The work undertaken in any project can be thought of
consisting of three fundamental types:
Compliant Work - Work
that complies with Guidance. Generally the most effective, most efficient and
least risky manner of achieving an end.
Non-Compliant Work - Work
that contravenes Guidance. Generally less effective, less efficient and more
risky manner of achieving an end.
Remedial Work - Work that
exists to correct previous Tactical Work (i.e. changing previous Tactical work
into Strategic Work)
Guidance here refers to the Structural (MACE) and
Transformational (MAGMA) information dependant on the phase of the
Transformation cascade we are in.
Here we see the Transformation Debt
Ratio™ (TDR) for the projects in the currently executing Project Portfolio. TDR
is the ratio (adding up to 1.0 or 100%) of Compliant vs Non-Compliant vs
Remedial work in any project. Each project has a different ratio of Compliant
vs Non-Compliant vs Remedial work.
Non-Compliant work is essentially a shortcut, and while a
dictionary definition of a shortcut sounds quite positive and inviting:
1 : a route more direct than the one ordinarily
2 : a method or means of doing something more
directly and quickly than and often not so thoroughly as by ordinary procedure
<a shortcut to success>
In the business world the following is more true:
“A shortcut is the longest distance between two points.”
- Issawi's Law of the Path of Progress
Add to this the following…
“Nothing is permanent, except for temporary solutions.”
- Jeroen van de Kamp
…and you can perhaps begin to see why Enterprises not only
naturally decay into entropy over time but how uninformed management decisions
actively encourage and hasten it.
If the work in a project complies with all Guidance (aka is
Compliant) then we have no problems. If not and some work does not comply with
some Guidance (aka is Non-Compliant) then a Transformation Debt™ Agreement
(TDA) is created. The TDA details three things:
Cost of Compliance - What is
preventing the project from complying with the guidance and what does the
project need to be given to allow the project to comply and therefore convert
the work from Non-Compliant to Compliant.
Cost of Non-Compliance - What
issues and risks going forward will this Non-Compliance create for the
Cost of Remediation - What will
it cost the Enterprise to become Compliant in the future (assuming the project
is not allowed to do what is required now to become Compliant).
In simple terms:
The Cost of Compliance - What
will it cost the project to do the right things now.
If the project is not granted the
Cost of Compliance:
The Cost of Non-Compliance -
What pain will the Enterprise have to endure going forward, until we incur
Cost of Remediation - What will it cost the
Enterprise later to fix it.
But why is it called an “Agreement” rather than an
“Assessment” or “Waiver” or something else?
Originally Pragmatic call it a “Waiver”, but that word did
not truly reflect what it was. The reason we call it a Transformation Debt™
Agreement, is because it really is an agreement! An agreement by management
that they agree to provide the resources required to satisfy the guidance, or
that they agree to accept the recurring cost of non-compliance and potentially
the future cost of remediation. Another way to think about it, since it is
possibly incurring debt, it is similar to a loan agreement, where you detail
the loan amount, what the interest is, and what it will cost to pay off the
loan in the future.
Having defined this information, a business decision can
then be made to either provide what is required now or accept the pain we will
have to endure going forward AND the costs of fixing it later. This is what
sits at the heart of Governance and Lobbying.
Since a project that is Non-Compliant with guidance while
the project is executing could become Compliant at any time before the project
ends, only when a project completes will we know how many TDAs have been issued
and the Transformation Debt™ being created in the form
of the Cost of Non-Compliance that the
Tactical work created and the Cost of Remediation
to correct that Tactical work in the future.
At that point in time the Cost of Non-Compliance that the
Non-Compliant work created and the Cost of Remediation to correct that
Non-Compliant work in the future can be added to the Transformation Debt™ for
the whole Enterprise.
In effect the Cost of Non-Compliance is akin to paying
interest on the Debt we have incurred, while the Cost of Remediation (if spent)
is akin to paying off the Debt.
When you incur Transformation Debt™, you are selling
tomorrow, to get through today.