← Scrum Master Toolbox Podcast: Agile storytelling from the trenches
Scrum Master Toolbox Podcast: Agile storytelling from the trenches
BONUS Martti Kuldma: How to Transform Century-Old Organizations Through Product-Driven Agile Transformation
00:44:05
BONUS: Martti Kuldma shares how to transform century-old organizations through product-driven agile transformation In this BONUS episode we explore the remarkable transformation journey at Omniva with CEO Martti Kuldma. From traditional postal...
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- [00:04]
Vasko
Hey there, Agile adventurer, just a quick question. What if, for the price of a fancy coffee or half a pizza, you could unlock over 700 hours of the best agile content on the planet? That's audio, video, E courses, books, presentations, all that you can think of. But you can also join live calls with world class practitioners and hang out in a flame war free and AI slop clean slack with the sharpest minds in the game. Oh, and yes, you get direct access to me, Vasko, your Scrum Master Toolbox podcast. No, this is not a drill. It's this Scrum Master Toolbox membership and it's your unfair advantage in the agile world. So if you want to know more, go check out scrummastertoolbox.org membership. That's scrummastertoolbox.org Membership. And check out all the goodies we have for you. Do it now. But if you're not doing it now, let's listen to the podcast.
- [01:12]
Podcast Host
Hello everybody, welcome to this very special bonus episode here on the Scrum Master Toolbox Podcast. And we have with us a guest that when I first talked with him, he was the CTO of Omniva, which is kind of the equivalent of the post office of Estonia, but is with us today as the CEO. Marty, welcome and thank you for being with us on the show.
- [01:35]
Marty Kuldma
Thank you for inviting me and welcome to everyone.
- [01:39]
Podcast Host
So Marty Kuldma is the CEO of Omniva and has been leading the transformation of that organization into a product driven logistics company. A former engineer leader at pipedrive and also former cto, now CEO at Omniva, he brings deep expertise in scaling teams, agile transformation and digital innovation. Marte is also a startup founder. Founder. He might want to tell you about the startup exit he's most proud about and a passionate advocate for high impact product organizations. So Marty, many of our listeners will not know what Omniva is, where it comes from, and I see this beautiful set of post boxes in the background which kind of links to this idea that it's a very old organization with a different existence a few hundred years ago. So tell us a little bit more about Omniva and also where it started when you joined.
- [02:36]
Marty Kuldma
Yeah, Omniva is Estonian national post and Omniva is our brand because we are not operating just in Estonia, but we are actually market leaders in Latvia and Lithuania as well. And then the parcel delivery last mile business. Plus we are actually already earning about one third of our revenue from international markets where we are actually doing the middle mile in Central Europe, Eastern Europe and Central Asia as well, company has very old roots. Like basically all the posters are quite similar. So three, four hundred years ago we had the postal network in Estonia based on the, on the horses and the couriers. Formal company was founded in the last century. So we are a little bit more than 100 years old as a company. And until, let's say until 2000, our main business was postal delivery. From there the transformation started to become the logistics company. And Estonia was the first market where the parson machine based business model for the last mile delivery was actually launched in the bigger scale. So we have been building the bars and machines on the streets for the last 15 years. And after we scaled the network in Estonia then we went to Latvia and Lithuania as well. And then the fun fact about the Latvia is that the parser machine in Latvian is called Omniva. So you can like the Xerox is the copier machine. So basically you can hear the conversation like I'm going to pick up the, the package from DHL Omniva in Latvia. If you are listening in.
- [04:50]
Podcast Host
Very good, very good. And this kind of already that parcel machine business already points to one aspect which I very often talk with my clients that whatever the business is, for example banks, banks are already a software business, they just don't know it yet. And I've worked in many different organizations and business verticals and that idea that it's already a software business, they just don't know it yet came up many, many times. But from what you're describing is that despite the roots in postal delivery and logistics, Omniva has really understood and embraced this idea that software is a very big part of the growth, the innovation and also enabling the business of the company. Right.
- [05:35]
Marty Kuldma
This is very true. And Omniva has historically been investing into software development and then also now into partial machine hardware development as well. So we own the IP for the parcel machines. One model that we are operating on the local market and our delivery team is actually close to 100 people. If we look at the engineering and product organization altogether and plus some analysts and designer roles and we very clearly see the, the software as a separate vertical in our business and we see the potential to actually export or how we call it, to productize the solutions that we have built for our own needs in the local market to package them up and offer it to other posters and logistic companies around the world. And we have a very strong foundation to do this business because of the history building the completely new business model based on the parcel machine here on the local market. And this is quite unique, know how?
- [06:49]
Podcast Host
Yeah. And I really love that part of the story because through the transformation that you have gone through with you first as the CTO and now in the CEO role, you have actually transformed software development in a traditional organization from being a cost center to being an innovation new business model and revenue center. And I think that we don't often talk about this, especially in more traditional organizations, that software isn't a cost, it's an enabler of innovation, it's an enabler of new business models. So walk us through a little bit high level that story. How did you come to join Omniva first as the CTO and what were the main steps of that transformation you went through?
- [07:36]
Marty Kuldma
Yeah, I joined Omniva first as a member of the supervisory board and five years ago I never dreamed that I would join a national postal, government owned company and the old industry because my history, my roots are from the software, from the product organizations. I have been entrepreneur myself as well as I have worked for the bigger and smaller corporations and startup scale ups and then working on the global market. But how it ended up for me being the CEO here is basically in Estonia we have the naming committee system where the the government is asking private sector to help out steering their companies and they are asking people to join the supervisory boards. And for me it was intriguing. First, the first year in the supervisory board we had like monthly meetings. I really didn't really understand the business and all that, but the longer I stayed there, I understood how huge the logistic is. And together with the E commerce, we are talking about one third of the global gdp. And this is really, really huge. And then if you look at what is happening in logistics, so it's in a very big transformation at the moment as a business, both digitally, how services are delivered to the customers and through the handset, through the systems, how you can automate with AI, all the logistics planning and all that and then also on the physical side. So already today there are technologies available on the market allowing delivery of shipments in such a way that no human hand will touch them. It's just a question when those models will become profitable on different markets. And I see that in the next five years there will be a dramatic shift in how the logistics is provided. So instead of human based couriers and sorting, more and more is going to be automated. It's not just that drone deliveries, this is cool, but I really see that ground drones are the way to go in high density areas and not even the wheeled ones, but maybe those robotic dogs they are really better match looking at agility and how they can operate the room, the urban room, like taking the stairs, maybe opening the doors and all that. So I see that this might be the next technology on the last mile delivery.
- [10:59]
Podcast Host
So when you joined as first part of the board, then you started to see the significance of this model. Then later on you joined as cto. And I guess that perhaps the biggest challenge is okay, so this is a, we call it rubber logistics type of company, right. Like using real trucks, real motorbikes, real cars to deliver stuff door to door. And then something changed. So when you came in as cto you probably already saw the challenge. But how were you able to help the organization move more towards looking at software as an enabler, as a differentiator rather than just a cost center?
- [11:40]
Marty Kuldma
Yeah, so if you look at the old school logistics, it's very, very like how to say, it's very simple business. I mean you have people manually sorting parcels, you have cars, you have people knocking on the doors, delivering stuff. And historically you, you have your like own equipment, you have your own cars, you have your own people. But the problem in the market is, is that there, the demand is, is not constant. Not during the day, during the week, during the year there are like peaks, there are low seasons. And because of the e commerce boom, there are also lots of shifts in volumes for the companies as well because different logistic companies are bidding for the volumes. Sometimes they win, sometimes they lose. Meaning that you need to be able to shift your ability to deliver to store the packages during the very short period of time there. I saw the opportunity to come out with the crowd based solutions like you have in the food delivery industry basically common around the world using people from the street to do the deliveries. We can do the same for everything else. And I see that logistic companies, especially the postals have here much better position for efficiency because we have the network as well. So each post office, each parser machine, distribution center can act as a sorting and consolidation hub. So basically instead of delivering everything to the central location and then doing the sorting overnight, how it's usually happening in the bigger logistic companies, we can move into a very agile model where the parcels are moving directly in the network. Basically if you know peer to peer almost right. So if you know how the IP network works in the Internet, so basically the same. So to have this like each package can have a separate routing between the nodes, stored temporarily in the corner shop, maybe in the parser machine and then next crowd courier will pick it up. And deliver the next layer and through that get the efficiency, the speed, and also provide services when needed and where needed.
- [14:55]
Podcast Host
Yeah, and when we think about that, of course the next thing is the IP network. The Internet does not work without software. And I'm guessing that as part of your vision, there's a big component that software enables, Right, Exactly.
- [15:10]
Marty Kuldma
And this is the holy grail that that needs to be solved. So if you have your own fleet, then it's pretty simple to do the routing because in the morning you know the packages that need to be delivered, you do the planning, you split the shipments between different couriers and cars and off they go. But with the crowd model, at any point of time there might be a courier might pop up in the network that is ready to do some pickup tasks or deliveries for the next two hours. And it would mean that we need to dynamically recalculate the whole network continuously. And just one courier showing up in the network will have this ripple effect across the whole network. And this kind of events is happening in the network almost like every minute.
- [16:15]
Podcast Host
And I think that this sets beautifully the next part of our conversation, which is that, okay, so you come in also with the ability to think how technology can enable this new vision for postal or logistics delivery. But you come in and you face a traditional organization where most of the IT was at, if I remember correctly, most of the software development and even IT operations was outsourced. So when you come in as a CTO and you see that happen, like how do you change it?
- [16:45]
Marty Kuldma
Right, yeah. So I joined as a. Sorry, as a CTO almost two years ago. And I came from a very different industry, international from the company, from the startup scale up unicorn delivering products on the international market. It was very like a growth mindset. And then I came into a government owned organization with waterfall process, annual budgeting procurement for the software development services and all that. And it took me couple of weeks to do the first round in the organization to understand from my point of view what we can quickly improve. I took my team together behind the table and said that I see this and that as a problem and then who is taking what problem to solve and let's go. And. And then nothing happened. So there were crickets basically and I didn't get any response at all from my direct team at that time. And then the second thing was that everybody was remote as well. So it was very hard to get the people back to the office because they were like used to working remotely. And if we talk about the contractor model, then this is very, very expensive for the companies. It's okay to do maybe one bigger project, but if you have the continuous need and the technology is core of your business, then continuously doing procurement for the next iteration of your core system, bringing in people from completely different company, not evaluating any culture and fit between the engineers and then the team. This is very, very expensive because for example if you do a procurement for like 1 year then first 3 months you are paying just for those like new engineers to learn your legacy systems. And as we all probably know, it takes maybe six to nine months for the engineers to get up to the productivity in the new company, to understand the tooling, the libraries, all those, how they're like good goes, structured, all that. And after the nine months or 12 months they have been in the company, they have produced some value and then they are taking your core know how with them and then leaving the company and, and that this is so, so expensive for us. And we decided to change that model and started hiring our own team. And then because of my background I was able to actually recruit from the market quite a good team already in the first half a year in Estonia we have depending how you count, but 10 plus unicorns. And for the country with 1.3 million people, it's basically like every, like every maybe like 50, like 15 people has a connection to some like startup or like engineering job here. So, so we have actually people who can build stuff that can be scaled in the global market.
- [21:16]
Podcast Host
So you started hiring people, you understood you needed to bring software development in house, you started hiring the people from your background and of course I'm sure attracting others as well. But change isn't always easy, right? Even though you might bring new people, it takes time. There are obstacles. What were some of the unexpected challenges or resistance points that you and your team encountered when going from this traditional waterfall outsourced software development into a agile product oriented, I would like to call it software native way of working that you were developing.
- [21:57]
Marty Kuldma
Yeah, the main challenge was not really contracts versus in house engineers, but really the process and the whole development process was very like waterfall. So we had maybe 11 plus different roles in the company. We had the business owner and the business owner in some business unit probably had someone like a project manager who put together the, the requirements document. And then we had a separate project management or product management team that didn't have anything to do with product management, but they were just translating one document to another. And then we had the business analyst and technical analyst and we had the architect and then we had developers and then testers and then we had application administrators and all that. So we turned this completely around. So we created product teams. So basically taking each one area in the business. One, for example was for core logistics. And we put together the product management engineering for some teams. Also UX design, if there were any like user facing interfaces and told them that we are not going to tell you what you need to build. You are accountable for the logistics efficiency. Those are your main KPIs, for example, the cost per delivered parcel or cost per sorted parcel. And together with the different stakeholders, you do your own prioritization, you create your own vision that will drive your development direction for the next three years and off you go. From the company's perspective, we decided that we will allocate, let's say 20 people to this area and that was it. We did the same for the digital channel and then other areas as well.
- [24:45]
Podcast Host
This really first of all, it's an inspiring story of course. So you went from this very traditional waterfall role heavy setup into what I understood from now, which is like this product area cross functional teams that were given accountability over business outcomes rather than a list of requirements to fulfill, right?
- [25:09]
Marty Kuldma
Yes.
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Podcast Host
So with that you needed to also develop this product thinking in your organization. So how did you then help these teams not only adopt this new way of working which you were already describing, but also to adopt this more holistic product oriented mindset.
- [25:30]
Marty Kuldma
Yeah, don't get the wrong impression that we are still in the transformation. So it's a long process. In some teams we are like already there. In some teams we were still struggling. But the main challenge was really the question of accountability, who is actually driving the business. And also the product manager role was not really understood here. The product manager can be put into a very weird position where they are not really doing the product management job, but they are really there to deliver more like a project manager. And I have seen it in so many different companies. For me the product manager is very clearly accountable directly for the business results. Either it's the habit, it can be also efficiency, it can also be customer satisfaction. It really depends on the team. But they must very clearly be accountable for some customer based or revenue based target. And to get there it was a struggle. And then final step interest transformation happened only after I took over the CEO position. Because until that time we still tried to boil two different soups in one kettle.
- [27:24]
Podcast Host
Yeah, I think that's a beautiful image. Boiling two different soups in one kettle dot and I want to take that, that statement that you Just gave us that the final transformation really started when you took the CEO role. Because I think that's a message that doesn't get enough exposure. Right. Like, we very often talk about transformations, agile transformations that get stuck or stop altogether or even reverse because of what we call lack of leadership support. I don't know if that's how you felt at the time, but I'm sure that you at least felt the accountability for the transformation, otherwise you wouldn't be the CEO today. How did that change right from the moment you understood, okay, something else needs to change. How did that change in you? Because it's also a personal transformation to accept that, hey, if this is going to change, I really need to step up.
- [28:17]
Marty Kuldma
That was exactly. So I had a choice either because I felt that I can't really deliver my company's objectives. So in Agile, it's very simple to do it very technically, and I call it pseudo agile. So if you don't do this transformation across the company and you do it only in technology team, or it's a little bit better if you do it also on the product team. But if the whole business is not behind you, if the product managers are not given the true accountability, the change is not really happening. And yes, you can get technically faster deliveries, but all the prioritization and actually getting the results out of it is not happening if the whole company is not really behind the product led Agile process.
- [29:30]
Podcast Host
And of course that means also that you need to then take a different perspective. A different set of things become important when you become the CEO. Right. So let's dive into that a little bit. Marty, what changed the most when you went from CTO to CEO and now of course responsible for the transformation, what were the biggest changes in you and how you saw your work, your role and the organization?
- [29:55]
Marty Kuldma
Yeah, for me, now my main tool is just talking, so I thought I can still put some time into the technology and look at the architecture, look at the product priorities. This is not so. All I do is storytelling both internally and externally. And basically I am the best salesman in the company, mostly because of my C title as well. But I can open doors and I can make the change happen that others can't. And this is understanding that that came through the practice and really the top leader of the company needs to be behind the Agile transformation. Otherwise you are doing it only halfway and you don't really get the benefits out of it. Absolutely, yeah. The second thing is what I do is really removing blockers, getting people aligned, getting them behind the table, and all that. And of course in government organization also we need to find the balance between the agility, between the moving fast and the compliance and all the legal frameworks.
- [31:38]
Podcast Host
Absolutely. And I really like how you phrase it, right. Like my first job is storytelling, make sure everybody understands where we're going and that we're all aligned. My second biggest job is removing the obstacles and I really like how you phrase that. It also reminds me that we as Agile coaches, Scrum Masters, we need to take on that role at different levels in the organization, of course, but we also need to take on that role. What do you think of this idea that leading an agile transformation from the ground up, so maybe even starting as SCRUM Master, Agile Coach and then going through the organization taking on more responsibility, eventually ending up as a CEO, that this would be a very valuable, let's say career path to really understand and then be ready to manage larger organizations.
- [32:27]
Marty Kuldma
It's definitely like opportunity but, but you must understand that, that there is like only one CEO position in each company and, and, and also in each level you need like completely like different skill set. You have a very like different drivers. All that. When I was in the CTO role my focus was on building the best architecture, getting the Agile process going, promoting product management practices, talking to customers, having quick iterations with prototypes and all that. Now in the CEO role, completely different objective, looking at the profitability, looking where we can get the new growth, all that. But in my toolbox I have the technology, know how I have the product team, I have this, what I already built and now I can really move much faster and I think that's a.
- [33:49]
Podcast Host
Very important part of it. Another interesting perspective I want to explore as well is your perspective on annual reviews and the whole philosophy on performance and feedback in organizations. So tell us a little bit more about that because I think it's a great story.
- [34:06]
Marty Kuldma
Yeah, for me I have never understood the value of annual reviews. I think that the feedback needs to be given immediately and of course you need to have those planning and sessions together with your team and people and to the retrospect and all that. But to have an annual review and, and then give feedback to my team and then say that or to a specific person and say that last year in May, you remember that project, your performance was not really the best. This is completely useless feedback. The other angle of the annual reviews is really that there is usually the component of some kind of 360 feedback or some other feedback from your peers, from your team. And in most organizations what I see Is that this feedback is anonymous. This is again for me this has a very little value. Again, the same example last year in May you were running that project and we have some colleagues that said that your communication was not the best. What can I do with this feedback? Firstly, I can't really fix it anymore because it's already in the past history. I can't really help this project to succeed anymore and I can't really like get the context out of it. So if like in my organizations I have always promoted that all the feedback must be like given personally and immediately. And that way we all have the opportunity to really learn and grow.
- [36:24]
Podcast Host
Yeah, I think that's a beautiful way to put it. Feedback must be given personally and immediately so that we can all grow. We're getting close to the end. But just one, one question. You've been part of other major transformations, not just at Omniva but also pipedrive, which became what we would call a unicorn these days. Looking back, when you think about those journeys, what are the key mindset aspects and practices that you have found for you useful when leading through complex change in organizations?
- [37:05]
Marty Kuldma
Yeah, in pipedrive we also had the major culture shift. We had the classical structure where we had those like small teams, SL teams usually like five to seven engineers. And the issue was there that there was very little communication and alignment between them. It was very hard as the team was growing really fast. It was very hard to get the best practices shared and keep the architecture together. So basically what I did there is I created the self managed culture with much bigger teams and dynamic. We called them mission teams basically to put for each project together a new team. And we didn't force the team structure and then people together, but really allowed engineers and PMs to the pitch and engineers and other roles could actually join the team together. And then that way the best practice is actually like we are spreading across the company because people from different teams actually had to work together for the projects. And also the know how on the architecture spread much easier as well. But that wasn't really the question. So the question was about what are.
- [38:50]
Podcast Host
The critical mindset perspectives and also the practices that you think help when leading these complex changes.
- [38:59]
Marty Kuldma
So firstly you need to tell the story, you need to convince people that they believe that this transformation is essential and needed. And the second thing is you need to trust, you need to let them make their own decisions, even if they make mistakes. Then if you have this open and healthy environment, then everybody can actually learn from those mistakes and quickly correct. Then giving the Accountability for the business outcomes to engineers is also the great way how you can actually empower the teams. And in Piper, what I saw is that after introducing the mission framework where the engineers actually took the mission read role and were accountable for the customer behavior or for example, conversion rate or something like that, then what I saw is that they took it so seriously that we had to ask them to leave the offices and.
- [40:34]
Podcast Host
And go home and to rest. Yeah, that is true. I mean, all we ask for, of course, is given to be given a chance to succeed. And if our, let's say, if the success is defined in business impact, this is incredibly motivating. No matter who we are. Right. Like whether we are engineers or project managers or product managers, we all want to succeed. Marty, it's been a pleasure. We really want to thank you for being here on the show with us. Where can people find out more about you, about Omniva and the work that you're doing there?
- [41:13]
Marty Kuldma
I think that the best place is look me up in LinkedIn and you can just write me a message and I'm ready to exchange ideas and listen if you have any interesting proposals.
- [41:29]
Podcast Host
Absolutely. And if you want to know more, there's a book coming out shortly with Marty's article that he so generously wrote for the Global Agile Summit book, which is coming up. Marty, once again, thank you very much for your generosity with your time and your knowledge.
- [41:45]
Marty Kuldma
Thank you.
- [41:48]
Vasko
All right, I hope you liked this episode, but before you hit next episode, here's the deal. This podcast is power by people like you, the members who wanted more than just inspiration. They wanted real tools and real connection to people who are practicing agile. Every day we're talking access to over 700 hours of agile gold, CTO level strategy talks, summit keynotes, live workshops, E courses, Deep dive interviews, books. And if you're into no estimates, we.
- [42:24]
Podcast Host
Got the pioneers of no Estimates in.
- [42:27]
Vasko
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- [43:31]
Podcast Host
It's important.
- [43:33]
Vasko
But doing it together, that's next level. I'll see you in the community. Slack.
- [43:40]
Podcast Host
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