In control of complexity with Lean Governance (#19)

"If you can start talking to audit, you can find solutions that they will help you reach that nobody else would have thought about" - Mark Richards

In Episode 19, hosted by Stephan Neck, Nikolaos Kaintantzis, Ali Hajou, and Mark Richards, the focus is on Lean Portfolio Management (LPM), specifically Lean Governance. The hosts stress the importance of governance in balancing spending oversight, compliance, and alignment between agile and non-agile teams. They highlight the need for engagement from roles like Value Management Offices (VMOs), business owners, and enterprise architects.

We discuss the challenge of synchronizing agile teams with the broader organization, ensuring vertical integration, and maintaining transparency at high levels. The episode explores the value of simulations, such as Get Kanban, to teach flow and governance to senior leaders. The hosts emphasize the importance of practice fields, visual tools, and fostering environments where new behaviors can be learned.

Mark shares how a simulation game helped a CIO and leadership team better understand and commit to Lean Governance. Niko explains how the power of visualization can be a game-changer, sharing the idea of using a simple magnet to indicate blockers on a board. The episode concludes with discussions on applying these concepts in real-world scenarios, using data for transparency and accountability. 

The conversation touches on unfinished work items in portfolios, caution against weaponizing data, and the importance of pattern-based problem-solving. Stephan shares a story highlighting the importance of collaboration between business owners and enterprise architects in lean governance. The hosts wrap up by offering tips for new SPCs, stressing the importance of understanding controls, collaborating with key stakeholders, and treating audits with care to avoid premature conclusions.

References:

• https://getkanban.com/ 
• https://scaledagileframework.com/value-management-office/

Cast:

Ali Hajou(Moderator)

Niko Kaintantzis

Stephan Neck

Mark Richards

Transcript

Mark Richards: 0:01

You're listening to SPCs unleashed a shaping agility project that emerged from the 2023 Prague safe summit. The show is hosted by Swiss SPCTs Stephan Neck and Niko Kaintantzis, Dutch SPCT Ali Hajou, and Aussie SAFe fellow Mark Richards. We're committed to helping SPCs grow their impact and move beyond the foundations taught during implementing safe. Each week, we explore a dimension from the frameworks competencies. We share stories about our journeys, the secrets we've found and the lessons we've learned the hard way. Welcome to another episode of SPCs unleashed. We are up to episode 19. That's quite exciting when I figured out the numbers like, oh, we nearly had 20 episodes. Actually, we're past 20, if you consider all the ones that we redid. But you know, this week, we are continuing down the journey over lean portfolio management, and we're heading into the exciting land of Lean governance, and we are in the hands of Ali, who's blessing us with a purple Skyline tonight. Over to you, Ali, oh

Ali Hajou: 1:05

yes, thank you. Thank you. Hello everyone. Welcome back. Thank you for sticking around today. Indeed, we're talking about Lean portfolio management and, more specifically, the lean governance dimension. Just like last week, lean portfolio management has been sort of a special pet peeve for us. We have sort of other thoughts about it. We figure out we have all kind of other tricks to to interpret it and use it to our advantage. So in this episode, we are going to talk, we're going to talk about the drivers for for proper lean portfolio, let's say operations, governance, and in this, in this case, the competence lean governance, which is, and I'll explain very briefly. It provides oversights of spending, audit, security compliance, expenditure measurement and reporting. The Lean governance, collaboration and responsibilities require an active engagement of all kinds of roles, including VMO, yep. We're going to talk about them at lace, the business owners, enterprise architects, and probably many more. But essentially, it's sort of the foundation of good judgment. So if you try to, you know, if I like to summarize it somehow, what is it about? It's really about remaining in control. It's really about trying to synchronize whomever is working agile with your trains and teams with anyone who is not working in Agile. It's, in a way, trying to generate and gain vertical integration, with respect to alignment, with respect to, let's say, how budgets are being used, and so forth, and more specifically, and we'll hear a lot about that, I think, I hope, is how to be extremely transparent and data driven on the highest levels of the organization. So in this show, we will hear Stefan, who is going to share about how to take an elevated focus on supplier dependencies and dependencies on all types of other teams, such as shared services and understanding how to regain control. We'll hear Niko talk about zombies and how traditional PMO is your friend, and essentially how to address them both. And we will hear Mark, who will highlight the benefits of insights, who will who will talk about how money is spent, and the discipline of blocker recording and the power of proving your worth. So that's also going to be very, very interesting. And what I'm going to do, I'll basically repeat the wise words of my colleagues over here, and sit closely and make notes and learn about how, how this dimension actually works in real life. So with no further ado, what is your special moment, surprise challenge or something that you'd like to share with respect to lean governance. And I'll start with you, Mark.

Mark Richards: 4:23

So for me, it's earning your way out. I think a lot of agilists just want to just sweep governance out of the way. It's evil. It's anti agile. And you know, governance exists for a reason, and how do you introduce new, leaner ways of achieving the same outcome, as opposed to going it's just bad and trying to get rid of it. That's my passion here.

Nikolaos Kaintantzis: 4:49

I can second that it sounds it sounds boring, it sounds do we have to do that? But my passion is really compliance and budgeting in this dimension, not in general. But. But in this dimension, it's compliance and budgeting.

Ali Hajou: 5:03

Yeah, yeah, right. It's, what is it? What is it with, with agilists who are, like, completely anti Well, you know, governance or process, because if, if you're, if you really have a lot of teams, and, you know, you create alignment, you create agreements on how to operate, and then that in itself becomes governance. You know, you need to gain insight. You need to you need to have some form of agreement on how we collaborate with each other, because that sort of shuts up the biggest critic casters. How about you? Stefan,

Stephan Neck: 5:40

yeah, I think we have to explore another gem when it comes to lean governance. It's also you need some rules, some regulations, some basis to reduce variability, and that allows you to stay in control. And I like that, right? So I'm looking to Niko in the German language, the word control has a bad connotation. Control sounds like someone is sitting on your shoulder, constantly watching you. But being in control means you steer. And I think we will talk a lot about this while we go through the different attributes, the different dimensions of Lean governance, and that's my passion as well, exactly,

Nikolaos Kaintantzis: 6:25

if I may, if I may, add controls. Sounds something sometimes like you have to do it also your own. You have to micromanage. And that's not the kind of control we mean. You can have control with data, with with great results, and not doing it by yourself. So I really love this example. Thank you. Stefan, yeah,

Ali Hajou: 6:41

it's, it's just surprising, because even if you'd have agile teams who you know, in typical agile fashion, it's, you know, gonna let teams figure out their approach, which work best, and you know, have them create alignment and agreement on how to operate, but which is completely true, but whenever, whenever you really, really have a lot of teams, there is a there is just a need to connect it with the rest of the the organizations, to sort of have an aggregated overview of how the company is. You know how the enterprise is doing and how how we are optimizing, let's say the time and the effort, but also the budgets that we have to deliver the maximum amount of value. So Stefan, I'll stay with you for a second. Do you have an example on how that looks like in one of your engagements? So to remain in control, also on the highest level of the organization, even though you have agile teams and trains and so forth, would you be able to share your story? Yeah,

Stephan Neck: 7:55

of course. Let me start like this, Lean and Agile is not just a bunch of loose teams and shared services and functionalities hoping to achieve business agility. So I think it's has to do with coordination on this portfolio level, where you have coordination across value streams, right while on essential safe, on an art level, you have this coordination within the value stream, across teams. And today, we're talking about this coordination across value streams. And one of my my stories and experiences, is from from an industry where we found out we totally neglected shared services, people supporting the valley streams, and when we drew our attention to those guys, we found out we had other bottlenecks. We neglected over the time. We didn't coordinate that we didn't pay attention to that, and we always thought the constraints were within the different value streams. And all of a sudden we found out, oh, certain val a certain shared services, or even inflicted by some compliance issues, we had other bottlenecks that we never saw, we detected them, and the so called other constraints dissolved, and then we could concentrate on what is really important. And we all have learned that if you want to improve a system, concentrate on the slowest integration point, and one of those integration points that were really slow was, for example, procurement or it was legal, not because these guys did a bad job, but they were not informed. They were not up to speed, up to knowledge, what is going on on that level. And if we looked at the books. Process at the processes at what we already had in place. We all had the means at our fingertips, or we didn't use it. It's like a toolbox. It's on your left, on your right. You look at those tools, but you don't grab them, you don't use them, right? So we had busy people. We had busy shared services. We forgot to bring them together at the right location, making sure there's high transparency, and we use the right toolbox, and we use the right tools within the toolbox, and we used it together. So I think lean governance is awesome, creating this environment where you then have insight into what goes well, what doesn't work or should work better, and then you can improve based on really facts and figures. It's at your fingertips,

Ali Hajou: 10:56

sort of getting a systems view on how value flows through the organization,

Stephan Neck: 11:04

exactly,

Ali Hajou: 11:05

yeah. A way of working sort of

Stephan Neck: 11:07

yeah and not jumping to conclusions. We think there's the bottleneck, there's the missing integration point. You really get this holistic view by stepping back like, yeah, see the whole picture, and see where there is a need for coordination, where there's a need for governance. And governance is really helpful. Yeah, thanks. And Stefan

Nikolaos Kaintantzis: 11:27

said really something important. So if you go to the meta level, you need also an environment so it's not done you as a coach, as an SPC, explaining how it works, and give them a training. And then imagine, oh, now they understood it now, and now they will do it right. You need also to create an environment. And why this? So if you go to a meta level, the people, the leaders in portfolio, are senior leaders. They come to this position because they were successful in the past. So the things they are doing brought them to success. And so whenever they are in stress, whenever something happened that feels uncommon, there go back to the DNA, to their muscle memory. And sometimes this usually not that what you have teach them. So you really need a great environment to create an environment to build up a new muscle memory. And that's really the important part in this, in this dimension, not just teach and say, yeah, it's clear what they have to do. It's creating this environment, creating the data, creating the cockpit, creating whatever they need so they learn, exercising the new behavior. And that's, think what's important from my side,

Ali Hajou: 12:39

how? How, if I can stay with you, Niko, how would you then guide, or what sort of your experience in guiding these leaders to, you know, to the right behavior to operate and contribute in in Lean and well, what we call lean governance.

Nikolaos Kaintantzis: 13:00

It's what you've seen in the last episode. I'm quite a visual guy, so I need visuals So to explain, to make stories you said about the zombies, they will also come as visuals. So what I try to do is, all the data I have, or they have at the moment, try to have a huge cockpit where they see the data and having these meetings in front of the cockpits, and not anymore in the nice boardrooms with the expensive furniture, can be the same boardroom, but at the end you have, you have posters, you have live data, and with that you can, you can change the discussion, because now you can go as a coach and say, Yeah, but it looks like we have here a problem. We have here no coordination. We have here the bottleneck. So I try to do it visual with the data I have at the moment, and try to find out which data are the right ones. All

Ali Hajou: 13:49

right. And do you have an example of how, let's say that looked like in yours, in your situation, your engagement,

Nikolaos Kaintantzis: 13:57

so what kind of data, or no,

Ali Hajou: 13:59

just how you sort of got your, let's say, your stakeholders, the people that you've been working with in understanding, you know, the system level, the aggregated overview, how I called it before, and of how, you know, capacity is being used, and how we, you know, maximize the amount of value?

Nikolaos Kaintantzis: 14:21

Yeah, I have two approaches. So one approach is find the people who really are in pain and try to put them together to give them some material to understand, some exercises to play. And what I have with senior readers leaders do a lot of physical games which they're exercising and feel on their own body what it means when, what flow is, what dependencies are. I try not to say games, because sometimes I don't know how it's in other countries. In Switzerland, it sounds like we're not in kindergarten, I don't play with you. Simulations sometimes work. So try to find new words to play with them around with small. Exercises that they realized, okay, that's what he means with cross functional, oh, that's what he means with flow. That what he means with pulling, not pushing. And that's really a game changer, because if you remember the reverse bicycle video in the old trainings, this video I still like to show and let coaches understand, that understanding is knowledge, that you just learned it, but you still it's not in the muscle memory. And that's the way I try to do it, showing some fun videos and doing together exercises games, and not call it games, not to make them so we are playing. We're not kindergarten.

Ali Hajou: 15:37

Indeed, indeed. As a matter of fact, I just got triggered by the the videos from, from this dude, from smarter, it gets smarter every day. He just, I mean, his, his YouTube channel is fantastic. He makes, lately he makes a lot of videos about, about anything related to spacecraft, which is really fantastic. So, yeah, just got triggered about that mark. How about you?

Mark Richards: 16:06

I was going to jump in and just on that front of games, because I love teaching through simulation as well. When it comes to teaching something like flow, get Kanban is an amazing simulation for that. And you know, it's, it's not a short one. By the time you put a group through get Kanban and do a decent debrief, you've done half a day. But I can't tell you how many exec workshops that I've done where we used get Kanban as the basis of the workshop. And in fact, I did it with one CIO and his leadership team, and it resonated so much with them that he said, I want everybody in my extended leadership team to play it. And we did an event where we literally had 60 senior leaders in the room simultaneously playing it, and most of them had been through leading safe. They were a number of years into their journey, and they were at that point where it was really starting to change stuff in the strategic layers that was important to them, and the number of them who came up after that to me saying, you know, we've been talking about flow and web limits for so long, and it's hard to act on web limits strategically. And I've kind of got the theory, but now that I've been through that simulation, I'm really convicted to lean in harder. And you know, that's just reinforcing Niko kaintantzisimulation. You know, if you go to somebody like Sen gay or various other leadership leaders, they'll talk about creating a practice field. But a practice field for the puffer is a difficult thing, and a great simulation can make a great practice field.

Unknown: 17:42

Yep,

Stephan Neck: 17:43

that's interesting, Mark, what you just mentioned the practice field, we we often forget to practice before we go into action, right? We don't have time for practice. And in sports, you practice a lot before you enter the event. And I think what you just said, and what Niko said, simulations help a lot to simplify what are your focal points, and then to to really draw the people to this alignment. And it bubbles up naturally. They find out, yes, we have to limit work. Yes, we have to align. Let's start finishing before we before we finish out, before we start at a stop and stuff. Awesome. I like it,

Ali Hajou: 18:25

yeah, so, I mean, so simulations, or simulation games, you know it, it's a translator of a concept to practice. And typically you need to go a little step further. I, in my opinion, is that after you've tried it out as a practice, you'd like to add some more real data, real examples, real, you know, day to day material to it. You know, in what I've in this sense, what I've sort of experienced is the difficulty of getting senior leadership involved in a in an engineering company who creates, like large machines where we had simulation on how to fund trains or how to fund value streams. People understand that. They understand the concept, but it only really resonated when we just we created Excel sheets, believe it or not, to explain how a train was funded. So we call it the funding spread. So how does the train funded? So it means it gets a little bit of budget from that project. It gets a little bit budget of some other program. It gets a budget from from some other area, from another business line. And that gave us a very clear sort of overview of how much work is, how much, how much capacity can be spent on a certain topic, and which also allowed us to you. At the end of a PI look at how much value has actually been spent, has been delivered with that capacity. So all of a sudden, by adding data to the entire thing, we got we got senior leadership on board, and they just understand the concept of funding value streams. So what went wrong there? You know it does. If you add real data to it, it becomes very painful to see that, for instance, if you have a you have a project who you know had the right of on half of the capacity of a train, but then close to nothing of value was delivered at the end of a quarter, but it's funded. Nothing really got delivered. So it's the transparency sometimes is just very painful. How about you? Mark your your example.

Mark Richards: 20:58

I'm gonna go left, actually, because Niko has caught a question from LinkedIn, which is, what are the most driving motivations for senior leadership to get into simulations? So I'll start with my technique, and then we'll see whether Niko has something to add. You need a sponsor. If I think about how I wound up with a half day commitment from a CIO and his executive team to play get cam in. I got there because I was actually playing it with a bunch of dev teams. We had dev teams, and I use it all the time with a dev team at a certain point in their life where I think they're ready to start to think more actively about flow. We get in, and we do, fundamentally, an extended retrospective. We play get camera, and we played it with an issue. I do a few teams at a time, so I had a session with a team. People came out raving about it, and I had a general manager, which in that organization was like the junior executive heard how excited people were, and he went, I'm going to come in and spend a bit of time in the room the next time you play it, see whether we want to use this more broadly across our other teams. And he walked in, and he looked at he went, Oh, that's really good. He only came in planning to spend about 20 minutes. He wound up staying for the entire thing. And then he listened to the debrief, and he went, I reckon this could actually work for our senior leadership as well. And at that point, I'd never tried it with senior leadership. But he went away and he talked to the CIO, and he said, Look, I've seen this amazing thing, and I reckon it could be brilliant for us as kind of advancing our conversation at the executive level. And then, based on his advocacy, the CIO went, Yep, let's do it. And, you know, it was, it was confronting, right? Because I distinctly remember it, because, you know, it looks like you're playing Monopoly when you've set a care manner. And so I've got this whole executive team of a semi government organization walking into the room, and they're all just making jokes to each other. Oh, we're here to play Monopoly with the Agile guys. But then they lost themselves in it, and it was just so powerful for them that they went we want more of our people to do this, because it's such a tangible learning so, you know, it's, for me, it's you've got to find an advocate. Because if you want, generally, if it's a meaningful simulation, it takes longer than the penny game, find an advocate, get that advocate to sell it, and if it's good simulation, once you get the advocate, and you get one group, it just cascades through the organization.

Stephan Neck: 23:27

And may I add to to the advocate, if you get this person, and if this person understands simulation is a safe space to play around without having already impact or outcomes that inflict with your daily business. That is really helpful. I remember the times in the army we had before action, we had those sand pit walkthroughs. It's safe in a sandpit. You have the overall view, you joke around, you even talk to each other and say, Okay, that's the plan. But there's a better option without having an immediate effect on on your troops, on your people, by your head alignment and and that makes it safe, and that's why I like simulations. Gift. Give that space to the people. But as Mark said, have the sponsorship that triggers it so people can move from making jokes to, oh, let's talk business,

Ali Hajou: 24:26

yeah. And if you, if you talk business, then you need to mean business. So I'm, I'd like to hear some more stories of you guys, because the moment that you translate, you know, a concept or a simulation into real like a real meeting with real data, with with real examples, or with a real overview of ongoing work. Yeah. I mean, these kind of insights are pretty, pretty tough, sometimes extremely painful. So a. And in a way, lean governance tries to emphasize that sort of this, you know, radical transparency, in a way. So I'm gonna start with you. Niko Nico, the habit of looking at actual outcomes, actual progress, and I don't know, actual ongoing disasters. What kind of do you have, like an example where, you know, this very data driven, let's say, you know, post simulation, doing the real thing, made the portfolio make a sort of an unexpected twist, an unexpected turn.

Nikolaos Kaintantzis: 25:44

I had one, but first I have to confess I'm a sinner. There's a quote from Edward Deming saying, without data, just another person with an opinion, and usually I was this person having a strong opinion, but not really accurate data. It just felt right. And then realizing I need data, and collecting this data and visualizing, etc, that's really an important thing. Just came with the years and the beginning I was just yeah, having a strong opinion, and thought I have data. And of the stories you ask, one of them was after we collected the data, we had the theory or the the hypothesis in the beginning was, yeah, the dev teams are the problem. They are the bottlenecks. They are not fast enough. They're not delivering enough in a nice time to market time box. And the dev team, of course, they are. They're doing agile and are worse than before. How crazy are they? And after having a look on the data, we realized it's not the dev teams, it's the whole priority shifting all the day, day after day. And there's a nice German video we show in our in our trainings, and the professor Cruz is saying, there what can do to fail, to fail with the organization, to failure to change. And they say the rate of change should be faster than the rate you can implement it, then you are absolutely in a disaster. And that's what I what we've seen. They just set a priority the team start working. And then after they started, they just reshaped the priority, and now they have to put it somewhere on hold and start something new. And this putting on hold was like half finished zombie things. And take this an image. Imagine your pipeline, your death pipeline is the whole way in your in your factory. And these unfinished things are zombies. What we are doing now. We have a hole full of zombies. And no wonder nothing can go through this line and finish, because there are a lot of zombies in between, which hinders you for the flow. And then what's happening? And this was the visualization somehow. And they realized, Okay, we have to do something on portfolio level. That's the problem we have. We have no decisions, consistency.

Ali Hajou: 27:56

Oh, wow. Having lean portfolio, or like a portfolio sync with that looks like an episode of The Walking Dead. I just say there's that sort of image that, but I understand that sort of the all of the work items, you know, epics, initiatives that we would like to develop, that in a way, are are just hanging around unfinished business, you know, sort of living dead, you know, simply because of priority changes that sounds very painful,

Nikolaos Kaintantzis: 28:33

maybe as a cold start, everything, finish, nothing, something like that.

Ali Hajou: 28:38

Copyright. Niko, nice, nice, nice. How about you mark any examples that you have of this, you know, switching or unconventionally.

Mark Richards: 28:49

Look, I've got a million examples. One thing I'd say in passing is be careful not to try and weaponize data. Right? If you're using data to generate change, it's very easy, particularly very easy as an agile person, to go, I've got data, and I can use it as a weapon, and I know exactly who I'm going to kill with it. And any moment where you're trying to use data to weaponize change, you are doomed. So be sensitive, because a lot of this is and when we're trying to kind of shift the world of governance we're going, I want to build some data that shows, perhaps some of the challenges being caused by a current approach and triggers a change, and then perhaps ask us to use new data to inform our ongoing governance process, but making sure, once you've got your hands on that data, to go What could go wrong when I get a group of people in the room to look at this data, and how am I going to make sure that I'm not just using it for harm? Would be one of the questions I'd ask, right? But if I went to a specific example, I'm going to be controversial just for change. And the controversial thing is. Funny. It was a couple of days ago, Eric and I were in a collaboration conversation. We were talking about portfolio flow, and I looked at him, and I said, Is it wrong that I am not always excited about a portfolio camera? And in fact, the longer I've played in portfolio, the less I've obsessed about the portfolio Kanban. And Eric looked at me and went, Is it wrong that as a guy who was a kanban guy, I don't obsess about it either, nice. And, you know, we got to chatting a little bit about it, and it's a little bit confronting, particularly if you think about the fact that I'm talking about the portfolio Kanban in the safe Summit in Washington. But the feeling that I really sit in with the portfolio Kanban is it's great for managing the flow of introduction of work to the system. It's not necessarily great once the work's in the system, because, you know, you fundamentally, you've got a set of portfolio Kanban columns that kind of look like the stage gates of your big pieces of work. And then, like many stage gating processes, we have many steps, and then we say, Go, and after that, you have this one step which is executing, and the whole world happens inside that one step. So the portfolio came in isn't necessarily the right tool, and there are worlds in which you can get it to serve that purpose, but one of the ways I test any visualization is, what is the conversations that it provokes, and what are the decisions that happen on the basis of those conversations? So if you've put together a dashboard, a Kanban, or anything else, and you're not seeing a lot of people have better conversations around it, then you've probably picked the wrong thing or the wrong thing for that moment in time, and to jump on actually, Niko as earlier example, one of my favorite dashboards To build for a portfolio is some kind of blocker aggregation dashboard. Because if we think about we want better flow execution, the biggest thing that hurts the flow of execution is blockers. And the blocker might be I'm waiting for a decision, I'm waiting for an approval, I'm waiting for a dependency. I've put it on hold because I'm working another priority, many things might be causing these and that's a really rich source of data about where the choke points in your system are. And if you get your teams just have a little bit more discipline about the way they use blockers and go, You know what? Maybe we'll find the blocker functionality in our tool, and we'll think about some way of categorizing blockers and storing a little bit of extra metadata about it, and then we start to aggregate that at the portfolio world and say, well, let's have a periodic discussion where we actually look not just at the individual blockers, but at the patterns of blockers as something it's going to point us towards some of the key checkpoints In flow that's been one of my most powerful interventions.

Nikolaos Kaintantzis: 33:04

We once had in a portfolio, a special magnet for blockers, and it ran out after a day, we had to think about categorizations of magnets. We just put the special color and put it on the whiteboard with what which was magnetic. And at the end, yeah, we needed more of them. It was also a cool sign. But I want to say a family wisdom when I heard Mark, be careful with the data underneath. Use them. My uncle once told me, with great power comes great visibility responsibility, so be careful.

Ali Hajou: 33:36

Well, I do like the the Freudian slip over there, with a great power comes great visibility. It does make very much sense, especially talking about, you know, lean governance. A lot of it is really about transparency and the ability to make make the right choices on, on, you know, the highest level of the organization. I haven't heard you, Stefan, about about any examples of in your situation where, you know, having those insights and the data caused a sort of an unconventional twist or turn in in in flow or in choosing what to spend our time on. Yeah,

Stephan Neck: 34:30

let me draw the discussion perhaps on another level as well. By introducing this story, if we talk lean governance, we also talk about the collaboration between business owners enterprise architecture. One group has the business perspective, the other one has the perspective on the existing landscape and to be built landscape. And all of this is facilitated by the Value Management Office, or a. The former days, we call it the program or project management office. So the story goes, one guy out of business perspective, said, Okay, we experienced that our suppliers are not that good in certain areas, certain parts are delivered with a lower quality than intended, than written down in the contracts. And they had to deal with that for years. And then the idea came up. Okay, why don't we improve our vertical integration in our company? Let's build it ourselves. Good idea, and one will probably say, let's go there. No, where's the data? And interestingly, someone already has done the job. There was data, there was an analysis. And I think data without the good analysis will lead to jumping to conclusions as well as Mark said, Be careful with data. You need a collaboration between the business and the technical or the design view to then analyze what are the pros and cons? So they did that. They found out, yes, the investment could be amortisized in a certain time. So let's improve the vertical integration. For example, we over two years time we get rid of this supplier, because we can do it as well, but we have to improve our knowledge. We have to onboard external help to do so, to come up to that standard. Interestingly, the kind of unconventional turn in that discussion or collaboration wasn't the decision to improve the vertical integration. It was, oh, we have existing business. Almost 100% of our capacity is geared towards what we do now. And all of a sudden we started talking about horizon two, what is emergent stuff? And the horizon three, what is the future? Because vertical integration, it's emergent and future growth. And now senior management kind of naturally talked about capacity allocation. And based on the facts and the figures, based on the portfolio Kanban system, which they already had in place, they found out, we have to shift the attention of certain capacities. We have to shift certain competences. And that led then to another discussion, okay, are our value streams still good enough? Should we create a new one for the vertical integration, or are we talking about having a small group diving into that topic and then creating the epics that span over multiple value streams? Sometimes interesting you start at a certain point, but use data, have have a good kind of analysis and the conclusion, which then drives further drivers in the transformation. And I think we as SPCs, we as change agents, we should be really having a good How do you call it? Be sensible to what happens between data and finding out the conclusion. And you should sit there and listen carefully to then help and not to beat people, not to shoot too early and and really lose the war.

Ali Hajou: 38:39

I hear you mentioning a couple of things. I hear you talking about the obvious thing of transparency, of course, understanding virtual integration and other players that you need, or taking the systems view. I hear you talking about a concept which is very much known in product product management, which is the so called three in a box, which is having the different engineering disciplines together, or different disciplines together to make decisions. So right product? It talked about the architects of the technical part, but also, in a way, line management. So you know how the organization is is geared. So, yeah, there's a lot of parallels that you're that you're making also with the stories of Mark and Niko. I see also that mark is, like, very eager to suit to to has to add on what you've just mentioned. Stefan, So Mark, I think that's what is. What can you add to it?

Mark Richards: 39:42

It's a quick add on to this whole thread around data. And it's that in the portfolio, we don't want to make point based decisions or look at point based solutions. We want to move from point based to pattern based. And that, I think the Stefan. The story that he just shared was a great example of that. You know, I could have made a point based solution, but actually, if I thought about a pattern based solution, it took me down a much deeper strategic path. Yeah, indeed. And as one of the things, being a visual management junkie, when I did my Japan lean study tour, you know, we walk into the Toyota factory, I'm like, I want to see their visual management ports. And I was very excited to see what a Toyota Kanban looked like, until the guy held up a ticket and said, This is a Kanban. And I realized that what we think at Kanban is and what Toyota thing at Kanban is very different things. But once we've moved past Kanban in a Kanban? Well, he was like, you know, a Kanban is like an order and, yeah, here's what it looks like. But I got to their visual management area and I went, and I wasn't allowed to take photos, but, boy, I studied it. Everything that was visualized in the visual management space for that factory was patterns of problems

Unknown: 41:03

as a very new episode for this. Yeah, yeah. Indeed create

Stephan Neck: 41:09

a new a new episode about this topic. I mean,

Nikolaos Kaintantzis: 41:14

I'm looking for season two, after we finished all the dimensions to dive in on this.

Ali Hajou: 41:21

This is indeed a very good topic. But let's okay, you know what? Let's how. Let's sort of take back all of this goodness and try to reflect on how, you know what would be out of our experiences and the mistakes that we've made and the ideas that we got, what, what would be the sort of the tips and tricks that you would give to to an SPC who is just jumping into the this, you know, brand new world of Lean portfolio management and, more specifically, this specific dimension. Now I'm going to stay with you. Mark, what would your top tip be?

Mark Richards: 42:00

So I think last week, I'm pretty sure it was Niko said, be an apprentice the first time. And I'm going to double down on that with seek first, to understand, you know, any kind of governance or control that you look at may not make sense, but you've got to understand what motivates it. You know, I did a bunch of coaching with a bank, and there'd been a lot of work over the last few years by the banking regulator in Australia about accountability of bank executives for Responsible Lending and things like that. And there was a truth that every executive in that bank knew that there was a chance they could go to jail if the wrong things happened on their watch. And if you're looking at, you know, controls that might have seemed a little bit heavy handed, and you're thinking about, how can I change this understanding that the person who owned the control could go to jail based on that control really changed the way you thought about it. So the first thing you have to do is understand why does this control exist? And it's only when you understand that that you can start to think about how might this control change, nice,

Ali Hajou: 43:15

nice. Nice had something similar with the how do you call that the plant manager who was extremely resistant to change, and therefore also changing a way of working, because the exact same reason they created some this was electrical components. That was their product. And if these electrical components were bad in functional safety. So they were unsafe. Then he it was literally his head to blame or his head on the line. So of course, he was extremely careful and initially opposing change. How about you? Stefan, what would your tip be for a new SPC?

Stephan Neck: 44:01

I just recently re watched a video from Professor akov where he elaborates on how do you transition from data to wisdom. And Ali, you called us wise man. I still think I'm an apprentice. And when it comes to lean portfolio management, the apprentice, I think, should go to the PMO, to the VMO, because the VMO is a facilitator. On that level, the facilitator has an abundance of data, has an abundance of or a capability of creating networks. So a VMO is, I would call it the gray eminence right. Go to them, learn from them, be part of such a VMO. And that's like the apprenticeship. Because they support, they leverage, they facilitate, they are moderators. And if you have learned how it. Really works in your environment, what the governance is then, I would suggest, based on my experience, then, as a change agent, you can transition into the collaboration of the Bos and the enterprise architects, right? Learn from the business owners. Learn from the enterprise architects. How do they bring together different perspectives, deepen your knowledge. And if you have done that, then you probably are at the end of your apprenticeship where you become a tradesman, a trade woman, where you can really contribute to that level and become a real change agent.

Ali Hajou: 45:37

I can hear the Agile community already talking about what PMO,

Stephan Neck: 45:43

it's needed. Come on. How

Ali Hajou: 45:47

about you, Niko, I saw the preparation you did. How about you? What is your stance on PMO, yeah.

Nikolaos Kaintantzis: 45:55

Oh, my sense of PMO, they are really important, because they have skills you need in your change too. So my experience in my young ages with pMOS were those people who were great in making projects shine. And hey, I want to shine too with my agile stuff. So take these teams, these people to your team. Call it apmo VMO at the beginning. I don't really care how they're called, but I need these skills in my transformation. Otherwise I'm tuned because all the others will look better than I'm looking. And they're great in talking to suppliers. They're great in making contracts. They're great in rolling out rules we have defined together. So PMO is really cool. So my advice is make friends with PMO with audit, we didn't talk a lot, a lot about audit, but make those people your friends because they are not evil. They're not doing a job because they really love to hurt people. They have a job. So try to find out what their job is, what you can make for them to make the job easier for them, and at the end, they will help you remove your own obstacles. So by treating them as customers, as friends, you realize how you can help them, how to make their job easier and to help you doing your job easier. That's why I really love audits. I love PMOS. Yeah, make friends is my tip.

Stephan Neck: 47:23

And may I quickly, quickly add to that one, Niko, audit time should be celebration time. You shouldn't fear an audit, because it works, and it's so revealing. No matter if it's an intern or an external audit, right, it should be a no event, and that's why we need lean governance.

Mark Richards: 47:42

Auditors are also great friends to have, because a lot of the blockers you run into are people going that'll never get past audit. But if you can start talking to audit, you can find solutions that they will help you reach that nobody else would have thought about because they were scared about what they didn't know about audit.

Ali Hajou: 48:00

Yeah, if things become so big that I mean that we that we need to think about the portfolio level. We need to, we need to involve more people. So the thing is, as an SPC, if we would like to just get a sense of, you know, how, how good we are at lean governance. What would you measure? So let's move to our sort of almost last section of our of our podcast, starting with you, Niko, what would you measure in the measure and grow, let's say list of measurements, if you would like to figure out how good or bad we are doing.

Nikolaos Kaintantzis: 48:48

First, I had the same thing as Mark and Stefan. That's why I don't say it. I let them arguing, and then I chose something else, just for fun, is I don't know if Mark is showing it already, the Miro board. So I'm with we review and adjust the funding that each development value stream receives at last, at least twice a year. So it's about thinking, how do we invest? How do we bring money to the stable teams? I think this is a nice challenge. That's why I would like to mention here, because we didn't talk a lot about it, about funding. So that's why I've chosen that. But to be really honest, if Mark and Stefan didn't choose their thing, I just would stay with them.

Ali Hajou: 49:34

Well, gentlemen, let the fights begin. Stefan, Well, which one did you choose, and why? Okay,

Stephan Neck: 49:44

my thinking went like this, what's the ultimate goal? It's business agility. So you you want to have impact. If you want to have impact, you need a good strategy. You need strategic themes that let you have focal points. Is that people can tie and connect their work to the strategic impact. It's like on a bowling alley. You throw the ball, you see the pins fall, and that's why I chose we evaluate progress towards our portfolio strategic themes at least quarterly, and a VMO is kind of supporting that you have the portfolio things, measuring the progress you have, the strategic review, which then goes into what you said, Niko, adjusting the funding of value streams, changing your processes, changing your toolbox. That's why I chose progress towards our portfolio, strategic themes.

Ali Hajou: 50:41

Thank you. Thank you. How about you, Mark?

Mark Richards: 50:43

Look a lot of the same reasons as Stefan. I think maybe the other piece for me is whether it's strategic teams or OKRs or anything else. The challenge a lot of companies have with them is they polish them, they publish them, and then they forget them. Yeah, and you've got to make them a part of your life. And getting to the point where actually, once a quarter, you look and you go, how are we going on this? What needs to change? What are we learning? Why are we not going as fast as we thought we would? What are we learning from the places where we're going faster, like that creates health in terms of shifting your conversations, but it also in order to be able to have that discussion once a quarter, there's a whole bunch of other stuff you need to be doing in the way you're approaching working and metrics and everything else to let you do that. So the fact of all the other work you'd have to do to enable that quarterly conversation, that's why I like to as my headline. Nice, yeah. And

Nikolaos Kaintantzis: 51:42

the reason why you had mine too was exactly with that, because you have to think about, what is strategy, what is purpose, what is vision, mission, etc. You You continue having a vocabulary, which, in the beginning, nobody was really clear with that. So that was why I started there. And I thought I have to have to put more spotlights on the on the

Ali Hajou: 52:01

fine. Okay, so, Niko, you also chose the exact same measurement. It's fine. You're all very fine, you know. And honestly, in my when I looked at it, I was like, yeah, no, I'm gonna try to do something else, because have the same thing. But I've, I thought, just for the heck of it, you know, if I want to measure anything and see whether it even exists, whether people are actually doing it, there's a measurement called, we ignore sunk cost when making future investment decisions. I don't know that's so difficult. I've been having so many discussions. It's really tough to really do this, because, in a way, whenever it's, whenever money is spent, it's, and you ignore sunk cost, then it's seen as a write off. Whenever it's a write off, you know, that's, that's like a loss, a financial loss on the company. So, like a, you know, a margin, impact on margin. So it's, if I want to measure something, I try to at least look whether that's existing. So

Mark Richards: 53:07

I can, I can give you a trick on that one, Ali, by the way, because

Unknown: 53:11

please, please. And

Mark Richards: 53:15

it's like the classic thing, you stand in front of a room full of people, you say, How often do you cancel a project? And you know the answer is never Yep. And generally, the driver is, it's not just the embarrassment of canceling a project, it's that, usually you carry your project costs as OPEX until your release, which is the when you can start to capitalize it. And if you cancel a project and you're not able to capitalize, most OPEX budgets run way tighter than most capex budgets correct, and the the OPEX write off kills you, and that's actually the really harsh bit of the cost. There's an argument to go the more that I shift towards incremental implementation, the less potential OPEX write off I have. So if I take an epic and instead of doing a big bang for the epic, I go, actually it's four incremental releases. That means I've got four capitalization points. And actually, if I was sitting in the MVP cycle, the moment when I make my pivot or persevere decision is actually a moment when I'm in a pretty good state of capitalization and I'm carrying very slow amount of OPEX burden, which is actually what frees me to step away from it. So this world where you can go we ignore sunk costs, ha, ha, ha. And there's another world where you go set of sales up to minimize sunk cost, or minimize the potential impact of the sunk cost, and that's how you start to get a shift in that behavior. And I've had some weird discussions with finance organizations really nice around that and the idea of the liquidity of an investment mcfair,

Ali Hajou: 54:58

especially if it's. Yeah, if you just, if you prove it once, and do this entire cycle with the colleagues from accounting and finance, then I think the change is not that big conceptually. But thanks a lot. Thanks a lot, guys. We've, we've been through quite some episodes where we had, like, a huge amount of measurements. Luckily, this episode, or at least this dimension, just had a few

Mark Richards: 55:33

measurements for government.

Unknown: 55:36

Yeah, you know it, it's,

Ali Hajou: 55:41

I have no idea. I have no idea, you tell me, which also means we maybe, maybe we're missing some, maybe we're missing some measurements out of the list of measurements that we have, that we have out of the measuring grow, let's say repository. I see that in the in the preparation, only two of us have added something. But I see also that, Niko, you maybe still have something to add. Let me you don't have anything to add for the measurement, not anymore. I

Nikolaos Kaintantzis: 56:15

don't like data. I just like my opinion.

Ali Hajou: 56:19

Oh, that's, you know, full circle, going full circle in this episode. Mark, how about you? What kind of measurements are you missing?

Mark Richards: 56:25

Look for me, one of the big things is, how do we get to cost metrics being evaluated in the context of value metrics? Because I so often say a portfolio that's drowned in is the only thing they know how to measure its cost. And if we're trying to get to how do we maximize the value realized from our spend? If I don't have value metrics, and all I can play with is cost metrics, it's going to be a very poor conversation. So the kind of shift in the kind of metric maturity model that's used for governance to go actually we're talking about value and cost in the same conversation on an ongoing basis. That's one of the biggest maturity needles for me in a portfolio. Yeah,

Ali Hajou: 57:06

yeah, nice, which is also, you know, the fundamental basis that you, that you're slowly trying to create for real agility, real insights, and in the end, remaining in control, even when, whenever you have a lot of agile teams operating in the in the company, great, great gentlemen, we've been through a lot today, a lot of stories and examples and ideas and controversial topics, especially in the ninja and in the Agile community, whenever things become very big, we tend to have less answers. So this is this was really helpful. I made notes, and I'd like to thank you for this episode, sort of ending the show here next week we I'll just very quickly look at our episode list. Next week we will have our next episode will be about agile portfolio operations. So we're going to stay with Lean portfolio management, but that will be the last dimension for this core competency,

Nikolaos Kaintantzis: 58:22

just one sentence. Just one sentence.

Mark Richards: 58:27

Niko, what's you just one sentence?

Nikolaos Kaintantzis: 58:30

After you steal mine. So I had to change mine. It's uh, in my case, uh, try to understand the jobs of audit, legal, finance, etc, uh, they have a job to fulfill, so help them to help you mark my sentence, please.

Mark Richards: 58:47

Well, actually, I started with seek, first to understand, and then I looked and went, Oh, you're all talking about understanding or go somewhere else and just jump on the bandwagon. Because I thought, you know, when you talked about audit, I went, Yes, I love that too. So my one sentence is, make order and finance your best friends. And I would

Stephan Neck: 59:05

like Stefan, yeah, I would like to pull it back to what I try to bring in into my daily life, listen, to understand, not to respond muy bien, muy bien.

Ali Hajou: 59:19

All right, thanks, guys, let's, let's wrap it up, I would say,

Mark Richards: 59:26

and wrapping. Thank you so much. And I thought Ali was throwing to me before he was really rap. It was lovely actually having some live audience and some fresh flow of questions coming through today. So thank you to those of us who threw us a question or two and gave us some feedback as we talked, and we'll look forward to seeing you again next week.