Economics, Models, and Money - No Fluff Just Stuff

Economics, Models, and Money

Posted by: Johanna Rothman on October 13, 2011

Israel Gat had a great Agile Cutter Advisor recently, the Friction of Agile (registration required). He discussed the friction of agile going up in geographically distributed teams because of the dis-economies of assimilation (the space-time continuum problem, and the issue of under-funding the infrastructure of the non US-based teams). He had a stunning (to me) quote from a manager, when he explained what moving to agile would cost:

“Such investment will break our economical model.”

Wage cost is not the same as project cost. And, if you don’t outfit the “remote” team with the necessary infrastructure as the “headquarters” team, you can save a bundle. (Do you hear my sarcasm?) Of course, you pay for it in the cost of communication, the cost to ask a question, the overall schedule delays, and project cost. And, if the remote team are the testers and the headquarters team are the developers, well, guess what? You’ve got second class testers.

Types of Teams

Types of Teams

In agile, we can’t afford second class testers (or second class remote teams), because the delay in acquiring information during the iteration is too high a risk. That’s Israel’s Friction of Agile bumping against the economies of scale.

If you look at the types of teams in this figure, you can see that everything above the middle line, the co-located and distributed cross-functional teams, have a shot of working well in agile, assuming they have adequate tools. Silo’d teams, and the dispersed teams have built in delays because they are not already cross-functional. Can you make them work? You can make anything work. Will they have communication delays? Yes.

But, as soon as you remove adequate tools from distributed teams, all bets are off.

If your economic model for distributed development is this: “Don’t pay people and don’t pay for their infrastructure,” I have a reply. “You can ‘save’ all you want on wages and infrastructure. You will pay for it in defects, technical debt, unhappy customers and eventual product death. Is that what you want?”

Infrastructure is inexpensive these days. I don’t understand why you would technologically handicap a team.

Johanna Rothman

About Johanna Rothman

Johanna Rothman, known as the “Pragmatic Manager,” offers frank advice for your tough problems. She helps leaders and teams learn to see simple and reasonable things that might work. Equipped with that knowledge, they can decide how to adapt their product development.

With her trademark practicality and humor, Johanna is the author of 18 books about many aspects of product development. She’s written these books:

  • Project Lifecycles: How to Reduce Risks, Release Successful Products, and Increase Agility
  • Become a Successful Independent Consultant
  • Free Your Inner Nonfiction Writer
  • Modern Management Made Easy series: Practical Ways to Manage Yourself; Practical Ways to Lead and Serve (Manage) Others; Practical Ways to Lead an Innovative Organization
  • Write a Conference Proposal the Conference Wants and Accepts
  • From Chaos to Successful Distributed Agile Teams (with Mark Kilby)
  • Create Your Successful Agile Project: Collaborate, Measure, Estimate, Deliver
  • Agile and Lean Program Management: Scaling Collaboration Across the Organization
  • Manage Your Project Portfolio: Increase Your Capacity and Finish More Projects, 2nd edition
  • Project Portfolio Tips: Twelve Ideas for Focusing on the Work You Need to Start & Finish
  • Diving for Hidden Treasures: Finding the Value in Your Project Portfolio (with Jutta Eckstein)
  • Predicting the Unpredictable: Pragmatic Approaches to Estimating Project Schedule or Cost
  • Manage Your Job Search
  • Hiring Geeks That Fit
  • The 2008 Jolt Productivity award-winning Manage It! Your Guide to Modern, Pragmatic Project Management
  • Behind Closed Doors: Secrets of Great Management (with Esther Derby)

In addition to articles and columns on various sites, Johanna writes the Managing Product Development blog on her website, jrothman.com, as well as a personal blog on createadaptablelife.com.

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