[Shane's full question: Good morning, this is Shane Hastie with InfoQ and we are here at Agile 2012 Conference and I’m talking with Pat Reed. Pat is a member of the Agile Alliance Board and she is an Agile consultant with iHoriz. Pat welcome and thank for talking with us today! You’ve been doing quite a lot of work lately talking about the new or trying to create a new Agile Accounting Standard, do you want to tell us a little bit about why such a thing matters, isn’t accounting just a boring stuff that happens in the background?]
One might think, but actually Agile Accounting is a blocker to Enterprise Wide Agile Adoption on a large scale basis, because all organizations need to subscribe to a fairly rigorous set of standards that dictate how we would track and manage and report project labor costs and because those standards were written in the 1990’s, when Waterfall was the dominant methodology of choice, the language of the standard was written around a staged-gate approach and was written in language that is very much Waterfall-centric.
So the blocker that is happening today is as organizations adopt Agile, especially as we adopt Agile and extend those to larger budgeted projects, there is an inconsistency or an incompatibility sometimes a natural friction that occurs between our accountants and our financial reporters, ability to interpret how we should consistently track project costs and because of that they exercise one of the accounting standards or principles of Conservatism and often times will either over-expense projects or mandate the projects of a large scale cannot be leverage an Agile accounting practice, so make sense that that would be a blocker.
2. They can’t actually use Agile because the accountants say “No” ?
Exactly, and the accountants say “No” because first of all they don’t understand Agile, and they don’t understand how to map our Agile principles and practices to their accounting principles and practices. At face value they might appear to be inconsistent, but in reality there are actually more consistent, so one of my passions around this area is to really enable large scale and Wide Spread Agile Enterprise adoption to be able to empower organizations to see the real benefit of Agile and how they actually compliment the accounting. So the approach that I’ve taken with the program that I’m directing for the Agile Alliance is multi-faceted: one is educational to be able to help Agilists understand what those accounting principles are and why it’s important for us to understand those from an advocacy point of view, so we can give them the information they need to help us be successful.
Leveraging Agile broader across the entire portfolio for those multi billion dollars projects, for those really large scale projects, and then also to help the accountants understand Agile. You know sort of have this mutual educational experience to build a conversation or create a space for a conversation to occur and to build a partnership so we can work together to benefit the organizations. This is also a problem that affects all organizations not only just in the US, but worldwide, because from a practicality and from a consistency point of view these Accounting Standards are consistent worldwide, they are all around investor confidence in our consistency of a charging project labor costs; does that make sense?
3. It does, so you are working with the financial standards baord?
The long term solution is going a require us to create an Agile standard. So what we are doing is we are going to be working with FASBI emerging issues task force. I’m also working with corporate executives, mostly individuals that are controllership level, the controllers office, accounting executives, CFO’s, management audit, each of these experts needs to understand the problem and needs to understand the benefits of what Agile brings to their organization in terms of being able to better manage their capitalization and project expense costs. So it’s working with corporate executives, working with other consultants and working with accounting experts to come up with a long term solution.
4. That is a world that changes slowly?
Yes, that is a world that changes slowly and the challenge we have in getting a sufficient critical mass to gain their attention is the challenge, so the approach that I’m taking, a two-fold approach: one is to work with the Agile Alliance in terms of forming this program and having a sufficient case studies and sufficient training materials and sufficient exposure through a letter writing campaign to have corporate executives of a significant organizations, send letters of concern or interest to the FASBI emerging issues task force to heighten their awareness of the criticality of this issue relative to all the other issues that are focused on right now. So I do expected to be slow but we will be persistent.
5. And people can find out more about this through the Agile Alliance website?
Yes, I welcome people’s interest and please do check out the Agile Alliance website and program updates, we are going to be posting free educational materials, workshops, FAQ’s, case studies, sample letters and have a forum to create a community of practice so we can have a forum of people helping each other as they work through this challenge.
Right, thank you Shane, there is another area of that I’m passionate about in terms of being able to make a difference for sustainable agility. As we’ve gain significant traction over the past ten years in our ability to understand how to build cohesive teams, even how to deal with the challenges of distance and effectively leverage Agile principles and practices to the benefit of team dynamics. What we are finding is organizationally there are legacy components of organizational reward structures and organizational career pathing structures that are actually counterproductive to the gains that we’ve gained in terms of Agile advancement, and I recognized this is another blocker Enterprise Wide Agile Adoption from a sustainability point of view.
To get real traction we are going to need to challenge and modify not only the reward systems, performance management systems that are actually undermining our advancement or our progress in building high performing teams from a sustainability point of view, so I’ve developed an Adaptive Career Framework and an Adaptive Performance Management Framework that focuses on the unique value that each individual can contribute and the importance of us as Agile managers and Agile leaders to create a space that actually takes a bolder approach to really challenge some of those antiquated reward systems and create an opportunity, co-create opportunities with each individual employee, or each individual team member, to create an opportunity where they can each be their best, focus on what their unique qualifications and capabilities are and where they want to go with their career. The level of engagement and the level of effectiveness of their organizations will benefit from this is significant and so it’s an area that I’m passionate about.
7. Surely the very professional people in H/R believe that they’ve got this right already?
It’s not unlike the challenge that we are facing in the accounting side where there is a traditional legacy performance management system, I think in spite of the fact that they all know there are some broken areas of this, they don’t know what the solution is and they don’t have sufficient incentives, they don’t have sufficient metrics or sufficient incentives to quantify the impact. I think if you are familiar with some of the great work that Daniel Pink has been doing lately in terms of motivation and engagement, the numbers are staggering in terms of the multiple billion of dollar problem this creates in terms of lack of engagement.
When you look at the statistics and some very reputable Gallop poll studies, you’ll find that 50% of our employees are only 50% engaged and there are 20% that are actually unengaged, when you look at the difference of performance and the difference of actual levels of an individual’s feeling of satisfaction in career growth, it’s a tremendous opportunity. We look at the seven wastes of that we are dealing with in systems, the 8th waste, or the greatest waste that is out there is disengaged employees or partially engaged employees who are undervalued and who fail to truly achieve their true potential because they are boxed into a career path or they are boxed in to a role that is very constraining, that is not truly empowering them to achieve their true potential and to achieve their highest level of performance, so the reward structures and most of the support structures that are out there are counterproductive to the benefits that were gaining in those very effective cohesive Agile teams, those high performing Agile teams and I think that it’s a critical problem to Enterprise Wide Adoption and sustainability of Agile.
It’s one of those unintended consequences, certainly is our HR value business partners or accounting business partners, we are designing solutions that was not the intend but if they are insufficient mettrics to measure exactly how effective the solution is, they are not open to wide spread organizational change and they are not aware of the unintended consequences that could turn toxic. I mean when you look at it in terms of classical performance management solution, which would be a forced ranking of individuals, and pitting individuals against each other.
In our Agile teams we are working so effectively to build a collaborative environment and we advocate trust, we advocate collaboration and we advocate focus on customer value as our highest values, yet if we don’t have a support structure that helps our teams to actually sustain that, we can have the most effective working relationship in the world, but if the only way I’m going to get promoted is at your expense, that does create an environment that is not only inconsistent but can become toxic, in terms of my career advancement or your career advancement, so does that make sense, is broken unfortunately.
9. And the model that you are proposing, help fix that?
Yes, the model that I’m proposing would actually shatter the existing not only career pathing process, but the career pathing process in most organizations is very similar to the promise management process, is very siloed and it’s not conducive to true growth, to true individual potential and self actualization, it’s also a not conducive to innovation or organizational knowledge transfer. That can happen more naturally and more dynamically if we look at each individual in terms of their unique potential that they bring to the table and where they want to go.
As Agile leaders, if we create a space that is focused on their highest level of interest, of their highest level of potential, and create an environment possibly even use metrics that are asking individuals to self-assess how much of my time personally am I spending in optimal performance or “flow”, and if there is something blocking me, work with my manager to actually co-create a solution for that, that doesn’t really happen in most organizations, most of performance management are these very structured cookie–cutter mid-year reviews and I think most people at least that I know, sort of dread those reviews, and we hate them, it’s like a necessary evil and it’s those what I subscribe to is, if any of the practices that we practices Agile as Agilists is not creating value, then it is creating waste, and that waste can accrue to toxic proportions if we are not attentive to taking on some of those big blockers and I think performance management and classic career pathing are big blockers to real true engagement and organizational effectiveness in a wide-spread spread Agile scale.
10. And if people want to find out more about this?
And this one, we haven’t developed a program yet for the Agile Alliance but it certainly has perspective. They are welcome to, (is my contact information made available Shane? Great, )they are welcome to follow up, I would be delighted on either one of these topics to do individual coaching sessions or just connect with people who are interested and who would like to join the community practice around developing these tools.
Great question Shane, I find great value in my contributing role as an Agile Alliance Board member and I think we have an opportunity as an Alliance to sort of self organize and identify where we have opportunities for voluntarism, for example as we are talking about these two initiatives, there may be a number of members that are passionate about these areas, but they don’t know where they might be able to contribute, they don’t know how they might be able to make a difference. So I do think as a membership, we have an opportunity to kind of coalesce and form communities of practice where we can make a difference. As you are sharing with me the story of other organizations or other teams who have done so, so I think we do have a greater opportunity to work more effectively together through voluntarism and through communities of practice, to grow and make a difference.
Shane: Pat, thank you so much for taking the time to talk to us this morning!
My pleasure Shane, thank you!