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TheEconomicsofProductDevelopment
KarimHarbott-Apr2016
@KarimHarbott#SGFLA
Whythistopic?
@KarimHarbott#SGFLA
1. ACommonLanguage2. Queues3. BatchSize4. Prioritisation
WhatWillWeCover?
• EnterpriseAgileCoachandTrainer
• The5thLeSSTrainergloballyand1stintheUK
• FormerHeadofScaledAgileatMcKinsey&Co.
• Formerdeveloper,ScrumMaster&ProjectManager
• TrainedTeamandExecutiveCoach
• YearsofexperienceinscalingScruminlargeproduct
groups
KarimHarbott
ALittleAboutMe
[email protected]@KarimHarbott
www.guidingagile.com
ACommonLanguage“Youmayignoreeconomics,buteconomicswon’tignoreyou.”
DonaldG.Reinertsen
@KarimHarbott#SGFLA
Shouldwerunourtestdepartmentat80%capacitywitha2weekqueueor90%capacitywitha4weekqueue?
@KarimHarbott#SGFLA
Shouldwedelaydeliveryby4weekstoincludeanextrafeature?Whatabout8
weeks?Or12?
@KarimHarbott#SGFLA
Wecanonlymaketrade-offseffectivelyifwehaveaneconomicframework.
@KarimHarbott#SGFLA
“Ifyouonlyquantifyonething,quantifycostofdelay.”
DonaldG.Reinertsen
@KarimHarbott#SGFLA
Time
£Pe
rWeek
Benefits
CostofDelay
DelayCost
DelaytoMarket
@KarimHarbott#SGFLA
Benefit
Cost
@KarimHarbott#SGFLA
BenefitCost
ProductDevelopment BusinessFunction
Queues“InProductdevelopment,ourgreatestwasteisnotunproductive
engineers,butworkitemssittingidleinprocessqueues.”
DonaldG.Reinertsen
@KarimHarbott#SGFLA
Whataresomeexamplesofqueuesinproductdevelopment?
@KarimHarbott#SGFLA
QueuesareEverywhere
@KarimHarbott#SGFLA
CapacityUtilisation
Que
ueingTime
x2
x10
M/M/1/∞queue
50% 90% 100%0%
0
5
10
15
20x20
Capacityutilisation=%ofcycletimewaitinginaqueue!!
CapacityUtilisation&Queuesize
@KarimHarbott#SGFLA
@KarimHarbott#SGFLA
ResourceCost
ExcessCapacity
Cost
TotalCost
DelayCost
CapacityUtilisation&Cost
@KarimHarbott#SGFLA
Selectivelyaddcapacityinareasofhighvariability.
@KarimHarbott#SGFLA
GrowT-ShapedPeople
@KarimHarbott#SGFLA
Watchthebaton,nottherunners.
BatchSize“Don’ttestthewaterwithbothfeet.”
CharlesdeGaul
@KarimHarbott#SGFLA
Whataresomeexamplesoflargebatchesinproduct
development?
@KarimHarbott#SGFLA
10Weeks10Weeks
SmallBatchesHaveManybenefits
@KarimHarbott#SGFLA
Prob
abilityofO
ccurrence
£1
100% Spend = £1
£2
10%
Saving=£0.90
£3
Saving=£0.99
1%
67%lessinvestmentforthesamepayoff
CumulativeInvestment
TheValueofFastFeedback
@KarimHarbott#SGFLA
@KarimHarbott#SGFLA
HoldingCost
BatchSize
Cost
TotalCost
TransactionCost
YourOptimalBatchSize
@KarimHarbott#SGFLA
HoldingCost
BatchSize
Cost
TotalCost
TransactionCost
EnablingSmallBatches
@KarimHarbott#SGFLA
Project funding
Large projects
‘Phased’ projects
Detailed project
planningManual
regression testing
Complex architecture
Reviews / sign-offs Manual
deployment processes
SomeInhibiterstoSmallBatches
Prioritisation“Thekeyisnottoprioritisewhat'sonyourschedule,buttoschedule
yourpriorities”
StephenCovey
@KarimHarbott#SGFLA
Whichjobshouldwedofirst?The2-weekjobwitha£10kperweekCoD?
Orthe3-weekjobwitha£12kperweekCoD?
@KarimHarbott#SGFLA
Schedulingisadecisiontodelayonejoboveranother.
@KarimHarbott#SGFLA
Ifdurationsandcostsofdelayareequal,usefirstinfirstoutscheduling(FIFO)scheduling.
@KarimHarbott#SGFLA
Ifalldurationsareequal,useschedulehighestcostofdelayjobsfirst(HCDF)
scheduling.
@KarimHarbott#SGFLA
Ifallcostsofdelayareequal,usescheduleshortestjobsfirst(SJF)scheduling.
@KarimHarbott#SGFLA
Ifdurationsandcostsofdelayarealldifferent,useschedule
weightedshortestjobsfirst(WSJF)scheduling.
@KarimHarbott#SGFLA
9 68
7 34
5 12
ShortMediumLong
Low
Medium
High
Duration
Costo
fDelay
Quick-&-EasyEstimation
InSummary
@KarimHarbott#SGFLA
1. Measurecostofdelay,evenifitisnotperfect.2. Payattentiontoqueuesandtheircost.3. Preventqueuesfrombuildingupbybuildingin
excesscapacity.4. Drivedowntransactioncoststoenablesmall
batches.5. Limityourwork-in-progress(WiP).6. Prioritiseusingweightedshortestjobfirst(WSJF).
Summary
@KarimHarbott#SGFLA
6MythsofProductDevelopment
FindOutMore
@KarimHarbott#SGFLA
“Whenhigh-qualitydecentralisedeconomicinformationisabsent,itistoooftenreplacedbythemind-numbingbureaucracyof
centralisedcontrol“
DonaldG.Reinertsen
@KarimHarbott#SGFLA
