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Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, www.parshift.com Agile System Principles and Practice ---- An Overview With a.

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1 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Agile System Principles and Practice ---- An Overview With a Focus on IT, Information Security Systems, and Business Systems INCOSE Chapter Meeting Albuquerque, NM July 21, 2004 Rick Dove

2 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Rick Dove Photo: Brian Zick Interim Exec/Change Mgmnt: - CIO at Silterra, President at ProMetal, Carnegie Mellon: BSEE, UC Berkeley: unfinished PhD in Computer Science 30+ years of start-ups and turnarounds Co-founder of Agile Enterprise concept in '91 at Lehigh Univ. Author: "Response Ability: The Language, Structure, and Culture of Agile Enterprise", Wiley, New Book: "Value Propositioning: Perception and Misperception in Decision Making", Dec 2004 Lives on Lama Mountain, Taos, New Mexico, at 8200 feet......Land of Enchantment.

3 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, This presentation will overview design principles of agile systems that arose from industry-led collaborative research during the nineties; and features a method for developing system dynamic requirements, a method for gauging the maturity of agile systems knowledge, and a method for developing insightful knowledge of agile systems. The presentation will highlight examples of agile mechanical systems, manufacturing processes, IT systems, and implementation processes. A new initiative for developing agile information security knowledge and changing the fundamental nature of security strategy will be previewed. A brief introduction to the true nature of decision making and how it reveals the talents required of project champions advancing value propositions will be previewed.

4 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, How-To Details Available at Amazon.com For additional writings….

5 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Uncertainty Ability to Respond Effectively Decreasing technology cycles Evolving business models Changing customer expectations Changing market profiles Fundamental Problem

6 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Language

7 Change Comes in 2 Flavors... Proactive changes are generally triggered internally by the application of new knowledge to generate new value. Proactive change proficiency: wellspring of leadership and innovative activity. Reactive changes are generally triggered by events which demand a response: problems that must be attended to or fixed, opportunities that must be addressed. Reactive change proficiency: foundation of viability and opportunistic activity. Attributed Copies Permitted © 2002 Rick Dove,

8 Correction Variation Reconfiguration Expansion (and contraction of capacity) Migration Improvement Modification (Add/Subtract Capability) Creation (and Elimination) Proactive Reactive Change Domain...and 8 Domains... Incremental improvement. Make or eliminate something. Foreseen, eventual, and fundamental change. Addition or subtraction of unique capability. Rectify a dysfunction. Real-time operating change within mission. Increase or decrease existing capacity. Reorganize resource or process relationships. Definition Attributed Copies Permitted © 2002 Rick Dove,

9 ...and 4 Metrics On-Time, On-Budget, On-Spec Predictability 100% 0% Elapsed Time Total Cost $ $ $ $ $ $ Activity Based Change Costing TimeCost ScopeQuality OK Stretch Sufficient Economic Range? Latitude Good Range Mission Boundary Bad Time Cost Quality Scope Attributed Copies Permitted © 2002 Rick Dove,

10 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Structure

11 System A group of components sharing a common interaction framework and serving a common purpose. Framework A set of standards constraining and enabling the interactions of compatible system components. Component A separable system sub-unit with a self-contained capability/purpose/identity, and capable of interaction with other components. Company of Divisions Team of People Cell of Workstations Practice of Procedures Basic Definitions Stereo System of Components Chain of Suppliers Attributed Copies Permitted © 2002 Rick Dove,

12 Note: 1 Dee Hock coined the word chaord for organisms, organizations, and systems which harmoniously exhibit characteristics of both order and chaos. The Birth of the Chaordic Century: Out of Control and Into Order, Chaordic Alliance, 1997, OrderedChaordic 1 Chaotic Lego Glue Model Lego Erector Set Frameworks: Three Types of Construction Toy Systems Attributed Copies Permitted © 2002 Rick Dove,

13 Peer-Peer Interaction Components communicate directly on a peer-to-peer relationship; and parallel rather than sequential relationships are favored. Deferred Commitment Component relationships are transient when possible; decisions and fixed bindings are postponed until immediately necessary; and relationships are scheduled and bound in real- time. Self-Contained Units (Components) Components are distinct, separable, loosely-coupled, self- sufficient units cooperating toward a shared common purpose. Plug Compatibility Components share defined interaction and interface standards; and are easily inserted or removed. Facilitated Reuse Components are reusable/replicable; and responsibilities for ready re-use/replication and for management, maintenance, and upgrade of component inventory is specifically designated. Distributed Control and Information Components are directed by objective rather than method; decisions are made at point of maximum knowledge; information is associated locally, accessible globally, and freely disseminated. Self-Organization Component relationships are self-determined; and component interaction is self-adjusting or negotiated. Evolving Standards (Framework) - Frameworks standardize inter-component communication and interaction; define component compatibility; and are monitored/updated to accommodate old, current, and new components. Redundancy and Diversity Duplicate components provide capacity right-sizing options and fail-soft tolerance; diversity among similar components employing different methods is exploited. Elastic Capacity Component populations in response able systems may be increased and decreased widely within the existing framework. Scalable Reusable Reconfigurable Response Able System Principles (RRS Principles) Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

14 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, SEMICONDUCTOR CLUSTER MACHINE Architecture: Reusable, Reconfigurable, Scalable Reusable Plumbing and Utility Module Reusable, Reconfigurable Production Process Modules Scalable-System Material Interface Module Reconfigurable Material Transfer Module User Reconfigurable Control Module Stylized Depiction of Precision 5000 Family, Applied Materials, Inc.

15 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, SCALABLE MACHINE CLUSTERS SEMI, 10/16/89 Document #1796 Cluster Tool Module Interface and Wafer Transport Standard Controlled Environment Inter-Cluster Transport Bay Cassette Module Process Module Docking Module Transfer Module

16 Key Proactive Issues Creation Create a new broad product family approximately every three years [tcs] Improvement Manufacturing cost [s] Machine calibration time [s] Customer yield curve [s] Migration Develop expertise in a new generation of science/ technology approximately every three years [ts] Modification Include new process capabilities in a machine when it becomes available [s] System Examples Systems Integrity Management Framework: Product manager Components: Engineering Inventory: Product manager Configuration: Installation crew AA A DE BD A BA D C BAE A A B B E D C Dedicated Parallel Processing Step Variable Steps Under Constant Vacuum Control Panels Transfer Robots Process Chambers Utility Bases Docking Modules Material Interfaces Components Key Reactive Issues Correction Time to return malfunctioning equipment to service, and effect that equipment outage has on total throughput [t] Variation Equipment configurations and process options [cs] Expansion Selectively expand/contract process-step capacity to meet (relative) long term product mix changes [ts] Reconfiguration Optional assembly procedures must meet local content needs of international contracts [qs] Product System - Response Ability Model: Cluster Machine (part 1 of 2) (Metric focus legend: t = time of change, c = cost of change, q = quality of change, s = scope of change) Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

17 Flat Interaction Scheduler in one base unit may access process history data for a process module on another base - perhaps to correct for a wafers prior process steps. Deferred Commitment - Process modules custom configured when installed. New process modules added when new capability required. User control modules are custom configurable for proprietary processing. Self-Contained Units (Components) Material interfaces, transfer robots, process modules, utility bases, docking modules, and user controls are independent units. Plug Compatibility Common human, mechanical, electrical, gas, vacuum, hydraulic, and control system interfaces. Facilitated Reuse - Processing modules may be mixed or matched within a cluster. Machine manufacturer extends/replicates process module family. Customer manages reuse of all modules. Distributed Control and Information Process history and tight-loop control located in process module, traveling with it when redeployed. Cluster controller manages macro-process and material transfer. Self-Organization Wafer path within cluster determined in real-time according to the availability of appropriate process modules. Evolving Standards (Framework) Standardization focused on individual module interconnect only: mechanical coupling, communication protocols, and utility connections. Redundancy and Diversity Machine utility bases are all identical, duplicate processing chambers can be mounted on same base or different bases. Elastic Capacity process modules per cluster. Docking modules can interconnect clusters into super- clusters. Transport bay can interconnect clusters and super-clusters without limit. We use this diagrammatic format, which we call a response ability model, to capture and communicate the interesting characteristics of highly adaptable systems. More is said about the use of response ability models as knowledge transfer mechanisms in Chapter 10. Comments made under the ten RRS principles above are representative examples of what is possible as a result of the actual Applied Materials Cluster Machine system design. Scalable Reusable Reconfigurable Product System - Response Ability Model: Cluster Machine (part 2 of 2) Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

18 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, AGILE ABS CELLS IN RECONFIGURABLE FRAMEWORK A4 A2 A6 D2 D4 D6 A3 A1 A5 D1 D3 D5 B4 B2 B6 E2 E4 E6 B3 B1 B5 E1 E3 E5 C4 C2 C6 F2 F4 F6 C3 C1 C5 F1 F3 F5 WSS

19 Key Proactive Issues Creation Design/install new-part production capability frequently and quickly [tcq] Improvement Customers are demanding a reduction in short run costs [t] Migration Moving from transfer line technology to next generation flexible machines brings different concepts [cs] Modification Higher product change frequency requires production process modification rather than replacement [tcs] System Examples Systems Integrity Management Framework: General manager Components: Operations manager Inventory: Operations manager Configuration: Customer account engineer Components # # # # # # # # Pallet Changers Work Setup Stations Loader/ Unloaders Guided Vehicles Rail Sections Work Setters Flexible Machines 3 Station Cell 6-8 Station Seasonal Cell Key Reactive Issues Correction Cost of lost production due to equipment malfunction and repair time [tc] Variation Prototype runs are more frequent, and require more varied machining options [tcs] Expansion Expansion and contraction of production capacity must accommodate unforecastable demand [tcs] Reconfiguration Salvage and reuse old production stages in new production configurations [cs] Process System Response Ability Model: Machining Cell (Part 1 of 2) (Metric focus legend: t = time of change, c = cost of change, q = quality of change, s = scope of change) Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

20 Flat Interaction Complete autonomous part machining, direct machine- repository program download negotiation. Deferred Commitment Machines and material scheduled in real-time, downloaded part programs serve individual work requirements. Self-Contained Units (Components) Flexible machines, guided vehicles, rail sections, work-setting stations, loader/unloaders, pallet changers Plug Compatibility Common human, mechanical, electrical, and coolant system interfaces. Common inter-module mechanical interfaces. Facilitated Reuse - Machines do not require pits or special foundations, and are easy to move. Account mgrs with P&L responsibility add/subtract resources as needed. Ops manager maintains resource pool. Distributed Control and Information Part programs downloaded to machines, machine history kept in machine controller and accompanies machine as it changes location, machines ask for work when ready. Self-Organization Cell control software dynamically changes work routing for status changes and for new, removed, or down machines on the fly. Evolving Standards (Framework) – General manager responsible for component commonality, and interconnect standards for mechanical coupling, communication protocols, and utility connections. Unit Redundancy and Diversity Cells have multiples of each component, all cells made from same types of components, machines have full work functionality. Elastic Capacity - Cell can accommodate any number of machines limited only by physical space for rail extension. A part can be made in multiple cells. One cell can make multiple parts. The representative reactive/proactive change issues are those perceived by the process owner/user making an initial transition from a fixed transfer-line configuration to a flexible cellular configuration. In time, a different set of issues emerge once the cellular configuration is the base perspective and the user expectations change. The examples of RRS system principles do not necessarily reflect actual usage of the Kelsey Hayes machining cells, but rather what is possible with the cellular configuration design. Scalable Reusable Reconfigurable Process System Response Ability Model: Machining Cell (Part 2 of 2) Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

21 Response Ability Model: JIT Assembly Systems (Metric focus legend: t = time of change, c = cost of change, q = quality of change, s = scope of change) Key Proactive Issues Creation Designing short-run assembly lines for new parts that come with long-run tooling [t] Improvement Productivity of limited space while increasing part variety [s] Migration Production of non-GM parts with non-GM tooling [qs] Modification Absorb employees from closed/downsized GM plants with different union work rules into cross-trained Production Team Member positions [ts] Key Reactive Issues Correction Union refusals to accommodate necessary work rule changes [cs] Variation High part production variety [s] Time available for new line design [t] New parts to accommodate with the JIT system [s] Expansion Absorb growing part variety [s] Absorb growing inventory of tooling [s] Reconfiguration Short-run assembly line construction/tear-down [t] Systems Integrity Management Framework: Configuration team Components: Component team Inventory: Component team Configuration: Production teams Weld Tips Controllers Production Team Members (PTMs) Hemmers Roller Tables Standing Platforms Mastic Tables Racks Components System Examples * * * Ctrl Programs ** Assem Areas P41 Deck Lid System Area B A47 Fender System Area A Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

22 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Culture

23 Stage 0 - Accidental - Characterized by: The lack of any change-process recognition, yet change manages to occur. Unpredictable completion and costs Surprising results and personnel reactions. Examples: Downsizing, fad-of-the-day, grueling overtime, fire-fighting, expediting. Stage 1 - Repeatable - Characterized by: Anecdotal lessons learned from past change activities. The time it takes to make a change is under control. Specific individuals/teams recognized for repeatable success. Stage 2 - Defined - Characterized by: The emergence of formal change processes with documented procedures. The base of practitioners is broadened as process becomes appreciated. Metrics for the change process are identified, cost of change is under control. Typically procedures are rigid and based on studied experience and analysis. Stage 3 - Managed - Characterized by: The appointment of change managers with established responsibilities. An evolving knowledge base of change process fundamentals and rules begins to emerge. Rigid procedures are loosened, and predictable change processes are the norm. Appreciation for and participation in the corporate change process is widespread. Stage 4 - Mastered - Characterized by: A principle-based, deep appreciation of adaptability. An understanding that process alone is not sufficient. Conscious engineering of business practice structures and organizational infrastructures. Corporate change loses its event status and takes on a constant fluid motion. Change Proficiency Maturity Stages Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

24 Supplier RelationshipsKnowledge Acquisition Proactive (Leadership) Assessment and Competitive Evaluation OpportunisticAgile InnovativeFragile A C B OpportunisticAgile InnovativeFragile A C B Product Innovation OpportunisticAgile InnovativeFragile A C B Comparing Companies A, B, C. Change Proficiency Maturity Model Metric WorkingCompetitive Development StagesFocusKnowledgeProactiveReactive 0 AccidentalPass/FailExamplesLuckyNone 1 RepeatableTimeConceptsCreationCorrection 2 DefinedCostMetricsImprovementVariation 3 ManagedQualityRulesMigrationExpansion 4 MasteredScopePrinciplesModificationReconfig'tion Metric WorkingCompetitive Development StagesFocusKnowledgeProactiveReactive 0 AccidentalPass/FailExamplesLuckyNone 1 RepeatableTimeConceptsCreationCorrection 2 DefinedCostMetricsImprovementVariation 3 ManagedQualityRulesMigrationExpansion 4 MasteredScopePrinciplesModificationReconfig'tion Opportunistic Agile Innovative Fragile Reactive (Viability) Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

25 Profiling Enterprise Change Proficiency Maturity Critical Business Practice 4.01Strategic Plan Vision 4.02Strategic Plan Dissemination 4.03Strategic Plan Buy-In 3.04Capital Investment Justification 3.05Infrastructure Investment Justification 3.56Business Eng. Investment Justification 2.57Business Unit Relationships 4.08Employee Relationships 0.09Partner Relationships 1.010Supplier Relationships 3.011Customer Relationships 0.512Information System Unit Relationships 2.013Production Unit Relationships 4.014Product Innovation Management 4.015Process Innovation Management 4.016Practice/Procedure Innovation Mgmnt 4.017Vision/Strategy Innovation Mgmnt 4.018Knowledge-Portfolio Strategy 3.019Knowledge Generation 2.020Knowledge Capture 4.021Knowledge Mobilization 3.022Leading Indicator Metrics 1.523Operating Metrics 3.024Health/Investment Value Metrics Maturity Working Metric Competitive Development Stage Knowledge Focus Proactive Reactive 0 AccidentalExamplesPass/FailNoneNone 1 RepeatableConceptsTimeCreationCorrection 2 DefinedMetricsCostImprovementVariation 3 ManagedResponsibilitiesQualityMigrationExpansion 4 Mastered PrinciplesScopeModificationReconfiguration Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

26 A newly built custom assembly line for each and every small-batch run, every time, just in time. Assembly Lines – Built Just In Time By Rick Dove, Paradigm Shift International, , Senior Fellow, Agility Forum Metaphor Story Look through Fred Mauck's eyes for a moment. You work in a GM stamping plant outside of Pittsburgh that specializes in after-model-year body parts. Your principal customer is GM's Service Parts Organization. They might order '73 Chevelle hoods quantity 50, '84 Chevy Impala right fenders quantity 100, or '89 Cutlass Supreme right front doors quantity 300. Your plant stamps the sheet metal and then assembles a deliverable product. Small lots, high variety, hard-to-make-a-buck stuff. Every new part that the plant takes on came from a production process at an OEM plant that occupied some thousands of square feet on the average; and the part was made with specialized equipment optimized for high volume runs and custom built for that part geometry. To stamp a new deck lid (trunk door) part you bring in a new die set - maybe six or seven dies, each the size of a full grown automobile, but weighing considerably more. And you bring in assembly equipment from an OEM line that might consist of a hemmer to fold the edges of the stamped metal, perhaps a pre- hemmer for a two- stage process, dedicated welding apparatus for joining the inner lid to the outer lid, adhesive equipment for applying mastic at part-specific locations, piercer units for part-specific holes, and automated custom material handling equipment for moving work between process workstations. You got a call a few weeks ago that said your plant will start making the Celebrity deck lids, and production has to start in 21 days. Not too bad - sometimes you only have four days. For new business like this your job is to get the necessary assembly equipment from the OEM plant, reconfigure the equipment and process to fit your plant, and have people ready to produce quality parts in the next three weeks. Others are responsible for the die sets and stamping end of the production process. In the last 12 months this happened 300 times. In the last five years you've recycled some 800,000 square feet of floor space in OEM plants for new model production. At this point you have assembly equipment and process for some 1000 different parts - but no extra floor space ever came with any of it. And no extra floor space materialized in your plant either. Good thing you haven't needed it - the core competency here is rapid new-part starts, and small-lot, high-variety production - in a business that is traditionally based on high volume economics - and you've learned to do it without the usual capital budget. Eight years at this has evolved some pretty unique techniques - and a pretty unique culture as well. You don't do this by yourself - you're a team leader that may use almost anyone from anywhere in the plant. At this point almost everyone is qualified to help bring in new work - surviving under these conditions has developed a can-do/let-me-at-it attitude almost everywhere, and a shared understanding of how to do it. Eight years ago the plant went to a single job classification in production, cross training everyone on everything - a press operator one day might change dies as well, the next day work in the assembly area building hoods in the morning and fenders in the afternoon - and the following day go off to another plant to review a piece of equipment or part for how to bring it back. For this new business Jim Lesniewski wanted to do the initial recon. He went on the last trip too, experimenting with his video camera. Now he thinks he's ready to do a perfect taping job. He got the idea himself while trying to bring several jobs at once back from another GM facility. This environment encourages self initiative. In addition to taping the operational assembly process he added close-ups of key equipment pieces this time. In the debrief review everyone saw the same thing at the same time - there was almost no debate over what to bring back and what to ignore - and you got a jump on the equipment modifications by seeing what was needed in advance. Some time ago the value of having a good cross section represented in these reviews became evident: nobody gets surprised, everyone shares their knowledge, and when the eqchine, two welding robots, the welding fixtures, two press piercers, the shuttles, the press welders, and the three automated material handling fixtures. Basically bringing back a foot print of 200 square feet from a process that covered 2500 square feet. The rest will go to salvage disposition while the hemmer goes to "hemmer heaven" - that place in your plant where some 200 different hemmers hang out until needed. That you only need the hemmer is where a key part of the plant's unique core competency comes to play. Rather than build a growing variety of product on some Problem Issues Solution Activities Solution Framework Systems Integrity Application of Principles Expanded Detailed Design Documentation If / When Needed Facilitated Re-Use: Unit inventory management, modification tools, and designated maintenance responsibilities. Configuration Team has responsibility for hardware/software module acquisition/modification/maintenance/inventory and for evolution of associated compatibility framework. Management & Union share joint responsibility for PTM classification and cross-training. Non-Hierarchical Interaction: Non-hierarchical direct negotiation, communication, and interaction among system units. Production Teams free to make process changes w/o seeking permission or approval. Free communication permitted and encouraged among: tradesmen, engineer, supervisor, and customer. Deferred Commitment: Relationships are transient when possible; fixed binding is postponed until immediately necessary. Process lines assembled JIT for production. New-part acquisition/transfer team is not designated until a transfer opportunity requires action. Plug Compatibility: System units share common interaction and interface standards, and are easily inserted or removed. Unit Compatibility Rules (hemmers): no integrated controllers, standard controller interface, use 1 of 6 standard controller programs, common piping/wiring, quick disconnect fittings. System Compatibility Rules: Nothing attached to the floor, everything carry/roll/fork portable, etc. Self Contained Units: System composed of distinct, separable, self-sufficient units not intimately integrated. Hemmers with set-up data sheet, quick-disconnect sockets, and wheels. Modules enumerated above plus: Standard control programs, multiple assembly areas, special fixtures, mastic templates, weld guns. Evolving Standards: Evolving, open system framework capable of accommodating legacy, common, and completely new units. Used to leave useless wiring/switches/etc on incoming hemmers, now strip all un-used legacy items to eliminate maintenance confusion. TDA Buddies added to overhead support grid in Area A. Intuitive flexibility culture is now being explicitly formalized. Distributed Control & Information: Units respond to objectives; decisions made at point of knowledge; data retained locally but accessible globally. PTMs (Production Team Members) make real time decisions on process configuration improvements and changes. Operation sequence sheet attached to hemmer (facilitating easy movement to anywhere in the plant). Self Organizing Unit Relationships: Dynamic unit alliances and scheduling; open bidding; and other self-adapting behaviors. People show initiative in solving problems and making operating improvements on their own - because risk is encouraged and occasional failure is expected. Unit Redundancy: Duplicate unit types or capabilities to provide capacity fluctuation options and fault tolerance. Eight identical controllers. Cross-trained production team with one work classification. Multiples of roller tables, mastic machines, standing platforms, racks, weld guns, weld tips, assembly areas, etc. Flexible Capacity: Unrestricted unit populations that allow large increases and decreases in total unit population. Number of simultaneous assembly configurations limited only by assembly area space availability. Number of modules limited only by contiguous storage space availability and access logistics for remote warehousing. Selected Observations of System Design Principles Auto Body Assembly Lines Built JIT Reusable Modules: Cross-trained PTMs (Production Team Members) Roller tables Weld tips Hemmers Controllers Mastic tables Racks Standing platforms Compatibility Framework: Overhead support grid Physical space Utility standards System compatibility rules Unit compatibility rules Plant flexibility culture Local union contract Change Proficiency Key Proactive Issues: Creation: Assembly line construction Improvement: Space productivity Migration: New performance metrics Addition/Subtraction: PTM staff changes Key Reactive Issues: Correction: Labor/mgmnt relations Variation: System set-up time Expansion: Space availability Reconfiguration: Flexibility culture System Examples Weld Tips Controllers Production Team Members (PTMs) Hemmer Heaven Roller Tables Standing Platforms Mastic Tables Racks P41 Deck Lid System A47 Fender System Reconfigurable System Engineering A-Team Builds/Obtains/Modifies Modules, Evolves Specific Framework Standards, and Designs Assembly System Configurations. B-Team Builds & Tears Down Assembly Sys. Knowledge Packaged as a Metaphor Model This figure is intended to convey a graphic impression of the two indicated models, and is not offered for reading purposes. Response Ability Model Metaphor Model Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

27 CoPCoP CoPCoP Portfolio management strategic group (Sets agenda/priorities) Collaborative learning project Small staff Rotating industry executives Package/recruit/facilitate learning projects and communities Chair Director CKO Learning Forum Collaborative learning project Collaborative learning project CoPCoP CoPCoP Technology infrastructure, repositories, maps Facilitate and support communities of practice Facilitate and support collaborative learning projects CKO Responsibility: The organization has the knowledge it needs when it needs it and where it needs it. Knowledge Portfolio Management Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

28 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, What We Saw Language Reactive and Proactive Change 8 Change Domains 4 Change Metrics Structure Framework/Module 10 RRS Principles (Reusable-Reconfigurable-Scalable) Culture (as in engineering some) Change Proficiency Maturity Model Knowledge Portfolio Management Metaphor Model

29 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Put It All Together and Get... Enterprise Agility Response Ability Reactive and Proactive Balance Portfolio Management Change Proficiency Adaptable Structure Knowledge Management...A Potential for Excellence

30 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, But Potential Alone Will Not Achieve Fundamental Goals Recognize opportunity Take advantage of opportunity Recognize threat Minimize impact of threat

31 Add Three More Ingredients to Raise Dynamic Integrity and Get An Intelligent Enterprise … exhibits goal seeking behavior, exercising its potential for agility by understanding the business situation, learning and adapting continuously, and demonstrating sustained achievement of purpose. Competency and Talent Collaborative Learning Decisive Action Response Ability Dynamic Integrity Reactive and Proactive Balance Competency and Talent Collaborative Learning Decisive Action Resource Portfolio Change Proficiency Adaptable Structure Knowledge Management Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

32 Intelligent-Enterprise System Framework Systemic Goals Recognize opportunity Take advantage of opportunity Recognize threat Minimize impact of threat Key Principles/Concepts Knowledge management Response ability Reactive/proactive balance Dynamic integrity Key Subsystems Change proficiency Adaptable structure Knowledge portfolio Collaborative learning Decisive action Competency and talent Intelligence is related to the volume of the pyramid. Goal-seeking emerges Response Ability Dynamic Integrity Reactive and Proactive Balance Competency and Talent Collaborative Learning Decisive Action Resource Portfolio Change Proficiency Adaptable Structure Knowledge Management Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

33 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Silterra - Malaysia

34 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, IT Seen In New Light Must not dictate or limit corporate capability Remove the ERP/Technology lock-in Provide freedom to use best tools Enable fast tracking of new IT technology and support of business strategy Must exploit new electronic connectivity opportunity Real-time visibility of all enterprise activity and information Everyone wired for immediate self-service Dashboards and "agents" to bring focus on desired information Assist and structure key management processes Quick connections to information trading partners No longer financial reporting, now enterprise capability infrastructure View as a logistics service, not as a financial function Distribute control and responsibility to the users

35 IT Strategic Objectives Supporting strategy with best-fit tools is enabled rather than inhibited Switching/upgrading to new technology and applications is enabled rather than inhibited. Accommodating custom electronic "partner" relationships is enabled rather than inhibited. Integrating new plants, facilities, mergers, and acquisitions is enabled rather than inhibited. All information is accessible electronically to those authorized to see it. Electronic "dashboards" will provide real-time vision and monitoring of operational and strategic activities Provide competitive advantage through enterprise visibility, adaptability, and technology

36 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, ERP/HRM Implementation WishTypical ImpActual with OSFM ERP in 12 mos working24-36 mos12 mos working Imp=80% of license cost %75-85% Budget $10 Million (5+5)$15-25 Million$9 Million HRM (PS) in 6 mos12-18 mos5 mos HOW?? Unique approach to integration methodology and management Adherence to methodology (ie, effective management) BSAs utilizing MBW tool to develop business processes BSAs taking responsibility for integrating ERP with users Bus/XML architecture connecting ERP with HRM Expertise to help integrate ERP with CIM (Triniti) Expertise in agile system design/implementation (Dove/Guglielmo) BSA = Business Systems Analyst MBW = Management by Wire (application from (To show metric results of a process designed with agile principles)

37 Architecture (1 of 3) SSO = Single Sign-On I / O = (# of Inbound Message Types) / (# of Outbound Message Types) MyBus MyETL SSO Data Power SSO Adexa SSO HR Factory Works SSO MyFab SSO MyProject SSO TMS SSO 14 / 0 0 / 4 ADC 0 / 3 Intranet MyETL MyBus SSO Klarity 0 / 3 MyETL

38 MyBus MyETL Architecture (2 of 3) SSO Financials Accounts Receivable SSO Inventory SSO CRM 3 / 0 Order Mgt SSO OSFM 4 / n Oracle applications use a backdoor approach to exchange information between themselves. MyBus MyETL SSO PR/PO SSO = Single Sign-On I / O = (# of Inbound Message Types) / (# of Outbound Message Types)

39 Architecture (3 of 3) SSO Policy Server(s) B2B Gateway Directory Server SSO Constituents Internet Intranet Silterra- defined XML Industry- standard XML MyBus MyETL SSO Demand Planner BOM SSO APS SSO PR/PO MyBus MyETL SSO IE DB MyBus MyETL Doc Mgt SSO SSO = Single Sign-On I / O = (# of Inbound Message Types) / (# of Outbound Message Types)

40 Agile IT Infrastructure Fab #1 Bus-Centric Plug-and-Play Component Architecture MyBus and MyETL Infrastructure Components People Soft My Projects Other Apps MyFab Oracle 11i Aps Other dBases Fab #n A&T #1 A&T #n Like Component Stereo... Loosely-Coupled Components Facilitate Upgrade and System Change Adexa Planner XML Enterprise Bus A&T = Assembly and Test Plant Oracle ERP dB Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

41 Agile Implementation Process Develop Business Rules and Data Defs Configure ERP Applications Configure Database Configure/Build Bus Adaptors Implementation strategy encapsulates each team, making them solely/totally responsible for functionality. bsa B-Rules Mgr …….. V1V1 V1V1 bsa V1V1 V1V1 V1V1 V1V1 …….. V2V2 V2V2 dba V2V2 V2V2 V2V2 V2V2 …….. V3V3 V3V3 IfT V3V3 V3V3 V3V3 V3V3 …….. Days Days Full Functionality Software Hardware Spec Training Implementation Encapsulation of projects promotes plugable encapsulation of functional components. Full Functionality Software Hardware Spec Training Implementation Full Functionality Software Hardware Spec Training Implementation Full Functionality Procedures Work Flow Rules Data Definitions Days days Step AStep BStep CStep D 3-Phases Template Alpha Beta bsa = business systems analyst, V 1 /V 2 /V 3 = different vendors, dba = database administrator, IfT = IT infrastructure technician. Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

42 …….. V2V2 V2V2 bsa V2V2 V2V2 V2V2 V2V2 …….. V3V3 V3V3 IT V3V3 V3V3 V3V3 V3V3 …….. 60 days 3-Phases Template Alpha Beta Develop Architecture and Design Develop Business Rules and Specs Manage Outsourced Development Conduct Testing and User Training Days Days bsa Proj. Mgr bsa Agile Process-management approach to IT development 120 days ssa Prog. Mgr ssa Steering Committee Program Manager Budget Owner IT Project Manager BSA IT Support Resources Outside Development Resources IT Infrastructure Operations COTS (ERP) Project Example

43 Creation Improvement Migration Modification with proactive domains of Correction Variation Expansion Reconfig- uration with reactive domains of Response Situation Analysis Reusable Reconfigurable Scalable achieved with architecture that is Self- Contained Units Plug Compatibility Facilitated Reuse Deferred Commitment Redundancy/ Diversity Evolvable Framework Elastic Capacity Self Organization Distributed Ctrl & Info Peer-Peer Interaction based on principles of Note: Relationships flow downward in concept maps unless an arrowhead is present. with objectives defined by Agile Strategy Concepts Agility Knowledge Management activities are Response Ability consists of activities are IT Adaptation Mgmnt IT Infrastructure Mgmnt Customer Satisfaction Mgmnt Talent Relationship Mgmnt Adaptable Systems Mgmnt Strategy Delivery Mgmnt Security Evolution Mgmnt Culture & Process MyBus & MyETL MyFab Outsource Support Culture & Training MyProjects Principles & New Vision apps are apps are apps are apps are apps are apps are apps are Service Integration Mgmnt MyStaff apps are

44 Agile Security Strategy Strawman Framework Proactive Principles Vulnerability Anticipation – Identify/fix vulnerabilities before exploitation, sense indirect indicators of exploitation Prudence – Correct vulnerabilities before exploitation Transformation – Change randomly the elements/nature of security system Threat/Risk Anticipation – Identify and counter threats and risks before exploitation Migration – Continuous upgrade of security strategy and components Accountability (Proactive) – Identify perpetrators with traps, glass houses, disinformation, etc, before damage Reactive Principles Detection – Detect intrusion and damage quickly Containment – Minimize potential damage scope Mitigation – Minimize potential damage magnitude Assessment – Understand what has been damaged and how Recovery – Repair damage quickly Accountability (Reactive) – Identify the perpetrators forensically, after damage Security Evolution Management Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

45 Agile Security Detection – Become aware that an intrusion is in progress or has occurred in the past. Containment – Partition the system so an intruder gaining access to one area cannot automatically gain access to other areas. Another meaning is to trap the intruder in a fish bowl. Mitigation – Damage control. Steps taken before hand to minimize the amount of real damage that can occur – like refreshing web pages with originals periodically, under the assumption that they may have been changed. Steps taken during an event to minimize the damage that can occur – like shutting off access to applications within the contained area, shutting down servers until the intruder is expelled and the entry path closed. Assessment – Discovering what was done by the intrusion that will need to be repaired/restored, and discovering how the intrusion occurred so this path can be blocked. Recovery – Repairing/restoring any damage that was done, and closing the path used for entry. Accountability (Reactive) – Discovering the direct and indirect parties perpetrating, aiding, and abetting the intrusion. Reactive Principles Activity: Security Evolution Management Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

46 Agile Security Proactive Principles Vulnerability Anticipation – Identify/fix vulnerabilities before exploitation, look for indirect indicators that vulnerability is being exploited. Example: see that a new type of attack mode has arisen and hackers will begin to use it, know that closing the door on one type of attack will make another the next avenue for exploration, hold periodic private white-hat war games to brainstorm new vulnerabilities, realize that an employee is living beyond their means, do penetration exercises, conduct periodic audits with different audit groups. Prudence - Correct known vulnerabilities before they are exploited. Examples: update the operating system when the vendor issues a security patch, Transformation - Changing randomly details of the security profile before knowledge of its nature can be used against it. Examples: passwords, check-sum methodologies, audit-trail analysis frequencies and strategies, audit trail, back ups. Threat/Risk Anticipation – Identify/counter threats and risks before they occur. Example: Realize when a political rift between one country and another makes you a target, suspect that entry into a new market might insight a malicious competitive response, reevaluate risks periodically, rebuild the threat model periodically. Migration - Upgrade continuously the security strategy and components. Examples: move from (or augment) passwords to smart-card authentication to PKI to bio-authentication to whatever's next. Accountability (Proactive) – Use disinformation, traps, glass houses, etc to tempt and identify intruders. Examples: dead-end known vulnerabilities that raise alarm, standard and duplicate stealth audit trails that catch alteration attempts. Activity: Security Evolution Management Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International,

47 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Silterra Successes That will probably stick: ERP/HRM implementation procedure (integration responsibility model) Agile IT infrastructure On-Demand application integration That will probably be lost: Access to comprehensive information On-Demand Differentiated eBusiness strategy and implementation Business manager responsibility for IT Agile business engineering office MyStaff concept of employee involvement (but IT support stays) That were planned but will probably not be implemented MyProjects: strategy implementation management/transparency Agile-culture development and maintenance Agile security strategy

48 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Hindsight Observations Value propositioning insufficiently addressed for execs CEO vision was articulated, but not bought into by others Benefits of agile vision neither appreciated, nor taught Major attention focus conflict Production focused on plant/process construction (Herculean) Sales/Marketing focused on getting orders (Herculean) Other areas struggling with OJT and cultural conflicts Unresolved responsibility gaps Copy Exact MES untouchable, sacred, isolationist Unresolved data-integrity conflict between ERP and MES Unresolved ownership of eBusiness strategy & proj mgmnt Unresolved cultural conflicts Serious intercultural cold war and gang politics Resentment of US mgmnt, impatience for power transition Competency and performance not appreciated concepts Unsustainable implementation and strategy Mandate to hire local IT, but insufficient capabilities available

49 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Hindsight Lessons Value propositioning for main decision should never stop People will not listen until they are ready Individual focus discovers and utilizes individual's values Success constraints should be addressed with separate and continuous value propositioning Do not assume problems are understood, make the case Start-ups do not have forgiving time frames Responsibility voids and conflicts must be resolved early IT cannot get cooperation w/o business mgr's commitment Cultural engineering should start early Soft stuff is hard part, and cannot be postponed Mismatch here is guaranteed rejection with time There is no substitute for competency and talent Plan sustainability up front and act early

50 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Hindsight Lessons Strategic Value Proposition Work Needed Agile security strategy and architecture Internal responsibility for IT integration Business management commitment to agility Access to information by employees and customers Business management responsibility for IT tools Business engineering responsibility

51 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, The Detail and Discipline Available at Amazon.com $70+ Available here at $60 Chap 8 Silterra IT infrastructure 3 Proactive/reactive principles 4 RS analysis process 5 RRS principles 7 RRS design process 10 Realsearch process Discovery workshops analyzed cases. Found underlying RRS principles. Then applied principles to a design, solving a problem for workshop host. This process is called Realsearch: Real people solving Real problems in Real time

52 Misperception Logic Plous: Behavioral Psychology of Decision Making © 2004, Rick Dove, Value Propositioning: Talent of Champions conforms to Selective Perception Expectations Hopes Context Dependence Memory Bias Associated Memories Inferred Details Re- construction of Event Partial Memory Other Information from filled in with Hindsight Bias Past Event believing Predictable was Mis- perception is caused by Consistency Biased Knowledge Self Image with forces Old Perceptions meaning results in Comparison Specific Reference Dominate Perception First Perception Last Perception Associated Perceptions determined by making may use meaningmaking with conform to drawn from Cognitive Dissonance Relationship flow is downward unless arrowhead present. Recency Effect Primacy Effect Contrast Effect Halo Effect will be Perception Creation by changing determined by

53 Individual Decision Logic Under Valued Increases Individual Decision Behavior Low Probability Gain High Probability Loss Averse Behavior "S" Curve RelativeNon-Linear Formulation Dependent Risk Averse Behavior Risk Seeking Behavior Steeper Negative Values GainLoss Value Status Quo Ruiness Outcome Hopes and Expectations Perception as Loss or Gain to High Probability Gain Low Probability Loss Under Weighted High Prob Over Weighted Certainty Psycho- logical Bias Over Weighted Low Prob Losses Loom Larger Knowledge Dependent Over Weighted Prob Under Weighted Prob Low Knowledge High Knowledge Chunking Probabilities Simplified Elimination by Simpli- fication reflects valuation as: unless results in with looks like shaped as Initial Gains/Losses Dominate Diminishing Incremental Values results in Not Significant if perceptions of if DM has sets neutral point of which biases shaped by effect is Probability (Prob) is the subjective likelihood, assumed by a Decision Maker, that a proposed benefit will deliver as promised. Relationship flow is downward unless arrowhead present. Kaheman & Tvarsky: Prospect Theory © 2004, Rick Dove, Propositioning: Talent of Champions

54 Relationship flow is downward unless arrowhead present. based on Perception Creation Group Decision Behavior Performance Targets Unresolved Conflict Simple Patterns Candidate Solutions Search Process Problem Perception Who's Searching Amount of Org Slack Standard Rules Past Experience Past Org Slack selected by Past Perform- ance Past Objectives Perform- ance of Others based on DM's Objectives Objective List Group Members involves Objective Setting Choice based on Influenced by based on "Satisficing" Valuation results in avoids uncertainty by Short Term View results in Contract Terms Negotiated Predictability Sequential Attention results in Postponing Some Objectives results in Lowest Commonality Acceptable Level Rules includes Mitigating Conflict Training and Experience Attention Focus Similarity to Current Solution by Value Propositions Decision Psychology interpreting from determined by Group Decision Logic Cyert & March: Behavioral Theory of the Firm Simon: Administrative Behavior © 2004, Rick Dove, Value Propositioning: Talent of Champions

55 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Competence and Talent ROI Development Skill Perception Influencing Skill Communi- cation Skill Trust Building Skill Core Concepts Cause and Effect Logic Talent ContextualInsightfulEmpatheticResponsive Behavior Tuned Strategy Response Improvement Skilled Champion Competence Value Propositioning employing conscious thought modes ofemploying unconscious thought modes of Focused Educating Focused Learning Focused Business Math Focused Clarity Focused Risk Reduction can have including which is has skill of master at has skill of journeyman at Relationship flow is downward unless arrowhead present. Knowledge Development Skill

56 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Security's Seven Mismatches with Reality 1. Human Behavior – Human error, whimsy, expediency, arrogance 2. Organizational Behavior – Survival rules rule 3. Technology Pace – Accelerating vulnerability introductions 4. System Complexity – Unpredictable unintended consequences 5. Globalization – Proliferating partners with different ethics and values 6. Agile Enterprise – Outsourcing, webservices, transparency, change 7. Agile Attackers – Distributed, collaborative, self organizing, proactive

57 Attributed Copies Permitted © 2004 RKDove, Paradigm Shift International, Current Pursuits Agile IT - Focus and refine RRS design principles for IT application and apply to specific host-site problem designs - Realsearch discovery workshop groups will do this - Deliverable: white paper on design principles and application - Ten workshop host-sites wanted, with real problem to work on Agile Security Forum - Needed: reality-based problem knowledge & solution fitness function - Agile Security Forum will do this (like Agility Forum in the '90s) - Ten kick-start participant organizations wanted Value Propositioning and Decision Making - Technology and decision-making behavior mix poorly - Three-book series in process - Book One at publisher now for Nov/Dec release... Value Propositioning: Perception and Misperception in Decision Making - Copies available at Amazon.com ~$10.00

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