Category Archives: Behavioral Science

About Contracts That Support Agile Ways of Working



One of various under-served (ignored) dimensions of agile transformations that frequently limit an organization’s success, there is one that requires special attention.

It is vendor management that can be traced back to legal contracts between a client company and supplier/vendor.

Vendor management norms and guidelines define relationships and interaction between a company’s own employees and external workers, individually and in team-level settings.  Unfortunately, this issue is not always obvious and therefore, is neither explicitly raised by inexperienced agile coaches, nor adequately addressed by senior leadership that is satisfied with limited results (could be also a sign of complacency).

There is a lot of improvement required in how corporate attorneys and vendor managers define, initiate and maintain external relationships with third parties.

This post provides a short summary of recommended improvements – they are  listed below.  It is based on a more comprehensive excerpt: Agile Contracts Primer, by T. Arbogast, C. Larman, B. Vodde.

(Also, please refer to Top-5 high-level recommendations for what to look for in vendors, selected for agile projects, in “Survival List to Vendor Selection on Agile Projects”)

Recommendations for Attorneys and Vendor Managers:
  • Acknowledge that Legal, just like Finance and HR can diminish project success if not considered as a part of agile ecosystem
  • Get rid of false dichotomies around the 3rd Agile Manifesto value: “just because we value customer collaboration than contract negotiation, it does not mean that a contract has no value” 😉
  • Make sure that attorneys understand that a “successful contract” is not the main goal.  It is a successful project or product (delivery) that is the main goal.
  • Draw analogy between software project complexity and your own (if you are an attorney) legal work complexity, to appreciate how difficult it is to do precise upfront estimation on huge, unpredictable body of work
  • Understand how agile approaches can lower (not completely remove) friction around, such areas of contract negotiation as liability, warranty, payments, pricing, deliverable
  • Understand that external legal contracts have downstream impact on internal non-legal contracts – relationships between people
  • Understand repercussions of subjective incentives and rewards (bonuses), given to attorneys for legal outcomes (event if they are successful), instead of focusing on an overall project success
  • Understand/study agile and iterative development (e.g. Scrum, Kanban), system thinking concepts, lean principles and agile project assumptions differ from traditional project assumptions
  • Gain strong grasp of what Acceptance Criteria, Definition of Done, PSPI and MVP mean
  • Study how continuous deployment and incremental development can reduce risk and exposure, as oppose to sequential/waterfall SDLC that usually  increases it
  • Understand positive implications of agile ways of working Limited Liability and Warranty, Deliverable and Pricing
  • Specifically, with regards to Pricing, understand:
    • Variations of T&M contracts and why they are good for agile projects.  For example:
      • Fixed price per iteration (per unit of time), fixed-price per large project
      • Fixed price per unit of work
      • Pay-per-use models
      • Hybrid shared pain/gain models
      • Capped-Price, Variable-Scope vs. Capped-Price, Partial-Fixed-Scope vs. Fixed-Price, Variable-Scope
      • Target-cost
    • Reasons why FPFS contacts are least desirable/most risky and what are some of the ways of lowering such risks
    • Difference between flexible scope without and with penalty (shared gain/pain)
    • Early termination – does not mean failure
Conclusion

Contracts are not necessarily always bad.  Having an external, legal contract between a client and a vendor/service provider/supplier is perfectly normal and even necessary.  It is the form of a contract that matters, as it has downstream effect on dynamics and behaviors between people within a client company, as well as between the parties.

To produce a meaningful contract for an agile project, an attorney should have good understanding of what is valued most in agile work, by agile teams, and optimize his/her own work for the benefit of an overall project, not just for having an amazing contract (locally optimized for an attorney’s benefit).  To gain such understanding a legal professional needs to invest significantly in studying principles of agile/adaptive product development (e.g. Scrum, Kanban), lean and system thinking.

Some of the above listed contract types are more supportive of agile work than others and each once must be explored in detail for suitability, depending on unique organizational settings.

 

Thoughts by Rick Waters, CST

Rick Waters is a Business Agility Coach and Trainer, from Chicago, with more than 15 years of technical software development experience, and almost 10 years of Agile leadership experience.  Rick primarily trains Scrum, Enterprise Scrum Business Agility, and Kanban.
This is what Rick wrote, in support of the recently released book by Gene Gendel (Adaptive Ecosystems: The Green Book: Collection of Independent Essays About Agility):

Nearly every time we talked, my dear friend, Mike Beedle (RIP), would challenge me to think deeper about less conventional concepts that I wouldn’t normally consider having an impact on the subject matter we were discussing.  Often, Mike would come back to Employee Experience.

“Employee Experience,” he would say “is the where we need to focus in order to truly give our customers the amazing experience that we want them to have with us, as a company, and our products.”

Recently, the well-meaning practices of installing ping-pong and foosball tables, or game rooms, or a kegerator in the lunchroom, have come under fire.  Though these ‘perks’ to working in a space where at least someone is focusing on an aspect of Employee Experience (EX) seem great on the surface (mainly to new employees during the interview process), they don’t speak to the long-term EX.  They speak, mostly, to something I like to call Short-term Employee Gratification.

I want to reiterate, the people responsible for work-place ‘improvements’ like those already mentioned, are well-meaning.  But, like many good deeds, they don’t go unpunished.  Here, mostly because these Short-term Employee Gratification efforts are just that – short-term.

Long-term EX is about sustainability.  We see, in the Principles behind the Manifesto for Agile Software Development, that there has always been someone concerned with sustainability.

“Agile processes promote sustainable development.
The sponsors, developers, and users should be able
to maintain a constant pace indefinitely.”

So, why do even the best of us not understand that our actions are not having the intended effects?  Because we are HUMAN BEINGS, and we have this natural tendency to believe that when we ‘fix’ something, that it stays ‘fixed’.  In this case, when we make our employees happy, they should stay happy.

So, why don’t employees stay happy?  Because they are HUMAN BEINGS, and trying to get a human being to stay happy when nothing around them is improving, the morale suffers.

We talk a lot, in the Agile world, about the concept of Continual Improvement.  We also warn those whom we mentor, to only take on as much change as they can handle at any given time.  Trying to change too many things at once and realize which of those changes actually had a positive effect can be darn near impossible at times.

So, in this example, maybe just provide one perk at a time.  But, in all fairness, slowly rolling out toys for employees to play with at work … that’s still just a stop-gap measure to gratification, not a solution to improving the Employee Experience.

I now invite you to take a trip down memory lane with me.  The year was 2004.  I was working at a young company in Chicago, still relatively small at 100-125 employees.  We had a culture of freedom, not fear.  That would come later.  Our products were platforms and API’s for electronic traders (of stocks, bonds, future, options, etc.) to make trades quickly, setup their own custom automatic trading rules, and develop custom trade strategies.

Life was great!  For a while.  There were monthly bonuses for everyone, when the Sales department hit their quota.  There were free donuts and bagels once a week.  I believe that, for a time, there were even free soft drinks from the vending machines.  Our team even had full autonomy over who we interviewed, and who we hired.

As the company grew, and we grew quickly, these perks slowly disappeared.  Every one of them.  Until if we asked around, “Hey, do you remember when we used to have <perk>?”  The general answer was likely “That was before my time.”  But, in reality, it likely wasn’t before their time, they just didn’t remember it.

Let’s fast forward a bit through the ugly parts – fast growth in head count, demanding deadlines and the resulting loss in quality, stolen/lost autonomy, creation of a command and control environment, increasing number of periodic performance evaluations, and finally periodic layoffs.

The changes did not take long.  Two years at most.  But they, and their resulting culture, lasted for much longer.

I eventually left the company.  I knew I was a valuable part of my team, but I was extremely frustrated with many of the negative turns the company had made, as well as some of the decisions my immediate co-workers had made.  I needed to get out to preserve my sanity.  Or so I thought.

I let my manager know I had another job offer, and I had already accepted it.  I gave my two-week notice.  He begged me to stay.  I asked him “If the company values me so much, why doesn’t anyone feel this way?”

Two hours later I got a meeting request from the CTO.  I was to bring all of my improvement suggestions to him, for discussion, first thing the next morning.  Improvement suggestions?  The CTO!?!

I went home and immediately started writing down everything I thought was wrong with the company and how they could improve the working relationships with their employees.  From problems with retention of talent, to employee happiness, to wage inequality, etc.  It ended up being a 3 page long handwritten bulletized list.  I was proud and scared at the same time.

The next morning I handed the papers across the CTO’s desk, and we had a 3 hour long conversation about why I was leaving, the devolution of morale at the company, my unwillingness to stay, his failure (his words not mine) to his employees, and much more.  This is saying a lot about a man who repeatedly would blow off scheduled meetings and short people on their time to talk with him.  Our meeting was only scheduled for 30 minutes.

I left that meeting feeling extremely valued.  Exactly what I wanted all along.  I was shocked, because nowhere in those three handwritten pages had I even come close to mentioning that a deep face-to-face conversation, with the CTO focused on me as an important employee, was enough to restore my hope in the company.  But that did the trick!

Out of foolish pride, I left anyway.  I wasn’t always as enlightened as I am today.  I’m still not as enlightened as I wish to be.  So I made mistakes.  And I will make mistakes.  Leaving the company at that point was probably a mistake.

After I left the company, it took me six weeks to meet with the CTO again and ask to come back.  He agreed.  He wanted me to see the changes that he was making.

I returned to the office (with a raise and promotion) after 10 weeks of absence.  I found a foosball table and a conference room had been transformed into a game room (the newest Nintendo® and XBOX® game systems installed with many games for each).  These were suggestions I had made.

But during those 10 weeks of absence, I realized I was wrong three different ways.  #1 for leaving.  #2 my suggestions were based on short-term gratification. #3 I never brought up any of my suggestions at the times they occurred to me over the last several years.

Just as you might guess, these improvements, and a few more over a short period of time, had an immediate positive effect on employee morale.  But, long-term systemic change had not been addressed.  Frequent performance evaluations still remained.  Deadlines were a constant source of stress.  Development was not focused on building Quality into the product, so it had to be tested out of the product afterwards.  Layoffs became more frequent, and the culture of fear quickly resumed, after the shine of the foosball table dimmed.

The EX had only gotten better for a short period of time.  Eaten alive by the terrible system that was still in place.  Like painting and waxing a rusty automobile, without grinding away the rusty bits first.

Agility is defined slightly differently by almost everyone in our industry.  To me it speaks of a company culture that I would love to work in.  During my entire career, I can think of only a few years when I worked in an environment that I can confidently describe as Agile.  All other environments were either deviating further and further from Agility, or trying everything they could think of to get closer to Agility (with varying levels of short-term success).

While hearing Mike Beedle’s words about Employee Experience echoing in my head, I blend them with Craig Larman’s.  Craig saying that cultural change follows only if there is systemic change, makes clear sense to me these days.

Today, when large organizations want me to help them change their culture, I try to refocus them on their system and how they are providing a long-term gratifying Employee Experience.  Cultural change will follow, and thus Customer Experience.

07/30 – LESS TALKS: Real life “war story” of LeSS adoption at Large Financial Institution – Continued

This was the second great presentation by Gordon Weir who delivered part-2 of his “Real life “war story” of LeSS adoption at Large Financial Institution” at NYC Large Scale Scrum (LeSS) meetup.

Please download Gordon’s Presentation (light on context, with very rich story behind)

This time, the event was made available globally, by using Nureva Span tool that allows to bring together distributed sites for real-time collaboration.  People from Canada and India have joined.  Zoom was added to capture in-class dynamics.

Participants were able to submit questions and comments for the speaker ahead of and during the session.   Canvas instance is captured ‘as is’ as well as transcribed below:

  Questions/Comments (about LeSS & Agile:

Transcribed Questions/Comments (about LeSS & Agile:

  • How did LeSS help financial org to stay lean and bring high impact and value to customers?
  • What involvement does HR have in LeSS adoption?
  • Will the speaker cover HR -related aspects of LeSS adoption?
  • What are some of the tricks you learned to break through the resistance to change?
  • How can we tell if our engineering practices are getting in the way of our success with LeSS?
  • What does LeSS recommend in terms of number of teams per Product Owner?
  • How product or value defined in Less?
  • Please, elaborate on Risk management with agile?
  • How to transform team divided by components into feature teams?
  • What will happen if any organization stops doing all the work except what is minimally essential?
  • As per Frederic Laloux, Teal is the color for agile.
    Ceremonies in Less
  • Attempting any sort of change in a financial institution is exhausting. How do we prevent burnout?
  • Most org’s/teams are not clear what their PRODUCT is – or agree on it!
  • Measurement, MBOs, Balanced Scorecards, OKRs, KPIs, lions, tigers, and bears.
  • Could you share practical ideas on changing status-quo mindsets of middle & first level mgrs?
  • Less Approach is a lot of work. Not for the faint of heart.
  • Are Agile transformations dependent on the right culture as a solid foundation?
  • Roles in Less compared to SAFe
  • Moving from SAFe to LeSS
  • Non-Violent (NVC) Friday discussion topics.
Transcribed Questions/Comments Nureva Span