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Mastering the Recession with Lean, Agile and Scrum

January 7, 2009 by Peter Stevens

Around the world, companies are challenged by the financial crisis. Companies face declining revenue and fixed costs. Lean, Agile and Scrum help your company at all levels to focus on doing the right things, like creating value for your customer and eliminating wasted cost and effort, to get you company back to profitability. Lean, Agile and Scrum help you focus on getting the right Vision, Values and Execution to meet challenging times. Now is the time to start the discussion with your top management.

Your CEO wants your company to survive and even prosper during the recession (and we’d all be happier if there were no recession or if we could turn it around quickly). Together with Sales and Marketing, the CEO is trying to figure out whether and how much sales will dry up in 2009. He is under pressure to cut costs. If he does nothing, the company will be stuck with the fixed costs, but not have the revenue to pay for it.

Cut Wastes, not Costs

Lean is an adaptation of the principles of lean manufacturing to software development. Pioneered by Tom & Mary Poppendieck, Lean explains (particularly to management) why agile works.

Lean thinking helps management and staff focus on the right problems at the right time:

  • Create Value for your customers. Dieter Zetsche, CEO of Daimler sums it up: “The best cure for the crisis are convincing and innovative products” 
  • Eliminate waste. Anything with does not provide value for your customers is wasted effort which should be reduced to the minimum.
  • Improving to Time to Market is a powerful cost reduction tool. If you can bring out a product in half the time, then you have half the development costs, half the carrying costs and you see a return on investment in half the time. (If in doubt, ask your CFO what that means).
  • Multitasking is an expensive form of waste because it increases time to market. Would you overload the database server at the center of your enterprise services? Of course not! The long response times would drag everything to a halt. The same is true of management and project teams. So deliver as quickly as possible by focusing on doing few things well.

Concentrate your efforts. Get new products and services “out the door”, one after the other. Get your corporate response times to a minimum.

Create a productive climate

Agile values ensure effective information flow. Openness, Honesty, Courage and Trust ensure that everything which must be said can get said. If your staff fears for their job, or fears the consequences of telling the truth, they will be less willing to raise difficult issues. If your staff do not trust each other to do a good job, then people will devote energy to proving themselves or shielding themselves from blame. All these activities detract from your company’s mission to create value for its customers.

Adopt agile value to create an environment where

  • Staff at all levels trust each other to do good job. 
  • Everyone can tell the truth, the whole truth, even in difficult situations.
  • All Stakeholders in a project have access to complete and correct information about the state of your projects.

Create great products and services

Agile is also a set of practices. For instance, Incremental Delivery means products are ready quickly for the customer (80/20 rule) and ROI can start quicker.

User Centered Design provides the basis for creating great products and services. Get inside your users heads. Understand what they want better than they do. Create a product which meets their needs, even the ones they didn’t know they had.

Create those innovative and convincing products, which give your customers products and services that they just have to buy.

Strive for perfect execution

Scrum organizes work based around simple principles to produce concrete results predictably and with ever improving productivity. In a company organized around Scrum, everyone knows what they have to do:

  • Top management provides Vision, Focus and Flow.
  • Middle Management eliminates impediments and drives productivity upwards.
  • Self organizing, interdisciplinary Scrum Teams solve problems and deliver solutions.

Vision is about knowing where the company -- and each project -- is going. Focus is ensuring that people really act to accomplish the defined goals (without distraction). Flow is having a continuous supply of work, not too much and not too little, so that the company can consistently and predictably deliver new value to its customers.

Scrum rituals ensure everything which must be said does get said. Continuous Improvement means your productivity will be at least 30% better by the end of the year than it is today.

The way out of the recession

For each company, the way out of the recession means getting customers to buy your products and services. So follow Dieter Zetsche’s advice and give them something wonderful to buy.

Get you top management interested in the problem and the solution. Tell them you want to their support for a pilot project, which will 1) create an innovative new product this quarter (which your customers will just have to buy next quarter), and 2) show how Lean, Agile and Scrum lay the foundation for a highly competitive enterprise. You will need 1) their support and involvement, 2) an interdisciplinary team of 7 to 10 top people from your around company -all the experts needed to make a new product and 3) probably some coaching and training to make it all work effectively.

Then go create something wonderful!

About the Author: Peter is an independent Scrum Trainer and Coach. His mission is to help you realize complex projects. He provides coaching, training and project management to help you get started with Scrum, save projects in crisis and make your IT operations leaner and more effective.

Originally from the US, Peter now lives in Zurich. He studied Computer Science at Colgate University, started his career at Microsoft, and is now a Certified Scrum Master (Practitioner). He speaks English, German, French and Italian. An Instrument rated private pilot, his current hobbies are sign language and Sudoku.

Comments

Examples

January 23, 2009 by Anonymous (not verified), 5 years 24 weeks ago
Comment id: 2189

Do you have any specific examples of organizations that have been successful with this?

re: References

January 23, 2009 by peterstev, 5 years 24 weeks ago
Comment id: 2190

It's fairly easy to identify companies explicitly employing one of the practices. For example, the Scrum Alliance maintains a wiki with 155 companies doing Scrum and I have started a list of central European companies doing the same. The most well known company on my list is probably SAP. The list of companies who are doing but not bragging is surely much larger.

Several of the leaders of the Scrum & agile community have embraced Lean thinking. For example, Jeff Sutherland, Henrik Kniberg and Joseph Little all teach and/or write about the combination.

Personally, I write about this approach because I have had success with it for my customers, most of whom are 'name brands,' at least in here Switzerland. Create Value, Eliminate Waste, Deliver Faster - simple stuff which can have tremendous effect.

Bureaucracy

April 21, 2009 by Christian Bucholdt (not verified), 5 years 12 weeks ago
Comment id: 2470

I have seen a lot of companies becoming more bureaucratic rather than agile in a crisis. for a lot of managers the crisis calls for even more control and risk reduction. Empowering people contains risk (some think so). Although economic pressure, sometimes, can force change to happen faster than in good times.

re: Burocracy

April 21, 2009 by peterstev, 5 years 12 weeks ago
Comment id: 2471

And why is this?

I suspect if you take someone who is already working too hard (and most top managers I know fit this description - exceptions excepted of course), put them under more pressure, then they will become less innovative, simply because they have no reserve capacity to consider something new. Add fear of being laid off (not allowed to make mistakes), and you have the makings for conservative, traditional decisions.

Been there, done that. Very risky strategy.

Cheers,
Peter

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