A new decade for social changes

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Vol. 9, 2020

A new decade

for social changes

ISSN 2668-7798

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Lean and Agile Project Management and the Challenges for its Implementation in SMEs in Czech Republic

Róbert Modranský

Prešov University in Prešov, Slovakia, Faculty of Management – PhD. student

Silvia Jakabová

DTI University, Slovakia – PhD. student [email protected]

Michal Hanák

DTI University, Slovakia – PhD. student

Albert Oláh

DTI University, Slovakia – PhD. student

Abstract. The purpose of this paper is to investigate the possibilities, challenges and benefits of implementing Lean & agile project management in manufacturing SMEs. Lean & agile project management methods were originally developed for the software development industry, where they have revolutionized the way projects are managed. In the last decade, practitioners outside software development industry have started to realize the potential and benefits of implementing the agile approach. However, there are still only a few researches devoted to agile hardware development, and even fewer on the possibilities of its implementation in SMEs. By conducting a case study in the only manufacturing SMEs that has successfully implemented Scrum, analysing internal company’s documents and interviewing several employees and top managers from different sectors, who participated in the projects where Scrum was implemented, the lessons this organization has learned and that could be beneficial for both researchers and practitioners, are reported. The findings from this research show that although some adaptions of the Scrum framework were required, the applicability of the Scrum in this manufacturing SME was possible and beneficial.

Keywords. Agile for SMEs, Agile hardware development, Lean & Agile Project management, Scrum beyond software development, Scrum in mechanical development .

1. Introduction

By the end of the 20^thand at the beginning of the 21^st century, the business conditions and the characteristics of the business environment have drastically changed. The globalization, excess supply, increased demand for high-quality personalized goods and service, intense technical progress and strong impact of information technologies are just some of the factors that Technium Social Sciences Journal

Vol. 9, 413-440, July 2020 ISSN: 2668-7798 www.techniumscience.com

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influenced the business environment in the last couple of decades. Modern business conditions have put the largest number of organizations in the situation that their survival and the future depend, above all, on the possibilities and the speed of adaptation to the new situation and conditions. The characteristic that distinguishes (and will even harder distinguish) the successful from the unsuccessful organizations is their willingness to adapt and redefine its business strategy to the unsteady environment.

One of the answers to overcoming modern business challenges was provided by the Japanese company Toyota in the 1950s by developing Toyota Production System (abbreviated as TPS hereafter), which by the 1990s became known worldwide as lean manufacturing. The original ideas of TPS included reducing the cycle of production, eliminating everything that does not add value to the final product and producing only the products that customers want [47]. The implementation of TPS made Toyota the leader in automotive industry for many years and changed the rules of the game in the automobile industry. Since then, the principles of TPS evolved and have been adopted by other industries as well. Today, the core values of TPS i.e.

lean manufacturing can be referred to as lean philosophy, as their implementation transcend the manufacturing industry.

The development of TPS influenced the defining standards and approaches in industries outside of automotive too. The numerous benefits from implementing TPS became globally acknowledged and even influenced the creating of the new approach in managing projects within organizations. This new approach has been gradually developing since 1970s and in both practice and literature became known as lean & agile project management (LAPM hereafter).

The project management (PM hereafter) in general is a specialized discipline and one of the most important aspects of management in modern enterprises, regardless of their size or activity. By applying the appropriate tools and methods of organizing, planning, implementing and controlling, PM enables achieving all project’s objectives with the optimal use of available resources, in the fastest and most efficient way. The traditional approach to PM (TPM hereafter) has evolved over the years through the work and contribution of the great number of researchers and practitioners to become globally recognized the standard to be applied in everyday practice by both multinational corporations and small and medium- sized (SMEs hereafter) today.

However, by recognizing certain shortcomings of the TPM, in the dynamic and the constantly changing business environment characterized by the Information Technology (IT hereafter) sector, LAPM approach has been defined.

The need for a new approach in managing projects showed up as a result of wasting too much resources on IT projects, that often turned out to be a failure. The main reasons why these big IT projects failed was because TPM approach was too rigid and unable to adapt to the changing requirements that the IT industry demands. The TPM works quite well in the situations where everything is well planned, agreed on and known in advance. However, the reality is that, very often, not all elements are known in the beginning and there is a high possibility that there will be some changes in the stakeholders’ expectations and requirements.

The likelihood of changing initial requirements is even higher in the IT industry than in others.

For that reason, LAPM, the new approach in managing projects, was originally developed for the IT industry, more specifically, for the software development.

The LAPM approach is the use of simple methods and tools for encouraging creative work in small groups with direct communication of team members, eliminating all unnecessary activities and obstacles, monitoring the implementation of project activities on a daily basis, and promptly introducing corrections when necessary.

Today, LAPM, also referred to as just agile project management (APM hereafter), is considered to be a mainstream approach in software development industry. LAPM enables software Technium Social Sciences Journal

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development organizations to become more responsive to changes, more efficient in delivering high-quality products and reduce the time necessary for a product to reach market. However, in non-software development industries, TPM remains the most common approach in managing projects.

Although the current trend is expanding LAPM approach to other industries as well, there are only few publications on the research devoted to application of LAPM in hardware development industry. Due to intense technical progress and expansion of information technologies to almost every domain, it can be difficult to identify the application of LAPM in industries outside of IT. The example can be marketing (digital marketing in particular) that is in almost every aspect underpinned by IT and driven by automation. However, it is clear that in manufacturing industry, and especially in manufacturing SMEs, there are very few researches on possibilities of implementing LAPM.

For that reason, this paper will be dealing with the possibilities, challenges, and benefits of implementing LAPM in a SME. The aim of this research is to contribute to the gap found in literature on the applicability of methods developed for the software industry to manufacturing industry. The findings obtained by analyzing and documenting the lessons learned from the case of this manufacturing SME could be beneficial for both further research on this subject and practitioners that are considering implementing LAPM in hardware development industry.

2. Literature Review

Before research methodology and findings obtained from this paper are presented, the literature will be reviewed. The literature review presents the knowledge gathered from the previously conducted studies on the subject of this research in order to understand and best support the case study of this paper.

2.1 Traditional Project Management

In order to better understand LAPM approach, the basic terminology of PM and the roots of PM must be firstly defined. By elaborating what TPM is, the essence of lean & agile approach and the differences between these two approaches will be more comprehensible.

2.1.1 Project

In everyday business and social life, the term project is widely used. Whether it is winning a new market, introducing a new informational system or a new organization, developing a new product, reconstructing a manufacturing facility, building a new factory, dam, hospital or a school, it is always about the realization of a particular project. The project is most often defined as a complex and inimitable endeavor that is undertaken to achieve the goals in the forecasted time and cost [10], [22].

Project Management Institute (PMI), the very respected and worldwide known institution for PM, defines project as a temporary effort undertaken for creating a one of a kind (unique) result, product, or service [31].

Every project has a specific goal, time limitation and a framework for drawing resources for project realization. Each project is to a certain degree risky and vague. Furthermore, in every project there is the concept that in literature can be find by the name PM Triangle, Iron Triangle, Triple Constraints or Golden Triangle that consist from three constrains that are mutually conditioned: scope (or quality), time and cost. This model is used to describe the fact that changing one component has an impact on other two. Every project has a different priority considering the three constrains, thus it is important to seek for the balanced solution [4].

Technium Social Sciences Journal Vol. 9, 413-440, July 2020 ISSN: 2668-7798 www.techniumscience.com

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2.1.2 Project Management

The concept that is used for the effective managing of projects is called project management.

To ensure project success and on-time-delivery PM methods are to be applied. The PM was used long before it became a scientific branch and a profession, but only in the mid-20^th century was developed as a distinct discipline. The main influence on developing PM as a method had WW2 and the cosmic projects in the 1950/60s. During this period, the Gannt charts, PERT, CPM, PDM, WBS as well as other significant tools and methods were discovered that are parts of PM to this day [38].

PMI provides very general definition of PM as “the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements” [31, p. 47].

2.1.3 Traditional Project Management Principles

The main idea behind TPM is that projects are rather predictable and uncomplicated with definite and clear boundaries which enables the possibility of making a detailed upfront plan of a project’s execution and sticking to it. The primary goal of TPM is efficiency and optimization and delivering the result within defined time, scope and budget [16].

Each traditionally managed project has the same lifecycle and consist of the following phases:

initiation, planning, execution and closure. During the realization of a traditionally managed project, the project’s scope is divided into these phases in order to ensure better management, control and to establish appropriate connections between project activities within the project sub-process. Furthermore, there are five process group that are implemented within four phases of a project’s lifecycle [31]: Initiation, planning, execution, monitoring and controlling, closing.

Process groups are rarely individual activities. In most cases, they overlap with each other with different intensity during the project and they repeat in each project life cycle phase. Contrary to that, phases of life cycle have a sequential and linear flow [31].

2.1.4 Waterfall Model

The main characteristic of TPM is a linear and sequential process of developing product or a service. This approach is widely referred to as waterfall model. Waterfall model was invented in 1970s by Winston W. Royce and in today’s terminology waterfall and TPM are almost referred to as synonyms [6].

Waterfall model implies that before moving on to next phase, all activities from the previous one must be completely finished, which means that all of the project phases are to be completed in a sequential order. This indicates that every phase of the project is viewed as a stand-alone activity. The end of each phase is characterized by handing over a certain output achieved at a given stage. Deliveries on the project are handled by the project team, while managing the project life cycle is the main task of a project manager [21], [27].

Waterfall model is based on a fact that a projects scope, all circumstances around the project and all the necessary tools that will be used for solving it are foreseeable and predictable.

Waterfall is the most appropriate method when user’s requirements are fixed and clear, technology and tools for delivering product and service are completely known and when the project is short. However, both practice and literature show that projects tools and all the requirements almost never can be planed and predicted completely. The biggest disadvantages of waterfall model are that no usable product or service is delivered until the final phase, there is a high amount of uncertainty and the change of scope or requirements is not possible [21], [40].

The waterfall model assumes that the customers’ requirements are stable and well known at the beginning of the project. After collecting detailed list of what the customers need, a thorough Technium Social Sciences Journal

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plan is made before executing the project. The great amount of time is spent on developing a plan for the scope of each project phase, because once the phase is finished it cannot be changed.

Nevertheless, the often situation is that customers’ requirements change or that he/she is not sure what does he want or at the time of ordering. If the customer detects any shortcomings at the time of results handover, it is too late to include these additional requirements in the project.

The following changes in the project are then very expensive and result in wastage [42].

2.2 Lean & Agile Project Management

This chapter will be dedicated to explaining the history, tools, and principles of LAPM. Firstly, the lean concept as a foundation of the agile approach will be briefly described. Afterwards, the common principles of both lean & agile will be provided as well as a comparison of TPM to LAPM.

2.2.1 Lean Philosophy

The roots of the agile approach can be found in lean manufacturing concepts. The lean concept was developed in the 1950s in Japan after World War II in the Toyota factory, but it was not until the 1990s that this approach in manufacturing was expanded globally. Today, the basic and core ideas of lean manufacturing can be applied into any industry and are rooted into lean thinking [12].

The lean philosophy (underpinned by digital technologies) lowers delivery time, requires less investment and does not produce products for which there is no market. The methods and tools of lean philosophy provide solutions to most modern challenges in the industry and services.

This philosophy promotes the flexible production that the modern market needs and eliminates losses by increasing productivity with high-quality products and services [47].

The core value of lean manufacturing is based on the elimination of waste. The term waste refers to all activities that require certain resources that do not contribute to value-adding, an error that requires corrections, production of products for which there is no demand, overproduction and unnecessary process. Initially, there were 7 types of MUDA i.e. waste detected in Lean environment. Taiichi Ohno, co-developer of TPS, stated that these seven forms of waste are responsible for 95% of all costs in non-Lean organizations. In the 1990s, there was an additional form of waste identified e.g. the unutilized people potential. The eight lean manufacturing wastes include the following [20], [23], [28]:

• Overproduction – by producing more than what customers want, the valuable labor and resources that could be used are otherwise tied up.

• Waiting – waiting unnecessarily for material, people, information increases the lead time; the resources are to be delivered just-in-time.

• Defects – the malfunctioning or damaged products require additional resources (time, people, material) and cause customer dissatisfaction.

• Transportation – the Lean requires point-of-use-storage technique i.e. everything should be transported straight from vendor to the exact location where the resource is going to be used.

• Inventory – by decreasing the warehouse spaces and supplies (which can be achieved by decreasing overproduction), enormous amount of savings and waste elimination can be accomplished.

• Motion – this form of waste constitutes of every unnecessary movement of people or equipment that is usually caused by poorly standardized work methods, workflow or layout.

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• Over-processing – includes all non-value adding steps of processes such as rework of damaged products or deburring.

• Underutilized Skills – an insufficiently used mental, creative and physical skills of labor are lately considered as the worst form of waste; the unused human potential offer occurs in the poorly managed organizations where true talent and skills of people cannot be reviled and expressed.

Lean manufacturing was designed to minimize and possibly eliminate these wastes. The consequences of doing so include shrinking lead time, increasing ROI and avoiding unnecessary costs [20].

2.2.2 Lean Principles

The main objectives of lean are waste elimination, increasing customer satisfaction and focusing on respecting people in every labor process. In order to fulfil these objectives, the lean manufacturing is based on several major concepts that include the following: value determination & value stream analysis, flow, pull and perfection [28], [34].

The first major concept includes the definition of value. Value is a parameter that is exclusively determined by the end customer and it represents their demands and desires. A team responsible for delivering the product or service must understand the customers’ requirements and translate them into feasible project. After the delivery time, functionality and quality of product or service e.g. the value, is defined and the following step includes the value stream analysis. The starting point of this analysis is mapping out the process, which means that each step of the production process is defined. Mapping provides a broad view of the selected process and visually displays product flows, materials, and flow of information. The desirable effects of mapping out a value stream are elimination of non-value-added process and focus on steps that add value [47].

Once the value and value stream are fully defined and unnecessary steps are eliminated, then the creating value flow steps follow. Flow should be continuous which means that all products must uninterruptedly flow through each operating process without delay. Lean manufacturing requires the redefinition of individual work, sector and company-wide tasks to make an adequate contribution to creating value flow steps. There are several prerequisites necessary to establish continuous flow: stability of process, quality, standardized labor, total productivity maintenance and flexibility of production system. Once a continuous flow is established, the time required to design a product and the time required to take an order is significantly reduced [34], [47].

The third major concept of lean manufacturing is pull or just-in-time. Implementation of the pull system means that the new production begins only when customers want a product. The demand chain management results the decrease of the warehouse spaces and the accumulation of supplies. The advantage of this system is that the products are made based on specific customer requirements. The pull system also leads to just-in-time delivery and production [28].

And the final element of lean manufacturing is striving for perfection. In lean environment, there is a systematic seek for achieving zero defects and inventory, providing continuous flow and maximizing the customers’ satisfaction i.e. the production ideals. Lean teams are constantly finding ways to increase value by focusing on elements that add values and eliminate non-value adding processes. The aim is to seek perfection through continuous improvement i.e. kaizen [34].

2.3 Agile Project Management

In this chapter, the history and evolution of the APM as well as agile manufacturing principles Technium Social Sciences Journal

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will be explained.

2.3.1 Agililty in Management

One of the definitions of the term agile that can be found in Oxford Learner’s Dictionary is the ability to move quickly and easily. When referring to agile business, the Oxford Dictionary defines it as managing projects by separating work tasks into smaller parts, with regular reviews of the work and with ability to adapt the plan. The term agile is often associated with flexibility, adaptability and quick responsiveness to changes [1].

Agility in commercial environment showed up as a comprehensive response to the changing business challenges. Some of the major challenges in the last couple of decades that appeared both in manufacturing and service sector include customers’ needs for high-quality, high- performing and personalized goods and services [44].

Today, agile management is primarily used by commercial organizations, but it is starting to be utilized by institutions in the public sector such as non-governmental organizations, universities or libraries [45].

[9] provides several characteristics of agile management and five approaches on how organization can become more agile. The same author claims that organizations must act quickly, experiment with new technologies and markets, flatten the hierarchy, encourage the disagreement in opinions and have a peripheral vision for what is going on the margins.

2.3.2 Agile project management

APM appeared based on critique of rigidity, unresponsiveness to changes and highly detailed planning of TPM. These characteristic of TPM were especially troubling in software development industry, where customers often wanted to change its requirements or were not sure what were their exact demands. Instead of delivering the final product at the end of project, software developers started to deliver smaller increments more often in order for the customer to review them and to realize if there is a need for changing or adding more requirements.

Contrary to TPM, agile thus become based on iterative i.e. iterative-incremental development wherein each iteration process goes through all stages of the incremental method [13].

The need for a new PM approach was based on the undesirable effects of the TPM approach in IT industry. It was realized that there is a huge amount of resources that were spent on an unsuccessfully finished IT projects. The failure of IT projects only in the U.S costs their economy about 50 to 150 billion USD annually [18].

The example of a failed federal IT project was the development of the FBI sentinel project. This IT project included delivering a new, modern and more complexed FBI information system after 2001. However, this project was led by traditional methods and waterfall methodology.

After 10 years, 2 companies and almost 700 million USD wasted sources on developing it, the informational system was still not completed, and project was cancelled and marked as a complete failure. Nevertheless, when for the third time FBI tried to renew the project, they changed the approach to managing it. This time they used an agile software development approach i.e. an agile methodology called Scrum. The agile approach in a managing project meant that the whole software design was divided into 670 parts, where 45 people worked in self- organized teams without a project manager. Every two weeks of work were followed by a demonstration of the achieved result. By dividing the work into the smaller tasks, it became possible to deliver working parts of software that were then given to agents to test them and express their opinions, remarks, and suggestions. On this third attempt with agile approach, the software was finally completed in three years and cost 99 million, which meant that huge amount of resources was saved when compared to initial project development with traditional Technium Social Sciences Journal

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methods [29].

After grand success of this FBI sentinel project, APM became world-wide known and respected approach to managing IT projects. Experts from around the world were assured of the many benefits that agile methodology was providing. However, even though agile methods have proven its success in software development industry extensively, to this day they remain almost exclusive for the IT sector [13].

Although agile practices have been gradually developing from 1970s and alternative incremental approaches have already been introduced in software development industry, 2001 was the year when the common ground for the different approaches to developing software was set for the first time. In Utah, a group of seventeen IT experts wrote the Manifesto for Agile software development where they defined 12 principles and 4 values of agile approach.

These four values were introduced as [8]:

• Individuals and interactions over processes and tools.

• Working software over comprehensive documentation.

• Customer collaboration over contract negotiation.

• Responding to change over following a plan.

Authors agreed on appreciating flexibility, responsivity, communication, optimization and constant learning and improvement as core values of APM. They introduced the following 12 principles that are to be followed in an agile environment [8]:

• Highest priority is to satisfy the customer through early and continuous delivery of valuable software.

• Welcome changing requirements, even late in development. Agile processes harness change for the customer's competitive advantage.

• Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale.

• Business people and developers must work together daily throughout the project.

• Build projects around motivated individuals. Give them the environment and support they need and trust them to get the job done.

• The most efficient and effective method of conveying information to and within a development team is face-to-face conversation.

• Working software is the primary measure of progress.

• Agile processes promote sustainable development. The sponsors, developers, and users should be able to maintain a constant pace indefinitely.

• Continuous attention to technical excellence and good design enhances agility.

• Simplicity, the art of maximizing the amount of work not done, is essential.

• The best architectures, requirements, and designs emerge from self-organizing teams.

• At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly.

Success of the Agile manifesto came faster than it was anticipated and surprised even their authors. The core ideas and principles behind are applicable to this day and implemented in many organizations. However, majority of founders agree that agile practices are often very poorly implemented. One of the reasons for its poor implementation is that organizations are not becoming agile, but just claiming to be agile, because it is a trend and good marketing.

The best part of founders also agrees that there is no need to change the original wording of the Manifesto [24]. Nevertheless, in 2011 [8] suggested that the next step in involving original Manifesto can be presented as following [17]:

• Team vision and discipline over individuals and interactions (over processes and tools).

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• Validated learning over working software (over comprehensive documentation).

• Customer discovery over customer collaboration (over contract negotiation).

• Initiating change over responding to change (over following a plan).

To this day, the original Manifesto stays unchanged and there are no indications that the founders are willing to rework it [24].

2.4 Lean and Agile vs. Tradititional Project Management

After literature was reviewed on both TPM and LAPM, the comparison of these two most common approaches for managing project will be given. In order to understand the differences, the brief summary of TPM and common principles of lean & agile will be described.

The aim of TPM is optimization and maximum efficiency within given resources and scope of project. TPM should be used when both solutions to resolving a given problem and the scope is completely known. The TPM assumes that the customers’ requirements will not change, and that customer declares their need at the beginning of project after which the detailed plan is made. The main characteristic of TPM is waterfall approach, indicating that all of the project’s phases are finished in a sequential flow, which means the change during the project’s duration is undesirable. The TPM provides a wide set of tools and methods that are described in the standardized books of knowledge such as PRINCE2, PMBOK Guide or ISO 21500: 2015 [16], [44], [48].

Contrary to TPM, agile approach with lean principles for managing projects was invented. After reviewing the literature on both lean and agile methodology individually, it is important to set the common principles and similarities of these two approaches. Even though lean and agile differ, the distinctions can be found not in principles but rather in implementation (e.g. lean is usually implemented within production systems within the whole organization and it is more process-oriented, while agile methods are commonly used in teams and in the service sector).

The common principles that describe both LAPM are [43]:

• Put an emphasis on customers and provides them the highest business value.

• Minimize and eliminate waste.

• Release small frequent versions of the product (iterative development).

• Respects and focuses on people and on teamwork.

• Continuous development and learning.

• Making decisions as late as possible during the process.

• Integration of quality and integrity into product/service.

• Inspection and measurement of processes.

By using LAPM approach, teams are able to deliver high-quality goods and services quickly by breaking down the workload into smaller pieces and eliminating waste [43].

Instead of discussing which PM methodology is "better", it should be stated that the choice between TPM and LAPM should depend on the nature of the project. [48] suggested that TPM should be implemented in the projects where both the goals and solutions are clear. TPM can be the most fitting approach in the projects where everything is well planned, agreed and known in advance. However, the reality is that, very often, not all elements are known in the beginning and there is a high possibility that some changes in requirements may occur. For the projects where the goal is clear, and solution is not, or instead goal is not clear, but solutions is, the APM should be the most appropriate methodology [48].

Over the years, the possibility of creating mixed traditional/agile PM methodology that would be the best fit for the needs of organizations was discussed and developed. Given the specific organizational context of each company and the complex nature of projects, it was concluded Technium Social Sciences Journal

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that in certain cases having only one PM methodology is not enough [40]. This led the creation of a hybrid model, that in literature became known as Agile-Stage Gate model. The Agile- Stage-Gate model combines the elements of the traditional waterfall model and agile elements mostly derived from Scrum methods. The elements of agile methods in this model include self- organizing development teams and short iteration cycles, while the structure remains the same as in the traditional model [39].

The studies have shown that the implementation of the hybrid model leads to a higher stakeholders’ satisfaction, improved performance, and increased efficiency not only in software projects but also in projects from sectors beyond software development [37]. To some extent, the researches on implementing Agile-Stage-Gate model in hardware development were conducted that show that hybrid model can be successfully applied for the development of physical products as well [14].

With a handful of empirical research of implementing hybrid model for hardware development, it was proven that Agile-Stage-Gate model brings positive results with numerous benefits and enables its application in industries beyond software development. However, the publications of application of not hybrid but sole lean & agile approach in hardware development industry is even more limited. The results obtained from the studies considering this subject will be discussed in this paper.

3. Material and Methods

Before conducting research, it is important to firstly establish the research problem and objectives. For the research to be both valid and reliable, appropriate methods and strategies need to be chosen. Finally, data collection and data analysis techniques are to be discussed.

3.1 Research Objectives

The review of the selected literature has shown that over the years LAPM has been almost exclusively reserved for the software development industry. Even though the agile manufacturing was developed in the 1990s mainly for the manufacturing industry, the agile methods eventually took hold in IT industry where they have proven its success. In other industries, especially manufacturing, the TPM still prevails as the mainstream approach for managing projects. Although there are numerous practitioners’ reports about implementing LAPM in industries outside software, there are only a handful of published researches considering application of LAPM beyond software development industry.

Based on the gap that was found in the literature review, this paper is investigating the possibilities of implementing LAPM in the industries beyond software. The essential of this paper is to contribute to the research about application of the PM methods, that were written exclusively for the development of software in manufacturing industry.

Furthermore, this research is focusing on the organization that can be categorized as SME in which, based on the literature review, there are even less evidence of application of LAPM than in large organizations.

The essential will be achieved by conducting an empirical research in a small manufacturing organization that implemented agile methods of PM in 2019. The SME successfully implemented Scrum in six different types of projects and documented the experience from it.

The main result of this paper is to document the lessons learned from one case study that could be helpful for the further research on this subject and also be helpful for the other non- software organizations that consider implementing LAPM.

Based on the essential of this paper, several research questions are formulated:

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RQ1: What were the key success factors and what were the challenges of the successful implementation of LAPM in the manufacturing SME?

RQ2: Did Scrum require adapting to the manufacturing SME and to what extent was it able to be fully implemented by this manufacturing organization?

RQ3: What were the benefits of implementing LAPM in the manufacturing SME?

3.2 Research Methods

Given the nature of this research and the fact that possibilities of implementing LAPM methods have not been thoroughly investigated in industries outside of software development, qualitative research methods will be used in this research.

3.3 Research Strategy

Based on the nature of the research question, the chosen research strategy is a case study.

According to [49], a case study should be used when: the focus of the research is to answer why and how questions, there are no clear boundaries between context and phenomenon and when the behavior of participants cannot be manipulated.

3.4 Data Collection Techniques

The main data collection technique used is a semi-structured interview. A semi-structured type of interview is chosen because even though the researcher prepares a list of questions, it enables participants to start a discussion and gives the possibility of follow up questions. In that case, a researcher can obtain more detailed or unexpected information about the investigated phenomenon [46].

Furthermore, the complement to the semi-structured interviews will be the document analysis technique. The intern documents from organizations will provide supplementary data that will help answer to the research questions and fulfil the objective of the paper.

3.5 Research Process

The semi-structured interviews were conducted at the analyzed SME between the 10^th and the 24^th of February 2020. There were overall three visits in this period to the organization and during those visits, four participants were interviewed in order to collect the necessary data.

Furthermore, the head of the technological department participated in an additional email conversation, in which he shared files, documents and photos that showed how the projects – in which Scrum was implemented – progressed. The following table (Table 1) illustrates the brief profile of the interview participants, their position in the organization, overall number of conducted interviews with them and if there is one – an additional data collection. Instead of their full names and surnames, the interviewees are coded with their initials.

Table 1. The interviewees at the analyzed SME The interviewee The number

of interviews

The additional data collection

The role at the analyzed SME

Interviewee VV 2 Email communication;

documents, photos, diagrams and the tables considering the project progress.

Head of the technological department

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Interviewee AL 1 none Technologist

Interviewee MM 1 none Commercial

manager

Interviewee DN 1 none Machine operator

Source: author

It can be seen that all of the research participants have a different job position at the organization. This leads to more reliable results of the research given the fact that different perspectives and experiences are observed.

3.6 Interview Composition

The semi-structured interview questions were composed mainly based on the formulated research questions. The overall interview was divided into three sections: Organizational culture and leadership; Meeting Scrum practices and Individual and organizational performance. The rough set of interview questions can be seen in the Table 2.

4. Findings from Interviews and Company Documents

In this part, the results obtained from the five interviews, observations and from the company documents will be discussed and summarized. The findings are structured under three sections:

Organizational culture and leadership; Meeting Scrum practices and Individual and organizational performance. The aim of each section is the better understanding of the implementation of LAPM in the manufacturing SME and the benefits and challenges that are related to it. The first section deals with the specifics of the organizational culture and the styles of leadership in the analyzed SME and the way how Scrum was initially implemented in this organization. This section also deals with the success factors and challenges that occurred and influenced the adaption to the LAPM. The second section Meeting Scrum Practices, investigates the extent to which the organization was adapting Scrum techniques, events, and artifacts. And finally, the aim of the third section is to find out the both positive and negative experience from Scrum adaption.

Table 2. The interview composition Interview sections Context from

the literature review

Research questions

Interview questions

Organizational culture and leadership

LAPM claims to have

fundamentally different values than TPM such as: team’s autonomy, customer focus, innovation...

RQ1: What were the key success factors and what were the challenges of the successful implementation of LAPM in the

manufacturing SME?

How was adaptation of agile methods initiated?

What were the main drivers and success factors for

Implementing Scrum?

What were the biggest challenges in

implementation of Scrum?

What was done do overcome these barriers?

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Meeting Scrum practices

Scrum practices differs from TPM in the commitment, management, communication and team level.

RQ2: Did Scrum require adapting to the

manufacturing SME and to what extent was it able to be fully implemented by this

manufacturing organization?

What Scrum events and artifacts did you apply in the projects (e.g. meetings, retrospective, user stories, sprints, estimation of the tasks, the visual

management...)?

Which Scrum artifacts and events do you consider the most helpful?

Which Scrum artifacts and events were the most challenging for you?

What would say is the biggest advantage and disadvantage of Scrum?

Individual and organizational performance

Lean & agile methods proclaim to improve quality, satisfaction and efficiency.

RQ3: What were the benefits of implementing LAPM in the manufacturing SME?

What kind of notable and/or measurable changes occurred in the projects where you implemented Scrum in the terms of quality, customer satisfaction, efficiency, communication and the delivery time?

What were the lessons learned from the Scrum implementation?

Would you recommend Scrum to other

manufacturing companies?

Source: authors

4.1 Organizational Culture and Leadership

The values of each subsidiary of analysed SME includes a continual upgrading of their knowledge, dedication, and discipline. Given the fact that the majority of SME subsidiaries is seated in the same areal, they share a mutual show & conference room where the different events, workshops and seminars are often held.

The top management of each SME subsidiary always attends these events, where they are provided with variety of different educational seminars. One of these educational seminars where the top management from every SME subsidiary participated was the workshop on Scrum. The workshop was held by mechanical engineer university professors, that also own the consulting company. At this one-day workshop that lasted 7 hours, top management of analyzed SME was firstly introduced to APM and Scrum.

However, it was only the top management that decided to change PM approach and try to Technium Social Sciences Journal

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implement the Scrum on the following projects. The workshop was held in the end of January of 2019 and the first project where they have tried the implementation of Scrum was in April.

Before the first project was initiated, the top management decided to educate the employees on Scrum methodology. Firstly, the head employees from every sector were provided with Scrum guide and with the Scrum: The Art of Doing Twice the Work in Half the Time book by Jeff Sutherland. The employees were given three weeks to read the book, after which the additional seminar on Scrum methodology by top management was organized. Even on the pilot Scrum project, the positive changes in team’s performance were visible. By the time this research was conducted, the analyzed SME managed overall six different projects with Scrum, in the period from the April 2019 until January 2020.

Right up to pilot Scrum project, the organization used a waterfall approach, with the structured hierarchy, where– once the project was initiated– it would become impossible to change the scope. Nonetheless, what was different in this organization was the state of mind of both top management and the employees. Their curiosity and desire for improvement can be spotted in the conversation and in the physical artifacts in their organization. The employees implemented majority of lean manufacturing elements and even invented their own approach to continuous improvements (Metazen). It was clear that the organizational culture and the desire for new knowledge, improvement and their dedication to the work differs from other SME subsidiaries (and from majority of other SME organizations).

Their sense of responsibility to work was also one of the key drivers for the Scrum implementation. The interviewee VV, the head of technological department, says that there is no point of the workshop if the employees do not try to implement the knowledge and skill they learned by attending to them.

The important element of their organizational culture is outgiving relations between colleagues.

Although this is a traditional manufacturing organization, with the rigid hierarchical structure, the top management considers the employees more as a team than as a subordinate. The top managers use a metaphor to say that they are "infected" with Metazen and that they want to

"contaminate" each employee with it. This means that they expect dedication, creativity, and desire for improvement from their employees by setting an example.

However, it is never easy (and probably impossible) to have each employee be equally motivated and dedicated to their job. Agile methods and especially Scrum give successful results only if each team member knows their responsibilities and follow them. If just one team member obstructs the process, the whole project can be damaged, delayed or not even finished.

The resistance from particular team members was a challenge in this organization as well.

According to the interviewees from top management, in each Scrum project there was one or two team members that resisted the new approach and tried to obstruct the teamwork. That team member would initially refuse to elaborate on the work done or plans for the future work. Also, there was a resistance to come to everyday to Daily Scrum. Some of the employees firstly felt that the projects where Scrum was implemented were additional job for which they should have been extra payed for. Even though the Scrum techniques are proven to be successful, for the team they were sometimes demanding, especially everyday meetings. In few cases, the employees that have shown zero participation in the projects that were replaced (one of the respondents refers to it as "rotten apple syndrome").

Nonetheless, the resistance to change occurred usually only in the begging. As the projects were developing, the team members started to feel that they contribute to the final product and they started to understand the bigger picture and their role associated with it. The satisfaction from the work done was a driver for the team members to successfully complete their duties. There was no need to exclude or penalize these team members. They soon started to feel embarrassed Technium Social Sciences Journal

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or ashamed when they would see that they were the only ones that did not do the work they committed to. As the top management was also a part of Scrum teams, they set an example which lead others to believe that everyone can benefit from Scrum and that this approach can be helpful. Once they saw the benefits from implementing Scrum, the former "problematic"

team members that tried to obstruct the teamwork, became eager and motivated to complete the project.

Also, given the fact the analyzed SME is the subsidiary of a larger organization, the obstructions can come from above. In the case of this organization, the involvement of parent company was just in the beginning, by organizing the educational seminar on Scrum. After that, each subsidiary was given a free rein to proceed with the implementation of Scrum. This means that there were no barriers in implementing Scrum from the parent company, but neither was there additional stimulation nor support to help the subsidiaries to fully transition to the new approach.

4.2 Meeting Scrum Practices

The development team participated in the six Scrum projects during April to December of 2019. Three of these projects had an external customer and the three Scrum projects had an internal user, which means that the project was done for the analyzed SME. They referred to projects where they implemented Scrum as SSA projects, which was the acronym of the Sprint Strong Agile projects. In each project, the different employees participated so overall more than half of analyzed SME employees have been a part of at least one SSA project. The team consisted of developers, Scrum Master and Product Owner and the usual number of team members was six. In the team participated the people from the different sectors: procurement, technology, commercial and production workers. The average age was 35 to 40, where around 50% of team has a high school education and 50% bachelor or higher degree, mostly in mechanical engineering or technology.

In the pilot SSA project, which was the display box production for the external customer, the head of technical department (the interviewee VV) had both roles of Scrum Master and Product Owner. In the following projects, the shift in roles was more than welcomed so that other employees can adapt to different obligations in the project. The role of the Scrum Master was mainly to guide the team and help them estimate the difficulty of each task. Overall, three of the employees participated in the role of Scrum Master. In the other SSA projects, with the internal user, the head of technological department took the role of a customer to whom work in progress was showed in the meetings. The responsibilities of a development team were to choose the task, estimate it and commit to it. Furthermore, the team members were obliged to participate in the everyday meetings and to do their work as agreed to. Even though Scrum guide prescribes that the Product Owner is responsible for the creation of the product backlog, this part of responsibility was usually divided among the whole team. The role of Product Owner consisted mainly of communication with the customer, however in these six projects never was a one team member "just" a Product Owner but also had additional responsibilities in the project.

Sprints on the weakly base were not incorporated to Scrum practice on these projects. The overall project (that usually lasted 3 to 6 weeks) was divided to smaller tasks and distributed among the team members. Instead of the weakly based tasks, the team members had daily tasks, which they have already estimated and have chosen from product backlog. This implies that, given the short nature of their projects, every SSA project had only one sprint in the duration from minimum 3 weeks to 2 months. It was not always easy to divide the overall work to a daily task. Even so, even if a team member did not have a task for a day or couple of days, he Technium Social Sciences Journal

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or she always participated in the Daily Scrum

Daily Scrum was an inseparable practice on each SSA project. The daily meeting always occurred in front of a Scrum board, which was stationed at the factory and never lasted more than 15 minutes. The team decided to have a daily meeting always at the same time, however when the team included employees from both working shifts and it was necessary to adapt so that all employees can attend the meeting. The experience has shown them that the early morning was the best time to hold a stand-up meeting because the team is then most focused.

If necessary, the meeting was held between shifts. The usual time of meeting was at 8:57h or 13:57h so the team would be accurate and appreciate every minute of the meeting. In every meeting, the team would decide on what will each of them do the day after, did they finish the work they committed they would do the day before and are they facing any difficulties in fulfilling their work.

Before the projects were started, the team firstly estimated the tasks by playing planning poker.

The team even made their own planning poker cards, that was used to evaluate the difficulty of each task from product backlog. Instead of the Fibonacci sequence, they developed its own sequence with numbers reaching up to 1000. Before starting a project, the team set aside one whole day for Sprint planning, just so the team members can choose the task they committed to do and to estimate each of them. Furthermore, the team followed the rule that if the estimation of the individual team members differs by more than two points, the people with the lowest estimation and with the highest estimation argue their opinion and discuss why they have chosen to estimate specific task by that number. Although the team members were employees from different sectors that sometimes were not sure about the difficulty and the necessary work that is to be done on the task, the planning poker was helpful and made the estimations accurate.

However, the role of Scrum Master was essential in this project phase because he or she helps the team decide about estimation.

The tasks that were estimated via planning poker were part of the product backlog that was usually created by the project initiator or the Product Owner. The product backlog was created in the Excel. After the estimations obtained from the planning poker, the results were also entered next to the task description.

Scrum board was used on every SSA project, but it was to some extent modified so it could fit the need of the project. The initial idea was that every team member has its own color of stickers with tasks on the board. The tasks that overall last two to four weeks were placed on the board, but each task was divided to smaller tasks on the daily basis. Their SSA Scrum board has six columns: task description, product backlog, to do, in progress, to check and done.

Retrospective was also a part of each SSA project. It always occurred when the project was finished. It usually lasted 2 hours, where the team gathered and looked back at the work done.

After each project, the presentation was made about the work they completed, the time that took them and the feedback from the user. The main aim of it was to figure out the lessons learned from each project and to recommend what could be done differently and why. All of the team members participated in the retrospectives.

Burndown charts were considered very helpful by the team. They were used every day of the project duration and placed on the Scrum board, so that each team member could see the progress of the work. Head of the technological department thinks that the burndown chart helps the team to stay focused and motivated to finish the project on time. After gaining experience on working with new practices, including burndown chart, the team was able to predict when will the project be finished in just five days after initiating it.

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4.3 Individual and organizational performance

The research shows that the results of implementing Scrum in all six SSA projects are unambiguous. The Scrum has helped the organization manage projects more efficiently and an increase was noticed in both individual and organizational performance. The organization reported that implementation of Scrum resulted mainly in decreased lead time, higher efficiency, increased customer satisfaction and overall better communication and interpersonal relations between co-workers.

These benefits were also spotted even in the pilot SSA project. The team claims that before, with traditional approach, that kind of project usually took 3 months to be fully delivered. The pilot SSA project was successfully completed in just 23 days, which means that the lead time was drastically reduced. Furthermore, not only was the final product delivered to the customer sooner, but the customer was satisfied with it. The team does not have the exact calculations of decrease in lead time, because the half of the SSA project had an internal user. These kind of projects (such as automation or improvement of internal processes) often used to dragged for months or even never finished with the traditional approach. By implementing Scrum, the team was motivated to finish them, and all the internal projects were completed within one month.

Although there are no precise calculations in lead and delivery time (because in some type of projects there is no earlier measurement to be compared with), the teams report that Scrum helped them lower the lead time by approximately 50% when compared to managing projects with TPM.

Reducing the overall time needed to complete the project implies that the fewer working hours were invested in the project which further implies decrease in the wage costs. With the less time spent on these projects, the external employees or the employees with higher wages (such as for example a technologist) had more time to dedicate their work to other projects which lead to more efficient usage of their skills.

The implementation of Scrum on internal projects indirectly resulted in developing several OPL (One Point Lesson) for the operators on the machines. These OPLs also lead to prolonging the lifetime of organizations’ machines, which also implies decrease in overall organizational cost.

In all the projects with the external users, an increase has been reported in the customer satisfaction. The customers were mostly satisfied with the following:

• By reducing the lead time, the customers received their products before the deadline.

• Because of the frequent communication and modifications of the desired products, the customers received the exact product they wanted.

The team reported that the clients were not aware that the team is using Scrum and that beside the more frequent communication and more active participation in the developing process, customers did not spot any additional change in the new approach.

Crucial benefit that resulted from implementing Scrum was releasing the creative energy of each individual at the moment when hierarchical obstacles were overcome. The Scrum team members claim to have felt liberty to express their opinion and experiment with the workload and the responsibilities they never had before. They also reported they felt more creative and less burdened with stress. Team members tried the different Scrum roles and the set of usually unused skills was revealed. The employees state that their new approach and freedom at the workplace came mainly from the loosen hierarchical structure. Without project manager, they had a liberty to choose and estimate the tasks they want to work on themselves which motivated them to work more efficiently.

Furthermore, for the majority of the employees this was the first time they have experienced working in the smaller and self-organized teams. Teamwork lead to more frequent and better communication with colleagues which also implies higher employee satisfaction. In the final Technium Social Sciences Journal

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phase of interviews, the respondents were asked about the current situation, lessons learned from implementing Scrum and the plans for the future PM in their organization. Firstly, the respondents said they plan to continue to use Scrum as their PM method. Furthermore, there is already a scheduled additional educational seminar about Kanban (a software development method) and Scrumban. The aim of this seminar will be an attempt to find the best agile method that can be implemented by the manufacturing SME. The interviewees are interested in trying additional agile methods and they say that they have already recommended Scrum to other SME subsidiaries by showing them their personal experience they had with new approach.

When asked about scaling agile e.g. possibility to extend the Scrum to more than one team simultaneously and to become an agile organization, the respondents said that they are aware of Scrum of Scrums and they have considered the option. They have not tried it yet because there was no need. However, they agree that it could be a good idea if someone could coordinate all the teams. On the level of the whole SME, respondents think that right now it would be impossible to scale agile.

Finally, team members from analyzed SME admit that they did not fully transition to Scrum and that they will continue to rely on TPM in long-term projects. Their experience from six SSA projects tells them the Scrum is most fitting method for the projects lasting from 10 days to 2 months top. If the project can be fulfilled in less than 10 days, they think that there is no need to form additional team, to distribute the roles and use Scrum artifacts. On the other hand, if the project’s duration is more than 8 weeks, the team members may feel overwhelmed and exhausted from the everyday meetings and the sense of extra work.

By the time this research was conducted, more than half of analyzed SME employees became familiar with Scrum methodology and participated in at least one SSA project. The top management goal is to educate everyone on Scrum techniques and to continue to implement in every short-term project.

5. Discussion

RQ1: What were the key success factors and what were the challenges of the successful implementation of LAPM in the manufacturing SME?

According to this research, there are several success factors that influenced the positive adaptation to the Scrum. First of all, it is their organizational culture and the approach to the work of both management and employees. Specifics of their organizational culture include the desire for new knowledge and continuous improvement, dedication to the work, creativity and the supportive leadership in which suggestions and recommendations are more than welcomed.

As [12] claims, APM above all implies giving up control, but instead enabling autonomy and system-thinking environment to the team focused on process output. To large extent, the autonomy and the system-thinking environment was already a part of this organization even before the organization was even familiarized with the Scrum. [11] even state that without the appropriate culture, the organizations cannot be considered agile.

One of the indicators of analyzed SME organizational environment and the fertile ground for the APM implementations is the invention and implementation of the Metazen. The organization adapted and implemented the elements of Kaizen and lean manufacturing tools they considered helpful, in order to minimize wastes and maximize efficiency at the workplace.

The change in thinking and the new approach (Metazen) to production started from above and was spread to all the employees. As many authors claim, the APM has its roots in the lean manufacturing and shares many common principles with it, such as emphasis on customers, minimizing the waste, iterative development, inspection, and measurement and continuous development [43]. This implies that it is no surprise that the Scrum can be more successfully Technium Social Sciences Journal

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adopted in the organization than it already has in lean philosophy. The results of this research as well show the positive relationship of the successful Scrum adoption and the organizational culture that enables autonomy, focuses on the people, and on the continues improvements and implements lean tools.

Key success factor was as well not only a support, but an active involvement is SSA projects of top management. The head of each sector actively participated in the SSA projects in the roles of Scrum Master, Product Owner, and/or the Development team member. By setting an example, top management motivated other employees to quickly adopt the new approach. Both [25] and [3] confirm the positive relationship between the successful APM implementation and the support from top management and claim that the top management can be key success factor in software development. The top management support, as a key success factor, was also identified in several case studies in implementing agile in hardware development [35], [41].

Similarly to [11] and [3] researches, this research shows that beside the top management support, organizational culture, communication and team capabilities, the key success factors include the delivery strategy, PM process and customer involvement. In the case of this organization, the more frequent and more active customer collaboration leads to higher customer satisfaction and overall more successful delivery of the SSA projects. Also, the fact that every team member was familiar with the delivery strategy and the PM processes was very important for the team members that participated in the SSA projects. One of the interviewees says: "By understanding the bigger picture and the way I fit and contribute to the project, I felt motivated to continue and finish the work faster and better." As opposed to the earlier approach, in the SSA project each team member knew exactly how the work that he/she was doing impacted the overall project, which motivated him/her and influenced on the successful implementation of the Scrum.

[3] research considers the agile development technique as also a key success factor. In the case of this organization, they were familiar with only one agile technique, Scrum, which they modified to some extent, so the impact of the appropriately chosen agile technique to successful implementation cannot be further discussed in this case.

When compared to [13] research, where several pre-conditions that could benefit the more successful adaption to the APM were stressed, it was found out that some of these enablers where also revealed in this study including: experienced teams and project manager, smaller team size, co-located teams and multidisciplinary project teams.

This research also reveals that in the case of this organization, the additional driver for the successful Scrum implementation was the feeling of embarrassment from the unfinished task that a team member committed to. Because the Scrum includes the everyday stand-up meeting where the team gathers to discuss the work done and the plans for the future work, it can be very unpleasing event for the particular team member that did not do the task that he or she personally chose and committed to do it. Several interviewees stated that what motivated them to work is the feeling that everyone else in team is contributing to project and that they alone did not want to (further) obstruct the teamwork.

In regards to the challenges of the implementation of LAPM in this organization, several barriers that had an impact on the Scrum implementation were revealed. First of all, at each SSA project there was at least one team member that resisted to change. Before the Scrum was implemented, the teamwork was not the common way how the work tasks were done, but instead everyone had their own responsibilities. The larger part of employees, this was the first time (in this organization) that they were part of a team that met every day and worked together.

Initially, the resistance was largely to Daily Scrum. Some of the employees have shown the resistance to come to Daily Scrum at the same time every day and to discuss about their tasks Technium Social Sciences Journal