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Lean Kanban Risk ManagementAgile Montréal – 11 Janvier 2017
Daniel Doiron, AKT
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LEAN KANBAN RISK MANAGEMENT : OPTIONS, LIQUIDITY & TRUST, HEDGING,
PRIORITIZING, SCHEDULING
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Risk and Real Life Options
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A Fantastic Book !
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KANBAN CADENCES
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WHAT IS RISK ?
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Kanban Mechanics
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H
FF OM
NK
J
I
Pull
Kanban systems are pull systems
Ideas
D
E
A
I
DevReady
G
5Ongoing
Development Testing
Done3 3
TestReady
5
F
B
CPull
Pull
*
There is capacity here
UATReleaseReady
∞ ∞
Pulling work from development will create
capacity here too –the pull signals move
upstream!Now we have capacity to replenish our ready
buffer
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WHO IS DOING WHAT ?Test
Ready
FH E
C A
I
GD
GYPB
DEMN
P1
AB
IdeasDev
Ready5
Ongoing
Development Testing
Done3 35
UATReleaseReady
∞ ∞
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Where is the RISK ?
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KEY RISK - LEAN MANAGEMENT
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LEAN KANBAN RISK MANAGEMENT TRIAGE
NOW
NEVER
LATER
What should we do now, later or never !
Failing to apply this decision matrix treats all demand as irrefutable: demand that will not be shaped !
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LEAN RISK MANAGEMENT – AVERSION
“Being risk averse is a bad thing in a modern business -- saying yes to everything and starting everything early is a sign of risk aversion …. ”
David Anderson 20:20 – 20:53
https://www.youtube.com/watch?v=qEpT0NPpBcI
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LEAN RISK MANAGEMENT – AVERSION
• Those who say ‘yes’ to everything are risk averse and treat all demand as irrefutable demand and let it enter the system
• They want everything to be finished asap and therefore they start everything as early as possible !
• WIP is therefore going thru the roof, variability sets in and results are random. Trust is eroded !
• As long as a demand has not entered the Kanban system, it is refutable demand and commitment is deferred !
• This is the robust and resilient way to manage WIP and prevent variability from entering the system. Allocate demand according to current capacity !
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OPTIONS, LIQUIDITY & TRUST , HEDGING, PRIORITIZING,
SCHEDULING
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LEAN RISK MANAGEMENT
Is your risk management approach:
a) Bringing people together ?
b) Triggering open discussions (narrative) ?
c) Cheap ?
d) Visual ?
e) Supporting many taxonomies ?
f) Qualitative ?
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LEAN RISK MANAGEMENT 1. Blocker Analysis
2. Cost of Delay
3. Liquidity and real option theory
4. Taxonomies and radar graphs
5. When is discussion needed ?
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Improve Quality By Understanding Why Bugs and Blockers Occur
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Blocker Analysis - Clustering
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Improve Quality By Understanding Why Bugs and Blockers Occur
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Improve Quality By Understanding Why Bugs and Blockers Occur
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Improve Quality By Understanding Why Bugs and Blockers Occur
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Improve Quality By Understanding Why Bugs and Blockers Occur
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Improve Quality By Understanding Why Bugs and Blockers Occur
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Improve Quality By Understanding Why Bugs and Blockers Occur
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LEAN RISK MANAGEMENT 1. Blocker Analysis
2. Cost of Delay
3. Liquidity and real option theory
4. Taxonomies and radar graphs
5. When is discussion needed ?
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Where do you need to be more predictable ?
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Qualitative Cost of Delay function sketches
Expedite – white; critical and immediate cost of delay; can exceed other kanban limit (bumps other work); limit 1
Fixed date – orange; cost of delay goes up significantly after deadline
Standard - yellow; increasing urgency, cost of delay is shallow but accelerates before leveling out
Intangible – blue; cost of delay may be significant but is not incurred until significantly later, if at all
time
impa
ct
time
impa
ct
time
impa
ct
time
impa
ct
Class of service and its policiesColor Function
https://www.youtube.com/watch?v=YBPa0FE4hRs
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COST OF DELAY TAXONOMY
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COST OF DELAY TAXONOMY
Cost of Delay is for for big stuff !
• Majority of people understand it within minutes
• Excellent for portfolio and project selection or features
• Not so good for individual ticket selection on day to day basis
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?
WHAT DO WE DO FOR SMALL ITEMS ?
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LEAN RISK MANAGEMENT 1. Blocker Analysis
2. Cost of Delay
3. Liquidity and real option theory
4. Taxonomies and radar graphs
5. When is discussion needed ?
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Real Life Options: Now, later or not at all
Real Life Options(Maassen, Matts)
• Options have value• Options have expiry
conditions• Do not commit early
unless you know why
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TRUST & LIQUIDITY OF SYSTEMS
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TRUST & LIQUIDITY OF SYSTEMS
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LEAN RISK MANAGEMENT
• Liquidity tells us if our assumptions about our statistical models based on the near past are still right and have not moved outside the range of volatility ! (Lucas’ law)
• Little’s Law & Variability & Throughput & WIP etc.
• Liquidity is a general system health indicator metric of a pull system. Like blood pressure it is easy to observe and hard to fake
• Olaav Massen and Chris Matts contribution to Lean Kanban Risk Management has taken paths into scheduling, hedging, liquidity & trust, discovery Kanban and much more
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General Health - Easy to Measure – Hard to Fake
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Flow efficiencies of 1-5% are commonly reported. *, **
> 40% is good!
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LIQUIDITY ISSUE – NO TAKERS FOR A TICKET
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Real Life Options: Who gets assigned a ticket ?
• Lean Kanban – Good enough to do the job first. Never assign the most flexible competent resources at first! Use those as coaches, reviewers, improvement thinkers… and only very occasionally “firefighters”. Keep options open !
• TOC – Same thinking
• Cynefin – Same thinking
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LEAN RISK MANAGEMENT
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USE AVATARS FOR MANAGING LIQUIDITY & RISK
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LOW WIP ? NOT ALWAYS !
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LEAN RISK MANAGEMENT
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LEAN DECISION FILTER 45
Lean decision filter :
Value trumps flow Expedite at the expense of flow to maximize value
Flow trumps waste elimination Increase WIP to maintain flow even if this causes waste
Waste elimination trumps economies of scale Never pursue economies of scale, balance demand with throughput 45
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CHARACTERISTIC OF A LIQUID FINANCIAL MARKET
Tightness : Bid-Ask spread
Immediacy : How quick an order is filled Breadth : Ability to handle large orders
Depth : Processing orders at different prices
Resiliency : Ability of the market to swing back to normal or adjust after a surge of orders off the market or one large order that moves the price
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CHARACTERISTIC OF A LIQUID KANBAN
Tightness : Variance between customer expectations and probability of meeting it within current lead time capability (Due date performance)
Immediacy : Flow efficiency or waiting time until pull (Time spent blocked or in done column)
Breadth : Variety of types of work handled (Classes of service)
Depth : Variety of risks under management and depth of taxonomies
Resiliency : Ability of the market to recover to normal or adjust after a surge in orders breaking wip constraints or swarming on expedite lane
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CHARACTERISTIC OF A GOOD KANBAN METRIC
A good Pull liquidity metric measures the transaction volume per unit of time.
A usefull Lean metric is:
• Simple • Self generating• Relevant• Leading indicator
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LIQUIDITY = THOUGHPUT MEASUREMENT !
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TIGHTNESS – DUE DATE PERFORMANCE
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IMMEDIACY – FLOW EFFICIENCY Test
Ready
FH E
C A
I
GD
GYPB
DEMN
P1
AB
Customer Lead TimeWaiting Waiting WaitingWorking
IdeasDev
Ready5
Ongoing
Development Testing
Done3 35
UATReleaseReady
∞ ∞
WaitingWorking Working
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BREADTH – CLASSES OF SERVICE & SLA
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RESILIENCY - DEFERRED COMMITMENT
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LEAN RISK MANAGEMENT
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LEAN RISK MANAGEMENT 1. Blocker Analysis
2. Cost of Delay
3. Liquidity and real option theory
4. Taxonomies and radar graphs
5. When is discussion needed ?
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SCHEDULING RISK TAXONOMY
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PRODUCT LIFECYCLE RISK
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DEPTH – RISK TAXONOMIES
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LEAN RISK MANAGEMENT
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LEAN RISK MANAGEMENT
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LEAN RISK MANAGEMENT
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LEAN RISK MANAGEMENT
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INVESTING IN SAME RISK PROFILE IS BAD !
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LEAN RISK MANAGEMENT 1. Blocker Analysis
2. Cost of Delay
3. Liquidity and real option theory
4. Taxonomies and radar graphs
5. When is discussion needed ?
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RISK TAXONOMIES BASELINE & CONVERSATIONS
No talk needed !Let’s talk !
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Demand Shaping ThresholdDimension 1
Dimension 2
Dimension 3
Dimension 5
Dimension 4
DefinitelyDo
This
Demand shapingthreshold
Talk aboutthis one
DefinitelyDon’tThis
Each risk dimension represents a taxonomy of categories describing
a known risk.
Policy describes the category in each dimension at or
above which we wish to accept demand
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BAZARVOICE BASELINE & CONVERSATIONS
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RISK TAXONOMIES BASELINE & CONVERSATIONS
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RISK TAXONOMIES BASELINE & CONVERSATIONS
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RISK TAXONOMIES BASELINE & CONVERSATIONS
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RISK TAXONOMIES BASELINE & CONVERSATIONS
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RISK TAXONOMIES – SHAPING DEMAND
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RISK TAXONOMIES & CONVERSATIONS
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BACKUP SLIDES
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LINKS TO CONTENT OF THIS PRESENTATION
https://www.youtube.com/watch?v=YBPa0FE4hRs
https://www.youtube.com/watch?v=00Ha_oA_Jeo
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LEAN RISK MANAGEMENT – MORE LEAN STUFF
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LEAN RISK MANAGEMENT
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