Last time I talked about executive coaching and the need for coaches to engage with senior leaders. A lot of the comments I got were along the lines of "great idea but I have no idea what to say to them. I can relate to teams because I used to be a developer. I've never been a senior leader so I don't know that their problems are". That's fair enough. It's hard to relate to something you have never been exposed to so I'll throw out a few suggestions to get conversations started. Once the conversation has started, it will take its own course.

In my brief stint as a senior leader, and in my many subsequent interactions with senior leaders, there are 4 key conversations that come up over and over again. Financials is usually a popular one - how to maintain financial control in an agile environment. Resource management is another one. There is usually a good conversation to be had around the age old question of measuring return on investment, otherwise known as "how do I make sure I get my monies' worth?". The last one I will cover is control - how do executives maintain control of their portfolio when decisions are being delegated to product owners and teams. But first financials. I know...boring. Try to stay awake here, this may be dull, and involve dealing with finance people, but it is important stuff.

One of a senior leader's biggest worries is budgeting. They are generally responsible for a P&L.  That's Profit and Loss Statement for the uninitiated - think of it like a household budget with incomings and outgoings and a need to have incomings greater than outgoings to avoid financial misery. Dickens' advice for financial happiness applies just as well to a corporate P&L as it does to a household budget -

"Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

They will generally have have financial objectives and KPIs tied to their P&L as well. Those  will directly tie in to their bonus so there is a personal aspect to this too.

They are used to managing finances through control of scope and resources - we know what we will be building (we have detailed requirements), we know how big it is (we have detailed estimates), we know how many people we will use on it so we can work out exactly what it will cost. In theory anyway.

The big worry in an agile environment is that by floating scope, we remove financial control - we just keep building (and spending) until someone says that enough has been done. This is where we need to be educating senior leaders about timeboxing - by strictly timeboxing a development activity, although we have variable scope, we have fixed costs.

The timebox is what allows us to retain financial control - we know exactly how much a sprint costs because we have a fixed team, we know how many sprints we have so we know exactly how much we will be spending. What we get for that money is a different question and leads to a discussion on ROI (more on that later). If the person you are talking to is a finance person, the magic phrase is "never to be exceeded monthly burn rate with a fixed end date".

Because we are producing production-ready code every sprint (we are, aren't we?), if we don't get through the whole scope in our fixed timebox, we can release what we have finished so we haven't wasted the money we have spent - the organisation will get something for their investment (assuming we produced enough for an MVP of course...we did do those bits first, didn't we?). The key phrase for financial types is "no writeoffs". Every bit of money spent leads to value being delivered. We aren't dependent on completing everything in order to deliver value like we are in a traditional projects. This is why producing production ready stuff every sprint and having a well defined MVP are so essential.

It is also worth pointing out that the old style financial model works in an ideal world, but of course we don't live in an ideal world. Estimates are estimates, not promises. The cost model they have will be full of assumptions - resource loading, estimation fudge factor, contingency, and so on. Cost blowouts on projects aren't the exception, they are the rule, which is why this is such a sensitive topic. We can show that through timeboxing we get much more accurate financial control than we do the traditional way.

If you want more information on this stuff,  I did a post a while back on outcome based funding.  A good book on beyond budgeting will be invaluable as well.

I was going to cover all 4 points in this post but I've spent too long on financials so it looks like this will become a series. Look out for how to talk to a leader about resource (also known as people) management next time.