One of the most misunderstood concepts in the agile community, complexity is often used to explain why we can’t predict anything or why there are no rules we can follow. Ironically, it is exactly this attitude that allows complexity to work against us. Al Shalloway discusses the true nature of complex systems, why we must deal with them in a holistic manner, and ways to evaluate structural and organizational changes to manage this complexity. Unfortunately, most agile implementations take an incremental, piecemeal approach to change, ignoring complexity. Although this approach causes problems that are attributed to the fact that we have a complex system, in reality these challenges are due to the way we are dealing with the pieces individually. Al describes the patterns of effective organizational change management and explains how understanding the true nature of complex systems can be used to lead organizational change―particularly at scale.

1. AT1
Agile Development Concurrent Session
11/13/2014 10:00 AM
"A Holistic View of Complex
Systems and Organizational
Change"
Presented by:
Al Shalloway
Net Objectives
Brought to you by:
340 Corporate Way, Suite 300, Orange Park, FL 32073
888-268-8770 ∙ 904-278-0524 ∙ sqeinfo@sqe.com ∙ www.sqe.com

2. With more than forty years of experience, the founder and CEO of
Net Objectives Al Shalloway is an industry thought leader in lean,
SAFe, kanban, product portfolio management, Scrum, and agile
design. Al helps companies transition enterprise-wide to lean and
agile methods, and teaches courses in these areas—one of a
handful of SAFe SPC trainers. He is the primary author of Lean-
Agile Software Development: Achieving Enterprise Agility, Design
Patterns Explained, Lean-Agile Pocket Guide for Scrum
Teams, and Essential Skills for the Agile Developer. Cofounder
(although no longer affiliated) with Lean Kanban University, Al is a
popular speaker at prestigious conferences worldwide.

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Al Shalloway
CEO, Net Objectives
SPC Trainer
A Holistic View of
Complex Systems and
Organizational Change
© Copyright Net Objectives, Inc. All Rights Reserved 2
Al Shalloway
alshall@NetObjectives.com
@AlShalloway
CEO, Founder
Co-founder of Lean-Systems Society
Co-founder Lean-Kanban University

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© Copyright Net Objectives, Inc. All Rights Reserved 3
Lean
Enterprise
Business
Manag
ement
Team
ASSESSMENTS
CONSULTING
TRAINING
COACHING
Lean Management
Project Management
Lean for Executives
Product Portfolio Management
Business Product Owner
Product Owner
technical process
Onsite SPC
Leading SAFe
+ with extended topics
SAFe Architecture
PM/PO
Kanban / Scrum
ATDD / TDD / Design Patterns
© Copyright Net Objectives, Inc. All Rights Reserved 4
Complex systems
still have patterns

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© Copyright Net Objectives, Inc. All Rights Reserved 5
different kinds
of predictability
© Copyright Net Objectives, Inc. All Rights Reserved 6
If you give people more things than they can handle, it will
lower both their productivity, and their resolve to do better
If you treat people poorly, they will not work as hard for you
as they would otherwise
If you separate people by distance and/or time, their ability
to work together will go down
if you reward people based on particular measures, they will
work more towards those measures than they will towards
what you put those measures in place for
if people ignore principles that effect their work, they will get
inferior results than if they attend to them
if people don't have a common vision, they will not work as
well together as a team that has a common vision
Some Easy Predictions

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if you don't define your acceptance tests before writing your
code you will waste a lot of effort
if you don't attend to code quality, your code will degrade
and be harder to maintain and update in the future
if you write for just yourself, your teammates will have
trouble understanding your code
if you use archaic names for your code variables, people
won't understand your code well
The longer you take between integrations, the longer the
integrations will take
if you don't get customer feedback quickly, you will write a
lot of code they really don't want (for any number of reasons)
Some More Easy Predictions
© Copyright Net Objectives, Inc. All Rights Reserved 8
If managers can't see what you are doing,
they won't understand what you are doing
If managers ask you to do one more thing
in your iteration and they don't know your
process (or you don't have an explicit one)
then when you say you can't squeeze it in
they will likely think you just aren't willing
to take the extra effort required
Some Predictions About
Management

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Systems & Structures
Poor systems cause most of our problems
Biggest sources of waste are:
• Delays in workflow
• Delays in feedback
Consider:
• Customers don’t know what they want
• What happens when we don’t do test-first
Consider:
• Developers and fixing bugs
• The delays due to system
© Copyright Net Objectives, Inc. All Rights Reserved 10
which part of the
airplane is responsible
for FLIGHT?

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Value Stream Impedance
Value Stream Impedance (VSI) is a quantitative
measure of the resistance faced by the work in a value
stream.
Impedance often creates delays which create more
work which creates more delays.
Impedance that slows us down is not as bad as the
impedance which creates additional work that we now
have to do, work that could have been avoided
Example. The thrashing that takes place when software
developed by different teams are integrated.
© Copyright Net Objectives, Inc. All Rights Reserved 12
Value Stream Impedance
Number and size of work in process
People in a value stream not working together
How people are both geographically and managerially
located
Sequence work is done in (test-first lowers this)
Too much WIP
Too little automation
Long feedback cycles
The disparity between management structure and the
way the real work takes place
contributors
to VSI

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Simple – easy cause and effect
Chaotic – small changes can cause big
impacts
Complicated – many to many
Complex – more about holistic
relationships – not exactly predictable in
advance
Types of Systems
© Copyright Net Objectives, Inc. All Rights Reserved 14
Thinking a System Is
Complex Is More About Us
What is complex now may be simple
tomorrow.
If we don’t take an holistic view we may have
problems.
Few approaches (certainly not Scrum or
Kanban Method) takes an holistic view

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Common Organizational Structure
inspired by Dan North, BSC/ADP 2012
Marketing Product
Management
Development Support
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What they can manage What they need to manage
Their people
• If they are working on
the right things and
at the right level
• Their “productivity”
The quality of work of
their people
Hierarchical

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The Nature of Our Work
Marketing Product
Management
Development Support
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We Manage This Way
even though our value flows this way

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What they can manage What they need to manage
Their people
• If they are working on
the right things and
at the right level
• Their “productivity”
The quality of work of
their people
Time-to-market
Effects of upstream groups
on their teams
Effects of downstream
groups on their teams
Hierarchical vs. Lean Management
© Copyright Net Objectives, Inc. All Rights Reserved 20
Who is
managing
the value?

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© Copyright Net Objectives, Inc. All Rights Reserved 21
Time-to-Market
Marketing Product
Management
Development Support
© Copyright Net Objectives, Inc. All Rights Reserved 22
how often does work wait?
Adding Value
Waiting
Adding Value Adding Value
Adding Value
Adding Value Adding Value
What percent of the time is our work moving forward?
How would you know?
No one is managing this in most companies.
Waiting
How much of the time is it waiting for something else to be done?
Waiting
Adding Value
Adding Value
Adding Value
Adding Value
Waiting
Marketing Product
Management
Development Support

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What happens when
adding value is delayed?
Between getting requirements and using
them?
Between writing a bug and it being detected?
Between two groups getting out of sync?
© Copyright Net Objectives, Inc. All Rights Reserved 24
The Whole Picture
Marketing Product
Management
Development Support

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© Copyright Net Objectives, Inc. All Rights Reserved 25
Legacy Organization:
Matrix Resources to Projects
Project 1
Project 2
Project 3
Project 4
Project N
© Copyright Net Objectives, Inc. All Rights Reserved 26
Let’s Create a Pilot Project
Project 1
Project 2
%
Project 3
Project 4
Project N
Business Analyst, Architect, Usability Expert,
Developer, Developer, Tester, Project Manager
Expert
Just creating a cross-functional,
co-located team you will improve
3x without changing your process.
While it may be successful
as a pilot, it will likely not
be sustainable.

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Getting
Requirements
Testing
Programming
Design
Integration
Planning
Collaboration
Re-doing
requirements
Working from old
requirements
“Fixing” bugs
“Integration”
errors
Deployment
Building
unneeded
features
Overbuilding
frameworks
What Work Do You Do?
Training
Documentation
Essentially
duplicating
components
What percentage of your time do you
spend on the left?
Write it down.
© Copyright Net Objectives, Inc. All Rights Reserved 28
1. Identify the actions taken in the value stream
ApproveRequest Reqts Sign Off
Review Deploy
Analysis
Design Code Test

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© Copyright Net Objectives, Inc. All Rights Reserved 29
120 hrs` 280 hrs 240 hrs 8 hrs2 hrs
1. Identify the actions taken in the value stream
2. What was the real time from start to finish of the action?
ApproveRequest Reqts Sign Off
Review Deploy
Analysis
Design Code Test
0.5 hrs 160 hrs8 hrs 8 hrs 100 hrs
© Copyright Net Objectives, Inc. All Rights Reserved 30
120 hrs` 280 hrs 240 hrs 8 hrs2 hrs
1. Identify the actions taken in the value stream
2. What was the real time from start to finish of the action?
3. What was the average time working on this vs working on other things?
Approve
.1 / 7.9 hrs
Request
0.5 / 0.0 hr
Reqts
60 / 100 hrs
Sign Off
1 / 7 hrs
Review
2 / 0 hrs
Deploy
3 / 5 hrs
Analysis
40 / 600 hrs
Design
40 / 80 hrs
Code
80 / 200 hrs
Test
40 / 200 hrs
0.5 hrs 160 hrs8 hrs 8 hrs 100 hrs

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© Copyright Net Objectives, Inc. All Rights Reserved 31
80 hrs320 hrs 80 hrs 320 hrs
80 hrs
160 hrs 80 hrs 80 hrs 80 hrs
1. Identify the actions taken in the value stream
2. What was the real time from start to finish of the action?
3. What was the average time working on this vs working on other things?
4. Identify time between actions
120 hrs` 280 hrs 240 hrs 8 hrs2 hrs
Approve
.1 / 7.9 hrs
Request
0.5 / 0.0 hr
Reqts
60 / 100 hrs
Sign Off
1 / 7 hrs
Review
2 / 0 hrs
Deploy
3 / 5 hrs
Analysis
40 / 600 hrs
Design
40 / 80 hrs
Code
80 / 200 hrs
Test
40 / 200 hrs
0.5 hrs 160 hrs8 hrs 8 hrs 100 hrs
© Copyright Net Objectives, Inc. All Rights Reserved 32
80 hrs320 hrs 80 hrs 320 hrs
80 hrs
160 hrs 80 hrs 80 hrs 80 hrs
120 hrs` 280 hrs 240 hrs 8 hrs2 hrs
1. Identify the actions taken in the value stream
2. What was the real time from start to finish of the action?
3. What was the average time working on this vs working on other things?
4. Identify time between actions
5. Identify any loop backs required
65% defective
Repeat 3X
20% rejected
Repeat 1X
Approve
.1 / 7.9 hrs
Request
0.5 / 0.0 hr
Reqts
60 / 100 hrs
Sign Off
1 / 7 hrs
Review
2 / 0 hrs
Deploy
3 / 5 hrs
Analysis
40 / 600 hrs
Design
40 / 80 hrs
Code
80 / 200 hrs
Test
40 / 200 hrs
0.5 hrs 160 hrs8 hrs 8 hrs 100 hrs

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© Copyright Net Objectives, Inc. All Rights Reserved 33
1. Identify the actions taken in the value stream
2. What was the real time from start to finish of the action?
3. What was the average time working on this vs working on other things?
4. Identify time between actions
5. Identify any loop backs required
6. Calculate Process Cycle Efficiency:
80 hrs320 hrs 80 hrs 320 hrs
80 hrs
160 hrs 80 hrs 80 hrs 80 hrs
0.5 hrs 160 hrs8 hrs 8 hrs
120 hrs` 280 hrs 240 hrs
100 hrs
8 hrs2 hrs
65% defective
Repeat 3X
20% rejected
Repeat 1X
Avg Time Worked
Total Cycle Time
PCE = = 14.9%
509 hrs
3433 hrs
509 hrs
3433 hrs
Avg Time Worked
Total Cycle Time
Approve
.1 / 7.9 hrs
Request
0.5 / 0.0 hr
Reqts
60 / 100 hrs
Sign Off
1 / 7 hrs
Review
2 / 0 hrs
Deploy
3 / 5 hrs
Analysis
40 / 600 hrs
Design
40 / 80 hrs
Code
80 / 200 hrs
Test
40 / 200 hrs
Approve
.1 / 7.9 hrs
Request
0.5 / 0.0 hrs
Reqts
60 / 100 hrs
Sign Off
1 / 7 hrs
Review
2 / 0 hrs
Deploy
3 / 5 hrs
Analysis
40 / 60 hrs
Design
40 / 80 hrs
Code
80 / 200 hrs
Test
40 / 200 hrs
0.5 hrs 160 hrs8 hrs 8 hrs
120 hrs 280 hrs 240 hrs
100 hrs
8 hrs2 hrs
320 hrs 80 hrs 320 hrs 80 hrs
160 hrs 80 hrs 80 hrs
65% defective
Repeat 3X
20% rejected
Repeat 1X
80 hrs
80 hrs
© Copyright Net Objectives, Inc. All Rights Reserved 34
80 hrs320 hrs 80 hrs 320 hrs
80 hrs
160 hrs 80 hrs 80 hrs 80 hrs
120 hrs` 280 hrs 240 hrs 8 hrs2 hrs
Approve
0.1 / 7.9 hrs
Request
0.5 / 0.0 hr
Reqts
60 / 100 hrs
Sign Off
1 / 7 hrs
Review
2 / 0 hrs
Deploy
3 / 5 hrs
Analysis
40 / 60 hrs
Design
40 / 80 hrs
Code
80 / 200 hrs
Test
40 /200 hrs
65% defective
Repeat 3X
20% rejected
Repeat 1X
320 hrs 80 hrs 320 hrs 80 hrs
160 hrs 80 hrs 80 hrs
65% defective
Repeat 3X
20% rejected
Repeat 1X
80 hrs
80 hrs
Eliminating
delays between
what you do
Getting better
at what you do
Which gives a better return?
0.5 hrs 8 hrs 8 hrs 100 hrs160 hrs

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© Copyright Net Objectives, Inc. All Rights Reserved 35
here’s a
spot!
…and
another!
© Copyright Net Objectives, Inc. All Rights Reserved 36
MAKE
VALUE
FLOW
Enterprise
Agility
Business
Manage
ment
Team
technical

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© Copyright Net Objectives, Inc. All Rights Reserved 37
BUSINESS AGILITY
BUSINESS INCREMENTS
PRIORITY AND SEQUENCE
RELEASE PLANNING
Business
© Copyright Net Objectives, Inc. All Rights Reserved 38
The Business wants to
Specify what is most important at any given point in time
Learn from what is already implemented
Learn from changing environment
Update and reprioritize requirements
do not build
what you do not need!
The Business may know what is valuable
but in the beginning they may not know or understand
everything involved in achieving it
Business Agility

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© Copyright Net Objectives, Inc. All Rights Reserved 39
Lean-Agile
improves
time-to-market
MORE
BETTER
market share
profit margins
product life time
customer satisfaction
bandwidth to pursue
more markets
return on investment
risk
investment
LESS
FASTER
© Copyright Net Objectives, Inc. All Rights Reserved 40
FLOW
VALUE STREAM VISUALIZATION
IMPEDIMENT IMPACT
WORKFLOW AS PROCESS
ACCOUNTABILITY
MANAGE (LIMIT) QUEUES
VISUAL CONTROLS
MANAGE FLOW (PROCESS)
Manage
ment

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© Copyright Net Objectives, Inc. All Rights Reserved 41
How Do Iterations Help?
• Easier to plan
• Better management visibility
• Identify problems, avoid and/or correct quicker
• Better prediction and certainty
Progress / Status
• Track functionality vs. activities
• Status / progress are visible… not derived
• Individuals, teams, management, and business
all use the same information radiators
Management Agility
© Copyright Net Objectives, Inc. All Rights Reserved 42
Management Responsibilities
• Achieving highest business value (ROI) from the
technology investment (development)
• Continually balance demand with capacity
• Ensure there is a process
and provide support for the process
• Develop and equip people so they can succeed
Management Agility

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© Copyright Net Objectives, Inc. All Rights Reserved 43
TEAM AGILITY
SELF ORGANIZATION
SPEED OF PRODUCING QUALITY
BUSINESS INCREMENTS
Team
© Copyright Net Objectives, Inc. All Rights Reserved 44
Value Delivery Teams
• Cross-functional
• Collective ownership
• Self-organization
Wins and Losses
• Quick wins for morale
• Quick losses for corrections
Consistency
Value focus
Visibility
Terminology and roles
Lean-Agile principles,
practices, and metrics
Velocity and Business Value
delivery capacity
Team Agility

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© Copyright Net Objectives, Inc. All Rights Reserved 45
TECHNICAL AGILITY
BEST ENGINEERING PRACTICES
TDD, DESIGN PATTERNS, EMERGENT
DESIGN, CONTINUOUS INTEGRATION,
REFACTORING
CONTINUOUS IMPROVEMENT
Team
© Copyright Net Objectives, Inc. All Rights Reserved 46
60%-80%
The right technical perspective saves you
Change-tolerant code
Good engineering practices
Discovering how best to evolve the system driven by Business needs
Maintaining scope of system extensions
Automating manual testing
of development
happens after the first release
Technical Agility

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© Copyright Net Objectives, Inc. All Rights Reserved 47
Portfolios
Programs
Projects
Book of Work
Rolling Releases
Levels 1, 2, & 3
Program Backlog
Releases
Multiple Teams
Product Backlog
Iterations
Whole Team
Lean-Agile
Framework
ScaledAgile
Framework
LAIterative
Framework Executive,
Business,
Management,
& Team
Business,
Management,
& Team
Business
& Team Practices
Responsibilities Scale and ScopeToolsets Complexity
© Copyright Net Objectives, Inc. All Rights Reserved 48
V A L U E S T R E A M O W N E R , B U S I N E S S S P O N S O R , T E C H N O L O G Y S P O N S O R , S TA K E H O L D E R S
TEAMPROGRAMPORTFOLIO
B U S I N E S S D I S C O V E R Y B U S I N E S S D E L I V E R Y
Input
Define Business
capabilities
Create MBIs
Sequence MBIs
Create Features
Assign to Team
Backlogs

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© Copyright Net Objectives, Inc. All Rights Reserved 49
BUSINESS PMO
PRODUCT MANAGER
B U S I N E S S D I S C O V E R Y B U S I N E S S D E L I V E R Y
TEAMPROGRAMPORTFOLIO
V A L U E S T R E A M O W N E R , B U S I N E S S S P O N S O R , T E C H N O L O G Y S P O N S O R , S TA K E H O L D E R S
Business
Priority
Define Business
capabilities
Create MBIs
Sequence MBIs
Create Features
Assign to Team
Backlogs
© Copyright Net Objectives, Inc. All Rights Reserved 50
BUSINESS PMO
SYSTEM ARCHITECT
PRODUCT MANAGER
ENTERPRISE ARCHITECT
B U S I N E S S D I S C O V E R Y B U S I N E S S D E L I V E R Y
TEAMPROGRAMPORTFOLIO
Business
Planning
Define Business
capabilities
Create MBIs
Sequence MBIs
Create Features
Assign to Team
Backlogs

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© Copyright Net Objectives, Inc. All Rights Reserved 51
B U S I N E S S D I S C O V E R Y B U S I N E S S D E L I V E R Y
TEAMPROGRAMPORTFOLIO
Business
Staging
BUSINESS PMO
SYSTEM ARCHITECT
PRODUCT MANAGER
ENTERPRISE ARCHITECT
Define Business
capabilities
Create MBIs
Sequence MBIs
Create Features
Assign to Team
Backlogs
RELEASE TRAIN ENGINEER
TEAM LEAD
© Copyright Net Objectives, Inc. All Rights Reserved 52
B U S I N E S S D I S C O V E R Y B U S I N E S S D E L I V E R Y
TEAMPROGRAMPORTFOLIO
Ready
to Pull
BUSINESS PMO
SYSTEM ARCHITECT
PRODUCT MANAGER
ENTERPRISE ARCHITECT
Define Business
capabilities
Create MBIs
Sequence MBIs
Create Features
Assign to Team
Backlogs
RELEASE TRAIN ENGINEER
TEAM LEAD

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Al Shalloway
email: alshall@netobjectives.com Twitter tag @alshalloway
Register at www.netobjectives.com/register for webinar info
Lean resources at www.netobjectives.com/lean
Tutorials
An Introduction to SAFe: The Scaled Agile Framework Mon 8:30-4:30
Design Patterns Explained – From Analysis To Implementation Mon 1-4
Eight Steps to Kanban Tue 8:30-12
Principles and Practices of Lean Software Development Tue 8:30-12
Lean Software Development is for Everyone Wed 4:15-5:15
A Holistic View of Complex Systems and Organizational Change Thu 10-11
Avoiding Over and Under Design Thu 11:30-12:30
Thank You
© Copyright Net Objectives, Inc. All Rights Reserved 54
Lean
Enterprise
Business
Manag
ement
Team
ASSESSMENTS
CONSULTING
TRAINING
COACHING
Lean Management
Project Management
Lean for Executives
Product Portfolio Management
Business Product Owner
Product Owner
technical process
Onsite SPC
Leading SAFe
+ with extended topics
SAFe Architecture
PM/PO
Kanban / Scrum
ATDD / TDD / Design Patterns