Wednesday, August 15, 2012

Agile Processes Feed Paris

Source: Benh Lieu Song, CC3.0, via wikimedia

What do traditional top-down project management approaches have to do with moleskin pelts and how are agile processes involved with making sure that the city of Paris doesn't go hungry? Let me explain.

Rotting Moleskin Pelts

Thomas Sowell, in his book Basic Economics: A Common Sense Guide to the Economy, provides an excellent example of what happens when you try to micromanage the coordination of activities from the top down. Specifically, he cites an instance where the Soviet government decides to raise the price it pays for moleskin pelts. Markets being what they are, more pelts are provided since they now fetch a higher price.

Here's the rub: industry had no use for the pelts. They rotted in warehouses. The government was aware of the issue but didn't have time to deal with the matter. Sowell notes:

"Its [the government] members are too busy to decide. They have no time: besides setting prices on these pelts, they have to keep track of another 24 million prices"
Trying to decide the appropriate price for each item for sale and allocate resources to the appropriate centers of population turned out to be a futile task. Centralized planning is not efficient.

Who Feeds Paris?

Who feeds Paris? That's the question Charles Wheelan poses in his book Naked Economics: Undressing the Dismal Science. How is it that nearly the right amounts of bread, fish, meat, coffee, etc are available for purchase on a daily basis? The answer is simple: the individual participants in the market decide the correct quantities. The system works quite well.

To prove this, let us take the example of a restaurant that sells steak to its patrons. Assume that the manager over-estimated his patron's appetite for beef. As such, the beef rotted and his profits were diminished. Next time, he orders less beef from the butcher. The butcher in turn orders fewer cattle from the farmer. If the trend persists, the farmer orders less feed since he needs to raise fewer cattle.

The amazing thing about this example is that no singular participant coordinated these activities. It happened 'all on its own'. This type of activity plays out daily on a massive scale in our economy. It is breathtakingly efficient.

Parallels to Agile

Traditional project management approaches have a lot in common with the rotting pelts story. These approaches are often misapplied and end up being micromanaged by a singular project manager. This person is usually completely frazzled because the task set before them is impossible to perform well. A few people cannot possibly coordinate the daily activities of all of the participants in a semi-complex project. The story about the pelts illustrates the futility of such an exercise.

Agile processes address this coordination problem by setting the individual participants free to work out the details between themselves. This enables management to focus on strategic direction (e.g. future projects for the teams). Further, it enables the leadership to realize the goal of becoming a service role. Leaders are empowered to support the teams by assisting in the removal of obstacles, etc instead of spending their time coordinating efforts between individuals.

The software engineering profession has been moving in this direction for years due to one simple reason: it works. Why is it, then, that the companies of the prototypical free market economy of the world insist on running their businesses like the centrally planned economy of socialist Soviet Russia? 

Indeed, some organizations are starting to adopt agile processes to manage non-technical projects. National Public Radio is a shining example of this. However, the vast majority of companies continue to do what they've always done, somehow hoping that this time it will be different. These companies will be vanquished by their more agile competitors. History shows this time and again.

Keep this story front of mind when you are about to launch your next project - software or not. Agile processes are the epitome of a free market economy. Free market economies work - it is how Paris gets fed.


  1. The book is generally excellent in light of the fact that it gets you to begin dissecting things with a sensible and efficient mentality. Sowell makes complex subjects simple and available to the overall population, with direct clarifications, coherent techniques for speculation and investigation and clear and basic language. Sowell exposes a significant number of the things that individuals accept to be valid, for example, lease control, the lowest pay permitted by law, value controls, and so forth.