Better Software - November 2007 - (Page 22)

between this and traditional measurement systems is that, for outcomes, the fierce link to quickly outdated plans or budgets is broken and the output measures are geared toward learning and improving by looking at relative performance across teams rather than performance against a plan. Two key objectives of APMS are: 1. To focus any enterprise group (team, department, division, or company) on a set of desired strategic or tactical outcomes (effectiveness) 2. To encourage those groups to perform at high measures of output (efficiency) mean we abandon measurement or completely replace existing systems, but it does mean that we have to adjust our thinking about what constitutes “good performance.” An example is how we traditionally think about measuring project management performance using the “iron triangle” of scope, schedule, and cost. Success is defined as having a project meet all its requirements and delivered by the planned time, within the budgeted cost. In many companies, requirements are “fixed” and project managers are forced to be maniacal about cost and budget—often to the detriment of delivering value. When management has rigid expecta- Rob Austin’s views on performance measurement in organizations described in Measuring and Managing Performance in Organizations. Budgeting systems in organizations In Beyond Budgeting, Hope and Fraser outline a measurement system and management style that fit with an agile enterprise. Although Hope and Fraser discuss issues beyond budgeting, they start with the issues surrounding traditional budgeting systems in organizations: Budgets have since been hijacked by a generation of financial engineers who have used them as remote control devices to “manage by the numbers.” They have turned budgets into fixed performance contracts that force managers at all levels to commit to delivering specified financial outcomes, even though many of the variables underpinning those outcomes are beyond their control. I would argue that the “generation of financial engineers” has been paralleled by a generation of project administrators who feed on the same ideas and have created a culture of conformance-to-plan performance measurement. Both financial and project management measurement systems suffer from the same problems: • They are cumbersome and expensive. We spend time and money on excruciatingly detailed plans based on a fuzzy understanding of the project and significant uncertainty about the future. • They are out of kilter with the competitive environment. These fixed budgets or plans are out of kilter with the competitive environment because things change and assumptions are invalidated. • “Gaming the numbers” is rampant. In fixed-performance contracts, budgeting and estimating are often hog-tied by politics, and their relationship to real performance remains tenuous at best. The solution to these problems with The Predictability Paradox Measurement issues are complex because the business community wants its organizations not only mobile, agile, flexible, and adaptive but also predictable and reliable. There seems to be a core disconnect here; pick one: agility or predictability. In fact, companies need both, and herein lies the dilemma. The business world requires agility to be successful, but many companies are mired in predictability in organizational structure, management style, and performance measurement systems. This could be called the “predictability paradox.” It is a fantasy to act as if we can continue to measure performance in traditional ways and also have flexible, adaptive organizations. This doesn’t 22 tions, project teams are actually discouraged from being flexible. The narrower the tolerance to variation, the greater the restrictions on adaptive behavior. The wider the tolerance to variation, the fewer the restrictions on adaptive behavior—within some limits. Success, particularly today, is a function of a team’s ability to react to change, not its ability to plan and follow that plan. How teams are measured affects their adaptiveness. Adaptation—rather than adherence—brings success. Measurement Concepts In looking for concepts on which to base an adaptive management system, two have proven to be particularly useful: the concepts described by Jeremy Hope and Robin Fraser in Beyond Budgeting and www.StickyMinds.com BETTER SOFTWARE NOVEMBER 2007 http://www.StickyMinds.com

Table of Contents Feed for the Digital Edition of Better Software - November 2007

Better Software - November 2007 Contents MarkYour Calendar Technically Speaking What’s Happening @StickyMinds.com Code Craft Test Connection Management Chronicles The Measure of a Management System Behind the Scenes A Story About User Stories and Test-Driven Development Product Announcements The Last Word Ad Index

Better Software - November 2007

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