To capture the mindset for effective vendor management, we extend the principles, promises, and guidelines of the Disciplined Agile® Mindset with philosophies. These philosophies are:
- Value first, cost second. Shifting your mindset from “what is this going to cost?” to “what value will this generate?” is critical to your success because it helps you to focus making better investments. You want to invest in endeavors that enhance your organization’s ability to produce value for your customers. This in turn provides the profits required for further investment.
- Minimize the cost of delay. One of the strategies for maximizing stakeholder value is to invest in developing functionality that will provide value to the organization soonest. For example, if you delay developing functionality that will generate annual revenue of $10 million for six months you have an effective cost of delay of $5 million because you missed out on half a year of revenue. Disciplined agile portfolio managers consider the cost of developing a solution, the cost of delay that results from putting off said development, and the revenue generated (or cost savings) when calculating the overall value of a solution.
- Invest in streamlining value creation. Not only do we want to produce value for our customers, we also want to be good at doing so. The implication is that we sometimes need to invest in ourselves through process or environment improvements.
- Prefer stable teams over project teams. Although portfolio management is often believed to be the oversight of project teams, it really is more about the coordination and oversight of initiatives in general. In Disciplined Agile we recognize that an initiative is seldom finished at the end of a “project.” There are usually subsequent changes required over time requiring future releases of the solution. The agile community has discovered that long-lived stable teams , whose membership evolves over time, have significant advantages over short-lived project teams in many situations.
- Align teams to value streams. These stable teams should be aligned long-term to value streams or lines of business (LOBs). High performing agile teams reliably deliver value frequently to their business stakeholders. As a result, the business learns to trust the teams aligned to their areas. This positive feedback cycle maximizes the effectiveness of your agile teams. Additionally, over time they learn more about the business adding to their effectiveness.
- Govern by risk, not by artifacts. Traditional governance often focuses on the review of common artifacts such as requirement documents, architecture models, and test results. Because it is relatively easy for teams to create the documentation that you want to see, in practice there is very little governance value in reviewing these artifacts. Disciplined Agile governance instead focuses on addressing common risks such as ensuring there is an agree to vision for what the team should accomplish, that the architectural strategy has been proven to be viable early in the lifecycle, and that the team has produced sufficient business value for their stakeholders.
- Rolling wave over annual planning. Annual planning often begins in earnest mid-year which means that prioritized initiatives may not be actually delivered for up to 18 months in the following year. This is not enterprise agility. Make your planning a continuous “rolling wave” activity year round with more detail devoted to planning initiatives no longer than 6 months out. Initiatives planned beyond 6 months should be described at a very high level.
- Prefer small initiatives over large initiatives. The larger the initiative the greater the chance of failure. Smaller initiatives are easier to plan and are lower risk to execute. Keep your initiatives small to allow for more frequent delivery of value with less investment in work in process (WIP).
- Invest in quality. Ensuring that teams produce new business value for your organization is clearly important. But so is ensuring that you will still be able to continue doing so a few years from now. To ensure the long-term sustainability of your teams you must allow them to make investments in quality. These investments include building high quality assets in the first place but also fixing low quality assets, what agilists refer to as paying down technical debt.
Our experience is that the philosophies described above – in addition to the principles, promises, and guidelines of the DA™ mindset – enable portfolio managers to be more effective in practice.