Adaptive Performance Management for Agile Enterprises

Jim Highsmith (Cutter Consortium)

Talking Heads · Leadership

Thursday, 08:30, 1 hour 30 minutes | Grand Ballroom North

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In a 2006 Cutter report, Helen Pukszta, wrote, “I recently asked a colleague whether he would prefer to deliver a project somewhat late and overbudget but rich with business benefits or one that is on time and underbudget but of scant value to the business. He thought it was a tough call, and then went for the on-time scenario. Delivering on time and within budget is part of his IT department's performance metrics. Chasing after the elusive business value, over which he thought he had little control anyway, is not.” If we are ultimately to gain the benefits of agile project management and development, if we are ultimately to grow truly agile, innovative organizations, then, as the above stories show, we will have to alter our performance management systems. Having a “system” that leads managers, and others, into valuing “conformance to plan” while delivering “scant business value” will seriously impede agility, whether in projects or the entire enterprise. Conforming to plans is a budget-driven mentality—a mentality in which the budget, or plan, is sacrosanct. Never mind that the budget is months out of date and the competitive situation has changed three times since the budget was developed. This tutorial explores the concepts and practices of one solution to the “conformance to plan” mentality at an enterprise level, an Adaptive Performance Management System (APMS) that has two key objectives: · To focus any enterprise group (team, project team, department, division, or company) on a set of desired strategic or tactical outcomes. · To encourage those groups (project teams) to perform at a high level. To make the transition from a few agile project teams in an organization to a truly agile organization performance management systems must be overhauled. This tutorial addresses three measurement ideas critical to creating an adaptive organization: · First, We must acknowledge that our performance measurement system impacts agility. · Second, We must alter our obsession with time to an obsession for customer value; · Third, We must separate the project performance management system from the team performance management system. The tutorial looks at two conceptual bases on which to base this adaptive measurement system—Beyond Budgeting from Jeremy Hope and Robin Fraser and Rob Austin’s views on performance measurement in organizations. Both have a distinctly agile or adaptive perspective and both deal with measurement systems in general, not just software project management. In Beyond Budgeting: How Managers Can Break Free from the Annual Performance Trap Jeremy Hope and Robin Fraser outline a measurement system, and in fact an adaptive, decentralized management style, that fits with an adaptive, agile enterprise. It is unrealistic to assume that agility at lower levels in the organization can be fully implemented without a change, at the very top of an enterprise, in how performance is measured. Performance measurement and management has proven to be much more difficult than people expect. Rob Austin’s Measuring and Managing Performance in Organizations , a sobering look into why measurement systems can go so awry. Measurement “systems” are difficult, according to Austin, because “unlike mechanisms and organisms, organizations have subcomponents that realize they are being measured.” In his introduction, Austin states that “if there is a single message that comes from this book, it is that trust, honesty, and good intentions are more efficient in many social contexts than verification, guile, and self-interest.” It is the intentions of the managers who use the measurement systems that ultimately determine its veracity. Drawing from the ideas from Hope, Fraser, and Austin, the four key guidelines for the Adaptive Performance Measurement System will be presented and discussed during the tutorial. The tutorial will keep a focus on the two key APMS objectives: To focus any enterprise group (team, department, division, or company) on a set of desired strategic outcomes; To encourage any enterprise group to perform at a high level. The presentation material and subsequent discussions should leave the tutorial participants with a lot of questions about their performance management systems, and possibly a few answers also.

Jim Highsmith is Director, Agile Project Management Practice at Cutter Consortium. He is the author of Agile Project Management: Creating Innovative Products, Addison Wesley 2004; Adaptive Software Development: A Collaborative Approach to Managing Complex Systems, Dorset House 2000, and, Agile Software Development Ecosystems, Addison Wesley 2002. Jim is the recipient of the 2005 international Stevens Award for outstanding contributions to systems development. Jim is a recognized leader in the agile project management and software development movement. He has published dozens of articles including “The Agile Manifesto,” co-authored with Martin Fowler, in the August 2001 issue of Software Development). Jim has worked with organizations worldwide to help them adapt to the accelerated pace of development in increasingly complex, uncertain environments.