VOLUME 2 | ISSUE 12 | NOVEMBER /DECEMBER 2021
DAWGEN GLOBAL INSIGHTS
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INTRODUCTION TO OUR MONTHLY NEWSLETTER DAWGEN GLOBAL INSIGHTS
Welcome to Dawgen Global and our November /December 2021 edition of our Monthly NewsletterDawgen Global Insights. This Newsletter has been produced to provide you with an overview of our firm and the wide range of services offered by Dawgen Global entities, whether audit, accounting, tax or advisory services. Over the past 19 years, I can proudly say that Dawgen has significant experience and expertise that we draw upon, day after day, helping our clients to progress. Our Monthly Newsletter will demonstrate the strength of our firm and the unique and innovative approach we engender. This is communicated through client case studies on how our team have collaborated to help our clients succeed. This issue of Dawgen Global Insights explores several management tools and strategies including Organizational Obstacles to Agile. Agile software development approach is getting ubiquitous. This approach is imperative to match customer expectations and emerging business trends. Implementing Agile approach to software development leverages significant benefits, including : Design and develop new product and service offerings rapidly, Revolutionize processes, Manage talent, Reform organizations. However, to embrace the Agile approach leadership needs to be aware of the obstacles that keep the organizations away from achieving their Transformation objectives. This article talks about the 3 common obstacles that organizations have to steer clear of to implement the Agile software development approach. In this edition we also examine the Levers of Control. The 4 Levers of Control model, developed by Robert Simons, provides managers in large organizations a framework to manage the tension between Value Creation and Control (managing and measuring value). Companies are always struggling with maintaining sufficient control in organizations that demand flexibility, innovation, and creativity. I hope that you will find the information we provide in this Newsletter helpful.
Dawkins Brown
Executive Chairman Dawgen Global
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TABLE OF CONTENT
20 29 04 04
20
29
ORGANIZATIONAL
4 LEVERS OF
DICE HARD
OBSTACLES TO
CONTROL
CHANGE
AGILE
FACTORS
ORGANIZATIONAL OBSTACLES TO AGILE 4
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To become Digital native, companies have to shift from a project mindset to a product mindset—and over the obstacles that prevent this shift Article Overview Agile software development approach is getting ubiquitous. This approach is imperative to match customer expectations and emerging business trends.
Implementing Agile approach to software
development leverages significant benefits, including: Design and develop new product and service offerings rapidly Revolutionize processes Manage talent Reform organizations
Agile development approach in sync with a product-focused mindset is all that organizations need to realize the real power of Agile and become Digital natives.
However, in order to embrace the Agile approach leadership needs to be aware of the obstacles that keep the organizations away from achieving their Transformation objectives. This article talks about the 3 common obstacles that organizations have to steer clear of to implement the Agile software development approach
1 2 3
Rigid Technology Architecture Poor Talent Management Lack of Product Mindset
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Agile Methodologies began in Software, but has since transcended to other functions with the organization
Agile – Overview For the past 3 decades, Agile Methodologies have
already
been
transforming
Software
development. Note that Software is a particularly difficult area to manage in the Digital Age due to the rapid advances of technologies and changes in customer demands.
Adaptive planning Evolutionary development
What is Agile? Agile
is
a
holistic
Key principles of Agile include:
system
Early delivery engineered
to
overcome more than a dozen common barriers to successful project deployment. Under Agile,
Continuous improvement Rapid and flexible response to change
requirements and solutions evolve through the
In Software development, Agile has increased the
collaborative effort of self-organizing cross-
average success rates from 11% to 39%.
functional teams.
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Beyond Software, organizations have adapted Agile methodologies in other parts of the organizations. These functions include: R&D Marketing Operations Corporate Strategy Due to Agile’s systematic and repetable characteristics, most organizations have been able to replicate the success in Software development across these other functions.
In the Digital Age, every company is a Software company, whether the executives realize it or not.
Source: Agile Innovation, Bain, 2016
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Agile takes a systematic approach,
which can be summarized in a 6-step
process
Agile – Approach The systematic approach adapted by Agile follows a 6-step process.
1
To address the problem, we first form a small, focused, cross-functional, selfmanagement team The team’s initiative owner builds a list of
4
Team members hold daily meetings to review progress and identify impediments to progress If there are any disagreements, these are
promising ideas or features, by leveraging
resolved via experimental feedback loops,
techniques such as Design Thinking. This
instead of internal debates or appeals to
person typically divides his or her time
authority.
between the Agile team & key stakeholders.
2
The initiative owner continuously ranks the list of features based on the latest estimates of value to customers, financial results, and impact on other relevant initiatives A process facilitator protects the team
5
If the customer gets excited, the increment may be released immediately, even if other stakeholders feel it’s not ready for release. The decision for release is driven at this
from distractions and puts its collective
3
The team tests small working increments with groups of potential customers
intelligence to work.
point by positive customer feedback.
The team then deconstructs top-priority items into small modules
The team then brainstorms ways to drive improvement of future cycles
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The team decides how much work to take on
Likewise, the team also prepares to go after
and how to get it done. They build working
the next top priority in the list.
versions in short cycles known as sprints. This process is completely transparent to the organization.
An Agile approach brings the most valuable offerings and features to market faster. 8
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Agile provides a diverse set of benefits Agile – Benefits Agile offers a wide array of benefits, which has led to its increasing popularity. According to studies, over 90% of IT organizations use Agile methodologies in at least some of their Software development.
Ability to manage changing priorities
87 84
Increased team productivity Increased team morale and motivation
79 77
Faster time to market
76
Reduced project risk 0
20
40
60
80
100
Got better with Agile
Agile also increases customer engagement and satisfaction by improving visibility and likewise adapting quicker to the customers’ changing priorities. Source: The Standish Group, CHAOS Report 2015; VersionOne, 10th Annual State of Agile Survey, 2015; Scrum Alliance, The 2015 State of Scrum Report
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Agile is a robust approach to Value Creation Agile – Organizational Obstacles More and more organizations are adopting Agile software development approach. Becoming Agile is imperative to match customer expectations
and
emerging
business
trends.
In order to become an effective Digital organization, companies have to steer clear of the obstacles that bog down the rapid progress of Agile software development. These obstacles include:
Implementing the Agile approach to software development leverages significant benefits, including: Design and develop new product and service offerings rapidly
Rigid Technology Architecture
Revolutionize processes
Poor Talent Management
Manage talent Reform organizations However, Agile alone is not enough.
Agile
Transformation can slip-up as Agile teams can
Lack of Product Mindset
stagger while working together and depending on others.
Overcoming these barriers necessitates sincere harmonization, persistent effort,
Anticipating and addressing these major organizational obstacles is integral to becoming Agile.
and commitment from the business and technology leadership.
Source: Agile Is Not Enough, Berez, Poindexter, MIT Sloan Management Review, 2019
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The IT architecture should be capable of integrating with most applications Rigid Technology Architecture – Overview Using and expanding the same old codes and plugging gaps with software patches has rendered the IT Architecture cumbersome and unyielding, at most organizations. Organizations have outdated systems to manage operations and facilitate their customers. The integration of these outdated systems with modern applications and IT architecture isn’t an easy job either, making them inflexible. Most of these systems and aps have to be interreliant and connected. A small change in a code can have serious implications on other connected applications.
It isn’t always feasible to redesign the entire stack of IT architecture or replace it altogether with nextgeneration IT architecture.
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Organizations can prioritize modernization of IT systems by identifying critical data while leaving alone legacy transaction processing systems Rigid Technology Architecture : Common Approaches Key factors that they consider in this regard include: Potential value envisaged from the
new architecture Requirement for new functionalities Rate of occurrence of linkages/ connections
between
different
applications and systems Risk of disruption of business Complications involved in the process Costs Extent of data fragmentation
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There are 4 common approaches that organizations typically choose in order to revolutionize their technology architecture:
1
Inaction The investment in overhauling certain applications is thought to be unviable as their impact is considered insignificant in the overall architecture.
2
Integrate Uncover the old system’s essential function/ elements and connecting them with modern systems using interfaces.
3
Overhaul Modify the design of applications—e.g. dissecting the code into distinct and autonomous sections and eliminating any hardcoded values.
4
Replace Design and create innovative applications having up-to-the-minute architecture (e.g. micro-services).
To overhaul the IT architecture, the key result to be kept in mind is to optimize theCustomer Experience.
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Outsourcing the talent sourcing function to contractors is one of the key factors contributing to the inadequacy of technical talent in IT companies Poor Talent Management – Overview DEFINITION Most leaders understand the importance of finding and staffing top talent in becoming Agile. However, outdated HR practices at most organizations become a major hurdle in attracting and retaining talented individuals. The issue with IT management at most technology firms in the recent past was their shortcoming in visualizing the problems through a business perspective. This led to the depletion of technology capabilities due to hiring of more and more people with
strong
business
sense,
but
inadequate
technological prowess. Another factor compounding the talent deficit is entrusting the hiring function to external contractors by scores of IT organizations. This practice, although, assisted in staffing talent and gaining new capabilities promptly, but diverted much of the executives’ time in supervising the external contractors.
This left
very little time for them to acquire new technical skills, gave the contractors too much control over
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innovation, and made innovation almost impossible. Outsourcing the software maintenance to 3rd parties is another factor that leads to poor talent management and poor accountability. To mitigate these issues, technology companies need to transform, strengthen their technical capabilities, eliminate dependencies on 3rd parties, and clearly define responsibilities. This necessitates revolutionizing the talent model grounded on 4 guiding principles: Strengthen technical capabilities Reskill the business managers Define responsibilities clearly Curtail reliance on 3rd party head hunters DAWGEN GLOBAL INSIGHTS I NOVEMBER /DECEMBER 2021
There are typically more people on the business side than in the technical roles in most organizations Poor Talent Management – Guiding Principles (1 of 2) Strengthen technical capabilities Focus on hiring experienced engineering managers in place of business-oriented IT managers. The engineering manager should have the technical capabilities to assure the quality of work of the coders as well as possess the business acumen integral for collaborating with product managers and business owners. The engineering manager is critical to recreate technical expertise and trustworthiness required to attract experienced and raw engineering talent.
Reskill the business managers Recognizing top business talent and retooling them into more value-added roles helps in surpassing the talent deficit limiting IT companies from becoming Agile. Capable project managers can be reskilled to become scrum masters.
To become Agile, organizations need to empower people, develop their capacity,and remove needless red tape.
Likewise, able business analysts can be trained to
Source: Agile Is Not Enough, Berez, Poindexter, MIT Sloan Management
take up the product owner roles.
Review, 2019
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Key technical talent should be given more responsibility and authority Poor Talent Management – Guiding Principles (2 of 2) Define responsibilities clearly Coders and developers are typically required to develop code as well as offer maintenance services for the code they write. Some software organizations make their talented developers
Information Technology management and Human Resource Planning should be done in line with this vision. Reliance on 3rd party contractors for staffing technical talent limits an organization’s visibility in
receive calls in the middle of the night for any
software developers’ forums.
issues with the code written by them. This level of
Information Technology companies should be
accountability and product ownership pushes the
open to open-source technology as most of the top
developers to write reliable code and create better
developers like to use open-source software for
products.
development. This makes hiring and retaining top
The developers in collaboration with operations
software engineers easy.
team can simplify integration, code execution, slash defects, and reduce time to market.
Curtail reliance on 3rd party head hunters Creative code and product development should be developed by internal teams of Agile experts, in coordination with people from the business side. Leadership should contemplate and set the right ratio of internal and external technical talent required, based on the organizational vision and objectives.
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Open-source software is the choice of most talented developers today— organizations should not limit their software engineering talent by allowing proprietary code only. DAWGEN GLOBAL INSIGHTS I NOVEMBER /DECEMBER 2021
Some executives consider Agile to only work for Digital natives—however it has much broader potential Lack of Product Mindset – Overview DEFINITION Traditional software development approaches—e.g. Waterfall method—does not go along well with the fast-paced Agile approaches common today. Even the Agile approach falls short of achieving the results required from Digital product and service offerings. With ever-growing acceptance of Agile practices globally, there isn’t much room for time-consuming, rigid, traditional approaches to software development. This age of Digital Disruption necessitates adoption of flexible Agile approach alongside implementation of responsive Product Management practices and behaviors, to cater to the evolving business and customers’ requirements. Shifting from a project to product-focused mindset
Agile approach can leverage immense benefits in terms of technology, talent, and Product Management.
warrants strong commitment and sustained efforts
Source: Agile Is Not Enough, Berez, Poindexter, MIT Sloan Management
from the business as well as technology leadership.
Review, 2019
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Agile method can provide value for organizations, but not entirely on its own Lack of Product Mindset – Product Management Principles To make Agile successful, organizations need to embrace a product mindset. To be ready for Agile, organizations need to adopt the following Product Management Principles:
Structure around products A product-centric focus rather than concentrating
In a product-focused structure, business and
on Project Management results in alignment of
technology teams coordinate to set key priorities,
software development work to realizing business
assign product owners for individual products, who
objectives.
are accountable for building product road maps,
A product-centric focus assists in tackling business problems, creating opportunities, developing new
assigning measurable metrics to track progress, and making data-driven decisions.
skills, and optimizing customer experiences. 18
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Establish persistent teams A product team persists even after the delivery of the product, to evolve it, and make iterations based on changing circumstances. In contrast, a project team gets created and assigned on some other engagement after a project is completed. This persistency transforms the product team into agile, creative, and constructive units.
Make long-term Investments Products have a prolonged life cycle than projects. This warrants annual investment in the product to realize their long-term objectives. This element of the product-based Business Model is a bit difficult to digest for the company’s financial leadership. However, this model offers more coherent assessment of outcomes than traditional
Appraisal of product investment on a quarterly basis enables adjusting priorities or investing in other products with potentially lucrative returns.
business case approaches, as product outcomes are measured persistently.
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4 LEVERS OF
CONTROL
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The 4 Levers of Control model , provides us a framework to manage the tension between Value Creation and Control Article Overview The 4 Levers of Control model, developed by Robert Simons, provides managers in large organizations a framework to manage the tension between Value Creation and Control (managing and measuring value). Companies are always struggling with maintaining sufficient control in organizations that demand flexibility, innovation, and creativity.
To reconcile
the conflict between creativity and control, Simon suggests 4 Levers of Control:
1
Belief Systems
2
Boundary Systems
3
Diagnostic Control Systems
4
Interactive Control Systems
A Lever of Control can be defined as a formal, information-based routine or procedure that is used by management to maintain or alter patterns employee behavior.
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By leveraging these 4 control levers effectively, we can ensure the benefits of innovation and creativity are not achieved at the expense of control. 21
Our model centers around 4 Levers of Control—Diagnostic Control, Beliefs, Boundary, and Interactive Control Systems 4 Levers of Control Most organizations tend to define control by measuring progress against plans to guarantee the planned achievement of goals. These “Diagnostic Control Systems” represent only 1 lever for control. Three other levers are equally important in today’s business environment: Beliefs Systems, Boundary Systems, and Interactive Control Systems: Core Values BELIEFS SYSTEMS Risks to be avoided Risks to be avoided BOUNDARY SYSTEMS Critical performance variables DIAGNOSTIC CONTROL SYSTEMS Strategic uncertain-ties INTERACTIVE CONTROL SYSTEMS
Collectively, the 4 Levers of Control set in motion organizational forces that reinforce one another. 22
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Each of the four control levers has a distinct purpose for managers attempting to harness the natural value creation of employees Value Creation from Employees Value to Contribute
Organizational Blocks Uncertainty about purpose
Managerial Solution Communicate core values
Control Lever Beliefs system
and mission
Value to Do right
Organizational Blocks Pressure or temptation
Managerial Solution Specify and enforce rules
Control Lever Boundary system
of the game
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Value to Achieve
Organizational Blocks Lack of focus or of resources
Managerial Solution Build and support clear
Control Lever Diagnostic control
targets
systems
Value to Create
Organizational Blocks Lack of opportunity or fear of risk
Managerial Solution Control Lever Open organizational dialogue Interactive control to encourage learning
systems
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To get a better handle on understanding an organization, we should ask the following questions
Always remember effective managers empower their organizations because they believe in the innate potential of people to innovate and add value.
Key Questions to Ask Have senior managers communicated the core values of the business in a way that people understand and embrace?
Have managers in your organization clearly identified the specific actions and behaviors
Are the control systems interactive? And have they been designed to stimulate learning? Are you paying enough for traditional internal controls?
that are not allowed?
Are diagnostic control systems adequate at monitoring critical performance variables?
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Beliefs Systems empower employees and encourage them to search for new opportunities Lever 1 – Belief Systems The Belief System is an explicit sets of belief that define basic values, purpose, and direction. These include the following elements How value is created Level of desired performance Human relationships
The purpose of Belief Systems is to provide momentum and guidance towards: Mission statements Vision statements Credos Statements of purpose
An organization must put in place Belief Systems, so that it can control commitment to the organization’s vision, core values, mission statements, vision statements, credos, and statements of purpose.
Belief Systems inspire all employees to commit to the organization’s purpose. DAWGEN GLOBAL INSIGHTS I NOVEMBER /DECEMBER 2021
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Boundary Systems establish the rules of the game Lever 2 – Boundary Systems A Boundary System is comprised of formally stated rules, limits, and prescriptions tied to defined sanctions and credible threat to
The purpose of this system is to allow individual creativity within defined limits of freedom:
punishment.
Codes of business conduct
For each
the Boundary System
includes:
codes
Strategic planning systems
of
conduct,
predefined
strategic
planning
methods,
asset
regulations, guidelines.
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acquisition operational
Asset acquisition systems Operational systems
Boundary Systems identify actions and pitfalls that employees must avoid.
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Diagnostic Control Systems allow managers to ensure that important goals are being achieved efficiently & effectively
The focus behind this control strategy is getting the job done—it follows the standard performance management approach of measuring against KPIs.
Lever 3 – Diagnostic Control Systems Diagnostic
Control
Systems
are
feedback
systems that monitor organizational outcomes and correct deviations from preset standards of performance. These systems include: Profit plans and budgets Smart goal setting systems Project monitoring systems Strategic planning systems These must be put in place by a company so that it can optimize outcomes, and get the work done: output measurement, valuation standards, incentive
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systems and compensation systems. The objectives of the Diagnostic Control System include: To allow effective resource allocation To define goals
This is achieved via: Setting standards Measuring outputs Linking incentives to goal achievement
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Interactive Control Systems enable top-level managers to focus on strategic uncertainties and to respond proactively Lever 4 – Interactive Control Systems Intelligent organizations use Interactive Control Systems for tracking new ideas, for triggering new learning, and for properly positioning the organization for the future: Incorporating process data into management interaction Face-to-face meetings with employees Challenging data Assumptions Action plans of subordinates These are the systems that team player skills use to advance and develop.
The objectives of Interactive Control Systems are:
These systems achieves these objectives by ensuring that:
To focus organizational attention on strategic
Information regarding changes in technologies,
uncertainties
customer
To provoke the emergence of new initiatives and strategies To ensure that the way we do business relates very closely to the changes in customer needs
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requirements,
supplier
strategy,
competitors’ strategies, and team skills are adequately and proactively incorporated into the strategy process The chosen strategy remains appropriate to the business reality and overall company objectives
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DICE HARD
CHANGE FACTORS
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The DICE framework is a Change Management methodology that evaluates “Hard” change factors to determine the viability of success for a project Article Overview The DICE Hard Change Factors framework is a Change Management methodology developed by Perry Keenan, Kathleen Conlon, and Alan Jackson of the Boston Consulting Group. DICE is used to calculate how well a company is implementing or how well it will be able to implement its change initiatives by evaluating 4 “hard” change factors.
Most change professionals are aware of the “soft” factors that influence the success of a change program namely, Vision, Leadership, Organizational Culture, Employee Motivation, Top-down or Participatory Approach. There are also several “hard” factors, which are often not considered. Specifically, there are 4 such hard factors, known as the DICE factors
Duration
Commitment
Integrity
Effort
(i.e Team Performance Integrity)
This framework is based on a research project conducted in the early 1990s by BCG that analyzed 225 companies.
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DICE has been used at over 1,000+ companies since its inception, confirming that these factors are the only ones correlated to predict the outcome of Change initiatives.
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DICE can be leveraged for all the following Change initiatives Usage of DICE Track the score of a project over time.
Compare the score of a project with the scores of previous projects.
Compare the score of a project before and after making changes to the structure of a project.
Manage a portfolio of projects—determine which ones should receive the most attention and resources.
Provide a common language to discuss change.
Enforce conversation and improve communication.
The four factors offer a litmus test that executives can use to assess the probability of success for a given project or set of projects. DAWGEN GLOBAL INSIGHTS I NOVEMBER /DECEMBER 2021
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Simplicity is both a source of strength and limitation in the DICE framework Strengths, Limitations, and Assumptions STRENGTHS Hard factors such as the DICE Factors can be measured, communicated and influenced. Simplicity—enables communication. Consistency—standard way of determining project feasibility. Using a framework helps managers to evaluate projects consciously.
LIMITATIONS Determining the scores is a subjective process. Simplicity—the method does not deal with the soft change factors, although they are important.
ASSUMPTIONS Organizations should pay attention to 4 Hard change factors before considering Soft change elements when considering or evaluating a change initiative.
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On the continuum of Change projects, most occupy the middle ground, where it’s difficult to assess their likelihood of success or failure DICE Approach – Change Project Continuum We can place the various types of Change initiatives on a continuum: Short projects that are led by a skilled, motivated, and cohesive team. Championed by top management. Implemented in a department that is receptive for the change and has to put in minimal additional effort.
These projects are very likely to succeed. Long, comprehensive projects that are executed by a non-expert, unenthusiastic, and disjoined team. Lack of any top-level sponsors. Aimed at a function that does not like the change and has to spend a lot of extra work.
These projects will normally not succeed. Most Change initiatives occupy the middle ground where the likelihood of success or failure is difficult to assess. We must leverage the four DICE factors carefully to determine if our change programs will succeed or fail. DAWGEN GLOBAL INSIGHTS I NOVEMBER /DECEMBER 2021
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With the factors defined, we now score each factor 1-4 & calculate the DICE score through a simple formula DICE Approach – Formula We calculate the DICE score using the formula below. Each of the 4 DICE factors is scored from 1 (very favorable) to 4 (highly unlikely to contribute to success): DICE Score = D + (2 x I) + (2 x C1) + C2 + E Duration < 2 months = 1 2-4 months = 2 4-8 months = 3 > 8 months = 4 (Team Performance) Integrity Very good = 1 Good = 2 Average = 3 Poor = 4
Commitment (Senior Management)
Commitment (Senior Management)
Clearly and strongly
< 10% additional = 1
communicate the need = 1 Seem to want success = 2 Neutral = 3
10-20% additional = 2 20-40% additional = 3 >40% additional = 4
Reluctant = 4 Commitment (Local) Very good = 1 Good = 2 Average = 3 Poor = 4
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Our final DICE score has a possible value between 7 (best) and 28 (worst)— using this score, we determine the project’s likelihood of success DICE Approach – Scoring
“Win” zone – projects are
“Worry” zone –risky projects,
“Woe” zone – very risky, indicating
very likely to succeed.
it’s hard to predict success.
high unpredictability or unlikely to succeed.
We can compare our DICE score on the day we kick off a project with the scores of previous projects, as well as their outcomes, to check if the initiative has been set up for success. Source: The Hard Side of Change Management, Sirkin, Harvard Business Review, 2005
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