Strategic Theme #1/5: The Lean Enterprise

[tl;dr Agile and lean concepts are core to any enterprise cultural transformational efforts, but need to extend beyond the realm of the IT function to ensure the desired strategic outcomes from a business perspective are achieved.]

Cultural and process transformation is high on the agenda for many large businesses, as this is (correctly) seen to be necessary to innovate and maintain agility.

However, such transformation is not limited to IT – it needs to extend to financial management, and risk, governance and compliance in order for IT to realise it’s full potential.

A lot of the thinking here is very well captured in the book ‘The Lean Enterprise: How High Performance Organisations Innovate at Scale’ by Humble, Moleskin & O’Reilly.

It covers key ideas such as:

  • extending agile/systems thinking and kaizen (continuous improvement) beyond the realms of IT into financial management, risk, governance and compliance;
  • differentiating exploration from exploitation from a project portfolio perspective (applying real-option theory to portfolio selection and project execution);
  • recognising and transforming the dominant corporate culture (pathological, bureaucratic or generative);
  • starting small and tolerating failure.

This material dovetails nicely with other thought-leading publications such as ‘The Phoenix Project’ (Kim et al) and ‘Continuous Delivery’ by Humble & Farley.

Other ‘lean’ best practices, such as Scaled Agile or LeSS (Large-scale scrum) also address these themes, although these do not attempt to bring the thinking into the non-IT domains of financial management and governance, etc, which (in my view) ignores a key driver for why IT processes in many large organisations are as broken as they are. Never-the-less, they all bring useful insights to the table and any one of them should be part of any transformational agenda.

Addressing complexity is something implicit in this topic: on its own, doing lots of experiments does nothing but create more complexity (even if they do temporarily add value). Systems thinking requires understanding what is no longer needed as much as what is needed (or, alternatively, what is strategic and what is commodity), and is key to preventing complexity from impeding innovation.

For now, I’m not convinced the topic of complexity management has been adequately addressed, but more on this as I dive deeper into this area.

The topic of ‘Lean Enterprise’ is more directly relevant to change management than it is to architecture. However, since architectures invariably follow Conway’s Law (which states that system designs follow the communication structures of organisations), how projects are run, and the level of collaboration established at the outset, can materially impact architectural outcomes, and this must be the starting point for major architectural change,

Strategic Theme #1/5: The Lean Enterprise