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Posts Tagged ‘Drucker

Threads from Washington, DC

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Rally’s July 23 Agile Success Tour in Washington, DC was somewhat unique demographically. About 50% of participants work for the government. Moreover, many of the commercial enterprises represented in the event derive a significant amount of their revenues from federal government contracts. The Agile challenges encountered by these folks reflect practices that are not necessarily applicable to “pure” commercial environment. For example, one of the participants asked me about Agile for a project of 500 developers/testers in which her company is the prime contractor for 100 subcontractors! (Recommendation: must devise a business design enabling her company to profitably invest in laying a joint Agile infrastructure across all these subcontractors. Such infrastructure leads to standardization of the Agile data. Click here for details).

In spite of the different demographics, most of the Agile issues brought up in DC were quite similar to those expressed in previous Agile Success Tour events. The bureaucracy with which various Agile champions in DC need to deal with might be stricter (due to security/confidentiality aspects of much of the development carried out in DC), but the underlying needs and dynamics are not really different from those in other cities in which Success Tour events were held.

Here is a sample of enlightening threads I listened to or participated in during the event:

  • The business fabric has not quite caught up with Agile methods. In particular, Agile contracts are not yet where they need to be. The costs associated with “ECOing the contract” each time a change in requirements is made offset the methodical benefits of Agile. We need to find a way to “encode” Agile principles in contracts.
  • In pitching software methods to their executives, Agile champions need to go beyond the benefits of Agile. Risk and risk mitigation are of equal importance. See The View from the Executive Suite for detailed guidance on the subject.
  • The benefits of Agile have to be expressed in terms of the business of the business. One has to go beyond capturing “just” the operational benefits and address financial and business benefits. Peter Drucker’s famous quip “Companies make shoes!” applies. Click here for examination of the quip in the Agile context.
  • Innovation through affordable experimentation is an Agile benefit that is under-represented in many discussions Agile champions hold. See the new edition of Jim Highsmith‘s Agile Project Management for an excellent discussion of this critical benefit.
  • Agile is about uncertainty, not about complexity. To demonstrate the power of Agile, choose a project of high uncertainty. Complexity in such a project depends on your risk tolerance – it could be either low or high. Be aware that various issues related to complexity might manifest themselves on the surface as process issues. See Uncertainty, Complexity, Correctness for an in-depth discussion of the subject.

Next stops of the Agile Success Tour “train” are in Boston, Chicago, Seattle and London. Stay tuned…

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Written by israelgat

July 26, 2009 at 6:01 pm

Companies make shoes!

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Peter Drucker made an astute observation which is quite relevant to the current business situation during a September 1998 interview with Fortune:

Securities analysts believe that companies make money. Companies make shoes!

Readers of this blog might have said “software” instead of “shoes.” The point would have been similar to Drucker’s. Good financial management is no doubt  important for your company’s success. It is no substitute, however, to focusing on the business you are in, the technology(ies) that drives the business and the effectiveness of the underlying systems and processes.

The current macro-economic situation gives you an opportunity to soberly assess the viability of your business design (as distinct from doing a lot of financial engineering). With asset inflation corrected, measuring the effectiveness of your business model in terms of the ratio Market Value/Revenues is much more meaningful now then it used to be prior to September 2008. As pointed out by Slywotzky in Value Migration, a market value to revenues ratio lower than 0.8  indicates value outflow for your company and possibly for your industry.

For software companies, the impact of “good enough” Open Source Software should be assessed in conjunction with close examination of the market value to revenues ratio. Twitting from the recent OSBC conference in San Francisco, colleague Andrew Dailey of MGI Research reported “… ERP/CRM are viewed as least susceptible to open source disruption… due to high transaction volumes and high integration needs.” Conversely, Andrew considers office productivity software as ripe [for the picking by Open Source Software]. I am personally of the opinion numerous Application Life-cycle Management tools could be massacred by Open Source Software.

The confluence of the threads highlighted above poses a fairly unique opportunity for the Agilist to convey a major premise of Agile to his/her executives. Like a thriving Open Source Software community, a hyper-productive Agile team can pick a ripe market faster and cheaper than an old fashioned software company could. Moreover, if a company is in one of the markets that are susceptible to an Open Source Software onslaught, Agile can (up to a point) provide defense against such onslaught. Whether you choose to attack or defend, Agile software gives you the advantages of proprietary software at a fraction of the traditional cost.