Agile Manifesto and principles form the premise for most Agile thinking. Donald Reinertsen in his book, “The Principles of Product development flow” helps us understand why it is economical to shift to an Agile mindset.

Here are a few key points that interested me (Refer the book for more breadth and depth)

For the product development Flow to be effective, we need to understand the economics of Queue’s, Variation, Work-In-process, batch Size, Fast feedback, Sequencing and their interrelations.

Queue’s increase Cycle Time, Variability and Cost of Process. As capacity Utilization increases Queues increase exponentially and processes become unstable.  The longer we delay adding capacity or shedding demand, the more expensive the problem becomes.

Variation is better managed by addressing the other parameters. Perform many small experiments (rather than one big one). Through repetition, reuse, and standardization variation is reduced.

By reducing project scope, we trigger a regenerative cycle of Faster Cycle time, Lower Risk, and shorter planning Horizons. This results in reduced need for oversight. Outcomes are more predictable as forecasting becomes exponentially easier for short time horizons. Accept variability in content to prevent variability in timing

Smaller Batch Size, improve Cycle Time and reduce variability in flow.

As Batch size become larger the consequences of failure increases exponentially, feedback is delayed, Overheads increase and rework will be more expensive. Large batches dilute responsibility and are de-motivating due to delayed feedback. Large Batches make Schedule & Cost grow up exponentially. When we batch together a no. of items the entire batch acquires the properties of its most limiting element.

Small batches reduces risk, there is less changes in technology or requirements to address. Small changes are easier to debug than large ones. Fast feedback improves efficiency because engineers are more efficient when something is fresh in their mind. Small batch size is a powerful tool to Increase urgency, motivation & Accountability. Short run lengths reduces Queues.

Always maintain a regular cadence. Regular cadence of small batch Size reduces Co-ordination overhead. A regular cadence for product introduction prevents delays in one product from cascading to other products. If we have to meet a regular product launch schedule, we need capacity margin to absorb schedule delays at intermediate milestones & variations.

To better understand on Queue theory, Variation, Work-In-process, batch Size, Fast feedback, Sequencing and their impact on product development, I recommend Don’s “The principles of product development FLOW, Second generation Lean Product development”