scale solutions such as internet banking developed in 6 - 8 weeks, where other companies have spent multiple millions to develop the same, and some of them have not got there.
The days of projects in the $50 million region, as recently announced by another financial service organization, are gone. We are talking about sub $1 million projects that now get very quickly evaluated, approved, planned and implemented in just a couple of months. Small cost effective projects delivering business value early, with improved time to market thus providing competitive advantage.
We are moving Agile into the maintenance and production support area which is delivering shorter cycle time and greater reliability. Automated testing has already started delivering hundreds of thousands of dollars in savings through actually providing the ability to extensively test legacy applications together with web front ends. This has never been done before.
In short, considerable savings from day one in many areas.
What are some of the high points in doing the Agile transformation project at Suncorp?
I think that one of the key high points, of course, was the Agile Academy, which Suncorp has actually invested in creating. When we started the journey, we realized that training and coaching is vital to success. We looked in the market and there was very little available, so we had to develop it ourselves. Suncorp invested in this and now we have built a suite of about 25 training courses that support the entire Agile transition. This has been offered to the industry via the Agile Academy, a not-for-profit organization with a partnership model.
This I think is a real highlight, because the minute that was in place in February 2008 the uptake just started soaring and people started to realise that this is not just lip service but there was actual commitment and investment behind it.
The second high point was when there was a realization by senior IT management that Agile really delivers tremendous benefits. It initially started off with a "lets try it" attitude, but the minute they saw that this is not just hype and only for Java developers doing new sexy things, they bought into it 100%
The third I think is business actually coming back and saying to IT "My gosh we can't keep up with your delivery speed", and this was a big eye opener. So I think getting the business' total support was a little bit of a surprise because a lot of people said the business would be resist the change. But in reality, it actually has been the other way round. Business has been one of the easiest groups to take on this journey because they see the benefits immediately.
What have been the most significant challenges?
The challenges came in waves. The first one was lack of awareness. So a lack of awareness creates a certain level of fear of the unknown. So once we managed to cover that with a whole demystification program, people began to realize what Agile really meant.
Then there was the next level of "Oh my gosh! How do I do it?" There was a level of competence fear. This was felt at all levels from senior management to the junior most in the organization. This fear was overcome through coaching, training and on the job support.
And then a third level of fear was actually the fear of certain roles not being needed. The fear of losing a job. The market took a dive at the same time. With the collapse in the market, Suncorp, like most major organizations over the last two years, went through re-organisations with considerable staff reductions. Now there was also that fear that with Agile and increased productivity, maybe certain roles won't be needed. Maybe middle management won't be needed. Maybe less Bas will be needed. Maybe PMs wont be needed. These are just myths. They are actually needed more than ever. Their roles are slightly different. They play and interact together in a different way, but there is still a need for all roles. Once this fear was dispelled the resistance reduced.
So those were the three main sorts of challenges that we faced and the way we overcame them was with patience, support, knowledge sharing and information dissemination through communities of practice.
Suncorp is a financial institution and you mentioned the meltdowns and so forth but one of the common perceptions out there and perhaps it is one of the myths, is that Agile projects don't work well in a heavily regulated compliance driven environment. How did Suncorp overcome that?
I think what you said is right - it is a myth.
When we started - to just give you a little example - we had a particular Agile project where the people came up to us and said "This is a heavily compliant area of the business. It is to do with treasury etc, and Agile will not be compliant. The auditors will not like it or approve it." So we asked who the auditors were. "Oh, well X&Y group are the auditors." So we said "Have you asked them?" "No, No, No, not really but I don't thing they will agree with it." So we said "Okay, let's talk to them." So we presented Agile to the auditors, and there was the myth among a lot of people including the audit team, that Agile was uncontrolled, chaotic, fit for cowboys and it wasn't very rigorous. However Agile is extremely rigorous extremely controlled and disciplined. So once we showed them the artifacts, the control points, the audit features, the risk mitigation techniques that we use in Agile, they were extremely happy, and in many cases, more happy than with the existing method, because it finally provided faster feedback and risk mitigation.
The other aspect to compliance is APPRA compliance. The Agile processes have been presented to them and they have met all the APPRA requirements.. We have delivered highly secure systems compliant with all the APPRA needs, using the Agile methodology and extremely successful at that as well.
How does the governance structure of projects challenge the Agile approach?
Well this is an interesting one as there are two levels of governance that have an impact on Agile projects.
The first is the level of governance that I call "doing the right work". This is the entire pipeline management, portfolio management, funnel management of business requirements and then deciding which initiatives to tackle. Applying Agile principles and Lean principles to managing the funnel is a key governance ‘must-have'. Forming cross functional teams that work on one project at a time is vital to increasing throughput and productivity by reducing switching loss. Throttling the funnel and prioritizing and managing the on-ramp are crucial governance activities in an Agile environment.
The second aspect is "doing the work right". This is governance that manages the projects in flight or program management if you want to call it that. This project level governance has to be aligned with the cadence on the Agile projects and be able to steer and respond with the same fast cycle time as the Agile projects.
If you are working on a two week iteration cycle and you showcase that to the governance steering committee, and they take three weeks to approve it, it won't work. So the approval and steering cycle has to be in the same cyclical tempo as the projects underneath. Otherwise you will get wasted resources, people twiddling their thumbs or maybe doing work without approval. Sometimes project teams could be disbanded because they're just waiting for approval, and then it is difficult to put them back again.
To summarize, the two critical areas in governance that have to be tuned to suite the Agile environment are portfolio management approach and project management cadence. For the rest all the same principles apply. You manage on scope. You manage on time. You manage on cost. You manage on benefits and you manage on risk. So you take them into account and nothing is different in that area.
What lessons do you think that other companies can take from the Suncorp experience? What does it take for an organization to make its Agile transition?
I'd like to split that into two parts: What it takes to make an Agile transition and then the lessons learnt.
The first thing that is fundamentally needed is a belief. A belief that Agile will work and can make a difference. Now that belief cannot be proven up front. You cannot say prove it to me first and then I will do it, because people will never believe what somebody else tells them. As someone once said, ‘People won't believe what they see. People may believe what their friends tell them but people will only really believe what they tell themselves.' So it is very important that the belief has to come from the leadership.
"The dots will not be connected when you start" to quote Steve Jobs at the Stanford University presentation. You build up your belief through observation, intuition, experience and trial. Do not start a major transformation till you really believe in it. If you don't then just trial it and test it out on a small scale, visit other successful implementations, get a second opinion and do whatever it takes to make a committed decision. If truly convinced, then go for it all out.
If you decide to transform to an Agile way of working then treat it like a serious change program, because it is a massive cultural change. The way you think, the way you work, the way you collaborate, the way you interact, will all change as you go Agile.
So it needs that commitment. That is the first thing.
The second thing is you don't have to do it all in one go. So just like eating any elephant, you eat it piece by piece. So it's a journey that will take time. You start small and then you grow it, and then you slowly expand it. It is vital to provide support all along the way in the form of training, coaching, communication and change management.
If you don't take this approach and just say - "let's start doing Agile", you'll not get the benefits. Look at Suncorp:
Suncorp started doing Agile five years before Jeff Smith arrived. About 2002. The first Agile projects were kicked off but they languished in small pockets, because if they didn't have the senior most management's commitment, no matter how good the teams are and have proved themselves to be, other people look at it and due to the fear of change, they say "Well that doesn't apply to me. We're slightly different. I know they can do it, but in my case it won't work because…"
Many large organizations started trialing Agile in small pockets since early 2000. These trials have mostly been very successful. However all they have to show for their efforts after many years are a few trial projects. This is because they did not provide the support and commitment to scale it across the organization.
So belief and commitment from senior management are key to an Agile transformation just like they are to any form of transformation of change program.
Now I go back to the lessons learnt and where we could have done better looking backwards. Where we could make changes, etc:
The first thing is we started on a difficult wicket, because there was no structured training spanning the whole spectrum. So it took us about six months to get that training developed. That was a massive effort that now is available for others. But it cost us and delayed us a bit.
The second thing is we could have placed greater emphasis on coaching rather than leave it up to the projects to ask for coaching. The approach we took initially was saying "Well the projects have to pay for the coaching, and if you want coaches just ask for them." So guess what? Projects are always under budget pressure so they never have money for coaching. So because they didn't have money for coaching they either started doing "Eliga" projects - which is Agile backwards - or "Tragile" projects as we call them. Which is "Ah let's just do a standup and let's just do a retrospective, and let's just try this." And then they fall down and there was no one there to help them and so there was a lot of pain, and that sort of pain was not good because it created ripples in the pool of experience, and that put other people off.
So looking backwards, I would recommend other companies to make coaching almost mandatory with expert help. Not just training, but training and coaching - what we would now call "Troaching".
The third one I think that is very important is to get management commitment through all layers of management, top to bottom, not just the Senior Management, and commitment that is more than lip service commitment. It takes absolute buy-in and trust among the leadership teams. This will take time and is a journey in itself.