Episode 11

Bryon Kroger (00:05):

Over the past few episodes, we've tackled how to structure teams, shape culture, and create alignment in a way that's scientific, iterative, and sustainable. But even the best teams solving the right problems can't sustain modernization efforts if the system around them is broken. And nowhere is the system more broken than in large enterprises with limited financial, human, and political capital. [00:00:30] Today, we're going to talk about how to fix it by replacing rigid annual budgeting and heavyweight steering committees with a modern model for goaling and governance that's rooted in evidence, speed, and trust. Let's start by being honest about the traditional system though. In most large organizations, funding is tied to an annual budgeting cycle. And in the government, it's tied to a multi-year congressional level budgeting cycle as well. But once a year, leaders come forward with detailed plans [00:01:00] for specific projects, and they ask for millions to build a pre-approved solution over the next three to five years.

(01:08):

My friend and serial Fortune 500 senior leader, Paul Gaffney, he calls this the project pageant. This process is the single greatest destroyer of value in the enterprise. It's the reason that zombie projects exist. Those multi-year, multi-hundred million dollar programs that everyone knows are failing, but they continue to lumber on consuming [00:01:30] resources because they have what we call entitlement funding. The traditional system forces you to start with the answer. It demands that you commit to a specific solution years in advance. Long before you've ever talked to a user, written a line of code, or validated a single assumption. It's a process that optimized for being right on paper, not for delivering results in the real world. And so we have to burn that model to the ground. It is slow, [00:02:00] opaque, and the opposite of Mission O/S, where we ship, learn, and iterate. Our new model starts where the last episode's left off with the Improvement Kata.

(02:10):

So after we've grasped the current condition, the third step of the Kata is to establish the next target condition. You can't have good governance if you don't have clear goals. So for this, we use a structured goaling framework. You can use any framework, but my preferred tool for large enterprise is OGSM. Objectives, goals, strategies, [00:02:30] and measures. Your objective is your qualitative vision. It's the what. It should answer the question, "how will the world be different?" A good objective is something like, "be our customers one-stop shop for their finance tasks." A bad one is "implement a user portal by Q3." Your goals then are the numbers. They are the time bound, quantifiable articulation of your objective. So if your objective is to be that one-stop shop, [00:03:00] your goals might be "reduce customer churn by 15%, and increase weekly engagement by 25%. Your strategies then, are the choices you're making to achieve those goals.

(03:14):

This is the how. For example, we'll create a mobile first application populated with both educational and customer specific data. And your measures are the metrics that tell you if your strategies are actually working. These are your leading indicators. So for [00:03:30] our mobile app strategy, our measures might be weekly feature usage and app store rating. What makes this framework so powerful is that it cascades clearly in complex domains. And this is a problem that I frequently run into with OKRs in large, complex organizations. In a large organization, the strategy at one level becomes the objective for the next level. So the corporate strategy to connect products to customer needs becomes the objective for [00:04:00] a division or many divisions. One division's strategy might be to enable a frictionless selling experience. That becomes the objective for a product group. This creates a clear unbroken line of sight from the highest levels of the organization down to the daily work of an individual product team.

(04:19):

It's how we create the alignment to let decentralized autonomous teams solve problems. Clear, measurable goals are the prerequisite. But you still need a mechanism [00:04:30] for governance and resource allocation. For this, we like to replace the old slow steering committees and program management reviews with a growth board. A growth board is a lean, cross-functional group of leaders that acts like an internal venture capital board for your enterprise. They don't meet annually. They meet regularly, maybe every quarter or even more often, and they make decisions about how to allocate resources to teams and problems that are showing the most promise based on evidence, [00:05:00] not ceremony and project pageants. The growth board doesn't review thousand-page program plans. They ask a simple set of focusing questions like, "How do we measure mission success? What are the riskiest assumptions this team is making? What have they learned since we last met?

(05:16):

Based on evidence, should we pivot or persevere?" And crucially, the growth board acts as a blocker removal service. When a team comes to the board and says, "Hey, we're being held up by this policy or we can't [00:05:30] get access to this system," the board members don't just listen, they take action to clear that path. And that brings us to two great heresies of modern governance. The two ideas that will feel the most radical and also hopefully the most powerful for your organization. The first heresy is this. You fund teams and problems, not ideas and solutions. In the old world, you ask for money to build a specific thing. In the Mission O/S world, the growth board allocates [00:06:00] budget to a high performing balanced team, and gives them a clear mission problem to solve, aligned to that OGSM. They say, "Here's your funding for the next six months.

(06:09):

Your mission is to reduce the tanker planning timeline. Go." And so they're funding the capacity to solve a problem, not a predetermined solution. They trust the team closest to the users and the tech to run experiments and discover the solution that works, and this completely inverts the traditional model. [00:06:30] Now, I realize the federal government budgeting cycle is still a fact of life, but in this model, we can employ strategies. Like in the DoD, we could align funding to multiple budget program activity codes or BPACs under a single program element so that money can be moved between initiatives without triggering reprogramming thresholds. For instance, we might want to defund a team that is failing to deliver and give that money to a team and a problem that's showing high ROI. [00:07:00] In this case, the money doesn't need to be reprogrammed because it's all aimed at the same problem or capability gap.

(07:06):

And so what we're really doing is establishing a portfolio structure that offers maximum flexibility to reallocate funding within it. The second heresy is just as important. Leaders are not managing ideas, but rather establishing the permissions needed to optimize for growth. The board members aren't there to be the chief product managers. They aren't there to second guess the team's design [00:07:30] choices or suggest features. Their job is to establish the strategic alignment, provide context, and then get out of the way. Their role is to ask the hard questions and remove the organizational friction that's impeding their teams. They empower the people at the edge to make decisions and deliver value. This is the new model. You start with clear cascaded goals that define your target conditions. Use a lean agile growth board to make regular evidence-based funding decisions. And [00:08:00] then you adopt a mindset of a venture capitalist, funding great teams to go after hard problems.

(08:07):

This is how you kill the zombie projects. This is how you escape the tyranny of the annual budget cycle. This is how you build a governance system that enables speed and learning instead of stifling them. But even with the right team, clear mission, and a better governance model, strategy is just theory until someone ships something. In a world run by software, [00:08:30] execution is everything. In the next episode, we'll talk about how the smallest act of delivery, getting hello world into production, can be the most strategic move that your team will make.

(08:55):

Cascaded goaling frameworks like OGSM can feel really stifling [00:09:00] to creative, fast-moving product teams, and I see them often resist that level of structure. I think what's important for these teams to understand is that their ability to fulfill their purpose and their mission is dependent on them continuing to exist and hopefully, scaling, right? Growing. And the enterprise is never going to let that happen unless they can see how what you're doing ties into the big picture mission impact that they're trying to achieve [00:09:30] and seeing that over a longer time horizon so that you're getting to the level of impact that registers on the enterprise dashboard. So you could do really great things for your user group in this small section of the mission value stream, and it means absolutely nothing to the person who's looking at the big picture. And so even when you're just getting started on what you're doing, it's so important to be able to show in a roadmap how what you're doing, [00:10:00] the target condition that you're chasing... that you're going to achieve, can be mapped out to the next target condition, the next one, the next one.

(10:08):

However far out, and look, I realize once you go two, three years out, you're getting much less granular, you have much less confidence. And we know that things can change based on what we learn in reality, in the messy real world, but mapping them out is still important so that people see that you understand the big picture and that you're aligned to it. That alone will [00:10:30] help you not only continue to exist, but get more resources so that you can grow and do more for the mission and the purpose that you and your team have.

(10:46):

When I think back to the first growth board that I ever established, we kept the membership pretty internal to the transformation effort that we were leading. We didn't really pull in a lot of the external stakeholders and [00:11:00] especially the mission stakeholders. Now, I think that's probably appropriate to start because the first thing I want to tell you is that your first growth board and your first set of OKRs or OGSMs, whatever you try to use, is going to be really ugly. It takes a long time to get good at even the OKRs or OGSMs, let alone building a management framework around them that functions well. I would say it took almost a year for us to get to a place where I felt good about both of them, and even then [00:11:30] there was still tons of room for improvement. So maybe you don't want to invite external stakeholders to the ugly iterations, but I will say that at some point you do need to bring them in because if you don't allow them to see that world, to see that you understand the big picture, that you have a real plan in place to get from current condition to, not only the next target condition, but the ultimate direction or challenge that they're trying [00:12:00] to solve for, if you don't do that, you're not going to get the resources you need.

(12:05):

And so building that picture for them and bringing them into it and even giving them inputs, but at the same time, making sure that you establish the conditions for the growth board and what the roles and responsibilities are on the growth board and staying true to that, if you can do those two things well, you will really unlock a lot of future growth, especially as it relates to getting the resources you need and unblocking [00:12:30] the problems that get in your way.

(12:38):

Early on, in almost every digital transformation, the biggest blockers are all around path to production. And so on one of the first growth boards that I ran, a team came to us and said, "Look, we've been led to believe that we have to use the Kessel run path to production and it's not set up for us right now. [00:13:00] There's no way we can use it and get to our delivery timelines that we've promised to our users and to Kessel Run." Now, this was an eye-opening moment for all of the leadership on the growth board because I think we had been led to believe that we had built this amazing path to prod and it would work for all of the teams. But there's a lot of engineering work and maturity that goes into scaling across different use cases for applications to be hosted on this path to production.

(13:27):

And so what we ended up doing [00:13:30] was just telling teams, "You know what? Your responsibility as a team is to get your app into production on the timeline that we proposed. You should use whatever path to production that will get you there. If it's not Kessel Run's, that's okay." And so this immediately cleared the blocker from this team's path. They went and talked to a few other options that were available in the enterprise, found one that worked for them, and met their production timelines. [00:14:00] It's important to remember that the goal isn't the program's success. The goal is mission success. And so in this case, even though it might make the program look bad to have one of our application teams go use somebody else's path to production, the goal was not to make Kessel Run look good. The goal was to get mission capability in the hands of the Warfighter as fast as possible.

(14:26):

And if that has to happen somewhere else, then so be [00:14:30] it. And that also creates an incentive then for the platform teams to build a service that everybody inside the organization wants to use. And this created the best possible outcomes for us. We got capabilities into the hands of Warfighters quickly. The platform team quickly recognized that they had to earn people's business, and they went about doing that. And a year down the road, all of the applications did end up being on the platform team, but it was because it was the fastest way to get outcomes into the hands of [00:15:00] users.

(15:08):

Now, if you're leading a program in the federal government, especially inside of the DoD, you probably don't have the power to change the whole enterprise funding model tomorrow, but the first small step that you can take to introduce these principles of a growth board to your organization, would be to make sure you understand that while you can't cancel programs [00:15:30] or reprogram funding across programs, you can cancel or modify contracts. And so take the current contracts you have and put them through this growth board process. Instead of a quarterly program management review or PMR, do a growth board and reframe. I don't want it to just be a relabel. Reframe the conversation around what outcomes can we expect to see in production in the next quarter, and [00:16:00] slowly work them into these outcome oriented ways of working. And if they can't hit those outcomes, penalize them.

(16:09):

If you've got an upcoming option, just don't renew. Or use it to modify the contract in a way that gives you some levers to pull on them achieving the next outcome. And if you do end up pulling funding from that contract or canceling it altogether, use that funding to find teams and problems to go solve, and compete them against each other, and slowly [00:16:30] allocate the funding to the highest performing teams that are solving the most valuable problems. You can do this within your existing authorities, but you have to be bold, and you have to measure the right things, and you have to hold people accountable when they don't hit those measures.