Mastering Value Stream Management – Mik Kersten, Planview

This is Techron tv. Hey guys, thanks for the throw. We're here with M**k, Kirsten as c t O for Planview, and we're talking about this whole notion of if every company's a software company, then where is everybody?

'cause it seems like we're all falling behind. So we're gonna dive into what those issues are. And M**k, welcome to the show.

Uh, thank you Mike. Great to be here. It has become something of a trope, right?

Everybody says this, everybody nods their head, but it's not clear to me that everybody gets it. So, when you talk to these organizations about the fact that they are software companies that happen to do acts or y um, does the management understand that or is that still something where they feel like, you know, they're a tractor company, but they're not really a software company? And how do we kind of make this next great leap?

Yeah, so this, this has been quite fascinating to see unfold over the last, really, over the last decade where I think senior leadership, so the C-suite has understood the need to transform, and they've had a lot of trouble translating that into results, organizational results and, and, and, and the end business results. So I think there's a, this really big disconnect between what leadership wants to do. Uh, let's say, let's say the, you know, Jim Farley, the c e o of Ford, who recently gave an interview and said they want to be a completely software driven company, but how difficult that is when you've got a supply chain of 150 different manufacturers, each of whom produces software, right?

Versus Tesla, who's a digital native. And I think we're seeing that across the industries, uh, legacy aspects of the business, of the way that it was made really as a cost center and not as something that drives investment drives company outcomes, uh, has made it really difficult for these leaders to transform their organizations. And I think the bottom line is, is we needed a new approach.

So these traditional businesses, traditional enterprises, these tractor companies are falling further and further behind, even though their leadership is pushing them very hard to become digital innovators Falling behind. Who are they dealing with? Rivals who are more efficient or is the entire vertical industry that they're in also falling behind?

So it all becomes relative and there's not enough pressure. So that's a great question. I think we have some sectors where there isn't enough pressure where there's not enough competition, but I think that what, what we're really seeing across the industry is that in, in almost every sector right now, industry sector, there are, there's a combination of startups wanting to move in with venture investment, push, you know, fueling that as well as potential growth from tech giants or unicorns wanting to take more and more of that market.

So I think we're now at the point, and that I do think this is now amplified through the pace of change through generative ai where organizations don't quickly shift into digital. Digital will be, you know, a 10th as efficient as those that do that, that are driven, uh, by software and by ai. So I think every single sector is right for disrupt disruption now, right?

You know, some are, in some sectors, let's say banking and financial services, there's been more change, there's been a faster pace of transformation, so it might be a little bit harder for tech companies to move in, but we're still seeing a, a, a ton of innovation investment on that front as well. So in my view, no sector is safe. We have seen in recent times a handful of CEOs get fired because software development projects fell behind schedule and the board figured out that that was gonna have an adverse impact on revenues and profits.

Do you think more organizations are starting to think that way and get that mindset because, you know, a delay to a project now has material impacts on a balance sheet? I, I think that's exactly the, that's exactly the challenge, right? And I think that investors and boards have recognized that if these companies don't change, then they are going to continue declining, right?

So whether it's, you know, delayed software initiatives at, at Volkswagen, uh, or large organizations spending billions of dollars, and this is what's happening, right? There's billions of dollars being spent on, on it portfolios at large insurers, large financial services not producing the sorts of results that investors are are expecting. I think you painted the, the, the scenario, uh, perfectly right there, Mike, right?

We, the customers and investors and boards want to see results and they want those results to be measurable. And meanwhile, these organizations are, you know, pouring money. And of course, in some cases right now there's, the budgets are more constrained, but the results are, you know, it's even more pressure to show outcomes from all that spend on it, on technology, on transformation.

And the thing that struck me working with a lot of these organizations is they don't even know how to measure whether they're improving or not, right? So a company that's producing, let's use the example of tractors, knows how many tractors they delivered and knows what each tractor costs. These organizations going through digital transformations have no idea at, at, at a senior level how to measure are they moving faster?

Is there time to market and improving or is it slowing down? That, by the way, is, is was kind of the core to, to me, writing that book, project to product and, and creating a way of measuring flow through software value streams, through how we build software, is to give today's leaders those tools. A lot of today's leaders have grown up in understanding business operations and finance not in writing code.

In contrast, today's the leaders of today's tech giants have a lot of, most of them actually have spent a lot of time writing code early on in their careers. So in my view, we need to give leaders the tools to understand how value flows through software and how to manages to, you know, what they call the, the economics of, of flow rather than economics of scale, economics of scale work for tractors, work for building cars. They don't work for creative things like, like building software.

And so I think it really is about giving today's leaders the tools to measure their organizations in terms of how they're improving their, their software capabilities, the digital capabilities, uh, where their bottlenecks are and, and really how the scale right now, so much of that investment is just total scattershot. Let's, let's put more money into here, into it, let's protect it. But there's no sense of how much do we invest in core platforms versus in mobile applications versus in, uh, re-architecting and investing in, in things like technical debt reduction.

And in the end, those are the decisions that that senior leaders needs to make. They just can't make it without visibility of, of basically how values flow through the value streams, what's driving the most value and what the biggest bottlenecks are. Is there a disconnect in the conversation?

Because sometimes I feel like if I go talk to business leaders and they've gone to school or a business school, they're reasonably familiar with the notion of value streams. Um, if I go to the technology leaders, it's like, you know, no idea. And so, you know, how do we have a conversation between two groups of folks who are using a completely different nomenclature to talk about what's really the same thing?

Uh, that that's a, that's a really interesting question and, and point, Mike. So I, I'm, I'm seeing the same thing, right? We've got a lot of business leaders who understand how value streams work, but a lot of their understanding is actually from manufacturing physical products or, or, or services.

And they work differently in software and software's all intangible assets, right? It's all building user experiences and, uh, creating, you know, bringing new mobile applications to market, bringing new gen ai, um, uh, offerings to market. And all of those are, they're knowledge work.

That's all creative work. So the question is how do we apply that kind of value stream thinking, the lean thinking that was mastered the, you know, the the entire area era of mass production. How do we apply that to digital and to software and, and how do we actually help the today's leaders apply those same concepts, uh, given that, for example, you know, what they're trying to do, that some of the things that do work such as maximizing resource allocation and, and basically long-term project planning, those work really well for building the next biggest bridge or building or factory.

They don't work well for software. Software has to be much more iterative and adaptive because it's so complex and so changing and so creative. So how do we apply?

And, and, but part of the problem, and I think what's kind of, what's, what's key to your question is a lot of the technology leaders are just throwing all this jargon at the business leaders as well and, and telling them they need to look at DevOps metrics and this telemetry and it, it gets all very technical and jargony. We need to bring the both the technology, um, concepts and the business concepts onto, you know, onto the same page. And really that's where so much of our, our focus and plan view, so much of my work has been is to give it a, a common vocabulary and a common way of measuring value that makes for sense for business and technology As we go along with this whole effort.

Um, is value stream management a platform, something I go and deploy and, you know, aggregate and it becomes the center of excellence? Or is it becoming a feature of all the platforms that we use and it needs to kinda, you know, be manifested everywhere because I need to be able to see what all the dependencies are between various things and I can't step out on one tool to go look at another tool to understand the implications of something. So, you know, what's your sense of where do we apply this?

Yeah, that's, that's again, another really interesting thing and I think something a lot of organizations struggle with because they've made investments in so many different kinds of tool platforms, right? They've deployed, uh, their developer tools like Atlassian or GitHub or GitLab or Microsoft Azure, DevOps have deployed their service management platforms like ServiceNow or Zendesk. They've got their Salesforce and all of these different systems.

So the interest this software and digital have become so complex. They're multiple platforms and they're all very special tailored to different kinds of, of, uh, of, um, knowledge work or basically different phases of it of this. I think that's really important common concept that you mentioned of value streams, right?

Um, so what we've realized is that value chain management is not about ripping all that out and saying, we're gonna put an s a p like platform in there. It's about saying, okay, these tools make these technology specialists really productive, right? They developers love tool X and it's a bit of a fashion industry of development tools out there.

What we need to do is to tie all of that together, much the same way as supply chain planning and execution tools and supply chain management tied together all of the, these disparate suppliers and supply chains, uh, and business operations. So to me, value stream management is about bringing all of those things together into something that actually provides leadership with the right kind of visibility and accelerates speed to decision making, removing of bottlenecks, basically applying investment to what's gonna accelerate time to market the most, but really layers over top of those existing platforms and enables things like the shift from project to product, right? Of shifting project oriented value streams where business terms work over defense to it to product oriented value streams.

We're, we're actually innovating for a customer in a very tight feedback loop and, and driving long lived product lifecycles that way Is our inability to understand the value streams, and for that matter, the dependencies between the things also slowing down the rate at which we transitioned to Agile and DevOps, because it's easier to see all this stuff using a waterfall methodology, but then it just takes longer to build everything. So we wind up kinda becoming our own worst enemy just 'cause we lack visibility. So is is all of this stuff interconnected?

Because, you know, at the end of the day we are all focused on an outcome, but you know, we're also at risk adverse. Yeah, Mike, I think that's actually one of the biggest problems that, that we're, that I'm seeing right now. We just did a state of the project to product industry survey, and we looked at, you know, both the tool data that we see through our tool platform of analyzing and measuring organization's value streams and survey data, uh, and, and what we saw across 3,600 different different organizations value streams.

And what we're seeing is that organizations have agile teams and DevOps deployed, right? To some degree of maturity. But that's not the constraint, that's not the bottleneck.

So right now, my view of the state of the industry is Agile's out there everywhere, but we've got agile teams. We don't have agile organizations or agile businesses because as as you said, basically you've got all these agile teams and then the waterfall processes on top of them. So operating models that were not made for digital, that were made for, for manufacturing, for different kinds of service delivery, um, or for just treating, you know, IT and technology as a cost center.

So I think that's what's so key about shifting from project to product and value stream management is to take those things that work for agile teams and to make those the operating model to get to a digital operating model for these organizations. Because what's happening is if you deploy, you know, take, take an organizations with 20,000 developers, uh, I tend to work with, with these very large organizations with, with tens of thousands of developers quite a bit, and they'll have hundreds of agile teams, but nothing's really moving any faster because those teams are always bottleneck dependent. They've got dependencies between each other, they're waiting for longer approval processes and so on.

So it's really agile's the right approach. It's just, it can't stop at the team level. We have to make those value streams agile, then we have to make the organization agile.

And that's all about creating those fast feedback loops and fast planning cycles and, and empowering leaders at every level with both the decision making ability and with, uh, empowering teams at every level with being able to make decisions and, and respond quickly at the edge. So I think that's, that's one that kind of a good way, I think of looking at the, the problem right now with digital transformations is whole bunch of agile teams and, and old school waterfall operating models getting in their way. So beyond reading the book and maybe reading the survey, what's your best advice to folks?

I mean, do I just throw everybody in a room somewhere for a week and lock the door until sanity prevails? Or is there some kind of structured way of thinking about this? Yeah, so I think there's, I think we've hit on some of the, the structure ways is, is, again, agile teams are solve problems, agile tools are a solve problem.

Uh, what we really need to do is you, you need to look at, as an organization, how are you gonna change your operating model? So, and to do that with data, to do that with measurement. So you need to first, I think the, the most success I've seen as organizations who first take a look at the, their current state.

So they measure the flow like the teams are doing work today, right? They're delivering value today, they're just doing it. What we see is 10 or a hundred times more slowly then a digital native might be doing it or startup might be doing it, right?

But so first just take a look at the data, look how values flowing today by looking at basically deploying this value management approach for everything that's working, and then take a very data-driven approach to improvement, right? Part part of the irony of all this is that almost every organization i I start working with, they take a waterfall approach to digital transformation, right? Mm-hmm.

So that they make a two year, one year, two year transformation plan. They assume they know how that's going to go, uh, and then they execute to that plan. But if you actually put data into the loop and you become agile about your transformation, you create a feedback loop in a roadmap, uh, and you treat that kind of as a, as a first class initiative, then you can pivot and you can see, okay, these teams are already doing great, let's get more impediments outta their way, or let's put more investment there.

Uh, these teams are, are stuck on such old legacy systems. We don't think we'll actually ever get them to move twice as fast. So let's, let's take a different approach and let's stop trying to modernize that and let's instead replace that technology.

So I think the key thing is measure your current state, create a roadmap of how to accelerate flow across the organization. And don't, and this is the biggest pitfall, don't do it just for technology. So much of this has been like, let's make the teams agile rather than let's, let's get the business stakeholders into the loop.

Let's get, you know, whether they use a two in the box model or you're create an organization, a matrix organizational structure, however you do it. Let's get business and technology together. Uh, let's define those value streams for how we operate today.

Let's measure flow and let's look how, how we improve flow, but always in a way that's directly connected to the business outcomes we're after. Right? In the end, every value stream, every team needs to understand what customer outcomes they're delivering.

And so it's, it's two sides of it, right? Get the data flowing up and get the alignment flowing down. All right, folks, you heard it here once again.

We have met the enemy and it looks a lot like that person we see in the mirror every morning. Hey M**k, thanks for being on the show. My pleasure, Mike.

All right. And back to you guys in the studio.