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Enterprise Services Planningwith Kanban
Defining Key Performance Indicators
April 29th, 2015
Brought to you by:
Agenda:
Introductions A Quick word from the Sponsor ESP with Kanban – Defining Key
Performance Indicators Audience Q&A
Some Housekeeping
Questions will be taken via Q&A box. Please enter your question in the Q&A box on the right side of your screen.
Questions will be taken grouped by topic in the order received
The webinar will be recorded. Slides and the recording will be made available after the meeting.
Introductions
David Anderson CEO, DJ
Anderson & Associates
Mahesh Singh Co-founder, SVP –
Product, Digité/ SwiftKanban
Today’s Speaker
Your Host
David Anderson
David Anderson is a thought leader and pioneer in the field of Lean/ Kanban for Software Development and managing effective software teams. He has over 25 years experience in the software industry starting with computer games in the early 1980’s. He has led software teams delivering great productivity and quality using innovative agile methods.
David has written 3 books, Agile Management for Software Engineering – Applying the Theory of Constraints for Business Results, and Kanban – Successful Evolutionary Change for your Technology Business. His latest book is Lessons in Agile Management.
David is of course the Chairman of LeanKanban, Inc. LeanKanban Inc. licenses trainers and training materials and organizes events around the world to promote adoption and high quality understanding of the Kanban Method and Enterprise Services Planning.
Last but not the least, David is an Advisor to Digité, Inc. and consults with us for overall product strategy, especially in the area of Lean/ Kanban.
Quick word from the Sponsor!
Digité, Inc. - Pioneer in Web-based Collaborative Products/ Solutions for Geographically Distributed Teams
Headquartered in Cupertino, CA Over 300,000 users in the Americas,
Europe, Asia/ Pacific Products that cover Lean/ Kanban, Agile
ALM, Project/ Portfolio Management SwiftKanban is our flagship Lean/ Kanban
product
SwiftKanban Visual Management – Software Development
SwiftKanban Visual Management – Marketing
SwiftKanban Visual Management – Planning the Thanksgiving Party!
SwiftKanban - Analytics
Over to David ….
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Learn to care about what the customer cares
about
KPIs should shape improvements to service delivery
Enterprise Services PlanningDefining Key Performance Indicators
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Lean Kanban North America 2015 conference
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
• Becoming Data-Driven• Objective Retrospectives• Forecasting• Enterprise Kanban & Lean Startup• Scrumban• Kanban Coaching• Blockers for Improvement• RBS Project Sizing• Kanban Academic Research …
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Kanban experience reports
app and mobile development
Including…
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Fitness for Purpose
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Which system is fitter?
5 10 15 20 25 30 40 45 55 65 More02468
101214
System A
Frequency
Lead Time (Days)
5 10 15 20 25 30 More0
5
10
15
20
25
30
System B
Frequency
Lead Time in Days
Mean 17 days Mean 12 days
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Measuring delivery against expectation
5 10 15 20 25 30 40 45 55 65 More02468
101214
System A
Frequency
Lead Time (Days)
-25 -20 -5 0 5 10 20 30 35 40 More0
2
4
6
8
10
12
System A
Frequency
Lead Time Expectation Spread (Days)
5 10 15 20 25 30 More0
5
10
15
20
25
30
System B
Frequency
Lead Time in Days
-15 -10 -5 0 5 10 15 20 More05
1015202530354045
System B
Frequency
Lead Time Expectation Spread (Days)
Mean 17 days Mean 12 days
System B is clearly fitter!
System B delivers 5/7 within expectationsSystem A only delivers 3/7 within expectations
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
What makes a pizza delivery service“fit for purpose” ?
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Meet Neeta - a project manager• Delivery time =
approximately 1 hour• Non-functional quality =
tasty & hot• Functional quality (order accuracy) =
doesn’t matter if small mistakes are made, geeks will eat any flavor of pizza
• Predictability =+/- 30 minutes is acceptable
• Safety =so long as health & safety in food preparation is good, it’s fine
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Neeta is also a working mom!
• Delivery time =20 minutes
• Non-functional quality =doesn’t matter too much, it’s pizza!!!
• Functional quality (order accuracy) =it must be cheese pizza! No other flavor is acceptable! (even if you take the pepperoni off)
• Predictability =+/- 5 minutes maximum!!!
• Safety =only mommy worries about that stuff!
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
To be “fit for purpose” there is a product component & a
service delivery componentWe need to offer a selection of
different recipes which are tasty & popular. However, we must also
deliver with speed & predictability
Lesson
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Modern creative & knowledge worker businesses often
obsess with product definition & strategy
Operational excellence and service delivery excellence are often overlooked or treated as
inferior management skills
Lesson
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Neeta has 2 identities –Mother and Project ManagerEach of Neeta’s identities
represents a different market segment for the pizza delivery
service
Traditional demographic & income group segmentation does
not accurately capture the context to understand
“fit for purpose”
Nor, for that matter, do personas. As Neeta
represents two segments not just one persona
Lesson
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Fitness Criteria DriveEvolutionary Change
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Fitness criteria are metrics that measure observable external outcomes
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Evolutionary change has no defined end point
EvolvingProcess
Rollforward
Rollback
InitialProcess
Future process is emergent
EvaluateFitness
EvaluateFitness
EvaluateFitness
EvaluateFitness
EvaluateFitness
We don’t know the end-point but we do know our emergent
process is fitter!
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Business Risks, Fitness Criteria & Classes of Service should all align
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Select Key Performance Indicators Carefully!
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Other Useful Metrics
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Defining Fitness Criteria
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Market Adoption Lifecycle Segmentation
Enthusiasts EarlyAdopters
EarlyMajority
LateMajority
Laggards
Rate
Of
Mark
et
Ad
op
tion
time
Moore’sChasm
LittleChasm
HipCool
BuggyCommunitydevelopment
NicheMarket
Features
Good func qualityAdequate non-func
quality
PermissionGiving
Early adopter
Exceptional func and non-func quality
CostEffectiveBroad Features
Exceptional func and non-func quality
Low Cost Easy Access Forced adoption Viewed as taxation
Fit for purpose Fit for purposeChanges over time
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Customer Storytelling & Clustering
Tell stories about real customers, their motivation, what they buy and why. Cluster similar stories
Give each cluster a “nickname” e.g.
• “All ins”• “Aspirationals”• “Bet hedgers”• “Boy scouts”
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
You can’t just ask!
Neeta, how fast would you like your pizza delivered? How predictable do you need us to be with our delivery estimate?
Customers will tend to tell you they need better service and more features than they
really need!
Would you pay more for the things you say you need and want?
No, probably not!
Believe what customers actually do, do not
believe what they say they’ll do!
Actually behavior will vary from declared
intent!
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Who knows your customers?
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Pizza boy knows Neeta’s Story!
Staff who meet customers can be trained to learn what matters to them and why
Create ways to capture customer stories or directly
involve customer facing staff when defining customer segments fitness criteria
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
GT car manufacturer story
A well known manufacturer of GT cars determined customers were prepared to wait 21 months to take delivery
They learned this by letting delivery time slip to 27 months and receiving cancellations and customers switching to a rival
manufacturer
Determining fitness criteria thresholds by
reducing service levels until customer
complaints rise to dangerous levels isn’t a “safe to fail” approach!
Damaging your brand, your reputation and your profitability is a
strange way to discover how to be…
“fit for purpose!”
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Retarding customer service until customers complain vehemently or take their business elsewhere could be damaging
• Undermines brand• Damages reputation• Loss of market share• Loss of revenue
Probing for threshold values by reducing service quality isn’t “safe to fail”
Is it “safe to fail”?
We need general guidance that allows us to probe for fitness criteria threshold values that is “safe to fail”
If we can’t ask, and we can’t allow service to decline until
complaints make the threshold evident, what can
we do?
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Probing for Threshold Levels
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Look for clusters or patterns of demand, or
patterns of similar expectations, or new
sources of demand that may represent an emerging segment
Probe with classes of service
Create a class of service to respond to the believed new segment
• Set service levels at or close to anticipated threshold levels
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Probe with classes of service
Observe take up of class of service
• Is it over-used? (or abused?) If so tighten qualification criteria
• Is it under-used? Consider removing it
• Is it used but you fail to deliver to expectations? Do people complain? If no then consider removing it. You are over promising
Fixed delivery date class of service
emerged this way.
Initially abused by marketing, eligibility
criteria were tightened up.
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Telecom Equipment Example
A platform maintenance department at a
telecom equipment manufacturer receives
demand only from internal application
departments…
… Each request is tagged with the originating telco operator for whom the request is being implemented. Each operator is given a lane on the kanban board
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Telecom Equipment Example
Imagine 3 American telco operators with different strategic positions…
• Verizon value quality most• Sprint value time-to-market• Voicestream/T-Mobile USA values low
cost
Now design and offer 3 classes of service…
• High quality, tight “done” criteria for each step
• Short lead time – pull priority, looser “done” criteria
• Low cost – junior staff, lowest priority compared to other work
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Different lanes, different risks
Done
F
H
E
C
A
I
Engin-eeringReady
Deploy-mentReady
G
D
GY
PBMN
10 ∞
P1AB
Ongoing
Development Testing
Done VerificationAcceptance10 10
Verizon 10
10
Sprint
T-Mobile
10
DE
DA
Each lane represents a different source of demand but also different fitness criteria and threshold values
Different classes of service and different pull criteria policies are defined for each lane providing service levels tuned to the “fitness for purpose” expectations of each customer
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
To have confidence you are offering a service that is “fit for purpose”, you must offer different classes of service
To serve more than one market segment adequately, you must offer a selection of classes of
service
Lesson
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Classes of service should align to market segments and
fitness criteria (or stakeholders needs)
Lesson
KPIs cannot be general! They need to be tied to customer expectations. Different segments have different
expectations. Hence, different threshold levels of the KPI
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Classifying Metrics
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
85% at10 days
Mean5 days
98% at25 days
Change R
equest
s
Pro
duct
ion D
efe
cts
85% at60 days
Mean 50 days
98% at150 days
Median 45 days
Lead Time Distribution is a KPI
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Blocker Cluster Data Guides Improvements
http://www.klausleopold.com/2013/09/blocker-clusters-problems-are-not.html
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Avg. Lead Time
Avg. Delivery Rate
WIP
Poolof
Ideas
ReadyTo
Deliver
Cumulative Flow is a General Health Indicator
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
TestReady
Flow Efficiency is a General Health Indicator
F
H E
C A
I
GD
GYPBDE
MN
P1
AB
Customer Lead Time
Waiting Waiting WaitingWorking
IdeasDev
Ready
5Ongoing
Development Testing
Done3 35
UATReleaseReady
∞ ∞
Flow efficiency % = Work Time x 100%
Lead Time
Working WaitingWorking
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Liquidity is a General Health Indicator
The volume of pull transactions in a kanban system defines its liquidity
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Volatility is a General Health Indicator
The derivative of liquidity shows us kanban system volatility
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Wrap Up
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
ESP Training Modules
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
ESP Training
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Thank you!
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
About
David Anderson is an innovator in management for 21st Century professional services businesses. He leads a training, consulting, publishing and event planning company dedicated to developing, promoting and implementing new management thinking & methods…
David 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 the 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 also Chairman of Lean Kanban Inc., a business operating globally, dedicated to providing quality training & events that bring Kanban and Enterprise Services Planning to a broad audience of professionals around the world.
sales@leankanban.com @leankanbanu Copyright Lean Kanban Inc.
Thank You!
David J Anderson Digité/ SwiftKanbandja@djaa.com sales@digite.com
@dja_djaa @swiftkanban
www.swiftkanban.com
Janice Linden-Reed
janice@djaa.com Mahesh Singh
mahesh@digite.com
Wes Harris @maheshsingh
wes@djaa.com
www.leankanban.com
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