Saahil Panikar

Hello. Thank you so much for joining us here at our talk, Changing the Way We Organize Around Value. My name is Saahil Panikar, and I'm excited to be joined by Lindy Quick as we tell you a little bit about our journey and our experience implementing business agility, DevOps, and some new concepts to the Northrop Grumman digital transformation.

Lindy Quick

Hi, I'm Lindy Quick. I'm an Agile Transformation Coach at Northrop Grumman, and I am so happy to be presenting with Saahil as well. I'm a SAFe Program Consultant 5, and a bit about my background is I spent 15 years at Social Security Administration as a programmer and then went into management, where I drove the agile transformation and automated testing for the disability case processing system. After that, I left and went to Guardian Life Insurance, where I was the AVP responsible for driving agile transformation at the portfolio level for one of Guardian's subsidiaries. Fortunately, then, I had the opportunity to join Northrop Grumman several years ago and step into agile coaching and product delivery, where I've just had so much fun and learned so much along the way that I'm excited to share with you today.

Saahil Panikar

Awesome. Thanks, Lindy. And just a little bit about myself. Like I said, my name is Saahil Panikar. I am a SAFe SPCT 5. In a previous life, I was a data scientist, and so I have always been really passionate about bringing that data-driven mind and that organizational clarity to the work that I do. I started doing agile over 10 years ago and went through my first organizational transformation in 2014. I started out with the federal government at the Department of Veterans Affairs and then moved over to private industry and have had experience in healthcare, financial services, oil and gas, and have been lucky enough to spend the last year at Northrop Grumman in the defense and aerospace industry. Across all of those industries, I have seen some unique challenges to transformation and some pretty common ones. And I'm really excited to tell you about the Northrop Grumman experience, and we're going to get into that in a lot of detail over the next 25 to 30 minutes or so. I hope that you find as much value out of this as we have gotten learning about these things.

So Lindy, if you wouldn't mind clicking to the next slide. First thing I just want to cover, just real baseline, is what is a value stream? Because it's critical to the conversation that we want to have with you.

You probably know already, a value stream is a series of interconnected steps that allow you to deliver value, whatever that value might be, to your end user or your customer. So it's all the workflows, the people, the systems, and the processes that are required to go from your trigger all the way to your value delivery.

And we talk about two different kinds of value streams. We have the operational value stream, which is your business function. It's the reason you exist. It's the purpose that you are trying to fulfill. It's why your customer cares about you. Your customer doesn't really care about all the steps inside the value stream, but they care about that value that you're going to deliver to them. And so I don't think I'm exaggerating when I say your operational value stream is the reason you exist.

But then as we look at our DevOps implementation, as we look at our transformation across business agility and digital transformation, we have to consider the development value streams as well. And these are supporting value streams. They are the value streams that are designed to convert a business hypothesis into a digitally enabled solution. Basically what that means is we need to better support the functions in our operational value stream, and we want to deliver working solutions to either our internal organization that will enable better value delivery or directly to our end user, because our development value stream has a multi-use context. So as long as we understand that the value stream is the steps that we go through to deliver value, we're able to have a very meaningful conversation about what we've learned trying to do this in an organization as complex as Northrop.

Lindy Quick

So Northrop Grumman has issued two different calls to action, both coming from our CEO, Kathy Warden. The first one was actually a call for agility, where Northrop Grumman is really striving to reduce the bureaucracy and be able to move quickly and nimbly through all the different contracting that we do, all the different building that we do, from hardware to software and everything in between. The leadership for these efforts really has started at the top, and it's really exciting to see your leadership of an organization really on board with this.

But we realized early on that the call for agility wasn't enough, and so we've also had a call for digital transformation. This is really focused on key partnerships and on being able to respond faster through the use of technology, not just to get new business, but to include our legacy systems as well. I think that's been one of the challenges with Northrop Grumman: we are so ingrained in how we've done things. We have this built-in quality already part of our culture, but what we have struggled with is making all of that work together.

And so what we're doing right now is really driving to combine our agility and our digital transformation together so that we are able to build out these systems as fast as possible with the highest quality possible and focus on delivering that value to our customer through the use of our value streams. So we're realigning a lot of our business to those value streams, but it's not easy. That's also some of what Saahil and I are going to talk to you about today.

Saahil Panikar

Awesome. Lindy, before we jump into this slide, I think it really is worth driving home. Like I said, I have done these transformations in quite a few different organizations, and in 10 years of agility and transforming large companies, I have never seen a company quite as complex as Northrop Grumman. I have worked with Fortune 10, Fortune 20 companies that have a lot going on, but the interconnectedness and the complexity of the business architecture is just on another level here.

Lindy Quick

Yeah, Saahil, you're absolutely right. And while Northrop Grumman isn't unique in the defense sector, we do have tons and tons and tons of moving parts that are going in a million different directions. I think that's what's made our transformation as difficult as it has been, but also very successful at the same time.

Northrop Grumman isn't only trying to become more agile, but we're really trying to drive and leverage that technology in all aspects of our business. Most companies are familiar with the technology challenges around digital transformation or through becoming more agile, or we focus a lot on software agility. But at Northrop Grumman, we couldn't just live in those two realms alone. We had to drive that excellence through model-based systems engineering. We also had to drive into the business aspect: how we write proposals, how we do those bids. And then we're a manufacturing company, so we have to understand how lean and agile work together, how we tie that into DevOps in conjunction with the model-based systems engineering to really drive that hardware agility as well. It's not just a little segment here and a little segment there, but we're really having to transform the entire company top to bottom.

It's hard because there are so many different moving pieces, and it's not like we can stop and say, "Magically, we're transformed." We have to do it incrementally on a bit-by-bit basis, and that makes it almost even more difficult. But fortunately, we've found some good success with those challenges.

To identify some of those challenges even further, Northrop Grumman has some big challenges when it comes to how we fund our projects. This is tied to legacy contracts that have been in place for many, many, many years. As I mentioned earlier, we're starting to shift how we write those contracts, but many of them are multi-year funded, which for those of us that are well-versed in new value streams, we want to look at that funding model a couple of times a year to make sure that we're funding the right things all the time. But when we have multi-year funding in place and it's tied to federal programs, we have different accounting models that we have to follow, and sometimes that funding doesn't naturally align to the value streams, but it aligns to very specific projects and programs. Then there's not always funding tied to help deliver agility or to deliver digital transformation. So we're having to look and mold and evolve how we are really shifting and driving all of that transformation in place.

Northrop Grumman really is forging ahead, and we're leveraging key successes in key areas that are going to drive and change our culture throughout. We're working to align our value streams to key technologies, not just key programs, and we're having to change that culture incrementally. One of the biggest things we have is many people who are working on a program, and if that funding drops, then they'll shift to another program. Or they're working on multiple programs at once due to the specialized knowledge and technology that they have. And so we're having to make some of these changes to establish our long-standing teams, to really drive that success and work on moving teams of people from program to program or project to project, depending on the funding, as opposed to just individuals.

Making these changes has been slow. It's hard to change how you've done business for the last 50, 60 years. These entrenched behaviors aren't easy. I like to tell a story of how we have to go through and adjust this, and I always liken it to a boat or a ship coming into the harbor, and it needs to turn around so that it can go back out to sea. In Northrop Grumman, it's been slow to get that boat into the harbor and to get it turned around. But what we've started to see over the last 12 to 24 months is that we've been making little nudges, little nudges, little nudges, and we're starting to see that ship turn. Then as the faster it goes, it starts to gain momentum. As we know, an object in motion tends to stay in motion. And so we're really starting to see that digital transformation, that agility really kind of grab hold, move forward, and we're going to have that ship turned around in no time fast and be headed right back out into the ocean very quickly.

The way we were able to do that is we kind of had an aha moment, and it came with combining that digital transformation and the agility together. But we also took one farther step, and we whittled it down to just being a digital thread. Digital transformation is a big undertaking. As you saw, it includes model-based systems engineering. We had to deal with business agility, software agility, technology transformation, hardware manufacturing, all of these things. And as we think about from an agile perspective, if we're coaching agile teams, we're talking with agile teams, we're talking with agile programs, we're like, "All right, what's our MVP? What's our minimum viable product that we can do?" So we pulled on this digital thread. What is the single thread that's weaving all the way through our applications, all the way through our programs, and focus on just building that first and combining that digital transformation with the business agility or with agility in general to really set up what that MVP is.

Now, there are lots of companies that are trying to do the same thing as Northrop Grumman. But this digital thread, that's kind of been our aha moment. It's been our piece of the puzzle that has really helped us gain traction and success as we've been able to move forward. This realization has really driven us through to that success. We're going to have a few examples in a couple slides of some of the programs and some of the turnarounds that we've had. But I can't hone in enough on the success of this digital thread concept and really creating that extendable, configurable integration that goes all the way through your entire program that we're able to understand. It's really that alignment to a value stream.

When we start looking at programs, we want to understand what are all the steps in the process? How do we go from concept to cash? We talk about that through a business flow. But what this digital thread gives us is that technology weave all the way through that as well. It's that combination of both of them, realizing we can't build that all out at once. So we're able to take and whittle that down from being a whole big fabric with lots of threads all intertwined together to just a simple single thread that we're able to wind through. Then we're able to build on that thread, and build on that thread, and build on that thread, iteration over iteration, increment over increment.

As we've gone through this, one of the things we've built out is we started to understand our digital transformation and our lean agile transformation and how--

Saahil Panikar

Lindy, before you jump to the next slide, let's stay on the needle thread for one more second. You said it, and I really want to drive this home. The digital thread was the piece that was missing as we were struggling to take the value streams that we had identified and tie that to those structural challenges that Lindy just talked about, the federally tied funding, the multi-year funding.

When we're trying to be dynamic and adjust to changing market requirements and conditions, and we can't because we are literally tied to money to a purpose, we were struggling to optimize our value streams in a way that was value added for our customers. It's almost like we were designing our processes to get through the system as opposed to deliver to our customer. Identifying this digital thread sounds a little simple, doesn't it? Just the sort of technology weave through the business process. But what that really enabled us to do was to highlight the core value and then to organize around the optimization of delivering that core value. Then, like Lindy said, adding thread after thread onto the digital thread so that we were able to, it's not quite rebuild, but pivot the already existing structures that we had with minimal disruption to reorient to these new goals of delivering through these digital threads.

I really want to drive that home for you guys. Lindy, you were on a roll talking about lean agile and how that goes to the digital transformation. So if you can get that back, feel free. Otherwise, let me know and I'll just keep going.

Lindy Quick

Go ahead.

Saahil Panikar

Okay, cool. Thanks. Realizing that we had this idea of a digital thread and that it was the missing piece, we then had to figure out how do we connect it to the business process? How do we tie it to our value streams and tie it to these long-lived programs? What we realized is the digital thread only works when it is paired with our lean agile transformation. That lean agile transformation includes the core concepts of Industry 4.0 and a lot of our DevOps practices around test-driven development and automation. But those lean agile principles became the foundation. That's how we are changing the culture, by getting people into that muscle memory of doing things in a lean agile way.

So we have these lean agile practices and principles as the foundation and accelerator of digital transformation. That is intended to provide this cross-domain partnership and integration. It's at lower cost because that is one of the most important things we can do in our context, but it still maintains defect-free solutions that satisfy customer expectations.

I'll be honest, we had a lot of conversation about shouldn't we be exceeding customer expectations? What we realized was, in this context, when our customers are the government and we're building complex defense and weapon systems, we want everything to be to spec. We want them to get exactly what they asked for and for it to work well and simply. To us, that is the exceeding and satisfying customer expectations. So that is what lean agile is meant to do for us.

Then we really crystallized on these four key pillars that are how our lean agile transformation enables the digital transformation of Northrop Grumman through the application of our digital threads, our new business process frameworks, and everything you see here: the dedicated lean agile teams and trainings, engaged business owners through customer centricity and design thinking. I cannot emphasize enough the lean portfolio management and value stream economics, because that becomes just absolutely critical to managing the execution of our digital threads. We're trying to conjoin the federal programs, the federally tied missions and those purses to our leaner way of doing the value stream economics. We're really trailblazing on this. I can't say that we have figured it all out, and I can't say that it's perfect, but what I can say is we're getting a lot better at it. We're identifying those roadblocks, and we're systematically removing them through these conversations. All of it holds up the digital transformation.

Lindy Quick

Absolutely. I'm going to just pull another thread here. Those pillars really are key and critical. Today on our talk, we're focused on that value stream and the lean portfolio management aspect of it. But one pillar on its own isn't really successful. So we have found that need for those other three pillars that we have as well, to have those dedicated teams, those engaged business owners, and particularly that customer centricity and design thinking as we move forward to really support that digital transformation.

When we talk customer centricity, I'm not just talking our external customers, but even our customers inside of our own programs, our own employees that are working to build these systems. As we look at our DevOps that we're putting into place, the technology that we're now using to build this out, it's absolutely key that our customer just isn't the federal government or a warfighter, but it's also our own employees who are building these systems, these really super complex systems, as we move forward and work to really integrate all this together and have a successful lean, agile, digital transformation.

Saahil Panikar

Awesome. I'm sold.

Lindy Quick

Yeah. So I want to tell you guys about a couple different programs. We have program A, B, C, and D here, and these are a handful of the successes that we've seen once we started really weaving that digital thread through our value stream and understanding how that all played together.

Program A, when we took them on, had really long lead times and tons of dependencies. Some were known, but they also had some that were unknown. We worked with that program to really understand their challenges, to lay out what that thread through the system was, and then mapped it out in PI Planning and had a program board. I can tell you it was the most spaghetti-filled, red-stringed program board I have ever seen, and I had done something like 30-odd PIs before I got to that. What we really took and focused on is we spent some extra time in the PI event and worked to eliminate those dependencies. Where were they? What were they? And we were actually able to overcome them.

One of my favorite quotes of all time really came from this program, so I have to read it because I just have to: "Wow, until this planning event, with all of our people, we had no idea we would have missed our due dates due to these dependencies." It really just shows the power of planning, but it also was getting everybody together, and it was absolutely critical that we did that. This was the first PI event that this program had gone through, and it really was key to that success. But that digital thread and understanding how that technology wove all the way through, that's where we hit those dependencies, and that's why it was absolutely so critical for us to understand those and start to work those.

Saahil Panikar

So what you're saying is without this digital thread, you wouldn't have known those dependencies existed.

Lindy Quick

Absolutely. We knew a couple of them, but we didn't recognize how many other ones there were until we started understanding all those technology intersections and who we were going to need and how that wove through, getting from concept to cash. This was actually a hardware program, so we were deploying hardware for this particular program. There was, how does digital thread apply to hardware? We were able to model out many of the places where the hardware was going to go and land and found some of those things where it wasn't going to work. So that was really exciting to see and drive. Saahil, you're absolutely correct. That digital thread was just key to understanding what those dependencies were and how we were going to drive those.

Saahil Panikar

Wow.

Lindy Quick

Now, in program B, this one was a little different. This one was actually a software program, but it's not truly software. It's a software development configuration, but really it's setting up those model-based systems engineering processes. With this one, we actually had to understand not only the flow through the system, but all the places where there were touch points into that thread.

When this program started, they were constantly changing. Their teams were unpredictable. They weren't able to release. If they had to upgrade the software, it was down for the whole weekend, which when we're doing 24-hour manufacturing doesn't exactly play nice. So with this program, I locked the program management away into a room, this was pre-COVID, for about three days. We really spent the time to understand what the underlying architecture was, because there were challenges in just getting the software from the development and test environments into production. But we also spent time understanding what that process was, and we discovered that we had been largely focused on trying to build out a process, and then another process, and then another process.

This is where that digital thread became so critical. Rather than building out process after process after process, we took that digital thread and wove it through all the processes. There were 62 processes in this particular system. We wound that thread all the way through those 62 processes, getting just that bare minimum that we needed. We were able to follow that thread through the entire life cycle of our legacy products, as well as that new system that we were replacing it with. On that single thread, we were able to, in one PI, once we had that defined, so in three months, actually show a part going all the way through the system, how it flowed all the way through, from design to manufacture. We were able to, in three months, show that process going all the way through the system.

Understanding that digital thread and where all the feeders were coming from, how it wove through the business, and what our different customers were, were key to the success of this program. We also then spent a lot of time fixing our underlying architecture, and this actually happened in that next PI, because it was a little harder problem to solve. We had to leverage a lot of different DevOps practices. We had to shift some of the technology that we were using. We had to really understand and work closely with one of our supplier partners to change how we rolled that out and to be able to deliver those incremental bite-sized pieces that we wanted to.

But again, what we did in that same practice, we understood and found what that simplest thread was all the way through the system, and then continued to build upon it and attach more threads to it and more threads to it and more threads to it, to where I just saw an update that they had 22 minutes of system upgrade, down from two days, this morning as the emails came through. So it's very exciting to have that thread wind through our programs and to really see how understanding that digital thread and how it impacts our business, how it winds through our value streams, how we deliver that value to the customers, is absolutely critical.

Saahil, you want to talk about program C, because you spent a lot of time with this program.

Saahil Panikar

I would love to talk about this program. This one was a large platform upgrade. Think of it like an ERP implementation. So it's big. There were some hardware components, but it was mostly software.

I had just joined Northrop Grumman a couple of months before I was brought into this program, and I was working on something else, and then I got told, "Hey, there's something happening, and they're in a lot of trouble. This program is six months behind schedule. They're $2 million over budget, and they need help, and we need to figure out what's going on." So they brought me in. In just some initial conversations, this is actually one of the conversations that really helped, for me, crystallize this digital thread concept. In the very early days of talking about digital thread and figuring out how we were going to solve these problems at Northrop, I realized in talking to this program that there wasn't a whole lot of clarity on the work that they had to be doing.

They had teams. They had many teams who were executing. They were running sprints. They had some pretty decent development practices in place. But when I was asking questions like, "What is the purpose? What are we trying to achieve? I understand that you're implementing this platform, but why? What is it trying-- Who's going to use it? What's it for?" No one was able to clearly articulate those answers.

And so we did. We really did identify the digital thread. We spent two days. I halted all the development for two days, brought all of the program leadership, the product owners, the scrum masters, the architects, everybody into one room for two days. It sounds a lot like PI planning, I bet, because that's where I was inspired to do it. We spent two days just identifying the digital thread that tied this program to the rest of the enterprise and understanding what are the use cases that will sort of justify other programs in Northrop Grumman using this platform or potentially our customers interacting with this platform.

And Lindy read a quote. I'm going to read this one because I cannot speak to what hearing this for the first time made me feel: "We've been working on this for six months, and until we mapped out the business process, we didn't know how to talk about the work." Until we mapped out the business process, tied it to the digital thread, we didn't even know how to talk about the work we had been working on for six months. That's the power of a digital thread right there.

Lindy Quick

And program D was a little different. They'd been a waterfall project. It wasn't fully funded. It was technology we knew we needed to do. We'd been dabbling with it for the last couple of years. This project is in its second sprint right now. But we spent a little bit of time upfront to understand what that digital thread was and how it looked, how we were going to use it. This program just is taking names right now.

I love the quote from this one in that one of our senior leaders for that program said, "That's incredible. We delivered in two weeks what previously took us three years to do." Which just speaks volumes. Once you understand what that digital thread is, what you're trying to deliver to, and how it winds through your entire business, that's really where that success of understanding how DevOps and value streams really tie together. It can't just be what your value stream is. You have to understand how your technology plays into it as well, and I think that's one of the key things, if you're going to take anything away from this talk, is understanding that winding of the digital thread, that transformation efforts, those technology systems in conjunction with your business processes, now everything ties together, is so absolutely critical.

Saahil Panikar

And I think it just goes to show the incredible complexity of Northrop Grumman, right? If you look at that program D, I'll tell you the first time I heard that, I said, "You mean, we did in two weeks what took three weeks, right?" No. They meant years.

Lindy Quick

Yeah. Just the complexity is absolutely overwhelming on that program, and so we just worked so hard to simplify it. I think to get down to that single thread, to understand what that thread was, and then build on it and build on it and build on it and build on it.

So where's Northrop Grumman going now? We've had a lot of successes, but we still do have a lot of way to go. We've been driving our digital transformation by focusing on these digital threads and understanding how we go through each of the systems, and that's our big win. But we have to continuously do this. And as Saahil mentioned earlier, we're continuously learning and applying these lessons so that we can replicate these successes over and over and over again throughout all of our business.

Saahil Panikar

Yeah. Sorry, Lindy, one thing to just add. We just told you four stories. Those are not the only four stories we have. When we talk about expanding this to the rest of our business, there is something like 110 programs already using this idea. And so again, freakishly large, freakishly complex. The expansion is critical, and the foundation that we're building is massive. It takes that level of validation to say, "Hey, it's working," over and over again to really believe this is a direction for the future of Northrop Grumman.

Lindy Quick

Yeah, absolutely. I know there are many other companies out there, too, that are struggling with this. We've talked about the success we've had with the digital thread, and part of that, though, is that shift and change in culture. That's been our biggest hurdle as well: proving out that this digital thread can work, proving out that we can simplify and understand our freakishly large, freakishly complex systems.

Also, we're a bit hands behind our back a little bit too, because we're not only changing Northrop Grumman's culture, but we're also impacting the culture of the federal government as well. It's a two-for-one battle that we're also fighting because of the way we have our longstanding contracts and that federally tied funding that we're continually bumping up against. But we are working our way parallel, and so we have our lean agile transformation and our digital transformation with our digital thread both leveraging and driving throughout our organization. We recognize that we need to adapt to an ever-changing market industry, and we have to do that quickly and rapidly. That's key to our success moving forward.

Saahil Panikar

Awesome. So the last thing we want to leave you with is just a little bit of a shout-out and thank you for the inspiration: Dr. Suzette Johnson, a Northrop Grumman fellow, Gene Kim, Ken Pugh, Jeff Shupack, Cindy VanEpps, Robin Yeman. Your work has been absolutely the inspiration and the nugget that we were able to turn into something that has a ton of meaning. We really just want to say thank you for that.

And then for anyone who's watching this, anyone who's working with us in the future, there is something we could use your help on. How can we carry this forward? First, outside of Northrop Grumman, find your digital threads. Let us know if this concept resonates with your organization. Help us improve. Give us feedback from your organizations. I know that Lindy and I would both welcome any feedback you could give us. Just reach out. We're both accessible. We're open. We love to connect with people in this space.

And then the other really important piece is we want to see this done outside of aerospace and defense. We really want to see this digital thread concept extended to other contexts so that we can prove this model works for everybody. So again, at this point, I'll just say thank you so much for giving us the opportunity to talk to you about this. And we hope to continue the conversation. Lindy?

Lindy Quick

Absolutely. Thank you, everybody. Have a wonderful day, and we look forward to hearing from you as well. Thank you so much.