Joanne Molesky & Barry O’Reilly @jemolesky #LeanEnterprise @barryoreilly

ENABLING INNOVATIVE

CULTURE

Right now, your company has 21st century Internet enabled business processes, mid 20th

century management processes, all built atop 19th century management principles.

- Gary Hamel, American Management Expert

MEET THE NEXT GENERATION

$1-2B Valuation $2-5B Valuation $5-40B Valuation $40+B Valuation

Sources: Dow Jones VentureSource and The Wall Street Journal. Valuations as of March 2015.

KEY FINDINGS OF 2014 DevOps Report

• High performance IT doubles your chance to exceed profitability, market share and productivity goals.

• DevOps practices strongly correlates with IT performance

• Culture matters. Collaboration and experimentation contribute to organizational performance.

• Job satisfaction is the No. 1 predictor of performance.

BUSINESS CEO, COO, CFO, CMO

TECHNOLOGY CIO, CTO, CDO (Digtial and/or Data)

SOFTWARE IS EATING THE WORLD

BUSINESS CEO, COO, CFO, CMO

TECHNOLOGY CIO, CTO, CDO (Digtial and/or Data)

SOFTWARE IS EATING THE WORLD

BUSINESS CEO, COO, CFO, CMO

TECHNOLOGY CIO, CTO, CDO (Digtial and/or Data)

SOFTWARE IS EATING THE WORLD

BUSINESS CEO, COO, CFO, CMO

TECHNOLOGY CIO, CTO, CDO (Digtial and/or Data)

SOFTWARE IS EATING THE WORLD

Technology as a strategic capability Willingness to support experimentation

Iterative, adaptive working processes and practices Reduce learning anxiety across organization

Ability to innovate at scale

CULTURE OF EXPERIMENTATION

Theme 1

SHOOK’S VERSION

John Shook, MIT Sloan Management Review

CONTINUOUS IMPROVEMENT

Humble, Molesky, O’Reilly Lean Enterprise: How High Performance Organizations Innovate At Scale

CONTINUOUS IMPROVEMENT

Humble, Molesky, O’Reilly Lean Enterprise: How High Performance Organizations Innovate At Scale

PORTFOLIOMANAGEMENT

Theme 2

DIFFUSION OF INNOVATION

Everett Rogers, Diffusions Of Innovations

CROSSING THE CHASM

Geoffrey Moore, Dealing With Darwin

CONTINUOUS LIFECYCLE OF INNOVATION

Geoffrey Moore, Dealing With Darwin

BUSINESS MODEL STRATEGIES

EXPLORE

• Uncertainty

• Complex

• Emergent

• Experimental

EXPLOIT

•Improved understanding

•Cause and effect

•Accumulated knowledge

•Forecast

INNOVATION PORTFOLIO

explore exploit sustain retire

kill kill kill killHumble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

INNOVATION PORTFOLIO

explore exploit sustain retire

kill kill kill killHumble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

INNOVATION PORTFOLIO

explore exploit sustain retire

kill kill kill killHumble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

INNOVATION PORTFOLIO

explore exploit sustain retire

kill kill kill killHumble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

INNOVATION PORTFOLIO

explore exploit sustain retire

kill kill kill killHumble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

INNOVATION PORTFOLIO

explore exploit sustain retire

kill kill kill killHumble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

INNOVATION PORTFOLIO

explore exploit sustain retire

kill kill kill killHumble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

INNOVATION PORTFOLIO

explore exploit sustain retire

kill kill kill killHumble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

INNOVATION PORTFOLIO

explore exploit sustain retire

kill kill kill kill

DISRUPT

Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

PORTFOLIO MANAGEMENT

TRANSPARENCY AND ALIGNMENT

NOTICE A PATTERN?

NOTICE A PATTERN?

NOTICE A PATTERN?

PROOF OF DISRUPTION

G I G A F A C T O R Y

THE DISRUPTION POINT

Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

CREATING END-TO-END FLOW

Theme 3

The main obstacles to improved business

responsiveness are slow decision-making, conflicting

departmental goals and priorities, risk-averse

cultures and silo-based information.

Economist Intelligence Unit: “Organizational agility: How business can survive

and thrive in turbulent times”

COMMAND AND CONTROL

Compliance rules Risk models

Quality controls Inspections

Balanced scorecards

Target and

incentives

Budget contracts

Adapted from:http://www.bbrt.org/beyond-budgeting/bb-problem.html

COMMAND AND CONTROL

STRATEGY

EXECUTION

ALIGNMENT

Compliance rules Risk models

Quality controls Inspections

Balanced scorecards

Target and

incentives

Budget contracts

Adapted from:http://www.bbrt.org/beyond-budgeting/bb-problem.html

COMMAND AND CONTROL

STRATEGY

EXECUTION

ALIGNMENT

MICRO MANAGEMENT

CONTROL

ACCOUNTABLE FOR TARGET& BUDGET

Compliance rules Risk models

Quality controls Inspections

Balanced scorecards

Target and

incentives

Budget contracts

Adapted from:http://www.bbrt.org/beyond-budgeting/bb-problem.html

COMMAND AND CONTROL

STRATEGY

EXECUTION

ALIGNMENT

MICRO MANAGEMENT

CONTROL

ACCOUNTABLE FOR TARGET& BUDGET

Compliance rules Risk models

Quality controls Inspections

Balanced scorecards

Target and

incentives

Budget contracts

Adapted from:http://www.bbrt.org/beyond-budgeting/bb-problem.html

THE CONTROL OF BUREAUCRACY 10-20% OF COSTS

TRADITIONAL VIEW

TRADITIONAL VIEW

BUSINESS Many good ideas, we need money!

TRADITIONAL VIEW

BUSINESS Many good ideas, we need money!

PROJECTS We’re working, give us money!

TRADITIONAL VIEW

BUSINESS Many good ideas, we need money!

PROJECTS We’re working, give us money!

OPERATIONS That doesn’t work – need more money!

STOP THE PROCESS MADNESS

Lean Enterprise Loop

Enterprise LoopHumble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

STOP THE PROCESS MADNESS

Lean Enterprise Loop

Enterprise LoopHumble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

STOP THE PROCESS MADNESS

Lean Enterprise Loop

Enterprise LoopHumble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

STOP THE PROCESS MADNESS

Lean Enterprise Loop

Enterprise LoopHumble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

Adhering to budgeting rules should not trump good

decision making.

- Emily Oster, American Economist

WHAT COULD POSSIBLY GO WRONG?

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!!!!Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

WHAT COULD POSSIBLY GO WRONG?

$$ $$

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!!!!Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

$$BIG PROJECT!

WHAT COULD POSSIBLY GO WRONG?

$$ $$

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!!!!Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

$$BIG PROJECT!NO CHANGE

WHAT COULD POSSIBLY GO WRONG?

$$ $$

!

!!!!Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

$$BIG PROJECT!NO CHANGE

!

!!!!

WHAT COULD POSSIBLY GO WRONG?

$$ $$

!

!!!!Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

$$BIG PROJECT!NO CHANGE

!

!!!!

WHAT COULD POSSIBLY GO WRONG?

OPERATION COSTS

$$ $$

!

!!!!Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

$$BIG PROJECT!NO CHANGE

!

!!!!

WHAT COULD POSSIBLY GO WRONG?

OPERATION COSTS

$$

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!!!!Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

$$BIG PROJECT!NO CHANGE

!

!!!!

WHAT COULD POSSIBLY GO WRONG?

OPERATION COSTS

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GREAT JOB!

$$ $$

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!!!!Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

$$BIG PROJECT!NO CHANGE

!

!!!!

WHAT COULD POSSIBLY GO WRONG?

OPERATION COSTS

$$

GREAT JOB! WTF?

$$ $$

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!!!!Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

FROM PROJECTS …

BUSINESS PROJECTS OPERATIONSMany ‘good’ ideas -

WE NEED $$$! We’re working - GIVE US $$$!

That doesn’t work - NEED MORE $$$!

Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

TO PRODUCTS…

PRODUCTS / SERVICES OPERATIONS

Customers

Service DeskOps Management

Cross-Functional Product Teams

Teams PushChanges Continuously

Product Teams for IaaS / PaaS

Infrastructure / Platform-As-A-Service

Humble, Molesky, O’Reilly, Lean Enterprise: How High Performance Organizations Innovate At Scale

PERFORMANCE MEASUREMENT

PERFORMANCE MEASUREMENT

MEASURE THINGS THAT MATTER •Do our customers advocate us to others?

•What is the outcome we achieved?

•Have we reduced complexity of our technology?

•Are we getting better?

TAKE AWAYS

TAKE AWAYS

Think Big, Start Now, Learn Fast

Continuous innovation is a strategic capability

Technology is the business

The Lean Institute: http://www.lean.org

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Management Innovation eXchange: http://www.managementexchange.com/

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Beyong Budgeting Round Table: http://www.bbrtna.org/

OTHER RESOURCES

THANK YOU

Joanne Molesky jmolesky@thoughtwoks.com @jemolesky

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Barry O’Reilly boreilly@thoughtworks.com @barryoreilly