At its core, Scrum emphasizes Lean principles and aims to minimize wasteful activities.
Why is Eliminating Waste the Most Important Factor?
In the context of Agile,
“Any activity that does not add value to the product, is Waste.” [1].
OpenView Venture Partners, a famous Venture Capitalist refer to these as “Junk Stories.” These stories or features should not be picked up for development by the Scrum teams at all. Moreover, any time spent in meetings and discussions on those stories adds to the waste. A study states that 64% of the features delivered to customers are either rarely or never used.[1]
Recent research exploring the success of Toyota reveals that while Lean manufacturing contributes to only 5% of the company’s profits, the remaining 95% comes from the work of Shusas, the Chief Engineers, who deliver superior value at reduced costs. Similarly, Tesla has demonstrated that combining Lean and Agile methodologies yields greater results than Lean alone, as evidenced by Brandon’s EV Financial Stats. [2] In today’s fast-paced business environment, the adoption of Scrum with Lean and Agile can lead to greater efficiency, cost savings, and improved overall performance.
Process Efficiency, Not Velocity
Frank Verbruggen, along with Jeff Sutherland and other fellow researchers contest the efficacy of Velocity as a measure to evaluate a scrum team’s performance. They argue in the publication titled, “Process Efficiency – Adapting Flow to the Agile Improvement Effort” that velocity is a relative measure that cannot be compared across different teams.[1] Thus, there is a need to establish an objective way of measuring team performance.
One way to do this is by adopting the Lean Manufacturing practice of measuring Value Added Time as a percentage of Total Time. This metric can provide valuable insights into production processes and help optimize them. They propose an adaptation to this metric for the Agile environment and name this as “Process Efficiency”. By using this metric, teams can obtain an objective understanding of their efficiency and compare it to other teams, regardless of the technology or domain of practice. This approach helps teams identify areas for improvement and optimize their performance.
An Increase in Efficiency Means a Decrease in Waste
“An increase in velocity, in simple terms, means the stories are churned at a faster speed. The bigger question, however, is, did those stories add any value to the customer? “
For the past two decades, the Standish Group has conducted a comprehensive analysis of over 500,000 projects, revealing that 64% of the features delivered to customers are either rarely or never used. [1] This highlights the critical need for a competent Product Owner organization, as, without it, up to 64% of staff time could be wasted on developing features that customers will not utilize. By eliminating these unnecessary features, we can optimize investments in promising projects, such as Data Dog, which saw exponential growth during the COVID-19 pandemic, generating an astonishing return of 53,300%.
Conclusion
In conclusion, the adoption of Lean and Agile practices can bring significant benefits such as improved efficiency, cost savings, and overall performance. Focusing on eliminating waste in the Agile process and delivering value to the customer is critical. Objective metrics like Process Efficiency can help teams measure performance and identify areas for improvement. Organizations must prioritize training and education on Lean and Agile methodologies to equip their teams to deliver value to the customer effectively. It is crucial to have a competent Product Owner organization that can ensure only the features that add value to the customer are developed and unnecessary ones are eliminated. By embracing Lean principles and adopting Agile practices, organizations can reduce waste and achieve greater efficiency, cost savings, and improved overall performance.
