Agile People Fika Cast - Resource allocation budgets opposed to prioritizing flexibility with people

welcome to the adal people F cost we talk about how to navigate with agility in our [Music] organizations so welcome everyone to the adal people F this is a small podcast where we will talk or try to talk about different subjects uh in Swedish we call that Pro PR it's uh when you throw in a subject and then you let's see where we end up uh it's nothing planned it's just a subject that we will talk about and today's subject it's about resource allocation budget or if we should prioritize the flexibility with people so let's dig into that and see where we end up and today we are couple of people from agel people and we also have David Thompson with us so welcome thank you thank thank you so I think yeah I think for me it it boils down quite a lot to if we measure value or if we measure cost and I see that the tendency that many seem to to count it as a cost instead of seeing that the the the heart and soul of the company producing the value and then it's a value creating um not Department because we shouldn't Silo each other anyway but it's it's um it's a value creation instead of a cost creation or cost center I think that is the the the key difference in the point of view here I think and of course when we when we look at the world we live in and the the volatility and complexity and all that that we're in we need to be able to be flexible so I for me that points strongly towards the the risks of having budgets I've seen um during my my years that for instance one team they had this huge this idea of a great Innovation that could potentially save their customers lots and lots of money but they didn't have the budget in that money bag they had budgets in other money bags and that completely then hindered value equation in that in that scenario so just as an example since the budget seem tend to lock in people into not being that Innovative not being that forward leaning but just delivering on on committed deadlines for instance because you have committed or set up a project according to your budgets and then you strive to deliver that and you don't become very Innovative I think I think you're governed by those budgets and the performance targets that are linked to those budgets as well and as long as you are governed by that this will be your priority if you are not governed by that fixed Target for your department or your team or your area then you could be free to share your resources where it was really needed instead of trying to safeguard and and you know keep all your resources for yourself even if they are not utilized to 100% to try to keep the resources for yourself right if if you weren't govern by fixed performance charges on a on a and sub optimizing them for a part of the organization then you could share where where oh we see it's a bottleneck over there can we help you how can we support to remove that bottleneck you know and then you can share your resources so Dynamic resource allocation could happen in that case if we didn't C by fixed performance Target so but we have my take we also have people that uh maybe holds the money bag uh and they they don't want the things to go go crazy in the organization so how could we help them in that scenario than Pia yeah what is go crazy what's the definition of going crazy is it to is it crazy to allocate resources to the places where it's really needed right now is that craziness I don't agree um but just because things didn't turn out like we thought in October or November previous year it doesn't me mean that we go crazy it means that we adapt to reality and I think that's a lot of common sense instead of craziness but still we we maybe just have a set of money and we cannot break that uh number um so of course we should use that money in the best way but exactly you should you should use the money in the best possible way what you want is the most bank for the buck that you have right so so this is really using the resources in the wisest way possible because if you hold on to your resources and they are not used because you don't have a need right now for them and you see that somebody else needs the resources what's the most W wise way to use your money back it's to share right then create Common Sense budget it's maybe creates a false safe or something that yeah we give them that amount of money and then that that amount of money and then we have control of the over the costs that we have so what is control what is control can we answer that question maybe I I threw it out to you what is control to be able to sleep at night not go bankrupt if I play that person yes yes do we go bankrupt if we use the resources wisely or do we go bankrupt if we don't yeah wisely how do we build in wisely so we are not overspending so how we handle that I are you are you referring to me or somebody else anybody right what is using the money wisely is to use them where they are needed the most at the time they are needed that's why in my in my head yeah so so it's it's that we maybe are doing something else creating that or sense of control but in a whole different way so we are spending where we should spend but we're not overspending and we have we have a system that can take responsibility over the spending also they have maybe transparency uh into the budgets that we have and um can take that responsibility as an organization than being given money for their own for for their different apartments or teams or whatever it is I guess it depends how good we are at predicting the future isn't it it's it's okay as we mentioned last week about budgeting um but it's it's it's always predictive it's never reactive um and so whatever your best guess is today is you know that can go out the window very quickly and so if I think of my world which you would be Consulting and and if it's a discrete project then how are you resourcing that and in terms of the people not everybody comes on day one you know people come staggered during the different development stages and you know and that's deemed to be the most I guess Equitable way of sort of managing that resource but again what we're not managing um again is is effective that is you know what's what's the efficiency it's literally you're applying getting bodies on the ground for particular stages but that doesn't mean say they're going to be so effective you know it's and and then to even getting the subject of bankruptcy again if we are resourcing on a discrete project and that's running well and it's it's you know that's that's that doesn't mean to say the company can't go bankrupt because company will be running running lots of discret projects and there'll be their business as usual activities Etc as well so lots of things can contribute to a company's downfall and I guess it as as we keep coming back to it's part of a company an organization can't just be the one that seem to be agile it has to be the whole organization that that buys into it and appreciate that we're still very much that infanty we we see very little companies who are completely agile you know and um and until we start kind of correcting some of those those behaviors and understandings then you know um all all the good work in some areas doesn't translate across the whole or really and I've seen that um um recently here in the UK um a number of public sector companies have gone bankrupt you know um no that doesn't mean to say they go out with business because the public sector you know it has to be retained so it has to be it has to be some sort of rescue package and that that will happen I'm sure and but if it was a private sector of financial services then that can easily you know um falter and a good few of them have happened in recent times as well I agree completely and I think it's just of time um before companies started to realize these things and uh we are focusing a lot in aile people right now on this and we have a upcoming certification in in October where we will be focusing a lot on on agile for finance and how to think and how to act in an unpredictable world because we we realize that this sense of control that we are after in finance and in the whole company is just a false sense of security it's a false U belief that we can control people because we cannot control people they are complex adaptive systems and we cannot control reality what is going to happen the future is not predictable we don't have the crystal ball to look into and when we realize that um then it's a totally different solution that is required right uh so so the budget reach is because people are used to it it we always used to do budgets that's the way we do and um if you go to a budget meeting you're important uh and this ritual is something that people stick to because they want to keep their power and status and it it's human isn't it I guess and but also think that that is something about acting in a responsible way and if we have that control or that perceived control mechanism then we can always say that we acted in a responsible way so what is the the the new way of acting in a responsible way when we accept the complexity we're in yes the responsible thing is to adapt and change with reality not following a predefined plan that doesn't match reality yeah and then also as I started with to to see to measure value instead of just costs yes I think so what is the potential in the value creation instead of what is the cost of that of course you need to balance the two but as long as you are on the plus side of things that's that's where you need to be if if we find an initiative along the way I mean during the year that we didn't even see or think of in in the in the end of the last year then we need to take that initiative and we need to do do something about it if we make a quick calculation wow this has huge potential compared to what we decided to do then we need to reprioritize what we should be doing or not maybe it's a it's a change in in the program planning and so on and but but people also have a tendency to stick on to projects which they have invested a lot in have you noticed that yeah that that oh but we invested so much into this project we cannot you know see it as a sun cost we cannot just just leave it to die now when we invested so much so and and that's just stupid really to to think like that very true exactly and I think also if you Embrace agility at at the heart of it then you have the iteratively incrementally delivering value and that only its own if you if you manage to to tie a uh a different business model to that then you reduce the risk as well if you long working long projects of course then you build up H huge risk of delivering something that's not really um attractive from the customer's perspective so if you cut that down into smaller deliveries incremental deliveries then you're the cost isn't that the risk isn't that high actually and then you actually design to to Pivot and to to change direction so you do an evaluation every time you finish a Sprint you say yeah should we continue now or not is there a chance that we could deliver more value or not and we make that no go noo decision after every Sprint uh this is a very good recipe for success and as I see it there it's it's very nice moving towards being more flexible with people but you need to have more in the organization we have been talking about some of them and uh one one more aspect yeah of course the the value creation that's connect really connected to flow as I see it and here many public sectors are suffering quite a lot because the system they have built it's very Silo oriented and within those silos there is a fixed budget with a fixed number of people but those silos could be huge bottlenecks to create flow and uh that more or less damag the whole system so it's very little value coming out uh and it's very costly to have sometimes a sick person moving through that system and and there is also the notion of fulltime employees FTE so for this function we need five FTE you know full time employees but how do you know I mean it depends on what employees we have right if they are really focused really engaged and very motivated and skilled and we don't need five St but but we are treating people like they are resources here we are treating people like they are changeable like pieces in the puzzle right so so this is also a fundamentally wrong um thinking that we can just exchange one FTE for another one we can't because people are different and can contribute in different ways and it depends on many many things if you can or not contribute uh there value there on to the classic one that uh yeah we need to put some more effort into this just add some uh some millions and add three or four more people into something that is suffering from something else than the lack of resources or lack of people they are maybe struggling with something else but it's really hard to see that from a distance instead you just see it's we don't get the value we we are looking for fast enough add more people and then you add a lot of more complexity and uh you of course you need to train and onboard people and that that's that's suffering and then you also have all the communication ways between people and all these things that making us fail even and the loss in the end is maybe even bigger I'm thinking maybe it would be better to decrease the number of people in in those instances that you are describing Daniel maybe you should split it up in smaller teams instead and and and maybe remove one person per team uh and and then see what happens you know and you need to add this way of experimenting and trial and error Let's test this and see what happens that is not on the on the menu for these projects which are driven in that way I think it I think it's not uncommon that you see that for instance if you have a a big demo or something that you need to to prepare I have an example from an automotive U exhibition where a team had to deliver some kind of prototype or something and then they selected people into a team that worked together for 3 four months and the the outcome was extraordinary so everyone was kind of shocked saying but how come that this team it was kind of a temporary team they didn't know each other well they delivered such good value in such short time and I think that that's back to they were quite few they had a clear objective uh and they were had a scope that was well defined I think that is often I think that points towards the direction you're at P that having smaller teams with better focus is always winning above having bigger teams with a more messy Focus or messy scope absolutely Steve Dunning he's talking about the power of the small teams yeah the power of the small team because it doesn't come that complex it's easier you know short communication paths yeah and and and there's less Reliance on a smaller team than you know there's no hiding behind that wider team group to say well you do all the work and I'll just sit over here and cheer you on type thing um you know and and just hide and just ride the wave and I mean there's a running joke here in the UK prob proba Universal is that in public sector takes three people to do the job one to do it and then two to make the tea um you know and and it's that lay those nonsense type layers within a team who just you know passively just contribute no value you know and if you if you if you cut that make it make it two people you know one to do the job and one to make the tea then fine you can you can rotate but at the same time you've got no one else to talk to with each other so you've created that small team and you you automatically holding each other accountable you make the tea today and I'll make it tomorrow fine let's move on yeah I have for me I get this picture in my head uh from when I took lean trainings and uh they they show this small stream and if you're stressing the stream a bit you lower the water in it you will start to see the big stones that is hindering the flow in the Stream so that's a bit what we're talking about yeah removing the people will stress the system because if this the stream is too fat and happy we may be not seeing these bottlenecks so uh we might have a lot of rework within the stream that someone one is doing in the Stream what we need to remove also to see uh but now we are also moving into something else what should we do yeah should we just remove people what's the value yeah I think I I came to think of Sven Erikson you know him well as well maybe David coach for England a few years ago in football or in soccer and and I I've heard a story saying that he always always have this one person in the team who is maybe not the best player but he contributes to building the others to cheer them up so they produc much better and that is kind of that it means that he he focuses on the value creation and not the cost so that we can at least relate to this topic so that is an active decision saying that okay this will cost a bit more but the value we get out of it is still on the plus side of things it's not Direct Value but indirect value indirect value yeah something the others to perform better right yeah and I think that's typically what we see with Team coaches getting the the team to play better and work better together than having a quite dysfunctional team working in silos maybe and and not getting the value out yeah and and I guess one thing that's it's a good point just to stay on football but to stay to to move on to women's football and it's quite interesting because so the women's football come to more prominence in recent times and and obviously Spain won the World Cup recently and but what each of those successive those teams do is that they they don't just credit themselves for the work of the achieving the goal they go back in history and say we're only as good as the Legacy that was created for us so so I think in terms of that value creation if we say it's only within a finite period of time then you're you're you're liability to be miscalculating there because there'll be Val there'll be huge value leaps in one period and then less a reduction another and so therefore as you net it out you know it's either up or down but the way to Value um I guess value or efficacy if you like is to say it's it's a progression it's it's born out of Legacy it's heading in the right direction it's not intended to have finite points although for financial purposes or regulative purposes we will do that but we're still staying in the game and we're reaching a higher goal you know and you know and and I think when when particular organization and when we talk about flow people just don't understand exactly that that white that bigger picture you know that that that kind of you know your future is bright is getting brighter you know you personally might not see it but you're you're creating that Legacy for um future for your community for society as a whole you know and I think that's always a good one when you talk to public sector because they're serving the P the public the community as a whole directly that's that's the main customer you know it's um you cannot ignore that okay if you're in a manufacturing or IT company you might not be directly involved with your customer but you should still see that your impact and and the value creation is greater than than you yeah what is the first step then moving into this direction if you're are more of a traditional organization and you you have a resource allocation uh highly connected to budget it's inflexible and uh we suffer in our organization from it so how what's what's the steps we know of them question the annual budget and uh start to make changes as needed instead to the annual budget that could be a first step that you start to think like the budget is something that is a moving Target and um don't reward People based on performance against fixed targets that's a start that's a start any other ideas I saw David you were thinking of it I'm always thinking about Daniel it's not always sensible Anders threw me there when he mentioned the the England quote um okay yeah yeah I mean it's always a tough one when you're dealing with traditional organizations because obviously whatever I guess regardless of how tiny the The Habit that you're asking them to change it's it's always going to be a difficult conversation isn't it because the minute they hear you talking then they're going to think oh you're talking about agile and you're talking about this and you're talking about that and all that misconception that they have around agility um and so you're kind of still introducing those half steps of you know how successful do you think you're being okay you might be making a profit but what what's what's your impact what's what's what what are you really doing that suits the vision that you you set out or your founder set out to to achieve are you are you still on track for that and if and if if the answers are resounding yes then fine carry on if it's not which is likely to be not um although they might not admit it um but you know almost just pull those strings and say listen have you thought about this changing the way that you view things not everything's in a uh an annual cycle things are beyond that you know your your existence is beyond that um your survival was beyond that um so can we think you know what what are what is it you we still aiming to achieve what we set out to achieve and sustain that so um yeah absolutely from a financial perspective budgeting is always the um the one that's completely uncertain um and it is just predictive so so yeah absolutely P let's let's go let's go um agile for finance yes alongside alongside H alongside HR as well yes and and contact the guys from Beyond budgeting they are not talking about agility at all we made the training together with them they are not talking about agility it's not about agility it's about survival and it's about having a modern leadership and governance for for the future that's what it's all about being profitable in the longer perspective and seeing that if we do it this way what might we then uh what profit might we then have not the profit we have today maybe we can even increase to think in a different as and maybe that's the thing um the approach to take then p is that we don't say that agility is the end goal agility is the enabler and that we we know that that will probably be replaced at some point in in in the future and uh that'll be that next asp irational step and there might never be an end game there might never be you know but it's it's always aspiring to to keep improving something else yeah absolutely so uh one other step we have also talked about it uh it's to take the training with us at agile people and if you're interested you can have a look at Adel people. and there you can find the the latest training that will soon be launched with Beyond body team so with that said the f is over for today see you next time byebye see you thank ni you cheers take [Music] care