Maturity or agility or …?

Maturity or agility or …? Juhani Anttila Venture Knowledgist Quality Integration, Helsinki, Finland juhani.anttila@telecon.fiwww.QualityIntegration.biz April, 2009 These pages are licensed underthe Creative Commons 3.0 License http://creativecommons.org/licenses/by/3.0/deed.en

Crosby, Philip (1979). Quality is Free (*) xxxx/19.1.2009/jan (*) a few pages

Capability Maturity Model Integrated (CMMI) Efficiency fulfilling specified requirements The CMMI a model of the maturity of the capability of business processes. A maturity model can be described as a structured collection of elements that describe certain aspects of maturity in an organization, and aids in the definition and understanding of an organization's processes. CMMI approach appreciates the use of ”Best practices”. (*) 3580x/19.11.2008/jan (*) 573 pages

Waterfall model There are various modified waterfall models with slight or major variations upon this process. (Ref.: Winston W. Royce 1970) 3579/19.11.2008/jan

Miten ymmärtää kypsyysajattelua? • Maturity: • the state of being mature • ripeness • full development • perfected condition Kypsyminen: • Jatkuva portaittainen kehittymismalli (*) Maturity model • Laatukäsitteistö rajattu • Based on best practices = past practices • Sertifiointi Arviointi • Suljetut ON/EI kriteerit Onko maturiteetti oikein tavoitteena? Tapahtuuko kehittyminen portaittaisesti? Eikö Best practice = Past practice? Mikä on suljettujen ennalta määriteltyjen yleiskriteerien dynamiikka? (*) Systematic, structured way to approach model-based process improvement one maturity/capability level at a time. Achieving each level ensures that an adequate process infrastructure has been laid as a foundation for the next stage. Achieving each maturity level ensures that an adequate improvement foundation has been laid for the next maturity level and allows for lasting, incremental improvement. A capability level 5 process is characterized as an optimizing process.The process is improved based on an understanding of the common causes of variation inherent in the process. The focus of an optimizing process is on continually improving the range of process performance through both incremental and innovative improvements. xxxx/8.4.2009/jan

Terminological nonconformity in the CMMI and ISO 9000 CMMI quality The ability of a set of inherent characteristics of a product, product component, or process to fulfill requirements of customers. requirement (1) A condition or capability needed by a user to solve a problem or achieve an objective. (2) A condition or capability that must be met or possessed by a product or product component to satisfy a contract, standard, specification, or other formally imposed documents. (3) A documented representation of a condition or capability as in (1) or (2). quality management ---- quality assurance A planned and systematic means for assuring management that the defined standards, practices, procedures, and methods of the process are applied. ISO9000 quality degree to which a set of inherent characteristicsfulfils requirements requirement need or expectation that is stated, generally implied or obligatory quality management coordinated activities to direct and control an organizationwith regard to quality quality assurance part of quality managementfocused on providing confidence that quality requirementswill be fulfilled xxxx/8.4.2009/jan

Business leaders’ key interest: How could sustainable success be possible in business in practice? Business leaders are interested in growth: • General conclusion from a recognized world-wide study (*): • Revenue growth is the primary driver behind the creation of shareholder value over the long-term. Value-building growth follows a specific pattern with common company-internal factors. Industry average Simple growers Value growers Industry average Revenue growth (%) Underperformers Profit seekers Market value growth (%) (*) A T Kearney 1729/8.9.2007/jan

Organizational development and growth Average Revenue growth Companies cannot maintain continuous growth simultaneously both in revenue and market value. However, the revenue growth is essential. Average Market value growth 1915/11.9.2007/jan

Transition phases in a transformation (*) Perceivable performance 7. INTEGRATION Confidence - New attitudes and behavior became part of behavioral repertoire 2. DENIAL Defensiveness - Retreat into false competence. Denial of need to change 6. SEARCH FOR MEANING Curiosity - Trying to understand how and why new behaviors are better. 3. INCOMPETENCE Anger, frustration and confusion - Awareness that change is necessary but unsure what to do. 5. TESTING Trying new approaches and coping with risk of failure (trepidation) 4. ACCEPTANCE OF REALITY Sadness - Letting go to past attitudes and behavior. Excitement - At prospect of improved performance 1. IMMOBILISATION Shock - Mismatch between expectations and reality Conflicts, decay, succumbing Time 3171/2.12.2008/jan (*) Ref.: Adams & al

Necessary emphases in modern quality management? Quality management  Quality of management • Integration: • Implementing effective / efficient and business-relevant quality principles and methodology embedded within organization’s normal activities of strategic and operational management • Responsiveness: • Being able to adjust quickly to suddenly altered external conditions, and to resume stable operation without undue delay • Innovation: • Striving continuously for new organization-dedicated innovative and unique solutions and encouraging various choices for quality management in different organizations. Dynamic and flexible business management Standard approach  An organization’s unique approach 3456x/2.3.2008/jan

Planning for the future: Hoshin (breakthrough) planning Business environment (Given) Past Future ”Is” ”Should” Mid-term sight Reflection, analysis Focus on Vital few Management process, business processes Last period’s management results Long-term sight Vision Facts Change plan (*) (What should be done in the next period) 1418/7.1.2007/jan (Ref.: Shiba) (*) Hoshin (breakthrough) plan

Business crises in turbulent business environments: “Authority without responsibility” • Typically business crises relate today to: • Conditions of instability or danger, as in social, economic, or political affairs • Unique situations that have reached difficult or dangerous culminating points • Times of great disagreement, uncertainty, suspense or suffering Today all these aspects are very typical and significant features of business environments to be considered by business managers. Prevailing and traditional quality management means have not a lot to help organizations in modern business environments. • Prof. Richard Sennett: Ever-mutable form of capitalism, “Mp3 Economy”: • Drastic changes in corporate culture wrought by downsizing, “re-orging”, and outsourcing • Appreciation of reality where one should continuously jump from task to another or at least have capability to continuous change • Erosion of certainty and the need to adapt to changing circumstances • Changes in work ethic, in our attitudes toward merit and talent, in public and private institutions (“specter of uselessness”). • Craftsmanship and getting the job right seen as negatively wasteful and obsessive. Business environments and society Speed Changes Agility Complexity Diversity Immaterialness Variety Problem Quality profession Time Crisis in quality management 3565/2.12.2008/jan

Modes of operation All business processes and activities consist of actions with three concurrent dimensions comprising different degrees of freedom and variety: • 1. Mechanistic • serial • automatic • accuracy • due order 3. Dynamic Complex, chaotic spontaneus responsive innovative virtual variative variable rules personified quantum leap 2. Organic complex, organized interacting actors networks concurrent communion Variety Diversity Degrees of freedom Operational and structural complexity 1754/27.1.2005/jan (Ref.: Legat)

Balance between process and structure AGILITY Activity Process (acting): Emergent, real- time, active, skilled, learned, open, alive MATURITY Stiffness of structure Structure (being): Planned, built, controlled, passive, trained, forcrd, closed, dead 3628x/3.1.2009/jan

Activities in complex responsive processes of relating All kinds of activities may exist in business processes. Innovation Creativity Debate “Zone of Complexity” Trial & Error Low Chaos Anarchy Political control - compromise Agreement Standards Guidance Monitoring Experimenting High Certainty High Low Appropriate management actions should be selected based on the degree of certainty and level of agreement on the issue in question. 3134/5.4.2006/jan (Ref.: Stacey, Ortner)

How to manage complex responsive processes of relating? Process # n • Elements for managing complex responsive processes of relating: • Identity of the actor(s): • The set of characteristics by which an item is definitively recognizable (e.g. a process plan) • The item: Process / Activity / Automatic actor / Person • Relationship of actors: • Level of agreement • Degree of certainty • Level of win / win • Communication between actors: • Open • Restricted • Closed • Fuzzy Relation- ship Communi- cation Process # m If the relating processes are not clearly identified (process plans), the situation falls into pieces of interacting process-internal actors, and even may develop towards chaos or anarchy. (Some of the relating processes may be hostile) 3135/21.4.2006/jan (Ref.: Ralph Stacey, Marian Naidoo)

Agility to respond volatile business realities • Agility: • a comprehensive response to the business challenges of profiting from rapidly changing, continually fragmenting, global markets for high-performance customer-configured goods and services • Agility attributes: • dynamic • context-specific • aggressively change-embracing • growth-oriented Agility versus maturity is a hot question of the modern business management. 1671/14.4.2007/jan (Ref.: Goldman, Nagel & Preiss)

Agility or Maturity? • Agility school versus Maturity school: • Individuals and interactions [Formal] processes and tools • Working solutions Comprehensive documentation • Customer collaboration Contract negotiation • Responding to change Following a plan • Which one does create the best value? 3212/2.2.2009/jan (Ref.: The Agility Manifesto)

Scrum methodology Scrum is an iterative incremental process of product development commonly used with agile development. Daily 15 min. standup project status meeting, ”scrum” 24 hours Product Backlog (Features assigned to sprint) • Roles in Scrum: • Pigs (committed): Product owner, ScrumMaster (facilitator), Team • Chickens (involved): Users, Stakeholders (customers, Vendors), Managers 1...4 weeks Sprint Backlog Sprint New developed product function- ality Prioritized product features defined by the customer 3581/15.10.2008/jan (Ref.: Takeuchi and Nonaka, 1986)

Breakthrough transformations as proposed by Dr. Shiba • Managerial actions: • Control (past) • Continual improvement (present) • Breakthrough (future) 3591/10.12.2008/jan

Transformation, a success factor for a sustained business success • In strategic development there is a need for a large-scale breakthrough change in performance of the organization and its products. • Transformation is a radical discontinuous change. Transformation means change of form, shape or appearance. • The Greek word metanoia may be more suitable than transformation. It means penitence, repentance, reorientation of one’s way of operate. Basically it needs a spiritual conversion. • Transformations are initiated and managed from the strategic (top management) level of organization. • Transformations do not happen spontaneously but by decisive actions. Perform- ance Transformation Now Time 3560/10.12.2008/jan (Ref.: Deming, Shiba)

Innovativeness in product realization • What is covered?: • Product characteristics • Product related processes Why? • For improving quality (degree to fulfill needs and expectations of the interested parties) • What is innovativeness about? New How Old Old New What 3589/20.12.2008/jan

Technology and innovation Technology: - processes by which an organization transforms labor, capital, and information into products (goods and services) to provide value for interested parties (stakeholders) (This concept of technology extends beyond engineering and manufacturing to encompass a range of marketing, investment, and managerial processes. It also includes quality management)) Innovation: - a change in one of the technologies 1983/20.1.2003/jan (Ref.: Christensen)

Sustaining versus disruptive technology Sustaining technologies: - technologies fostering improved product performance (Development of sustaining technology may be discontinuous or radical in character or of an incremental nature.) Disruptive technologies(discontinuous innovation): - technologies that result in worse product (technical) performance (at least in the near term) (Generally, disruptive technologies bring to market very different value proposition than had been available previously. Generally, disruptive technologies underperform established products in mainstream markets. But they have other features that a few customers value. Products based on disruptive technologies are typically cheaper, simpler, smaller, and more convenient to use.) 1984/20.12.2000/jan (Ref.: Christensen)

The impact of sustaining and disruptive technological innovations Perform- ance Progress due to sustaining technologies Performance demanded at the high end of the market Performance demanded at the low end of the market Disruptive technological innovation Time 1986/20.2.2006/jan (Ref.: Christensen)

How to solve the “Agility - Maturity Dilemma”? • Agility versus maturity is a hot question of the management and the quality management of dynamic organizations: • Agility means dynamic, context-specific, aggressively change-embracing, and growth-oriented issues. • Maturity means consistently continuously developed established and well-defined systems for management and operations. The both approaches are needed simultaneously, but the big question is how. Flexible and agile systematic approach is seen possible even from the quality point of view when understanding the underlying features of business dynamics and using new modern principles for business process management and advanced information technology. 2950/11.11.2004/jan

Lao Tsu (*): Tao-Te Ching,Poem #26: “Lightly strong” Solution to the maturity / agility dilemma: “Gravity is the root of lightness; stillness is the ruler of movement.Therefore a wise prince, marching the whole day, does not go far from his baggage wagons. Although he may have brilliant prospects to look at, he quietly remains in his proper place, indifferent to them. How should the lord of innumerable chariots carry himself lightly before the kingdom? If he do act lightly, he has lost his root; if he proceed to active movement, he will lose his throne.” 3366x/5.9.2007/jan (*) c. 600 B.C.E.

The Law of Requisite Variety (*) For any organization to be successful, a necessary and sufficient set of disciplines (knowing people) must be in play. Each of these contributes a language that will frame decisions and actions. The organization must also structure relationships between the disciplines. Valid organizational design means putting requisite variety into play. It means establishing relationships among the necessary and sufficient set of disciplines to appropriately frame the conversations, decisions, and actions of the organization. For appropriate regulation, the variety in the regulator must be greater than the variety in the system being regulated. In other words, a system can desplay something only to the extent that it has sufficient internal variety to represent it. As a system moves toward equilibrium, it tends to become increasingly efficient and insular, rejecting external input. To increase efficiencies, it seeks to reduce variety. Therefore, attempts to increase variety are likely to be misconstrued as inefficient or even as a failure to execute. (Ref.: Sun, The little grey book) (*) W.Ross Ashby, 1954 3622/2.2.2009/jan

Role of leadership and language in organizations An organization is a living organism. It is a set of conversations among people. Language is the defining environment in which an organization lives. It is how those in the system reach agreement. Language is a medium for organizational growth and change. Narrowing languageincreases efficiency. A common shared language helps the organization arrive at decisions more efficiently. Narrowing language increases ignorance. Constrained by a limited vocabulary, the organization becomes unable to adapt to fundamental changes in its environment. Unable to change, the organization eventually declines. Ignorant of our own ignorance, we cannot ask questions outside our own language experience. It is possible for an organization to learn and grow only if it creates conditions that help generatenew language. Using new language, an organization may create new paths to productivity, and regenerate itself. The conversations necessary for generating new opportunities come from outside the system, From the language that has a different history. This is often technically and intellectually demanding and, consequently, often dismissed. (Ref.: Sun, The little grey book) 3621/2.2.2009/jan

Scoring guidelines for AD items 2271/2.1.2002/jan

Maturity or agility or …?