Kanban Maturity Model: Evolving Fit-for-Purpose Organizations

Review

The Kanban Maturity Model (KMM) has as purpose supporting the adoption of Kanban and to developing organizational capabilities to create a business capable of survivability in the long term by delivering produces and services that meet or outserves customer expectations.

The book starts with the presentation of the model, describing the seven maturity levels (ML) and the observable behaviors and kanban patterns of each level. The maturity levels are:

• ML0 Oblivious: the organization is oblivious to the need to follow a process, with ambivalence about the value of management and lack of collaborative working
• ML1 Emerging: there is a recognition that management adds value but there is no consistency of process, policy usage, or decision framework. There is no consistency of the desired outcome
• ML2 Defined: there is a basic definition of processes, workflow, policies, and decision frameworks, which are followed consistently. However, there is still a lack of consistency in the desired outcome
• ML3 Managed: there is a consistency of process, policy usage, or decision frameworks. There is now a consistency of the desired outcome with customer expectations being met
• ML4 Quantitatively Managed: the organization moves its focus to economic outcomes as well as developing robustness against unforeseen events and exceptional circumstances. The goal is to be ever “fitter-for-purpose” from the perspective of a variety of stakeholders
• ML5 Optimizing: the focus is now on optimizing for efficiency and improved economic outcomes, increasing productivity without sacrificing quality, increasing margins, extracting premium prices for premium classes of service or quality, minimizing costs, and optimizing the value of work done through a superior prioritization and triage capability. Significant job satisfaction is now derived from delivering improvements
• ML6 Congruent: the business is truly “built to last”. At this level, the business is capable of questioning the identity of the business, its purpose, what is done to deliver on its purpose and how it does that. The business anticipates market needs as it is constantly redesigned around customer segments aimed at long term survivability

Then on part II, the book delves into the practices available at each maturity level, presenting them in six chapters that group them into the each of the Kanban values: Visualize, Limit Work-in-Progress, Manage Flow, Make Policies Explicit, Implement Feedback Loops, and Improve Continuously, Evolve Experimentally. If the part I is about the depth of the model, part II is about its breadth of each maturity level.

The integration of the model with the Fit-for-Purpose framework (co-created by David Anderson, one of the co-authors of the KMM) and with the Real World Risk Model gives more tools to support a Kanban adoption. The Fit-for-Purpose, in special, make the classes of services more focused on the stakeholders perspective thanks to the framework’s metrics classification. The mapping of the Real World Risk Model, interwoven with the maturity levels and its practices gives the business the capabilities of risks’ hedging in an increasing awareness level.

The book is more a reference than a pleasant cover-to-cover reading. Part 1 has a more prose style. Part II, however, is the reference part of the book (and the longest) and is all about the practices. But I recommend a cover-to-cover reading as a lot of Kanban adoption gems are available in part II. It will give food for thought, making the reader reflect on his previous Kanban implementation attempts (and even on projects not managed with a kanban system). Absolutely essential to any Kanban practitioner.

Some quotes

The purpose of the Kanban Maturity Model is to support the development of the following organizational capabilities:

• Relief from overburdening
• Delivering on customer expectations
• Organizational agility
• Predictable economic outcomes and financial robustness
• Survivability

(Maturity Level 0 - Oblivious) At maturity level 0, individuals are responsible for handling their own tasks. Frequently, the person who performs the work is the use of its outcome as well; that is, the work is self-generated tasks rather than customer requested work orders.

(Maturity Level 0 - Oblivious - Observable behavior) The organization is oblivious to the need to follow a process. There is ambivalence about the value of management or organizational processes or policies. There is no collaborative working or, if there is, there is no recognition of collaboration. Collaboration may be fleeting, on an ad hoc basis without recognition of a pattern or repeated need. There is no concept of “a team” — a group of people who work collaboratively to deliver on a common goal.

(Maturity Level 1 - Emerging) At maturity level 1, there is recognition that management adds value and that some organizational structure and transparency to how work is done will offer consistency. Emerging covers a wide range of aspects of process, management concepts, and behavior. At the lowest level, there would be no definition of processes, procedures, or workflows. However, some collaborative work will be happening. There is some form of “value-stream” rather than mere individual craft work taking place.

(Maturity Level 1 - Emerging - Observable behavior) There is no consistency of process, policy usage, or decision framework. There is no consistency of desired outcome. Work is not seen as a combination of services, and customers perceive service delivery as unreliable.

There is an understanding of what the work is, but perhaps not how it should be done, what the finished product should look like, or the service delivery expectations of customers. There is little understanding of who the customer is or why they have requested the work. Consequently, there is an observable lack of alignment among teams. This affects the consistency of product design and implementation as well as service delivery.

(Maturity Level 2 - Defined) At maturity level 2, there is a basic definition of processes, workflow, policies, and decision frameworks. These are followed consistently. There is recognition that the process definitions describe “the way we do things.” However, there is still a lack of consistency in the desired outcome. Customers will observe unacceptable inconsistencies in quality and service delivery, though less so than at maturity level 1.

(Maturity Level 2 - Defined - Observable behavior) The process, policy usage, and decision frameworks are consistent. However, there is still no consistency of the desired outcome.

There is an understanding of what the work is, and both how it should be done and what the finished product should look like, as well as the service delivery expectations. There may not be a full understanding of who the customer is or why they have requested the work. This is most often true for shared and internal services that lack visibility to the end customer and the motivation or purpose behind a work request or the risks associated with that work or its delivery. As a consequence, there may be an observable lack of alignment among teams and interdependent service workflows. This affects the consistency of service delivery as seen by the customer.

(Maturity Level 3 - Managed) At maturity level 3, there is an agreed and understood definition of processes, workflow, policies, and decision frameworks. These are followed consistently, and, in addition, desired outcomes are achieved consistently within customer expectations and tolerances.

(Maturity Level 3 - Managed - Observable behavior) There is a consistency of process, policy usage, or decision frameworks. There is now a consistency of desired outcome. Customer expectations are being met. Product design, quality, and service delivery are all within customer expectations and tolerance levels.

There is an understanding of what the work is — both in how it should be done and what the finished product should look like — as well as the service delivery expectations. There is a strong sense of unity and purpose along the value stream or across the workflow. There is a sense of a team collaborating to deliver a piece of work. There is a full understanding of who the customer is and why they have requested the work. There is a strong sense of fulfilment amongst the workers when delivering finished work.

(Maturity Level 4 - Quantitatively Managed) At maturity level 4, design, implementation, and service delivery have become routinely “fit-for-purpose.” Consistency of process and consistency of outcome have the effect of relieving a lot of stress, and the organization moves its focus to economic outcomes as well as developing robustness against unforeseen events and exceptional circumstances. Attention is now given to quantitative risk management and economics. The question is now whether consistency of delivery can be achieved within economic expectations of cost or margin, and whether performance can be robust to unforeseen circumstances through appropriate risk hedging. Quantitative analysis of metrics and measures becomes more important. The goal is to be ever “fitter-for-purpose” from the perspective of a variety of stakeholders.

(Maturity Level 4 - Quantitatively Managed - Observable behavior) Work is now classified by customer risks, and a variety of classes of service is offered. Demand shaping or capacity limitations by work type and class of risk are present. Triage is now driven by risk assessment, and class of service is directly linked to risk. Scheduling is influenced by cost-of-delay and a quantitative understanding of service delivery risks such as the probability distribution of lead time.

(…)

There is extensive systems thinking and service-orientation present in the organization. Organizational units are now forming around defined services with known and understood dependencies. Shared services are recognized as a highly effective and efficient approach and therefore are desirable economically. Shared services are seen as providing an advantage to organizational agility — the ability to reconfigure quickly to changing marked, regulatory, or political conditions.

(Maturity Level 5 - Optimizing) At maturity level 5, not only have design, implementation, and service delivery become routinely “fit-for-purpose,” the business is now entirely “fit-for-purpose” from a shareholder’s perspective. The focus is now on optimizing for efficiency and improved economic outcomes, increasing productivity without sacrificing quality, increasing margins, extracting premium prices for premium classes of service or quality, minimizing costs, and optimizing the value of work done through a superior prioritization and triage capability. The goal at ML5 is to be “fittest-for-purpose.” A strong culture of continuous improvement has emerged and we observe acts of leadership at all levels contributing to improved performance. The workforce feels empowered to suggest and implement changes. Workers have a sense of ownership over their own processes and a sense of pride in their capabilities and outcomes. There is a culture of “seeking forgiveness” rather than “asking permission” and consequently the organization is able to act and move qiuickly. Individual units can act with autonomy while remaining aligned to strategy, goals, and objectives. The organization has agility and is readily reconfigured to offer new services and/or classes of service. The business is now solidly robust to changing customer expectations and other externalities.

(Maturity Level 5 - Optimizing - Observable behavior) There is extensive process instrumentation. Improvement opportunities are aligned to customer fitness criteria metrics. Improvement driver metrics are formally established. Improvement drivers have achievable targets. Improvement initiatives are predictive, model-driven, and there is a known causation between improvement action and forecasted outcome. Significant job satisfaction is now derived from delivering improvements, as delivering customer requested work within expectations and to the customer’s satisfaction is now routine and is taken for granted.

(…)

New services can be rapibly defined and composed of calls to a network of existing shared services. Reconfiguring the organization to service different markets with different classes of service is now a routine action causing little to no disruption.

(Maturity Level 6 - Congruent) Maturity level 6 is when we can claim that a business is truly “built to last.” At level 6, we observe several double-loop learning capabilities. The business is capable of questioning:

• Is the way we do things still competitive? Are new technologies, processes, methods, or means becoming available that we should be investigating or adopting?
• Do we offer the right products and services? and if not, how should we change?
• Are we serving the right markets? and do we have the capability to serve our chosen markets adequately?
• Who are we as a company? and is our current identity relevant and appropriate? or do we need to reinvent ourselves?

(Maturity Level 6 - Congruent - Anticipated behavior) There should be extensive market instrumentation to provide feedback on wheter the firm’s products and services are viewed as “fit-for-purpose.” Market segments should be oriented around customer purpose. The entire business should be service oriented and driven by service delivery. There should be assessment of design, implementation, and service delivery capabilities against expectations in each market segment. The organization should be capable of transparently reporting its fitness-for-purpose in each segment. Improvement actions should be driven by a desire to amplify a segment or switch it off.

Maturity levels 1 through 5 provide various scales of single-loop learning — getting better at what we do and how we do it. Maturity level 6 sees the emergence of two forms of double-loop learning. This manifests as a capability to question:

• Is our strategy correct? Are we offering the right products and services to the right markets? Should we redefine our market segmentation and change the products and services we offer?

and

• Do we as a business have the right identity for the current business, political, economic, and technological environments in which we compete?

(MF 3.12 Forecast delivery) A forecast is a prediction of what will happen in the future. There are two basic types of delivery forecast: forecast when a delivery of a fixed scope of work will be made (when will it be done?) and forecast how much work will be delivered on a fixed and known delivery date (how much can I expect?). Unlike estimating, which tends to use a reductionist and deterministic approach, forecasting uses a probabilistic, non-deterministic approach. Consequently, forecasting is cheaper, faster, and often more accurate than estimating. We might think of estimating as a white-box approach that requires a lot of analysis and guess work, while forecasting takes a black-box approach that relies on factual historical data to model a probability distribution.

(MF 4.3 Use two-phase commit for delivery commitment) The term two-phase commit, with respect to kanban systems, refers to breaking out the commitment to do something with the specific commitment to deliver on a particular date. Analogously, it is compared to the act of becoming engaged versus the wedding ceremony. Engagement to be married is a commitment to marry. It is a commitment to proceed. However, it is extremely rare for the wedding day already to be set and planned at the point of the engagement. Hence, the act of getting married involves a two-phase commitment. First, the promise to marry, followed, on the day of the wedding, by the actual commitment to marry.

(…)

Psychologically, two-phase commit has an advantage: it makes it far more likely that an item will be delivered against a specific promise of delivery. A single commitment to both undertake the work and make delivery on a given day or within a specific period is fragile: there is a greater probability of late delivery and a broken promise. Hence, use of a two-phase commitment enables a service to be seen as much more trustworthy from the customer’s perspective.

(XP 3.1 Establish explicit purpose of metrics) For each metric or measure recorded and reported, there should be an explicit purpose detailing why the metric is captured and how it is used; that is, what decisions and actions might be expected based on changes in the reported data.

It may be helpful, though not expected, at ML3 for the metrics to be classified using the Fit-for-Purpose Framework. Each metric should be classified as a Fitness Criteria (for a specific customer purpose) and hence a Key Performance Indicator (KPI), General Health Indicator, Improvement Driver, or Vanity Metric.

(XP 3.7 Establish customer acceptance criteria for each work item or class of work items) Customer acceptance criteria ensure that customer expectations are properly understood for a given product or service. They remove ambiguity and prevent misunderstandings with respect to customer satisfaction.

(XP 5.1 Align strategy and capability) Misaligned strategy and capability happens when current capability is insufficient to meet customer expectations. The customer would find the product or service unfit-for-purpose.

(…)

Customer or market segments should be based on our ability to meet expectations for design, implementation, and service delivery. In general, new capabilities — new design features, new implementation capability, or new service delivery capability — should be developed before targeting a segment or a specific customer with expectations beyond our current capability.

(…)

In maturity level 5 organizations, capability leads strategy. Strategies are chosen based on current capabilities or planned capabilities where there is strong confidence that a sufficient level of capability will be achieved.

A lack of customer focus will be an impediment to achieving maturity level 3. Again, this will become more and more acute the deeper the attempted implementation or the greater the scale of the implementation. To achieve level 3 and deeper, an organization needs to think in terms of services and see the organization as a network of interdependent services.

To achieve maturity level 4, there needs to be respect for the shareholders and the concept that there is a business, an economic entity, which requires making profits in order to exist. Without respect for the owners who have placed capital at risk, there will be scant regard for margins, profitability, cost controls, and so forth. There will be no drive to achieve deep maturity level 5 and 6 if the long-term survival of the business isn’t explicitly valued. It is common for founders or founding families to value long-term survival. Their interests are aligned with the lowest paid and least mobile of the workforce. It is often the middle maangers who are least vested in long-term survival — there is nothing in it for them, no shared interests, and their skill set and relative wealth make them highly mobile and resilient to partial or total business failure. To enable levels 5 and 6, it is necessary that senior leaders align the interests of middle management and give them “skin in the game” of long-term survival. Traditionally, this was done using corporate pension schemes rather than the more common employer-subsidized individual contributor systems preferred in modern business. Other approaches typically involve employee ownership, including stock grants or stock options with vesting periods typically exceeding five years. Such systems have had limited success in creating a middle-ranking workforce truly vested in long-term corporate survival. Leaders need to think deeply about how to align the interests of highly mobile, economically secure middle managers if deep maturity is to achieved and sustained.