BDD is the anchor that is weighing down your organisation’s agility
Beware the local optimisation trap!
“Project X will have to wait. It may be important to you but we have our own priorities.”
How many times have you heard something like this? How many projects, initiatives, requests (you name it) suffer unnecessary delays because of this mindset? What drives such behaviour?
In my experience, organisations that show these symptoms suffer from a grave case of an illness I call BDD.
Bonus Driven Development, or BDD, is a simple yet powerful prioritisation technique that goes something like this:
Where is BDD most common?
Bonus Driven Development abounds in organisations that operate under a silo mentality. These organisations promote resource efficiency, which translates into “keeping everyone busy”, at the cost of higher throughput times.
Focusing on resource efficiency means having lower levels of flow efficiency, creating efficient islands. This concept was coined by Niklas Modig and Pär Åhlström in their book This is Lean: Resolving the Efficiency Paradox as part of what they call the efficiency matrix:
“In this state (efficient islands), resource efficiency is high and flow efficiency is low. The organisation consists of sub-optimised parts that operate in isolation, where each part works towards maximising its resource utilisation. Through the efficient use of its own resources, each part contributes by lowering the costs for the goods or services being produced. However, efficient utilisation of resources comes at the expense of efficient flow. Flow efficiency for every individual flow unit is low. In manufacturing, this is represented by each component/product’s spending most of its time as inventory. In services, this is often represented in the form of unwanted waiting time during which the customer does not receive any value.” — This is Lean
In my experience, silos can take many forms: Sales, Marketing, UX, Engineering, Operations, etc. Some of them may be comprised of smaller silos, like Systems or Architecture in the case of Engineering. These silos work to maximise their resource utilisation. This is known as local optimisation.
Organisations that operate this way are prone to “catching” Bonus Driven Development.
How can you diagnose BDD?
Luckily, Bonus Driven Development is a pathology that is very easy to diagnose. What are the symptoms of an organisation that suffers from BDD?
- Multiple handoffs.
- An apparent culture of lack of ownership.
- Localised, disconnected decision-making.
- Fire-fighting.
- Conflicting goals between departments and/or teams in the same value stream.
- Delays caused by reprioritisation.
- Blame culture.
This is not an exhaustive list. I am sure there are other symptoms of BDD.
But what is the root cause? The silo mentality is generally seen as a top-down issue arising from competition between senior managers.
The source of this competition is usually related to the individual goals given to senior managers by the organisation. The competition turns less and less friendly the more conflicting the individual goals are between each other. Moreover, these individual goals tend to be tied to a juicy monetary incentive (the “bonus” part in BDD). It should come as no surprise, then, that managers set goals to the people “below” them in a similar way, in order to maximise their chances of achieving their goals and getting their bonuses.
Monetary incentives are not the (only) problem
If you have been paying attention, I only mentioned the term “monetary incentive” a few seconds ago. They only serve as a motivation for decision-making. But let’s be honest, who wouldn’t want a big, fat, bonus at the end of the year?
The real issue is a mis-alignment of the individual goals. Competition emerges because each individual realises there are limited time and resources to achieve the goals, so prioritising work that brings you a little bit closer to your goal (and to your bonus) makes total sense.
Sadly, money tends to work as a perverse incentive. It is out of the scope of this article to discuss this topic in detail. Even so, I have added a small section in the end dedicated to this.
How does Bonus Driven Development prevent organisations from being Agile?
“Organizational agility is the ability of the organization to pursue its strategic vision and realize it while anticipating the evolution of its business environment and adapt its strategic roadmap and related governance to this evolution.”
— Olivier Lazar
Without a clear vision, it is almost impossible to craft sensible goals. Without a clear vision, it is not clear when an organisation is achieving its expected outcomes. Without a clear vision, an organisation doesn’t know “what to adapt to”. Without a clear vision, it is easy to “just keep people busy”.
Without a clear vision, it is easy to fall into the local optimisation trap
If the efforts of the people of the organisation are not aligned under a common vision, the organisation will not be able to absorb the necessary changes to respond to market demand. If goals are not aligned with the overall strategy of the organisation, teams and individuals will “row in different directions”.
Bonus Driven Development is a disease that tampers with the teams’ vision. It forces them to focus their efforts on things that may seem important but in reality are irrelevant to the success of the business
What can an organisation do to get rid of Bonus Driven Development and local optimisation? How can it foster collaboration between departments and teams?
Align individual goals towards a common vision using OKRs
To foster collaboration and to fight local optimisation a company needs to pursue flow efficiency. To pursue flow efficiency means to put the system to work on the right things to deliver value faster. This means that instead of having individual goals, the whole system operates under a common goal (or set of goals).
To be able to adapt to change, organisations need ways to measure outcomes and to frame their strategy in a tangible way.
OKRs are a fantastic tool to achieve this. The theory behind them is out of the scope of this article, so I’ll just refer to Jeff Gothelf’s blog:
An example of how to align teams around a common vision could be:
Update your incentive programs to promote collective commitment
I have unintentionally stepped into a different topic: incentive programs and money.
I am not an expert on this, but I have some notions. I will only say this:
- If an organisation focuses on flow efficiency, it is the system that shares accountability for the outcomes. Thus, the individual performance of each “link in the chain” makes less sense.
- Individual performance reviews are necessary and a great way of motivating people to become the best they can be.
- To avoid Bonus Driven Development, motivate and incentivize managers that promote collaboration and collective ownership.
Endnote
Bonus Driven Development is a real thing. It tampers with an organisation’s ability to deliver value and adapt to the changes in the market and customers’ needs (a.k.a. its agility). If your organisation wants to be Agile it needs to operate under a common vision and to adapt its strategy based on tangible evidence. One way to achieve this is to use OKRs (the Jeff Gothelf way).
What is your experience with Bonus Driven Development?
Would you like to continue reading? Here is Part 2.
Thank you for reading.
Cheers!
