from productivity to profitability by saket bansal - lean india summit 2014

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From Productivity to Profitability

Saket Bansal


From Productivity to

Profitability

By Saket Bansal, SPC


About Me


The Goal

We want to ………

products faster

build / sell

Image Source : Diego Barbieri / Shutterstock.com


Why Agile?

• Increase Productivity

• Improved Project

Visibility

• Ability to manage

changing priorities

• Improve team morale

• Enhance Software

Quality


Metric we care the most

Velocity


Focus Remains

Productivity Utilization


Queue Size Vs. Capacity Utilization

Source : The Principles of Product Development Flow ,

By Donald G. Reinertsen


Productivity and Work In Progress


Kent Beck's value stream map

Lean Software Development: An Agile Toolkit By: Mary Poppendieck; Tom Poppendieck


Optimize as Whole

…getting each machine to work as efficiently as possible does not

work as well as maximizing efficiency of the production flow in its

entirety. Focus on the whole process – from the beginning

(concept) to the end (consumption).

Lean-Agile Software Development: Achieving Enterprise Agility

Alan Shalloway, Guy Beaver, James R. Trott


Easy … so where is the problem?


Value Stream Management

A company that maintains a single management system throughout

the value stream will see a 25 percent to 30 percent cost advantage

over competitors

Peter Drucker, Management Challenges for the 21st Century,

Harper Business, 1999, p. 33.


Watch the Work Product

“Watch the work product, not the worker.

In product development our greatest waste is not

unproductive engineers, but the work products sitting ideal

in process queues. “

The Principles of Product Development Flow , Donald G.

Reinertsen


Metrics

Process

Output

Outcome

Process Process


What to Measure?

Cycle Time Velocity

Velocity / Capacity

……

Value Point

Delivered

……


Beyond Proxy Variables

• Should we delay the release by

one month to fix the defects ?

• Should we reduce the cycle time

by adding one more team?

• Should we delay the release to

add functionality?

• Should we delay the project by

one month to get more

innovative ?


The Economic View

Value

added

Risk

Cycle Time

/ Delays

Product

Life Cycle

Profit


Five Economic Objectives

Source : The Principles of Product Development Flow , Donald G. Reinertsen


Sample Economic Framework

0

200

400

600

800

1000

1200

1 2 3 4

Product Life Cycle Profit

Life Cycle

Profit

Product

Value

Development

Expense

EMV of

Risks

Cost of

Delay = - - -


“There is nothing so useless as doing efficiently that which

should not be done at all.” —Peter F. Drucker


Summary

• Organization should focus

more on profitability

• Productivity variables should

be measured with care.

• Optimize the whole

• Project situation affects

multiple variables , so do not

just measure one

• Create Economic model for

project

• Economic View helps in better

decision making


References

• The Principles of Product Development Flow , Donald G. Reinertsen

• Lean Software Development: An Agile Toolkit , Mary Poppendieck; Tom Poppendieck

• Lean-Agile Software Development: Achieving Enterprise Agility :Alan Shalloway, Guy Beaver, James R. Trott

Twitter : @saket_tg

Email : [email protected]

Web : www.iZenBridge.com

LinkedIn : www.linkedin.com/in/saketbansal

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mailto:[email protected]

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from productivity to profitability by saket bansal - lean india summit 2014

Leadership & Management