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Lean at Cisco: Lessons
Learned from Lean Product
Development and Lean Startup
Ken Power
Internal Agile-Lean Coach/Consultant, Cisco Systems
Thursday June 21, 2012
Lean Startup Event Organized by Enterprise Ireland and ITAG


© 2010 Cisco and/or its affiliates. All rights reserved.      1
January 2008!                                        December 2009!          August 2010!          June 2011!           May 2012!


                                                               Formal Agile                                                  Portfolio
                                                                Transition       Agile Office         Culture and          Management               Ongoing
  Pilot Projects                                                 Program         Established           Mindset              across the             continuous
                                                                Launched                                                   Business Unit          improvement



2008                                                    2009                  2010                 2011                  2012                2012+
• First agile pilots                                    • More Teams          • Commitment to      • Support teams in    • Synchronize all   • Create Flow
• Agile Projects                                        • Agile Program        sustainable and      innovating and        products across     through the
• Organic Growth                                         Management            sustained agility    developing the        the BU              Organization
 across the BU                                          • System Wide         • Broad               processes that       • Problem solving   • Continue to Lead
 through ground-                                         Focus                 Organization         are right for them    and obstacle        through
 up pilot projects                                      • Formal Training      Focus               • Expand adoption      removal at an       Innovation
                                                         Plan                 • Focused             across product        org level          • Focus on Teams
                                                                               Stakeholder          areas                • Organization       and Culture
                                                        • Formal Exec
                                                         Support               Engagement          • Lean Startup         Learning           • Refine and
                                                                              • Closer Customer     principles           • Quantify and       Improve
                                                        • Broader
                                                         Stakeholder           Engagement          • Improve              reduce Technical   • Build on
                                                         Engagement           • Investigate Lean    capability of         Debt                Organization
                                                        • Lean Thinking        Startup              organization         • Agile              Learning
                                                                               approaches          • Develop Portfolio    Architecture       • Sustainable
                                                        • Lean Principals
                                                                                                    Management           • Eliminate Waste    Organization
                                                                                                    Concepts
    © 2010 Cisco and/or its affiliates. All rights reserved.                                                                                 Cisco Confidential   2
•  My day job
          Co-Founder, Agile Office at Cisco
          Internal Agile-Lean Coach/Consultant

•  Extra-curricular activities
          Fellow of the Lean Systems Society (http://LeanSystemsSociety.org/)
          Award-winning publications in Agile and Lean product development
          Frequent speaker at major international Agile and Lean conferences
          Involved in organizing international Agile and Lean conferences
          Industry/academic collaborative research on Lean software development with Lero, UL, NUIG
          PhD research in Lean product development (NUIG)
          Agile-Lean Galway Meetup (http://www.meetup.com/Agile-Lean-Galway/)
          Blog: http://SystemAgility.com/



© 2010 Cisco and/or its affiliates. All rights reserved.                                              Cisco Confidential   3
http://SystemAgility.com/publications/
                                                           http://SystemAgility.com/events/

© 2010 Cisco and/or its affiliates. All rights reserved.                             Cisco Confidential   4
The fallacies that
                                                                                                              cause delays,
                                                                                                              undermine quality,
                                                                                                              and raise costs
                                                           D.#G.#Reinertsen,#“The$principles$of$product$development$flow$:$second$genera8on$lean$
                                                           product$development”.#Redondo#Beach,#Calif.:#Celeritas,#2009.#
                                                           #
                                                           #
                                                           S.#Thomke#and#D.#Reinertsen,#"Six$Myths$of$Product$Development,"#Harvard#Business#
                                                           Review,#vol.#90,#pp.#84G94,#May#2012#


© 2010 Cisco and/or its affiliates. All rights reserved.                                                                                           Cisco Confidential   5
#
                                                                                     S.#Thomke#and#D.#Reinertsen,#"Six$Myths$of$Product$Development,"#Harvard#Business#
                                                                                     Review,#vol.#90,#pp.#84G94,#May#2012#




Myth 1                                                     High utilization of resources and people will improve
                                                           performance.
Myth 2                                                     Processing work in large batches improves the economics of
                                                           the process.
Myth 3                                                     Our plan is great; we just need to stick to it.
Myth 4                                                     The sooner the project is started, the sooner it will be
                                                           finished.
Myth 5                                                     The more features we put into a product, the more
                                                           customers will like it.
Myth 6                                                     We will be more successful if we get it right the first time.

© 2010 Cisco and/or its affiliates. All rights reserved.                                                                                            Cisco Confidential   6
•  Lean Startups are based on three trends
          Use of free and open source software
          Application of agile software development methods
          Ferocious customer-centric rapid iteration, as exemplified by the Customer Development process

•  Sometimes described as Lean Thinking applied to the entrepreneurial process

•  Equally applicable to large organizations – different challenges




                                                                                    http://theleanstartup.com/
© 2010 Cisco and/or its affiliates. All rights reserved.                                             Cisco Confidential   7
•  Entrepreneurs are Everywhere
                                                           http://theleanstartup.com/
•  Entrepreneurship is Management
•  Validated Learning

•  Innovation Accounting
•  Build-Measure-Learn




                                                                                                   !


© 2010 Cisco and/or its affiliates. All rights reserved.                      Cisco Confidential       8
© 2010 Cisco and/or its affiliates. All rights reserved.   9
#
                                                                                S.#Thomke#and#D.#Reinertsen,#"Six$Myths$of$Product$Development,"#Harvard#Business#
                                                                                Review,#vol.#90,#pp.#84G94,#May#2012#




                                                                                                                      Total Cost



                                                           Optimal Batch Size
               Cost




                                                                                                                     Holding Cost




                                                                                                        Transaction Cost




                                                                       Batch Size


© 2010 Cisco and/or its affiliates. All rights reserved.                                                                                       Cisco Confidential   10
#
                                                           #
                                                           S.#Thomke#and#D.#Reinertsen,#"Six$Myths$of$Product$Development,"#Harvard#Business#
                                                           Review,#vol.#90,#pp.#84G94,#May#2012#




© 2010 Cisco and/or its affiliates. All rights reserved.                                                                  Cisco Confidential   11
© 2010 Cisco and/or its affiliates. All rights reserved.   12
Product




                                                            Extended Customer Trials
Early
Customer
Engagement




 © 2010 Cisco and/or its affiliates. All rights reserved.                              Cisco Confidential   13
© 2010 Cisco and/or its affiliates. All rights reserved.   14
“ 




     Views expressed by Tom & Mary Poppendieck and Taichi Ohno

© 2010 Cisco and/or its affiliates. All rights reserved.         Cisco Confidential   15
•  Extra Features
•  Delays
•  Handoffs

•  Extra Processes / Relearning
•  Partially Done Work

•  Task Switching
•  Defects

•  Unused Employee Creativity




© 2010 Cisco and/or its affiliates. All rights reserved.   Cisco Confidential   16
“ 




     James Womack

© 2010 Cisco and/or its affiliates. All rights reserved.   Cisco Confidential   17
“ 




     Eric Ries, The Lean Startup. (page 274)

© 2010 Cisco and/or its affiliates. All rights reserved.   Cisco Confidential   18
© 2010 Cisco and/or its affiliates. All rights reserved.   Cisco Confidential   19
© 2010 Cisco and/or its affiliates. All rights reserved.   Cisco Confidential   20
“ 




     Credo of the Lean Systems Society (http://leansystemssociety.org/credo/)

© 2010 Cisco and/or its affiliates. All rights reserved.                        Cisco Confidential   21
•  Do not just focus on building great products or
     providing great services
•  Focus on developing great people and building
     great teams
•  Build great organizations that appeal to people’s
     sense of intrinsic motivation


© 2010 Cisco and/or its affiliates. All rights reserved.   Cisco Confidential   22
Thank you.

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Lean at Cisco: Lessons Learned from Lean Product Development and Lean Startup

  • 1. Lean at Cisco: Lessons Learned from Lean Product Development and Lean Startup Ken Power Internal Agile-Lean Coach/Consultant, Cisco Systems Thursday June 21, 2012 Lean Startup Event Organized by Enterprise Ireland and ITAG © 2010 Cisco and/or its affiliates. All rights reserved. 1
  • 2. January 2008! December 2009! August 2010! June 2011! May 2012! Formal Agile Portfolio Transition Agile Office Culture and Management Ongoing Pilot Projects Program Established Mindset across the continuous Launched Business Unit improvement 2008 2009 2010 2011 2012 2012+ • First agile pilots • More Teams • Commitment to • Support teams in • Synchronize all • Create Flow • Agile Projects • Agile Program sustainable and innovating and products across through the • Organic Growth Management sustained agility developing the the BU Organization across the BU • System Wide • Broad processes that • Problem solving • Continue to Lead through ground- Focus Organization are right for them and obstacle through up pilot projects • Formal Training Focus • Expand adoption removal at an Innovation Plan • Focused across product org level • Focus on Teams Stakeholder areas • Organization and Culture • Formal Exec Support Engagement • Lean Startup Learning • Refine and • Closer Customer principles • Quantify and Improve • Broader Stakeholder Engagement • Improve reduce Technical • Build on Engagement • Investigate Lean capability of Debt Organization • Lean Thinking Startup organization • Agile Learning approaches • Develop Portfolio Architecture • Sustainable • Lean Principals Management • Eliminate Waste Organization Concepts © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 2
  • 3. •  My day job Co-Founder, Agile Office at Cisco Internal Agile-Lean Coach/Consultant •  Extra-curricular activities Fellow of the Lean Systems Society (http://LeanSystemsSociety.org/) Award-winning publications in Agile and Lean product development Frequent speaker at major international Agile and Lean conferences Involved in organizing international Agile and Lean conferences Industry/academic collaborative research on Lean software development with Lero, UL, NUIG PhD research in Lean product development (NUIG) Agile-Lean Galway Meetup (http://www.meetup.com/Agile-Lean-Galway/) Blog: http://SystemAgility.com/ © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 3
  • 4. http://SystemAgility.com/publications/ http://SystemAgility.com/events/ © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 4
  • 5. The fallacies that cause delays, undermine quality, and raise costs D.#G.#Reinertsen,#“The$principles$of$product$development$flow$:$second$genera8on$lean$ product$development”.#Redondo#Beach,#Calif.:#Celeritas,#2009.# # # S.#Thomke#and#D.#Reinertsen,#"Six$Myths$of$Product$Development,"#Harvard#Business# Review,#vol.#90,#pp.#84G94,#May#2012# © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 5
  • 6. # S.#Thomke#and#D.#Reinertsen,#"Six$Myths$of$Product$Development,"#Harvard#Business# Review,#vol.#90,#pp.#84G94,#May#2012# Myth 1 High utilization of resources and people will improve performance. Myth 2 Processing work in large batches improves the economics of the process. Myth 3 Our plan is great; we just need to stick to it. Myth 4 The sooner the project is started, the sooner it will be finished. Myth 5 The more features we put into a product, the more customers will like it. Myth 6 We will be more successful if we get it right the first time. © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 6
  • 7. •  Lean Startups are based on three trends Use of free and open source software Application of agile software development methods Ferocious customer-centric rapid iteration, as exemplified by the Customer Development process •  Sometimes described as Lean Thinking applied to the entrepreneurial process •  Equally applicable to large organizations – different challenges http://theleanstartup.com/ © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 7
  • 8. •  Entrepreneurs are Everywhere http://theleanstartup.com/ •  Entrepreneurship is Management •  Validated Learning •  Innovation Accounting •  Build-Measure-Learn ! © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 8
  • 9. © 2010 Cisco and/or its affiliates. All rights reserved. 9
  • 10. # S.#Thomke#and#D.#Reinertsen,#"Six$Myths$of$Product$Development,"#Harvard#Business# Review,#vol.#90,#pp.#84G94,#May#2012# Total Cost Optimal Batch Size Cost Holding Cost Transaction Cost Batch Size © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 10
  • 11. # # S.#Thomke#and#D.#Reinertsen,#"Six$Myths$of$Product$Development,"#Harvard#Business# Review,#vol.#90,#pp.#84G94,#May#2012# © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 11
  • 12. © 2010 Cisco and/or its affiliates. All rights reserved. 12
  • 13. Product Extended Customer Trials Early Customer Engagement © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 13
  • 14. © 2010 Cisco and/or its affiliates. All rights reserved. 14
  • 15. “  Views expressed by Tom & Mary Poppendieck and Taichi Ohno © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 15
  • 16. •  Extra Features •  Delays •  Handoffs •  Extra Processes / Relearning •  Partially Done Work •  Task Switching •  Defects •  Unused Employee Creativity © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 16
  • 17. “  James Womack © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 17
  • 18. “  Eric Ries, The Lean Startup. (page 274) © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 18
  • 19. © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 19
  • 20. © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 20
  • 21. “  Credo of the Lean Systems Society (http://leansystemssociety.org/credo/) © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 21
  • 22. •  Do not just focus on building great products or providing great services •  Focus on developing great people and building great teams •  Build great organizations that appeal to people’s sense of intrinsic motivation © 2010 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 22