Exploit Variability. Explore Economic Opportunities.

A simple litmus test to determine whether the organization’s prevailing mindset is Reductionist or Lean-Agile is evident in how the organization deals with variability:

  • Reductionist mentality: Variability can be eliminated if you try really hard. Variability is highly undesirable and therefore should be eliminated.
  • Lean-Agile mentality that embraces organizational complexity: Variability is not good or bad, it just is. Variability cannot be reduced beyond a certain level. Variability can be effectively exploited to identify and explore new economic opportunities, some of which may have significantly high payoffs.

To learn more on the topic of exploiting variability in product development, consider Donald Reinertsen’s book “The Principles of Product Development Flow”.

If the notion of variability is not sorted out, the rest of Agile adoption is basically pointless. That’s why it is critical that as part of the transformation, this question is addressed properly as a matter of both adequate training and, most importantly, effective coaching in the context of the actual applications of this tenet. In a reductionist view, variability is a bad thing as it leads to deviation from a desirable intended outcome. From a complexity perspective however, variability may lead to outcomes significantly better than those initially intended. It is important to remember that acknowledging inherent variability of complex systems is not a subjective choice, but a reality. The only question on the table is whether we perceive reality in adequate terms or indulging cognitive biases that stem from fundamental fear of uncertainty and prevent us from operating effectively in a product development environment.

The following scenarios may assist in the process of adopting the right perspective on variability:

  1. Create frequent overlaps of management and engineers in Gemba (however beware of Gemba Surrogates anti-pattern)
  2. Pick some historical data on defect counts, estimations, scoping decisions, etc. Demonstrate inherent variability on those examples. Ensure correct interpretation.
  3. Allow the management to drive the demo of the current increment themselves. This facilitates the discovery of new opportunities of advancing customer value that were not part of the initial plan

Optimizing for Uncertainty is a useful tool to explore and exploit economic opportunities.