Steve Denning, a former world bank executive and author gave two presentations at Agile 2011, both of which were of extreme relevance and importance for business analysis practitioners. I was able to attend both and found in this case at least, we were able to schedule across stages in the right order. His Making the Entire Organization Agile talk was a great overview to the ideas in his newest book The Leader’s Guide to Radical Management: Re-inventing the Workplace for the 21^st Century.

About the Talk

The main premise of the talk is that there are five fundamental shifts that need to occur in the management in order for an organization to thrive in today’s environment. These five shifts are:

1. Goal: From making money for shareholders to delighting the customer. Steve also described this as from inside-out (“You take what we make”) to outside-in (“We seek to understand your problems and will surprise you by solving them.”)
2. Role of the Manager: From controller to enabler to better lead the knowledge workers of today.
3. Mode of Coordination: From hierarchical bureaucracy to dynamic linking. In other words, adopt some of the coordination practices of agile approaches throughout the entire organization.
4. Values: From efficiency to transparency and continuous improvement
5. Communications: From top-down commands to peer-to-peer conversations that solve problems and generate new insights.

Let’s look at some of the nuances of these shifts.

The switch in goal from making money to delighting customers represents a shift from focus on output to a focus on outcome. By understanding and helping to solve your customer’s problems, you run a good chance of delighting them, and profits will come as a result. In other words, making money is the result of the organization’s actions (assuming they are for profit), not the goal. A focus on delighting the customer may lead to lower profits in the shorter term in exchange for higher profits in the long term due to the strong relationships established. An example of this phenomenon is Zappos, which decided to keep its warehouses open 24×7 in order to ship orders as soon as possible.

Steve suggested several practices to delight customers, which he expanded on in his other talk (covered in a separate post):

• Commit explicitly to the goal
• Aiming for the simplest thing
• Deliver it sooner
• Evaluate what customers do, not what they say
• Let clients become co-creators
• Stop doing things that don’t add value
• Measure! Customer delight can be measured by using such things as the net promoter score.

Delighting the customer means running the organization in a different way, which drives the shift in the manager’s role from control to collaboration. This shift requires the change to dynamic linking, which Steve defines in a post on his blog as:

• Work is done in short cycles
• Management sets the goals of work in the cycle, based on what is known about what might delight the client
• Decisions about how the work should be carried out to achieve those goals are largely the responsibility of those doing the work
• Progress is measured (to the extent possible) by direct client feedback

That description provides a nice summary of how agile approaches, especially Scrum, organize work.

An example of the changing from value to values of radical transparency is the Ford Progress stoplights. When the new CEO took over, the senior leadership of Ford had a war room where they met on a regular basis that included stoplight indicators for all their major initiatives. Even though the company was losing $40 billion, all stoplights were green. It took some haranguing from the CEO to get people to become more transparent in their status reporting – most were concerned what would happen if anyone reported something other than green based on past experience. Finally after a couple of weeks some orange and red stop lights started showing up and CEO celebrated the new openness.

Steve also shared some ways to move communication from command to conversation:

• Authentic storytelling
• Practice deep listening
• Know the customer’s story
• User stories are catalysts for conversation
• Use stories to enhance team cohesion

These ideas come from Steve’s earlier book The Leader’s Guide to Storytelling

Steve finished his talk with some other key points:

• Need to do all shifts at once – they are interdependent.
• Delighting the customer is the driver, conversation is the oil.
• Culture of organization is embedded in five assumptions of traditional management.

Application to Business Analysis

The content of this presentation is what business analysis should be about. Some of the key ideas are:

Take to heart the change in goal to delighting your customers. The customers we want to delight are the ones who are buying your company’s products and services, not your “internal” customers. While delighting internal customers may make your job a little easier in the short run, you risk introducing sub optimization that is not beneficial for the organization as a whole. Even if you are working on an application that will support a process that may not directly impact the end customer, it’s still helpful to ask “is what we are doing going to delight our customers?” Asking this question could change the way you approach a particular process or application, or help you determine that process is not needed in the first place.

Once you have determined that you are helping to delight the customer, then look a little closer to your own efforts and remember the shift from inside-out to outside-in. Instead of taking the attitude “you take what we make” (come on, admit it, you’ve been on a team that has done this in the past) approach your next project with the attitude “We seek to understand your problems and will surprise you by solving them.”

The shift in the goal provides a clearer definition of business value. Instead of defining business value as something that increases or protects revenue or reduces cost in alignment with organizational strategy, define business value as something that makes progress toward organizational goals, and then define the goal as delighting the customer. Thus, instead of asking “Does this provide business value?” You can now ask “Will this delight our customer?”

Aim for the simplest thing, deliver it sooner, and stop doing things that don’t add value. In the world of business analysis, this means worry more about understanding your customer’s problem and solving it rather than worrying about how detailed your requirements are. Remember, requirements are a means to an end, effectively a way to describe the problem and characteristics of a good solution. Customers are not delighted by impeccable requirements. They are delighted by solutions that solve their particular problem when they need it solved.

Measure! Denning introduced the Net Promoter Score which provides a way to measure customer satisfaction. Aside from being a good technique, the important idea is the net promoter score represents a way to measure success based on outcome, not output. Success is measured based on progress toward the goal (delight the customer) rather than how quickly the effort was done, how many requirements were written, or how many errors were found. Measurements are very important and useful, but they should measure the right things. Instead of trying to measure the effectiveness of business analysts by themselves (will lead to sub optimization) focus instead on the outcomes generated by the team the analysts are on.

There are several ideas that come from Denning’s work that I’ll cover in later blog posts.