An organization’s agile leadership team reached out to me to review their agile transformation approach. Their Senior VP who was leading the organization wanted their software development to be state-of-the-art. They reasoned that agile development was state-of-the-art, so a transformation initiative was underway to adopt agile development methods. They had experienced agilists leading the transformation effort with a well constructed, long-term approach. We spent time together every other Friday to discuss various issues and concerns raised as they proceeded forward.
One day a business analyst in the organization reached out to me asking how I would answer the Senior VP’s question regarding how other organizations calculated ROI of an agile transformation. Great question. I should have responded with ‘Yacht racing!’ as in the America’s Cup Race yacht race. I wasn’t as pithy at that time.
Why ‘Yacht racing!’? Not that I’m into yacht racing. I sail a 16 foot, center-board, Vanguard 420 sailboat on small lakes. Oceans are too big for my sailing abilities. I have a general interest in the America’s Cup yacht racing tournament. As you may be aware, the racing world was in shock when 1988 Dennis Connor and the San Diego Yacht Club responded to a challenge race with a multihull catamaran. This started the monohull vs multihull design innovation race. Near 2010, yacht racing took another turn as hydrofoils and rigid sails were added to the design, doubling racing speeds. Even today, yacht designs are changing as they add dynamic hydrofoils to monohull yacht racing akin to a shovel-snouted lizard lifting their legs to cool off. Each America’s Cup, yacht racing design teams have to accept the defending team’s yacht design terms otherwise they don’t race.
Equally, agile development methods can be key to how certain markets operate. For example, a leading micro-services, REST-API, as-a-service, DevOps offering in the customer relationship management (CRM) space, would likely use mature agile development methods to constantly release a stream of customer value while staying always-in-production. To participate in the same market as our mythical CRM as-as-Service offering, competitors would likely have to match the leader’s capabilities and innovate better, faster and smarter to take market share. Agile development methods are table stakes to participate in the market.
Let’s assume that before we undergo a transformation, that we’re a capable competitor in our market using reasonably mature traditional development methods (waterfall, spiral, sequential, etc). What are the costs of a transformation? New organization, new decision making methods, new development methods, new validation methods, new roles, new leadership behaviors, new architecture, and new delivery methods are just a few costs to incur. However, the highest cost items are time and talent. My estimate is that an agile transition will take on the order of 3 to 5 years from start to maturity and will yield, at least, a 20% turnover in key, talented people.
Under what circumstances does something this costly merit consideration? I can only think of two circumstances. The first is we want to disrupt the market before our competitors disrupt the market, like Dennis Connor’s move to multihull yachts did for the America’s Cup race. The other is that our market has been disrupted and we are forced to follow the new leader. These are big gambles and require strategic consideration, investment and commitment.
Let’s head back to ROI of the ‘desire to be state-of-the-art’ reason for going with an agile transformation. Both traditional and agile development methods can be state-of-the-art, in their own way, and deliver market-leading customer value. The assumption that a development methodology is only state-of-the-art if it is an agile development method is incorrect. From my experience and reasoning (that’s another series of blog posts to be written), the difference in customer delivered quality between traditional and agile methods operating at full maturity is relatively small. With the cost of an agile transition in effort, time and talent being extremely high, the ROI is low when shifting from one state-of-the-art method to another is the sole benefit.
What’s much more critical is when the market is defined by agile development characteristics. For example, in our mythical CRM market leader described above. This fictional CRM market, micro-services, REST-API, as-a-service, DevOps, constant stream of customer value and staying always-in-production are aligned with agile development methods. Hence, even with state-of-the-art traditional methods, market participation and leadership would be extremely difficult without a transition to agile development methods.
If an agile transformation won’t help you redefine your market, making improvements to your traditional development capabilities will likely deliver better returns.
Why do an agile transformation? Remember Yacht racing. Be the winner in applying agile development methods in your market.
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