Tuesday, July 22, 2008

Thought for the day: Venture Capitalists Should Only Invest in Agile Companies

In a new talk, Scrum cofounder Jeff Sutherland makes a compelling argument for Scrum, XP and Lean as the basis for "hyper-productive" companies. The potential improvement is on the order of a factor of 10(!). But to get those gains, you have to adopt Scrum and adapt yourself to Scrum, not the other way around.

The actual competitive advantage which can be achieved by consequently deploying the principles and practices of Scrum, Lean and XP have coincided with substantial revenue gains for the companies concerned:
  • Excellent Scrum - annual revenue up 400%
  • Good Scrum - revenue up 300%
  • Pretty Good Scrum - revenue up 150% - 200%
  • ScrumButt - revenue up 0-35%
BTW - "ScrumButt" companies score 7 or less on the Nokia test.

His recommendations to investors:
  • Invest only in Agile projects
  • Invest only in market leading, industry standard processes – this means Scrum and XP
  • Ensure teams implement basic Scrum practices
His recommendations to managers:
  1. Get your teams to pass the Nokia test. 
  2. Get management totally involved.
  3. Use communication saturation as a competitive advantage.
    • What backlog item will drive the earliest appearance of a high priority feature that can be tested?
    • Entire team decides this and it is the first thing selected to be worked on. 
  4. Extend the definition of done
A fascinating talk, which he will repeat at Agile 2008


felix@armerkater.de said...


what else would you propose if you were Jeff? In short: Invest into me, give me all your money because I am the one who knows best how to use it ;-)

Once again I don't like the terms like hyper-productivity.

However he is right in summarizing key factors for productivity: Involvement/commitment and removal of impediments. Small highly committed team, focusing on producing business value.


Peter said...

Agreed - Hyper is, well, uh, hype. I'm going to put it in quotes.

I have personally experienced a factor of three productivity spread from a team in a very disorganized state to that same team in very productive state with most impediments removed.

So I do believe his analysis: 30% improvements if you get something close to Scrum, much more is possible if you deeply institutionalize it.