In this section, we’ll see how an executive at TechCore in a mad dash to make a success of his company is unable to keep his priorities straight—until he starts using Scrum. Michel felt as though he had to chase down every lead, but pulling together a Product Backlog enabled him to see that the real money could be made by focusing attention on product development. Within four months of implementing Scrum, he had more than achieved his goals: his company’s prospects had improved so much that a previous offer to buy out TechCore was reinstated at a significantly higher amount.
TechCore was one of the many startup telecommunications companies in Boston during the late 1990s. The cry at these companies was “more bandwidth, more capacity,” and at TechCore, young PhDs from MIT had the patents and the answers. Using dense wavelength frequency multiplexing and avoiding transitions from light wave to electric at junctures, Michel’s company, TechCore, was able to increase capacity by over 4000 percent. Michel hired other bright MIT PhDs to develop his products. Mortals from micromanufacturing, finance, human resources, purchasing, and administration staffed the rest of the company, which was growing as rapidly as people could be hired. The company had recently had a $540 million offer to buy it and its new technology, but Michel and TechCore’s investors felt that their company was worth more.
Michel was determined to pull together a subsystem of TechCore’s technology that would more clearly demonstrate a greater value at a telecommunications conference and show four months away. Meanwhile, component yields were 1 in 1000, human resources was bringing in the wrong people, finance was busy planning the next expansion, and Michel was trying to be all things to all people, even going so far as to design the cabinet that the subsystem would be demonstrated in at the upcoming show.
Michel and I pulled together a Product Backlog that focused on things important to the upcoming show; all other work—even improving manufacturing yield—was given a lower priority. Yes, it was important to have sustainable yields, but not if the strategy was to sell the company in the near term. Whoever acquired TechCore would probably have the necessary manufacturing expertise to do so. The exercise of pulling the Product Backlog together was extremely beneficial. Michel had thought that he could do it all. He thought that he could ensure new product delivery while managing every other task being performed at the company. As a result, he was stretched too thin, and he wasn’t able to give anything adequate attention. In deciding that product development requirements were higher priority than manufacturing, space planning, and recruiting, Michel was also admitting that he had only limited energy and that he had to decide where to allocate it.
Previously, Michel held daylong review meetings to impart his knowledge and direction to the development engineers. These often degenerated into design sessions on one part of the subsystem, helping only a small segment of the team while chewing up everyone else’s time. We decided to get Michel involved through the Daily Scrums. At the Daily Scrums, it became clear that the PhDs weren’t talking to each other; they were often stuck on problems that someone else could have helped them solve. Team members began helping each other on a daily basis. And Michel saw ample opportunities to step in and provide necessary and critical assistance. As each engineer reported his or her status, Michel saw that if he focused his attention on product development, he could expedite design decisions, ensure that the correct path was taken, and actually get involved in the critical business of his company. He focused his efforts on helping the team with its short-term problems, which were all related to preparing the subsystem for the show.
One surprising problem that the Daily Scrums made visible took a while for me to understand. It seemed to me that most of the engineers spent inordinate amounts of time acquiring components. They would request components from purchasing and then sit around and wait for them. When the component finally arrived, it often wasn’t the one they needed. When I discussed this problem with purchasing, it became clear that this department was also frustrated by the situation. The components that the engineers were requisitioning were new to the market, often little more than preannounced prototypes. The manufacturing yields for these components were low because they used new technologies, and they were also very expensive and hard to locate. The purchasing staff often had to attempt to describe the components to the vendor when they didn’t have the technical knowledge that would enable them to do so. The result was a lot of wasted time and frustration. Engineers would ask for a component, purchasing would try to find the part, the vendor would try to provide an alternative component, purchasing would interrupt the engineer to get his advice, and even if the engineer accepted the alternative, by the time purchasing got back to the vendor, the component had often been sold to someone else. This happened every week.
To solve the purchasing problem, we hired two junior engineers to work in the engineering development group. They were “junior” only in the sense that they didn’t have PhDs from MIT. A senior engineer would address a request for a part or component to a junior engineer. The junior engineer would then work with purchasing to acquire the most appropriate part as quickly as possible. The junior engineer was empowered to make tradeoffs. To help increase the likelihood that tradeoffs were optimized, all of the engineers were equipped with cell phones. Tradeoffs were made in the real time between the vendor, purchasing, the junior engineer, and—when necessary—the senior engineer who needed the part.
You might think that expediting the purchasing process is a trivial accomplishment. However, the Daily Scrum showed that dealing with purchasing was one of the greatest drains on the team’s time. It was keeping the senior engineers from working with each other and with Michel. It also demoralized them because they were getting so little done.
Michel’s intense participation in product development improved the department’s focus exponentially, and it sped critical problems to resolution. Hiring junior engineers as procurement specialists freed the senior engineers to work on difficult problems and simultaneously sped up procurement. The result was a successful demonstration of a subsystem at the show followed by BigTel’s $1.43 billion buyout of TechCore a month after the show. Michel’s focused participation in the company’s highest priority work generated an ROI of almost $1 billion dollars within six months. Not a bad day’s work.