Business Agility Sparks
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Business Agility is the ability of an organization to create and respond to change through the customer-focused, holistic embrace of the Agile mindset, principles and practices from individual teams and programs to the portfolio level, and across the entire enterprise.
In most organizations, budgeting is aligned to annual funding cycles and to large projects, both of which are usually too long of a planning cycle to be adequately reactive to market changes.
Agile businesses are starting to budget at a higher level of abstraction. Instead of budgeting and estimating around a highly detailed scope of work or requirements, they budget around a desired business outcome.
Agile businesses are built upon the idea of fixed and stable teams that stay together for extended periods of time. By staying together, they become well-oiled machines that have learned how to leverage each other’s strengths, have learned how to communicate with each other, have learned how to work together, and have learned how to get things done.
By extending them to Value Stream teams, we can achieve huge levels of efficiency and productivity that far outweigh the supposed flexibility coming from pulling people and moving them around to different projects. The ‘fungible resource’ model of moving people around to projects causes teams to be in a constant state of storming/forming/norming and makes it almost impossible for them to achieve ‘high performing’ state.
In addition, fixed Value Stream teams are much easier to manage financially. A fixed Value Stream team has a fixed cost. It has a constant burn rate that makes costing and estimation much simpler.
Visual Management Systems (VMS) or “Kanban Boards” are Lean artifacts. Typically, they are large boards or information radiators that create transparency into all the work being done. They allow anyone to very rapidly see work in progress, understand its status, and also rapidly assess what is under control and what isn’t.
These Kanban boards are designed to optimize flow. Applied at the portfolio level, they help drive a continuous flow of ideas, prototypes, deliveries, revenues, and customer feedback.
Managing for flow is not a model to which most organizations are accustomed; they tend to manage for local silo efficiency, utilization, or around traditional processes, none of which enhance organizational flow. An end-to-end Visual Management System to manage the portfolio is essentially a tool to help leaders see and manage flow. At the highest level, it helps them to spot bottlenecks and manage speed of delivery.
A simple Portfolio Kanban, as shown, can help leaders prioritize general demand, shortlist and prioritize demand, and feed a program backlog with prioritized work lined up for implementation by multiple teams.
The past few years have seen the integration of Lean Startup® Techniques into Agile methods. For instance, Dual Track Scrum overlays a discovery component onto standard Scrum Delivery, and allows for Lean Startup style validation of business ideas in parallel with product delivery.
In our experience, the business and product side of most organizations still operate in traditional waterfall approaches that are largely driven by a projectized funding model. The net is that there is pressure to lock in scope, schedule and budget upfront. But, by locking in scope, in particular, we increase waste, stifle innovation, and deliver useless features to customers.
n our own agile product development work, we employ an integrated model that integrates the disciplines of Lean Startup®, Design Thinking and Agile Delivery. While high level scope is defined and agreed upon up-front, detailed scope is deliberately deferred to the last responsible moment, and is driven by a continuous, lean discovery effort. Business ideas are validated or invalidated via Lean Startup style experimentation. Design Thinking helps us progressively develop exactly the solution that end users need, and then we only develop the features they need and discard all others.
Many traditional PMOs are optimized around two key goals: project initiation and governance, both of which need to change if they are to adequately support business agility.
Project Initiation: In many organizations, the PMO tries to find ways to start projects. An Agile Value Management Office™ or AVMO™ focuses instead on completion and flow.
For the AVMO to enable business agility, it needs to manage the work-intake process better than the traditional PMO. It needs to time the start of new work in such a way that inflight work can deliver. It needs to insist that projects and releases all be smaller and more frequent so that resources are not locked down for too long. Finally, it needs to visualize and see overall organizational project flow and put more focus on delivery and less focus on project starts. Or, put another way, the AVMO drives the mantra, stop starting, start finishing.
Governance: Governance in many organizations is built around the idea of large, infrequent changes. The expectation is that product deliveries, project releases, and business process changes will all happen very infrequently and when they do, the changes will all be done at once.
For example, in most organizations, changing a production IT system involves a series of approvals and signoffs that can take weeks or even months to get through.
Once again, these processes are not designed around the concept of “flow”. They are not designed to handle small, frequent changes.
To enable business agility, the governance model will need to change. It needs to encourage small and frequent changes, since those are less risky. And it needs to design smaller, lighter weight controls that can be executed quickly and efficiently.
Dynamic Strategy & Decision Making
Many organizations are locked into an annual mindset. They set financial targets for the year, they set strategy for the year, and they launch projects for the year. Underlying this approach to strategy is the assumption that, through detailed upfront analyses, we can predict the future of our businesses accurately enough to choose a clear strategic direction a year or more in advance. Unsurprisingly, in many of these organizations, delivery also happens by the year. It is not uncommon for us to see large organizations with 200+ day cycle-times for the delivery of larger programs and strategic initiatives.
As organizations move toward Agile, many accompany a new way of working with modern and trendy management structures, such as the adoption of Holacracy or enterprise-wide self-management. Because organizations become adaptable, listen closely to end users, and work in short iterations, there is often the misconception that they just go with the market flow, with no longer term strategy or business plan.
In fact, the most Agile enterprises are heavily grounded in a shared sense of purpose, driven by a leader with a razor-sharp vision and an unwavering set of principles. Rather than just go with the flow, Agile organizations make decisions based on data, and build dynamic strategy through continuous sensing, learning and responding.
One of the most powerful things that leaders can do to make their organizations become more agile is to move to shorter strategic windows. A more agile business might set quarterly goals, and have small quarterly strategies that make incremental progress towards those annual goals. Delivery organizations will then need to create smaller, shorter efforts that show measurable progress towards the strategy.
Each quarter, the leadership team can assess which targets are being met and which ones are not. By this time, competitors may have launched new capabilities, customers may be demanding new services, our own financial stance may have shifted, and we can adjust the next quarter’s strategy based upon the best and latest data. No longer are we locked into year-long bets, year-long spending, and a year-long wait for results.
DECISION MAKING VELOCITY
Such a system will require a more dynamic, and decentralized decision making process, one that works fast and efficiently, and one that can create good and credible decisions sometimes based upon very incomplete data. More importantly, leaders will need to build their team members’ capability to make decisions on their own, without the leader herself becoming a bottleneck.
In Principles: Work and Life, founder of the mammoth hedge fund Bridgewater Associates Ray Dalio shares guiding principles that have been the cornerstone of the growth of his company and himself. In his straightforward list of rules, readers find a rock-solid path to rapid, decentralized decision making.
To make decisions effectively, according to Dalio, one must learn well, simplify and decide well. A “radically open-minded” leader weighs choices based on advice from people with “believability,” and decision making becomes a process guided by principles. To Dalio, believable people have “repeatedly and successfully accomplished the thing in question — who have a strong track record with at least three successes — and have great explanations of their approach when probed.
The leader’s job then is to develop decision making capability, ensure that decisions are made through open and transparent critical thinking and discussion, and that the decisions made by people with proven decision making capabilities are weighted more than decisions made by people without experience of a track record or believable opinions.
End-to-End Value Stream Teams
An agile business has, at its base, a network of end-to-end, entrepreneurial End-to-End Value Stream Teams that are focused on improving customer experiences, and adapting rapidly to their changing needs.
These Value Stream Teams extend the notion of ‘stable agile teams’ and extends it across the full range of activities that it takes to define, build, and deploy a solution. In a sense, it is a company within a company that can take full ownership and accountability of its product.
This entrepreneurial unit is able to move with speed and flexibility because it does not need to navigate ten different silos and functions. It has all of the skills and resources that it needs to deliver, right now.
Minimal, sufficient-to-purpose Digital and Portfolio Management oversight and governance defines how the Value Stream Teams operate. This includes short term considerations like metrics, investment, measurement and reporting, and long-term considerations like strategy and roadmaps.
DevOps Deployment and Outcome-Based Measurement
DevOps principles and practices encompass the entire technology value stream and enable IT organizations to develop and deliver value quickly, reliably and securely to its customers or stakeholders. Improving the flow of value through the technology value stream is foundational to achieving business agility. Further, it is necessary to amplify and radiate the feedback at every step back to the team and business stakeholders so that there is visibility into how customers are interacting with their products and services.
DevOps emphasizes communication, collaboration and integration across traditionally separate organizational silos, and relies on automation to drive business success. Technical practices such as version control, continuous integration, continuous delivery, automated testing, loosely-coupled, cohesive architectures, low-risk release patterns, and telemetry are key enablers to faster delivery of features safely and reliably.
Besides the business benefits, DevOps adoption has shown to foster higher employee engagement, morale, and retention as well. Quite simply, organizations that embrace DevOps practices get more done, with higher quality, improved operational efficiency and higher customer satisfaction .
Furthermore, DevOps techniques enable outcome-based measurement, as shown. From customer success to business success and through intermediate stages, we can measure the delivery of value and outcomes at each and every step.