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Lean, Six Sigma & Agile: Putting It All Together September 14, 2006 www. ccpace. Lean, Six Sigma & Agile: Putting It All Together September 14, 2006 www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 1

About Me Arlen Bankston Director, Lean-Agile Consulting Six Sigma Black Belt Certified Scrum. Master About Me Arlen Bankston Director, Lean-Agile Consulting Six Sigma Black Belt Certified Scrum. Master Trainer and Agile Methodology Coach 20 Lean and Agile projects implemented over past five years www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 2

Agenda Topics I. Lean & Six Sigma in 10 Minutes II. The Case for Agenda Topics I. Lean & Six Sigma in 10 Minutes II. The Case for Combination III. CC Pace’s Experience IV. Discussion www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 3

About You Let’s take a moment to introduce ourselves: What’s your name, company and About You Let’s take a moment to introduce ourselves: What’s your name, company and job role? How familiar are you with Lean, Six Sigma, and/or Agile? What do you hope to learn from this discussion? www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 4

Some Common Questions… Have you ever wondered… Am I choosing the “right” projects? Will Some Common Questions… Have you ever wondered… Am I choosing the “right” projects? Will they result in improvements my customers will feel? Do they fix the most critical issues in my business processes? Are they oriented towards the long term? Are they sub-optimizing locally, rather than improving globally? Why do so many of my projects lack clear focus and objectives? Why are IT projects so disconnected from the business processes they’re intended to support? Who is my “customer? ” Is what my “customer” asks for all that I need to know? How could a Lean Six Sigma effort with clearly defined objectives still fail during implementation? www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 5

I. Lean & Six Sigma in 10 Minutes www. ccpace. com (c) 2001, C. I. Lean & Six Sigma in 10 Minutes www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 6

Process Improvement Origins Why Were Lean and Six Sigma Developed? Japanese developed many “Lean” Process Improvement Origins Why Were Lean and Six Sigma Developed? Japanese developed many “Lean” techniques based on work by Henry Ford, Dr. W. Edwards Deming & others to compete with U. S. Auto manufacturers Six Sigma was developed by Motorola to raise the standard of “Quality” to meet competitive pressures www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 7

Basic Concepts of Lean Core Concepts: 1. Value: What the customer is willing to Basic Concepts of Lean Core Concepts: 1. Value: What the customer is willing to pay for. 2. Value Stream: Actions that add value to a product or process. 3. Flow: The continuous movement of product, favoring single-piece flow and work cells versus production lines. 4. Pull: Replacing only material that is used and eliminating excessive inventory. 5. Continuous Improvement: A relentless elimination of waste on a never-ending basis. www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 8

Lean Continuous Improvement Cycle Continuously improve in the pursuit of perfection 1) Specify value Lean Continuous Improvement Cycle Continuously improve in the pursuit of perfection 1) Specify value in the eyes of the customer 2) Identify the value stream and eliminate waste 3) Make value flow at the “pull” of the customer 4) Involve and empower employees 5) Continuously improve in the pursuit of perfection www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 9

Basic Concepts of Six Sigma Is: 1. A scientific method 2. A disciplined approach Basic Concepts of Six Sigma Is: 1. A scientific method 2. A disciplined approach (DMAIC) 3. A management philosophy 4. Focused on breakthrough improvements 5. Reliant on data and correlation: Y=f (X 1, X 2, X 3…Xn) 6. Sophisticated analytically, requiring complex training 7. Driven by executive level support Core Concepts: 1. Critical to quality (CTQ): What the customer wants 2. Defect: Failing to deliver what the customer wants 3. Process capability: What your process can deliver vs. customer CTQ 4. Variation: Process stability & consistency over time www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 10

Basic Concepts of Six Sigma (continued) A 5 step approach founded on asking the Basic Concepts of Six Sigma (continued) A 5 step approach founded on asking the right questions: 1. Define: What is important to the customer? What are their targets and acceptable limitations; anything else is considered defective 2. Measure: What is the frequency of defects? How many defects? Capability: How is the process performing for the customers? Entitlement: How good can the existing process be? Gage R&R: How good is the data? Is it reliable? 3. Analyze: Why, when and where do the defects occur? Data driven analysis to prove what the root causes are 4. Improve: How can we fix the process/critical defects? How can root causes can be addressed? 5. Control: How can we ensure the process remains fixed? Develop controls to ensure process improvement is sustained www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 11

Lean or Six Sigma? Convergence: Program Six Sigma Lean Thinking Theory Reduce variation Remove Lean or Six Sigma? Convergence: Program Six Sigma Lean Thinking Theory Reduce variation Remove waste Application Guidelines 1. Define 2. Measure 3. Analyze 4. Improve 5. Control 1. Identify value 2. Identify value stream 3. Flow 4. Pull 5. Perfection Focus Problem focused Flow focused Assumption s A problem exists, figures and numbers are valued. System output improves if variation in all processes is reduced. Waste removal will improve business performance Many small improvements are better than system analysis. Primary effect Uniform process output Reduced flow time Secondary effects Less waste. Fast throughput. Less inventory. Fluctuation – performance measures for managers. Improved quality. Which is better? Answer: Less variation. Uniform output. Less inventory. New accounting system. Flow – performance measure for Who Cares? managers. Improved quality Lean Six Sigma Commonality of both methodologies: Focus on the customer Drive toward understanding exactly what the customer wants Improve processes by eliminating/reducing things that prevent the process from delivering exactly what the customer wants Require continuous effort to ensure improvements are sustained www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 12

Agile Basics - Key Principles Key Agile principles are: Focus on customer value – Agile Basics - Key Principles Key Agile principles are: Focus on customer value – Employ business-driven prioritization of features. Iterative & Incremental Delivery –Create a flow of value to customers by “chunking” feature delivery into small increments. Intense Collaboration – Face-to-face communication via collocation, etc; diversified roles on integrated teams. Self Organization – Team members self-organize to fulfill a shared project vision. Continuous Improvement – Teams reflect, learn and adapt to change; work informs the plan. www. ccpace. com What is Customer Value? The right product, for the right price, at the right time. “The right product” is the product with exactly the features that the customer wants. “The right price” is the price that customer believes is a fair deal. “The right time” is when the customer wants it. (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 13

Agile: A Lean Execution Engine Agile methods can be interpreted as a Lean approach Agile: A Lean Execution Engine Agile methods can be interpreted as a Lean approach to IT project management and execution. Lean Principle / Practice Agile Principle / Practice Kaizen Continuous improvement Iteration Planning Sessions Process & Project Reflections Kanban Information radiation and project transparency Product backlogs Iteration backlogs Daily Standups Burndown charts Project and quality sliders Automated test dashboards Setup reduction Adaptability to rapid change Automated builds Continuous integration Test-driven development Automated testing Takt time Delivery based on customer demand Iterative development cycles Incremental development Work cells Co-located resources for a given task Cross-functional teams Collaborative team environments Generalizing specialist roles Pair Programming www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 14

Lean Execution via Agile: The Mechanics Agile practices include: Release Planning (1) (creates Product Lean Execution via Agile: The Mechanics Agile practices include: Release Planning (1) (creates Product backlog) Iteration Planning (2) (creates Iteration backlog) Daily Standup Fixed-length iterations and small releases Feature Review (3) Process Reflection (4) Identify top-priority items and deliver them early and often. www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 15

II. The Case for Combination www. ccpace. com (c) 2001, C. C. Pace Systems II. The Case for Combination www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 16

Why CC Pace Combined Lean & Agile There are many common barriers to Agile Why CC Pace Combined Lean & Agile There are many common barriers to Agile adoption across an enterprise: Large, complex projects Many projects in flight Lean concepts offered proven solutions to these issues: Lean Project Portfolio Management Driven by Lean goals and metrics Minimized Work in Process (WIP) Multiple projects performer Rigid functional roles Lean Staffing & Scheduling Dedicated, cross-functional teams Alignment by platform and value stream Rewards based on legacy process compliance Lack of IT and business alignment Lean Human Performance Management Rewards based on business results Support for generalizing specialist career paths www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 17

Process Management Maturity Curve Maturity No process measurement or control Time Pilot Program • Process Management Maturity Curve Maturity No process measurement or control Time Pilot Program • Identify & map core value streams and processes • Select diverse portfolio of pilot projects • Launch LSS pilots • Measure & adapt LSS structure appropriately • Integrate LSS into organizational fabric Some breakthrough improvements Lean Six Sigma Projects • Focus on major value streams • Address root causes of process problems • Refine LSS metrics and support structures • Generate value! www. ccpace. com Many incremental improvements Continuous Improvement Culture • Measurements drive and direct change • Kaizen events implement changes quickly • Performers identify and address waste within their own work • Culture is focused on striving towards -- but never reaching -perfection (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 18

IT and the Lean Rate of Change www. ccpace. com (c) 2001, C. C. IT and the Lean Rate of Change www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 19

Lean at Three Levels Lean Enterprise Drives Enables Business alignment with and optimization of Lean at Three Levels Lean Enterprise Drives Enables Business alignment with and optimization of value streams. Lean IT Organization Supports Lean Project Execution Enables An IT organization that can support a Lean rate of change. Projects that use Agile to adapt to change, focus on customer needs and deliver value incrementally. www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 20

Agile’s Contributions Agile execution of process improvements yields: Direct, continuously updated linkage to the Agile’s Contributions Agile execution of process improvements yields: Direct, continuously updated linkage to the Voice/Heart/Soul of the Customer Ability to handle change beyond initial process analyses Minimized risk by accelerating time-to-value through iterative development and incremental delivery Close coordination between Business and IT Focus and refinement of recommended improvements at the implementation level An ideal platform for innovation and new product introduction Support for whole-of-life product maintenance and continuing development www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 21

How Agile Supports Lean Alignment Agile Projects support true IT alignment with value streams; How Agile Supports Lean Alignment Agile Projects support true IT alignment with value streams; Lean IT Organizations support Agile Projects. www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 22

Lean Six Sigma’s Contributions Lean Six Sigma provides a number of advantages to Agile Lean Six Sigma’s Contributions Lean Six Sigma provides a number of advantages to Agile project execution: Directed portfolio design Select projects based on critical process constraints Align projects across functional silos Grounded project vision and clear focus Initial Product Backlogs Insight into rationale underlying requirements Stronger business cases Quantitative assessment of feature values Clear linkage of IT efforts to business benefits Means to measure success Key metrics identified for a particular process Measurement and control system in place www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 23

Why Combine Lean Six Sigma & Agile? Together, Lean Six Sigma and Agile: Support Why Combine Lean Six Sigma & Agile? Together, Lean Six Sigma and Agile: Support incremental improvements with a process designed around iterative delivery Tighten feedback loops in process management and improvement efforts Accurately measure value generation and strongly link to strategic operations Align project portfolios with true, grounded business needs Improve execution speed of process improvement initiatives www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 24

How Might a Combined Approach Work? Most simply: Lean Six Sigma projects provide initial How Might a Combined Approach Work? Most simply: Lean Six Sigma projects provide initial definition and analysis of process areas Tackle large, complex process issues Provide grounded business cases and clear focus Provide metrics to define success Agile projects are spawned in the “Improve” phase Utilize output from LSS projects to form Product Backlog Members from LSS team are involved in execution Adjustments are made as necessary to initial LSS analyses based on exploratory and production data influx Much richer interactions can be imagined as both techniques are adopted throughout an enterprise… www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 25

Tricky Issues Implementation can face many challenges: Process perspective in IT organizations Roles and Tricky Issues Implementation can face many challenges: Process perspective in IT organizations Roles and responsibilities of Lean/Six Sigma and Agile champions and performers Balance of analysis and execution Meaningful metrics for project value Human performance management rewarding proper behavior All of the standard Lean Six Sigma & Agile barriers… www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 26

III. CC Pace’s Experience www. ccpace. com (c) 2001, C. C. Pace Systems Lean, III. CC Pace’s Experience www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 27

CC Pace’s Experience Lean Project Portfolio Management Analysis Lean Staffing & Scheduling Analysis Lean CC Pace’s Experience Lean Project Portfolio Management Analysis Lean Staffing & Scheduling Analysis Lean New Customer Acquisition Analysis & Improvement Lean Six Sigma Access Control Risk Management Analysis Lean-Agile Maturity Assessments Lean Six Sigma Marketing and Production Services Analysis Lean Six Sigma Enterprise Process Mapping www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 28

IV. Discussion www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma IV. Discussion www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 29

Contact Information Arlen Bankston PHONE: 703 / 631. 6600 Director Arlen. Bankston@ccpace. com WEB: Contact Information Arlen Bankston PHONE: 703 / 631. 6600 Director Arlen. Bankston@ccpace. com WEB: http: //www. ccpace. com MAIL: 4100 Monument Corner Dr. , Suite 400 Fairfax, VA 22030 www. ccpace. com (c) 2001, C. C. Pace Systems Lean, Six Sigma & Agile Page 30