PPI SyEN 61 A2

 

Leadership Values and Behaviors in Lean Organizations

by

Rainer Grau

Digitec Galaxus AG

Version 2.0    December 10, 2018

Abstract

Lean and agility are recognized success factors of companies. In particular, when we consider the largest companies by market cap[1], we find organizations that have implemented agile and lean consistently from top management throughout the entire organization. Research concerning lean and agility identifies that the company´s culture and leadership[2] are important prerequisites to establishing lean thinking and agility.  An important question is: what concrete aspects of leadership support, foster, and consolidate change towards an agile and lean culture? This article discusses lean and agile principles and derived specific good practices and methods as building blocks for leadership values and behaviors in lean organizations

Email:              rg@juropera.com

 

Introduction

It is widely accepted that it is not possible to create or form a specific company culture by direct means and activities. A company culture emerges as result of behaviors, measures, actions, rules, and conditions cultivated over time that are executed and active within a human work system that is, by definition, a complex system. Members of management are, by definition, more prominent in companies than employees without management responsibilities. Therefore, members of management occupy a position of power, provide a leadership role, and play an important part in the process of cultural change.

Leadership in lean and agile companies implies that members of management have to adapt behaviors and have to apply new or modified measures that support cultural change. This article discusses lean and agile principles and derived specific good practices and methods as building blocks for leadership values and behaviors in lean organizations.

It is important to point out that selection and implementation of good practices and methods does not by itself ensure success. The results from using good practices and methods always depends on the context of the specific situation.

Needs, Values, Principles and Practices

Starting with the agile manifesto [3], continuing with the extreme programming movement by Kent Beck [4], and supported and developed towards the spine model  [5], the agile community has evolved an intellectual model that defines the concepts of needs, values, principles, and practices. The spine model explains this intellectual model as follows (citation from http://spinemodel.info/explanation/introduction/):

“Once you understand the reason [the human work] system exists in the first place, and the reason you want to be a part of the system (Needs), you can decide what to optimize for (Values). Once you have decided what you are optimizing for, you can decide what ecological levers are going to get you there (Principles). Once you have that, then decide how you are going to do it (Practices). And once you have done that, decide if any refinement is needed (Tools).”

Every specific implementation of this intellectual model of needs, values, principles, practices, and tools depends on the specific human work system. That is, every human work system will have its own specific needs, values, principles, practices, and tools. This is independent of agile or lean approaches and is valid for any human work system.

Over time a very stable and consistent set of values, principles, practices, and tools has been observed in practice that support agile and lean thinking. While this is not a fixed and officially acknowledged set, nevertheless it can be treated as common agreement in the lean and agile community.

Examples of values sets can be found in process frameworks including Scrum [18] (Focus, Courage, Openness, Commitment, Respect), SAFe [17] (Alignment, Code Quality, Transparency, Program Execution), and Extreme Programming (Simplicity, Communication, Feedback, Respect, Courage). Interesting as well are the value definitions of companies that identify themselves as agile and lean. For example, the official values of Google are:

  • We want to work with great people
  • Technology innovation is our lifeblood
  • Working at Google is fun
  • Be actively involved; you are Google
  • Don’t take success for granted
  • Do the right thing; don’t be evil
  • Earn customer and user loyalty and respect every day
  • Sustainable long-term growth and profitability are key to our success
  • Google cares about and supports the communities where we work and live

Based on such values, we can identify a relevant and consistent subset of values that address agile and lean thinking. In this article, we refer to this set as the core agile and lean value set (or just core value set) as including the following:

  • Focus
  • Courage
  • Openness
  • Commitment
  • Respect
  • Communication
  • Feedback
  • Transparency

The discussion in this article is based on these values. Values do not suggest advice or recommendations for specific behaviors. Rather, values “…are the qualities we believe we should optimize for in order to meet the Needs [of the human work system]. They can be used as measuring sticks when deciding how to apply Principles”. (Citation from the Spine Model)

To keep focus in this article, the values openness, respect, and communication are explicitly omitted.

Company Values and Their Relationship to Leadership Values and Behaviors

An active and living core value set is a desired property of an agile and lean company. As stated above, there are no direct measures to create these values. There is no guarantee that a specific measure will create or improve directly a specific value. Instead, a consistent set of measures influences the evolution of the value as a whole. The reason is that a human work system is a complex system with no direct relation between a measure and an effect. Following the terminology of the spine model, “measures” is a synonym for the term “good practices”. In the following discussion, we will use the term good practices.

It is the responsibility of the leading individuals in a company to agree upon, implement, support, and anchor good practices. The term “leading individuals” is selected intentionally. Leading individuals often are members of management, but not all leading persons are members of management. Leading persons provide examples, engaging in change in an outstanding way. Leadership is executed by leading individuals.

In the situation in which a company is in an active transformation towards agile and lean, the transformation is an organizational change project driven by a change team provided by leading individuals in the company. In this case, change is addressed explicitly. Leadership is more important and relevant when a company claims itself to be agile or the change project officially is declared as finished successfully. An ongoing investment into the company culture is required to anchor, improve, and preserve the current state.

Leadership drives and anchors agile and lean values beyond explicit change activities as part of the daily work. Leadership in agile and lean organizations is the engagement by leading individuals to agree upon, implement, support, and anchor good practices that foster agility and lean as part of the daily work. Accordingly, we can state:

Leadership values are identical to the agile and lean core values set. Commitment to live and represent the agile and lean core values is an extra responsibility of individuals having a leadership role in an organization.

Leadership behavior at its highest level is the engagement by leading individuals to agree upon, implement, support, and anchor good practices that foster agility and lean as part of the daily work based on intrinsic motivation.

Leadership behavior includes setting a positive example.

Based on the core value set, the most important value in leadership is commitment; commitment to invest continually in anchoring the core values in the organization.

From Core Values to Good Practices

This article focusses on leadership behavior based on the core values: Focus, Courage, Commitment, Feedback, and Transparency. As stated above leadership behavior is the application of specific good practices as invest into core values.

Following the idea of the spine model, principles follow values as a set of general beliefs one can use to effect a desired change to a system. The discussion of principles behind the core values goes beyond the scope of this article. For more information about principles, we refer you to the spine model. This article focusses on leadership behavior as recommendations concerning what good practices in the form of methods and techniques that support one or more of the core values. The following sections discuss good practices to foster specific values.

Leadership Behaviors that Foster Focus

Maintaining Focus is one of the most difficult values. Focus is continually in conflict with ambitious company goals. Ambitious company goals strive to reach as many goals in a given period of time as possible. A typical error is to start too many activities simultaneously. Task switching and reducing the quality of the outcomes, resulting in future rework, are typical effects of this behavior[3].

Leadership behavior strives to limit the work in progress (WIP) in the system. Ideally every employee and every team in an organization is actively working on not more than two distinct work packages (project, business epic, activity, whatever term a company uses) at one time. Kanban[4] systems support this behavior. Visual Kanban boards for teams and individuals are a technique that allows adaptation of the work flow towards a continuous flow with the least amount of waste in human work systems. Requirements work packages should be as small as possible. A principle behind this is to treat every work package as a minimum viable product (MVP)[5].

The second important behavior is to establish a pull system instead of a push system. Capacity consumption and planning is delegated to the teams. Teams pull work as soon as they finish a work package according to a well-defined Kanban work in progress limit. To establish this behavior, management support is essential. A typical management error is to push work into the system assuming this will encourage progress.

WIP limit and pull are the most important good practices to be supported by leadership. This includes 1) Delegating capacity planning responsibility to teams to optimize team work; and 2) Balancing teams with the objective of minimizing the number of work in progress (WIP) items in the entire human work system.

In summary, recommended good leadership practices in to foster focus are:

  • Restrict work in progress (WIP) for teams and individuals to the minimal possible size. Ideally, every employee and every team should be actively working on not more than two distinct work packages.
  • Work packages are as small as possible to establish a continuous work flow instead of a sequence of activities.
  • Establish the human work system as a continuous flow. Any activities (meetings, planning, decision making) are aligned and synchronized along this continuous flow.
  • Teams and individuals pull work packages according to their WIP limit.

Leadership Behaviors that Foster Courage

Courage is often communicated by management and as often it is misused. An encouraged employee decides to experiment with solutions or processes that are not covered by or are explicitly against company rules. Specific (non-agile) company cultures punish misbehavior, for example in employee performance ratings, or misuse this behavior for peer blaming because of potential carrier options.

The most important leadership behavior to foster courage is the principle behind a living failure culture. A living failure culture analyzes a failure; it identifies the root cause and learns by defining corrective action. Failures are treated as opportunities to learn while minimizing the number of failures within the human work system.

To foster courage, a core good practice is to set a good example, i.e., communicating one’s own failures in an active and transparent way including executing actions to analyze and learn. Specific actions to analyze a failure are retrospectives. Retrospective techniques are well known and documented[6]. Concrete actions are manifold. One type of action is offering training and education options, either external or prepared and executed internally. For internal training and education establishing and fostering communities of practices (CoP) are a good practice as recommended by the Large Enterprise Scaled Scrum Framework LeSS[7].

Another good practice is to establish an on-employee level exchange with other companies on level of principles and good practices. Community of practices are a perfect base to establish and foster exchange under companies.

In summary, recommended good leadership practices to foster courage are:

  • Leaders share their own failures in an active and transparent way, including executing actions to analyze and learn from failures.
  • Providing training and education options.
  • Establishing and fostering communities of practices (synonym: guilds).
  • Establishing and fostering external out of company exchanges concerning principles and good practices.

Leadership Behaviors that Fostering Commitment

In many companies, one of the most discussed topics is the “gap”. Gaps are recognized and identified in many manifestations, for example, the gap between business and IT, the gap between management and the work force, the gap between goals and capabilities, the gap between project portfolio and available capacity, and many others.

A gap is a symptom for missing feedback (→ see section feedback), transparency (→ see section transparency) and call for action. An important question for leadership to answer is how to design a call for action. Call for action comes in two varieties, extrinsic and intrinsic. Agile and lean communities state that intrinsic motivation (=call for action) is the most important driver for a human being to do something. Research in Psychology and Neuroscience observe a well-set balance between extrinsic and intrinsic motivation as a key driver[8]. Based on these observations, principles and specific good practices can be derived.

A well-agreed principle is to work with vision and mission statements. The problem is to communicate, align, and bind vision and mission statements to specific activities at the employee level. Feedback and transparency are values that support disseminating vision and mission statements throughout an organization. Feedback and transparency are required, but in many cases, not sufficient. Additional activities are required to represent and communicate vision and mission throughout the organization in the form of specific guidelines for a target audience (i.e., an organizational unit).

One principle for such activities is to communicate on eye-level. Members of the management and leading individual have to offer a relationship based on respect and eye-level. A relationship based on respect and eye-level communication fosters a mutual understanding of the needs, a feedback culture based on openness and transparency, and the respect of the vis-à-vis. These are enablers that create intrinsic and extrinsic motivation depending of the content of communication. Eye-level communication is the means to close gaps. The content of the communication is the mechanism to create the well-set balance of extrinsic and intrinsic motivation.

In summary, recommended good leadership practices to foster commitment through communication on eye-level are:

  • Establish a regular One-day-with-X event. An arbitrarily selected employee accompanies a leading individual (or manager) one day in all her activities and vice versa.
  • Strategic development invites employees from all organization units and at all levels of hierarchy.
  • Top management provides a regular vision and mission roadshow including Q&A sessions for all departments and employees on a half year or even quarterly basis.
  • Official company-wide chat sessions with leading individuals or managers on strategy, vision, mission, values, principles, or even specific projects.
  • Leading individuals or managers work in staged activities at the employee level for one or more days – for example, as cashier in a retail shop, or as a bank branch office with direct customer contact.

Leadership Behaviors that Foster Feedback

Feedback is a well-defined and established value. Principles are found for example in the agile manifesto (“At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly”), XP (“Rapid Feedback”) or in queueing theory (“Fast feedback enables smaller queues; Use fast feedback to make learning faster and more efficient; Whenever possible make feedback local”).

Feedback has distinct dimensions. Feedback dimensions include the created customer value, the (professional excellence of the) development process, the personal engagement, and others. It is the responsibility of management to establish a holistic feedback system that addresses the most important feedback dimensions. Transparency (→ see section transparency) is a required prerequisite to establish a holistic feedback system. Leadership behavior is the communicated desire to receive open and transparent feedback and to apply means to demonstrate that open and transparent feedback is desired on a regular basis. Concrete actions are then to guide and coach teams to define, establish, and execute feedback activities in a regular cadence. Specific good practices include retrospectives in different forms and for different actions, and teams providing feedback on S.M.A.R.T.[9] goals.

In addition to feedback concerning organization development, feedback on personal development is as important. Agile organizations distinguish between team development and personal development. Team development addresses organization goals to implement vision and mission (→ see section commitment). Personal development addresses capabilities and competences of individuals in areas such as self-competences (self-discipline, flexibility, autonomy, professional education…), social competences (communication, cooperation, conflict behavior …) or leadership competences (delegation, coaching, responsibility, alignment, setting a good example). Core principles in leadership for personal development are decoupling of personal development from the annual personal review process and a feedback process that includes 360-degree feedback elements.

Over all good practices for feedback exist on many different levels and address different aspects in an organization. Good practices strive to establish a holistic feedback system that incorporates all levels and aspects in a sufficient manner.

Recommended good leadership practices to foster feedback include:

  • Invest into (→ see section transparency) and (→ see section commitment)
  • Require feedback for yourself on a regular (institutionalized) basis to provide an example and to communicate feedback results in a natural way.
  • Establish coaching for teams to support in the definition of S.M.A.R.T. goals.
  • Establish an active retrospective culture by demanding retrospectives for concrete actions, projects, or aspects.
  • Invest in personal development in cooperation with the human resource department (perhaps better named the human development department).
  • Decouple personal development from the wage and salary process
  • Experiment and strive for 360-degree feedback as the most important element in personal development.

Leadership Behaviors that Foster Transparency

The traditional behavior in companies is to allow access to only that information required to execute all activities as defined by a specific job description. For example, a customer service agent has access to information that is required to answer customer calls and to get feedback about her performance (calls per hour) and her call quality (customer satisfaction feedback). This behavior often results in tunnel vision, a limited view on vision and mission of the organization and in finger-pointing to collaborating organizational units in the event of problems.

An agile and lean principle to foster transparency is to allow access to as much information as possible to every individual in the organization. Ideally, restriction exists only where compliance or legal aspects apply or where the objective risk of damage or loss is extreme. In many companies the subjective risk is taken as the rationale to hide information. The internal publishing – for example – of information about the realization of a new and competitive feature offered to customers is a typical case for a subjective risk. Google for example keeps all employees informed about a new feature as soon as possible and trusts employees not to communicate externally before an agreed point in time.

This behavior is even harder to implement within an organization in the area of performance indicators. Performance indicators are typically used to rate the performance of a team or an individual. A lean and agile interpretation of performance indicators is the valuation of the organizational power, capability, and ability. Leadership in respect to performance indicators motivates every employee and every team to employ performance indicators as benchmarks against competition or an organizations goal and deriving actions to improve the human work system towards the benchmarks. In this way heuristic thinking, an “optimize the whole” thinking is supported, and a tunnel vision or limited view attitude avoided.

This transparency includes two qualities: 1) to allow access to as much information as possible to every individual in an organization, and 2) to establish a mindset to work positively with the information, i.e., to utilize the information as benchmark of the current state and an opportunity to identify options for improvement of this state aligned to vision and mission of the organization, rather than to harm the organization.

Recommended good leadership practices to foster transparency include:

  • Clearly define the set of limitations that provide restricted access. Clarify why any specific information unit is under restricted access.
  • Define and communicate benchmarks against competition or derived from company vision and mission (in the form of S.M.A.R.T. goals)
  • Delegate the development of performance indicators to teams and support the definition performance indicators aligned to S.M.A.R.T. goals.
  • Give access to the reporting system to all staff members.
  • Establish behaviors as listed under “commitment”.

Summary

It is widely accepted that it is not possible to create or form a company culture by direct means and actions. A company culture emerges as the result of behaviors, measures, actions, rules, and conditions that are executed and active within a human work system that is, by definition, a complex system.

It is also widely accepted that leadership behavior influences company culture. This article identifies behaviors that strive to comprise a company culture with agile and lean thinking. The starting point is the discussion of needs, values, principles, and practices as defined in the spine model. A small set of relevant core values is identified as the desired properties of an agile and lean company. From this core value set, the article identifies and discusses specific leadership behaviors and good practices that apply the values in action.

Essential is the finding that these behaviors are interrelated. It is misleading to select a single good practice and to expect a specific impact as effect. It is as well a property of an organization to select an appropriate set of good practices and to experiment with different combinations of good practices. Feedback concerning company culture is essential to observe whether the applied good practices influence company culture as desired. A core leadership behavior is to make all this happen.

List of Acronyms Used in this Paper

Acronym                                             Explanation

CEO                                                     Chief Executive Officer

WIP                                                      work in progress

SAFe                                                    the Scaled Agile Framework

MVP                                                     minimum viable product

MMP                                                    minimum marketable product

CoP                                                      community of practice (or guild)

Intrinsic motivation                              people’s spontaneous tendencies to be curious and interested

Extrinsic motivation                             when an activity is done in order to attain some separable outcome

S.M.A.R.T.                                              Acronym for specific, measurable, achievable, results-focused, and time-bound

Acknowledgements

A sincere thank you to SyEN Editor Dr. Ralph Young for his extensive and very helpful collaboration with me.

References

[1] Chart: The Largest Companies by Market Cap Over 15 Years. http://www.visualcapitalist.com/chart-largest-companies-market-cap-15-years/. Copyright by Visual Capitalist.

[2] Al-Najem, Mohamad, Dr. Hom Dhakal, and Professor Nick Bennett. “The Role of Culture and Leadership in Lean Transformation: A Review and Assessment Model.” International Journal of Lean Thinking, Volume 3, Issue Number 1, 1 Jun 2012, Pages 119-138.

[3] The Agile Manifesto, http://agilemanifesto.org/.

[4] Beck, Kent and Cynthia Andres. Extreme Programming Explained: Embrace Change, Addison-Wesley; 2nd edition (November 16, 2004), ISBN-13: 978-0321278654.

[5] Spine Model, http://spinemodel.info/, © 2017 Spine Model is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.

[6] Reinersten, Donald G. The Principles of Product Development Flow. Celeritas Publishing, 29 May 2009, ISBN-13: 978-1935401001.

[7] Ries, Eric, The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, Publisher: Currency, 17 Oct 2017, ISBN-13: 978-1524762407.

[8] The Large Enterprise Scaled Scrum Framework. https://less.works/, © 2014 ~ 2017 The LeSS Company B.V. All Rights Reserved.

[9] Lean Leadership of Senior Management, Research Paper, OPX-Institut, BTW: NL8530.24.418B01. Available at http://www.vanassen.info/wp-content/uploads/Research-paper-Lean-Leadership-of-Senior-Management.pdf.

[10] Larman, Craig and Bas Vodde. Scaling Lean and Agile Development. Addison Wesley, 8 Dec 2008. ISBN-13: 978-0321480965.

[11] Ryan, Richard M. and Edward L. Deci, Intrinsic and Extrinsic Motivations: Classic Definitions and New Directions, University of Rochester, Contemporary Educational Psychology 25, 54–67 (2000).

[12] Di Domenico, Stefano I. and Richard M. Ryan. The Emerging Neuroscience of Intrinsic Motivation: A New Frontier in Self-Determination Research, Frontiers Human Neuroscience, 24 March 2017. Available athttps://doi.org/10.3389/fnhum.2017.00145

[13] Ambler, Scott. Disciplined Agile Delivery. IBM Press, 23 May 2012. ISBN-13: 978-0132810135.

[14] Appelo, Jurgen. Management 3.0. Addison Wesley, 28 Dec 2010. ISBN-13: 978-0321712479.

[15] Pflaeging, Niels. Organize for Complexity: How to Get Life Back Into Work to Build the High-Performance Organization. Betacodex Publishing, 19 March 2014. ISBN-13: 978-0991537600.

[16] Strathausen, Roger. Leading When You’re Not the Boss: How to Get Things Done in Complex Corporate Cultures. 1st ed. Edition. Apress. ISBN-13: 978-1484217474.

[17] SCALED AGILE, INC, http://www.scaledagileframework.com/, Copyright © 2010-2017 Scaled Agile, Inc.

[18] Schwaber, Ken, Agile Software Development with Scrum, Prentice Hall; (18 Feb 2002)

Language: English, ISBN-13: 978-0130676344.

[19] Ester Derby, Diana Larsen, and Ken Schwaber, Agile Retrospectives: Making Good Teams Great, Pragmatic Bookshelf, August 5, 2006; ISBN-13: 978-0977616640

[20] Luis Goncalves and Ben Linders, Getting Value out of Agile Retrospectives – A Toolbox of Retrospective Exercises, June 4, 2014; ISBN-13: 978-1304789624

[21] Norman L. Kerth, Project Retrospectives: A Handbook for Team Reviews, Dorset House, February 1, 2001, ISBN-13: 978-0932633446

Footnotes

[1] See [1]. http://www.visualcapitalist.com/chart-largest-companies-market-cap-15-years/

[2] See [2].

[3] For more information see [6].

[4] Kanban is a lean method to visualize and optimize flow in a system.

[5] For more information see [7].

[6] For more information see [19], [20] and [21]

[7] See [8]. https://less.works/less/framework/index.html

[8] See [11] and [12].

[9] S.M.A.R.T. goals are specific, measurable, achievable, results-focused, and time-bound

 

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