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Scrum: Do as per expectations, but is that less ..

The situation that I am going to describe can be somewhat interesting, and also very frustrating for a scrum team. One of the biggest problems that a Scrum team can face is about getting their estimation right, which means that the team delivers as per what they have estimated, and they continue to do this on a regular basis. Such kind of predictability means that stakeholders in the Scrum team have a good belief in the ability of the Scrum team, and it also means that the Scrum team is able to do their work correctly. It is not easy to get to this point, since the estimation is being done by the team members, and it can take time for many of the team members to be able to do such estimation correctly. It also means that there is a much better interaction with the Product Owner, since one of the reasons why there can be a variability between the estimates and actual achievement is because of a gap between the desired feature of the Product Owner and the way that the Scrum team has understood this.
We had an interesting case, as reported by one of my colleagues. The Scrum Master was fairly comfortable with how the team was working; they would run into problems but would be able to diagnose the problems in their regular discussions, and if there were issues where there were organizational issues or infrastructural problems, they would call upon the Scrum Master for help in resolving these issues. Most of the time, this went well, and there was an overall level of satisfaction. The team felt that they were doing well, achieving the targets and overall trying to improve themselves without buring themselves out.
However, there was a shock that the team faced. They met a senior manager of the organization in a regular meeting that the manager used to have with small teams, and reported about what they were doing. The organization used to have a policy about what was the status for every team as part of their regular progress against their responsibilities (with the status typically being Red – Yellow – Green), and the expectation was that status being Red was that risk was out of the window and they needed some intervention to resolve issues (for example, if there was an issue where an important dependency was getting problematic, in most cases it would mean red since the team needed outside support from outside the team for help in getting these resolved).
When the manager wanted to know about the status of the team, typically the status of the team was reported as either Yellow or Green, but never anything that was more problematic, very rarely venturing into the Red status, and never because of the feature progress not being as expected. The team was expecting to be complimented, but instead what they heard from the manager was that maybe the team was not stretching itself, after all, he was expecting that the team would be more red from time to time, since that would mean that the team was trying to stretch itself. The team was shocked, but since this was a senior manager, they were not able to express themselves too much other than asking a couple of related queries where the manager made it clear that he was not impressed with the team being able to meet their estimates and deliver as per schedule. It was the managers of the team which got to hear a lot of feedback from the team, but they were in a position where they could not say too much; after all, this was a senior manager. This also started off an inconclusive discussion in the Scrum Masters about the level to which a team should stretch itself, where senior manager might be happy only if they see some amount of strain in the team and take that to mean that the team is doing more than expected.
What do you people think ?

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