Result-oriented organizations should operate on clear and simple performance indicators. That is the core message of American Scrum Founder Jeff Sutherland, in conversation with Xebia's Serge Beaumont, a certified Scrum@Scale trainer. Sutherland explains how optimized production helps bring the right products to market at the lowest cost.
Beaumont: Performance management is all about quantifying results in order to improve them. Focus on turnover, profit, and the share price is a very business-oriented perspective, Can Agile and Scrum also be used to achieve more idealistic goals?
Sutherland: Taking the financial figures as a starting point might be a slightly different approach to that of many Scrum evangelists, but it all comes down to results. I have quite some experience in the risk capital sector. If you want your company to raise $20 million, you have to be able to show the financial rewards. That will allow you to raise all the money you think you need to get these benefits.
Scrum helps the teams involved make these rewards happen. It makes it possible to double, triple or even quadruple the production. After that, you need Scrum to increase the revenues per unit by some factor. Combined, this increases your turnover by at least four hundred percent. This is the kind of value creation investors are generally very interested in. They are looking for Scrum. It also makes the people in the organization happier, which leads to an additional increase in productivity.
Beaumont: I imagine things work slightly differently for non-profit organizations. Sometimes Scrum isn’t so much about turnover, but about happier people, or making it easier to enter an order. Have you ever used different indicators?
Sutherland: Absolutely. In health care, nurses and doctors are challenged to provide better care, to save lives and improve the quality of life for patients. As Scrum Inc., we are currently working on a project at a surgery center in America, where we have optimized the utilization of their 42 operating theatres. They are now able to perform an additional 50-100 operations a day, which has a tremendous positive impact on patient welfare, as well as on the hospital's turnover.
Another example is the World Bank. That bank is, in fact, a group of financial institutions that are committed to stimulating economic growth in developing countries. There are giant sums of money involved. Nevertheless, there was no real oversight. The World Bank actually invested the available money fairly arbitrarily. Nobody told them what was or wasn’t effective. They asked us what improving performance could mean for them. We simply looked at the motivations behind their investments. For example, the degree of poverty or the rate of death in a country or region. Once you have those initial values, you are able to quantify decreasing poverty or improved mortality rates.
Beaumont: So it comes down to maximizing the organization’s
objectives and expressing them in simple indicators, which you can monitor?
Sutherland: Alternatively you can look at costs. When I started with Scrum, I had a hunch that teams at optimal performance could be ten times faster. In that scenario, the product can be manufactured at just ten percent of its original price. This makes the product—let’s say, a pair of running shoes—much more accessible to those people who, so far, might have been interested but weren’t able to afford them. As such, a lower price has a positive impact on society’s level of well-being.
Beaumont: The revised version of the Scrum at Scale Guide was published recently. Are there fundamental differences between the Scrum we’re familiar with and a scaled-up version? Does this create new challenges when it comes to quantifiable results? Does this, for example, require the use of different indicators?
Sutherland: The challenge of scaling up is captured in Brooks’ Law: “Adding human resources to a late project makes it later.” Most Scaled Agile frameworks do not solve this problem. Scrum at Scale does address this issue. People require a measure of structure to work together. There also has to be a minimum ruleset to prevent things from slowing down. That is one of the central themes of Scrum at Scale: coordinating the elements so that they come together. In other words, ensuring that many teams collaborate towards a shared objective, without being slowed down by an excess of overhead.
Beaumont: So when scaling up, the core principles for the highest returns and values remain unchanged—it just requires a different implementation to achieve the intended results?
Sutherland: That's right. And the bigger the project, the more important Scrum at Scale becomes. Various examples from healthcare, public services, industry, and other sectors show that simply expanding the teams and increasing the budgets doesn’t always bring
the desired results.
Beaumont: As before, you initially focus on production increases, through acceleration and optimization of processes. After which you primarily concentrate on commercial value?
Sutherland: Investors always value a streamlined production process. Once that’s up and running, you are able to invest time, money and attention in sales and marketing. But if production stagnates, it’s impossible to bring the right product to market at the lowest cost and at the best price.