Role of the Agile Leader in

Reconfiguring the Business

Role of the Agile Leader in

Reconfiguring the Business

Israel Gat

Agile 2009Chicago, IL

August 27, 2009

Israel Gat

Agile 2009Chicago, IL

August 27, 2009

Agenda

• Techno-economic Cycles:

• The Past 11 Months

• The Past 9 Years

• The Past 238 Years

• Implications for Strategy

• Three Chasm to Cross

• Customers, Problems, Solutions

• The Agile Social Contract

• Cultural Duality

• Software as Oil

Techno-economic Cycles

Techno-economic Cycles

The Classical Techno-EconomicParadigm a la Perez

• A sequence of events characterizes each of the techno-economic cycles:

• Major technological innovation introduces new infrastructure

• The new infrastructure disrupts both industry, commerce, society

• In good time the new infrastructure gets harnessed and becomes a stabilizing force for a prolonged period:

• The technology gets understood

• Confidence builds in the new order that evolves around the technology

• Sufficient “runway” for investments to pay off

Five Successive Technological Revolutions

Revolution Name Country Initiation Year

First The ‘Industrial Revolution’

Britain Arkwright’s mill 1771

Second Age of Steam and Railway

Britain The Liverpool-Manchester railway

1829

Third Age of Steel, Electricity and Heavy Engineering

USA and Germany

The Carnegie Bessemer steel plant

1875

Fourth Age of Oil, the Automobile and Mass Production

USA Ford Model-T 1908

Fifth Information/Tele-communication

USA The Intel Microprocessor

1971

Source: Carlota Perez, Technological Revolutions and Financial Capital Source: Carlota Perez, Technological Revolutions and Financial Capital

Production Capital Financial Capital

• We have witnessed a double bubble:

• Technological bubble:

• The Internet Mania and crash of the 1990s

• Financial bubble:

• The easy liquidity boom and bust of the 2000s

• Both are part of the assimilation of successive waves of technological revolution

(*) Based on Perez, CERF Working Paper No. 31, April 2009

Revisionist Theory*

• The historical pattern itself has been disrupted:

• Disruption followed by stabilization is no more the case

• The pace of change in Information and Telecommunication is exponential

• Uncertainty and instability are pervasive

• Sustained periods of prolonged equilibrium are unlikely

• Both business and social systems need to adapt on an on-going basis to turbulent changes

(*) Hagel, Brown and Davison, Shaping Strategy in a World of Constant Disruption, Harvard Business Review, October 2008

Implications for Strategy

Implications for Strategy

Adapters and Shapers

• Two schools of thoughts to choose from:

• Adaptive: Winners are those that can react faster than their competition

• Sense change and respond quickly within the techno-economic cycle

• Shaping: Winners use technology changes to create new business eco-systems

• Alter the industry/market fast as part of non-cyclical universe

• Both strategies critically depend on end-to-end Agility

Malleable Software• As software is malleable, it can respond

exceptionally well to the demands imposed by turbulent times:

• As an end to itself

• As embedded software

• As part of a business process/initiative

• The higher the embedded software content in a product/process is, the more malleable the whole product/process becomes:

• For example: cellular phones

• End-to-end: • Development Deployment Operations

Agile Infrastructure• Continuous Deployment

• Flickr updates its servers every 30 minutes

[Kent Beck, Trends in Agile Development]

[Allspaw & Hammond, 10+ Deploys Per Day]

• IMVU updates its servers every 9 minutes

[InfoQ: Beyond Continuous Integration: Continuous Deployment]

• Continuous Operations

• [Shafer and Nasrat, Agile Infrastructure, today at

2:00PM, Grand Ballroom A]

• Aligning development with operations and business requires reconfiguring the business

Three Chasms to Cross

Three Chasms to Cross

Chasm #1: The Customer,the Business and R&D

• The myth that the required features are known

• The myth that the required features are unknown

• Iteratively discover the customer and define the product in tandem

• Contained cost of experimentation

The Lean Startup Steve Blank and Eric Ries

Chasm #2:The Broken Social Contract

• In 1942, the turning-point year of WWII, 833,000 person-days of coal mining were lost due to strikes in the UK coal industry.

• Even a world war in which the UK was fighting for its life could not compensate for a broken social contract.

A Social Contract for Agile

• “Team, my overarching organizational objective is to preserve our team and its institutional knowledge for our corporation and its customers for years to come

• We will achieve this goal by enhancing our software engineering prowess to the level that the resultant benefits will outweigh the repercussions of the current financial crisis

• The state of the Agile art should enable us to attain hyper-productivity

• In the event that we fail to accomplish hyper-productivity and our assignments fade away, you will find the Agile skills you developed much in demand in the market

• Whether you will or will not be with the company in the future, I acknowledge your need to develop professionally as an Agile practitioner and commit to invest in your education/training”

 

Chasm #3: Cultural Duality

• By rolling out Agile, you create a cultural duality, possibly a conflict

• Culture=“how we do things around here in order to succeed”

[Schneider, 1994]

• The Agile Manifesto=“how we do software in order to succeed”

• The cultural duality/conflict intensify at scale

Scale Up• Likely to be least disruptive up to a

point – you will probably stay within the culture in which you already demonstrated success

• Furthermore, you are likely to be able to use the same Agile infrastructure

Scale Out• In this era you are likely to be

adding local culture(s) into the mix – Bangalore, Beijing, Moscow, Sao Paolo, etc.

• Fully Distributed Agile might not be optimal, but their use is inevitable in an era characterized by off-shoring and outsourcing

Scale Downstream• Leveraging Agile success in R&D to

drive change in downstream functions is an effective strategy…

• … as long as you are mindful of the cultural boundaries you are crossing

• Classical cultural clash between development and IT:

Agile vis-a-vis ITIL

Software as Oil

Five Successive Technological Revolutions

Revolution Name Country Initiation Year

First The ‘Industrial Revolution’

Britain Arkwright’s mill 1771

Second Age of Steam and Railway

Britain The Liverpool-Manchester railway

1829

Third Age of Steel, Electricity and Heavy Engineering

USA and Germany

The Carnegie Bessemer steel plant

1875

Fourth Age of Oil, the Automobile and Mass Production

USA Ford Model-T 1908

Fifth Information/Tele-communication

USA The Intel Microprocessor

1971

Source: Carlota Perez, Technological Revolutions and Financial Capital Source: Carlota Perez, Technological Revolutions and Financial Capital

Enormity of the Opportunity

• Software is becoming pervasive:• 3 billion mobile devices nowadays touch the

Internet

• [Joshua-Michele Ross, The Rise of the Social Nervous System]

• Software is quickly becoming the biggest component in many products in which it is embedded

• Each of the aforementioned 3 billion mobile devices probably contains about 1 million lines of code

© Copyright 1/11/2009 BMC Software, Inc.

The New Economics of Software: Productivity Index Values by Application Type

0 2 4 6 8 10 12 14 16 18 20 22 24Productivity Index (PI) w/ ±1 Standard Deviation Source: QSM Associates, July 2007

Business Information

Command and Control

Process Control

Scientific

System

Telecommunications

Engineering

Avionics

Microcode

Real Time

Real Time

2826

Software as Oil• In conjunction with Open Source

Software, Agile software satisfies the four condition required for an input to become a key factor in a technological revolution:

• “Clearly perceived low - and descending - relative cost

• Unlimited supply for all practical purposes

• Potential all-pervasiveness

• Capacity to reduce the cost of capital, labor and products as well as to change them.”

(*) Source: [Perez, 2002]

Continuing our Dialog Continuing our Dialog

Israel Gatisrgat@gmail.com

www.TheAgileExecutive.com

Israel Gatisrgat@gmail.com

www.TheAgileExecutive.com

Auxiliary Slides

Auxiliary Slides

Taxonomy of Core Cultures

8

Actuality

Impersonal

Possibility

Personal

Collaboration•Affiliation

•Family/Athletic team•Nurse

Control•Power

•Military•Surgeo

n

Competence•Achievement

•University•Research scientist

Cultivation•Self-actualization

•Religious institutions

•Minister, priest, rabbi Source [Schneider, 1994]