(ism207) how the principles of lean transform innovation

© 2015, Amazon Web Services, Inc. or its Affiliates. All rights reserved.

Joanne Molesky, ThoughtWorks [email protected]

Conor McNamara, AWS Enterprise Strategy Lead APAC [email protected]

October 2015

ISM207

The Lean EnterpriseHow the Principles of Lean are

Transforming Corporate Innovation

mailto:[email protected]


What to expect from the session

Learn how:

• The application of lean principles has evolved from the

field of manufacturing to corporate innovation

• To challenge traditional thinking on management

processes and governance practices

• Leading corporates across the globe have leveraged lean

principles to innovate

• To get started

Organizational effectiveness – which one are you?

http://www.slideshare.net/npflaeging/betacodex11-the-3-structures-of-an-organization?qid=0a86fca0-6294-45a1-b489-bbbe1bc34c09&v=qf1&b=&from_search=1

Conventional Business Models are under attack

EMPOWERMENT

ADAPTIVE

VARIABLE CONSUMPTION

ZERO MARGINAL COST

LOCK IN

EFFICIENT

OWNERSHIP

LOWER COST

CUSTOMER

PROCESSES

RESOURCES

COST BASE

…..all enabled by the emergence of Cloud Computing

What is Lean?

The Principles of Lean

1. Focus on Customer

Value

2. Map the Value

Stream

4. Create Flow

5. Continuous

Cycle & Iteration

3. Reduce Batch Size & Waste

https://www.flickr.com/photos/130321091@N06/

Origins of Lean

The Lean Startup: Why Products Fail

YouCustomerAssume you know what the

customer wants

A lot of the time doesn’t

actually know what they want

Technology is no longer the bottleneck!

Customer

Clo

ud e

nable

d In

novatio

n P

latfo

rm

Traditional

Management

Processes

Ideas/ Business

Opportunities

The Lean Enterprise:

Innovating at Scale

In the enterprise, there are many bricks in the

wall…

YOU CUSTOMER

Gary Hamel, American Management Expert

“Right now, your company has 21st century Internet enabled

business processes, mid 20th century management processes, all

built atop 19th century management principles"

Key Findings of 2014/15 State of DevOps Reports

• IT performance = Business performance

• Culture matters.

• 30X more frequent, 200X shorter lead time, 60X

fewer failures.

• Greenfield, brownfield or legacy - it all works

Puppet Labs, IT Revolution Press, PWC, 2015 State of DevOps

Puppet Labs, ThoughtWorks, IT Revolution Press, 2014 State of DevOps

BUSINESS

CEO, COO, CFO, CMO

TECHNOLOGY

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

…but the age old gap is inhibiting value creation

Bridge the gap

Lean Finance

Traditional budget process view

BUSINESSMany good ideas, we need money!

PROJECTSWe’re working, give us money!

OPERATIONSThat doesn’t work – need more money!

Stop thinking projects…

business projects operations

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

= No Visibility into actual value of

products/services

Continuous Deployment

Think end-to-end products

Customers

Service DeskOperations Management

Multiple Cross-Functional Product Teams

Cloud Competency Center

Cloud


= Visibility into total value of

products/services

Implementing Beyond Budgeting (Bogsnes 2009, John Wiley & Sons)

http://bbrt.org/

Lean Procurement

The pendulum has swung

Consumption Economics Creates Value

Contract Tenure

Value

WASTE

Lost Opportunity CostWhat you

traditionally pay for

What you now pay

for

The Cloud provides real-time commercial levers

Elasticity Right-sizing Reserved Capacity

…but you need to invest in skills and capabilities to pull these levers

Case Study – Incentive alignment between IT & the

business

Case Study

http://www.computerweekly.com/news/4500251688/GDS-saves-the-government-17bn-through-digital-and-technology-transformation

Consumption Economics: The New Rules of Tech Book by J. B. Wood, Thomas Lah, and Todd Hewlin

Lean Governance, Risk &

Compliance (GRC)

Manage THIS:

What’s the biggest risk you face today?

You build the wrong thing

Stop the process madness

Lean Enterprise Loop

Enterprise Loop


The Problem with GRC

Large teams

+

lots of waiting

+

lots of box ticking

$$$

+

Ineffective

risk management

=

…many GRC processes are the antithesis of Lean principles

There is an alternative approach

…at a fraction of the cost and with a much heightened risk

effectiveness

Manage own risk

position

Ongoing

monitoring and

reporting

Fine tune and evolve

processes in real-time

High control

effectiveness (Design

& Operate)

AWS

Common Goals

Ongoing

Collaboration

Define

boundaries

Product

team

GRC

team

Lean Corporate Governance

Horizon 1

Execute, Sustain, Retire

Seeds of today,

planted for tomorrow

Time

% o

f p

ort

folio

DISRUPTION POINT DISRUPTION POINT

Horizon 3

Envision, Explore, Disrupt

Horizon 2

Demonstrate, Exploit, Scale

Enterprise Portfolio – The Three Horizon Model


Remember the wall – ask yourself?

Corporate Governance: What do you need to change to develop horizon

2 and 3 in your organization’s portfolio of work?

Finance: What is the first step you can take to increase visibility

into the total cost of products in your organization?

GRC: How do you need to change the relationship between your

teams and GRC teams to manage risks more effectively?

Procurement: How would you change your organization's

procurement practices to allow better use of technology?

Organizational Alignment: What common measures could you use

to determine the contribution of your teams to customer value?

Although undoubtedly tough, this

is all completely doable

Suncorp’s 2014 annual report “simplification has enabled the Group to operate a

more variable cost base with the ability to scale resources and services according to

the market demand. Simplification activity is anticipated to achieve savings of $225m

in 2015 and $265m in 2016”

£2.3Bn budget

Actual £10bn

Outcomes?

Technology simplification

£105m savings

(+ve) citizen experience

Flagship

2011 2015

http://www.computerweekly.com/news/4500251688/GDS-saves-the-government-17bn-through-digital-and-technology-transformation

So how did they do it?

• Formed the “right” multi-disciplined team

• Limited initial scope

• Delivered value early & often

• Strangled the old world

• Pursued principles over rules

• Fostered a culture of continuous improvement

AWS helps you become a Lean Enterprise

1. Focus on Customer

Value

2. Map the Value

Stream

4. Create Flow

5. Continuous

Cycle & Iteration

3. Reduce Batch Size & Waste

Eliminate the undifferentiated

heavy lifting

Reduced cost of support &

maintenance

Common platforms,

modularization

PAYG

Eliminate the innovation

bottleneck

Automation

Process Uniformity

A/B testing

Real-time

customer data

So what should I do next?

Establish a Cloud Competency Centre (CCC)

Start Small, Think Big, Learn Fast

Lean Enterprise: How High

Performance Organizations

Innovate at scale

Additional Reading

www.lean.org

Thank you!

Joanne Molesky [email protected]

Conor McNamara [email protected]

