When Agile isn’t Responsive to Business Goals
Today, leaders often strive to be responsive to an everchanging marketplace, and their current tool of choice is often Agile.
In 2020, there has been significant pressure on businesses to respond to customers, adapt to market pressures, and continue to evolve their products and service at any cost. Agility is important, but it is not a replacement for a solid business strategy — one that is responsive to customers needs while keeping sight of your primary business goals.
In our latest eBook, we show you how to create a strategy that is both agile and responsive. Learn how to create a strategy that:
- Includes strategic drivers that derive from the goals and strategy of your business
- Supports effective dynamic decision making, and operational impacts
- Can adapt to both external and internal changes
When Agile isn’t Responsive to Business Goals
An effective and well-aligned business strategy provides the necessary guardrails and ultimately the direction, if not the specific destination, to drive needed change in the organization.
Today, leaders often strive to be responsive to an everchanging marketplace, and their current tool of choice is often Agile. Agile processes, from IT delivery methods, have been adapted and adopted across organizations and at enterprise scale. This is primarily because it provides principles and practices that anticipate and handle ambiguity and change in a formalized process. Although this may be true, the constant refinement of strategy development, business processes, and service delivery can quickly veer off in directions never considered by the business. Sometimes this leads to profitable serendipitous outcomes, but many times, after some reflection, the journey results in a destination where the organization as a whole did not anticipate nor fully desire to go. This also tends to leave some parts of the organization behind and/or struggling to keep up, leaving the enterprise without a united front. Responsive business agility is more than an ever-changing direction that attempts to drag along the organization. It needs to be heads-up, ever vigilant to the changing landscape, responsive yet still self-aware enough to navigate opportunities towards key achievable goals.
Origins of the Agile Processes
Over the past few decades, there have been tremendous advancements in businesses’ ability to confidently deliver new technology solutions. In the early days of the digital business, companies relied on large technology firms that built hardware to also provide needed software solutions with their products. Eventually, as the information technology skills grew within companies, the process of delivering new solutions needed to be formalized and better managed – think classical waterfall project approaches. This would entail a full analysis of requirements, then full design based on those requirements, then build, test, and deploy. These new methods provide far more reliability that the end result would be more or less what was expected at the start of the project. As more solutions and complex projects were undertaken, cracks in the linear waterfall approach became apparent. These cracks were not insignificant, and there were plenty of very large complex projects being abandoned well before completion was achieved – at a massive cost. Soon more and more projects were adopting agile methodologies to build in small digestible iterative steps to reduce the risk of getting to the end with a product that was no longer needed or didn’t quite meet expectations. Agile was a revolution and continues to be practiced in various evolving forms in most companies.
Leveraging and Expanding the Concepts
Leveraging and Expanding the Concepts Recent years have seen Agile practices flow out of IT and into various business departments, leading to Agile Engineering, Agile Human Resources and Agile Marketing organizations, among others. 4. Following on the success of the agile methods in solution development and looking for new ways to be more adaptive to changing market conditions, many companies are applying these agile processes to other aspects of their business including their business strategy development. Agile for all? -John Edwards, InformationWeek – 12/17/19
Recent years have seen Agile practices flow out of IT and into various business departments, leading to Agile Engineering, Agile Human Resources and Agile Marketing organizations, among others.
We will see the original values and principles of Agile software development applied to new departments, like Agile Customer Service -Scott Abate, Agile Project Manager, Anexinet
The move to extend agile methods and concepts to enterprise scale and into other organizational areas is clearly underway. This has some clear benefits, such as:
- Incorporating immediate learnings and refining perceptions of future possibilities throughout the process
- Ensuring more checkpoints along the way to build alignment and regularly clarify direction
- Engaging more stakeholders earlier and more often
- Providing some demonstrable results or early quick wins to justify continued investment
Having a strategy that allows an organization to adjust course where necessary is a good thing. Unfortunately, there seems to be a trend towards abandoning proactive strategy definition and relying on “being fully agile.” In a recent article (Bungay, 2019), Harvard Business Review addressed this “Myth.”
You don’t really need a strategy; you just need to be agile?
Why it’s plausible – Agile firms, especially start-ups, are always turning on a dime and they certainly don’t seem to be following any kind of plan. Easy enough, then, to assume that what you see an agile firm doing – acting at high speed, maintaining a high tempo, being highly responsive – is all there is.
Why it’s wrong – Agility is not a strategy. It is a capability, a very valuable one which has immediate operational benefits, but that cannot permanently affect a firm’s competitive position unless there is a strategist taking the right decisions about where to direct that capability.
This article correctly addresses why the approach is seemingly logical, yet all too often misguided. There is significant pressure on businesses to respond to customers, adapt to market pressures, and continue to evolve products and services, all while achieving financial revenue and profitability goals. This pressure can be overwhelming and force many companies to continually adjust their strategy. An ever-changing single strategy is not effective and therefore not truly responsive to both the needs of the customer and the organizational stakeholders.
Business agility is an excellent goal and there are places where agile principles and methods are warranted, but the complexities and pitfalls should not be overlooked.
One critical aspect of adopting these principles that does not get enough attention is the cultural change that is often required. Strategy change is very disruptive to an organization that is well-tuned to reliably deliver to existing customers. Customers too, force disruptive changes on businesses and strategies, but surprisingly there are cases where the customer pull is not disruptive yet still detrimental.
Some Cautionary Tales
In the classic business book, the Innovator’s Dilemma – When New Technologies Cause Great Firms to Fail, by Clayton M. Christensen, there are warnings from business history about companies who followed their current customers into an unprofitable future by following good management principals and strategies. The book provides some longitudinal studies of market dynamics in a few industries to demonstrate this phenomenon. The overly simplistic, but still informative lifecycle sketch, of these firms is the following:
- New technology, process, or unique strategy enables your entrance into a market – usually to satisfy small niche or low-profit subset of market (not pursued by established market leaders)
- Initial agility and survival instincts drives early growth.
- Learnings, customer loyalty, formalization of key processes and enhanced reliability lead up the profitability curve.
- At market leading position, organization becomes well-tuned to deliver to current customer demands – Focus, investment, awareness recedes away from niche, less profitable customers.
- New technology, process, or unique strategy enables a new entrant into a market – usually to satisfy small niche or subset of market (not pursued by established market leaders = YOU).
- As new a firm moves up, current customers either begin to adapt to market disruption and move to new entrants or begin to fail with you.
And so the cycle repeats, over and over, for too many companies across too many industries. So, what is the lesson here for established market-leading firms? Overall, the strategy needs to be clear, with defined direction but without blinders or unnecessary constraints to market changes on the periphery. Some successful mitigation techniques that may apply agile principles, but in a more “targeted” way, are:
Spin-offs or Skunkworks approach
Enable a dedicated team with a separate strategy to assess and address potential opportunities. The benefit of this approach is that it enables agility to take on a potential new strategic direction without pulling the entire organization through the change, until it is proven.
Dynamic Process approach
Build-in more dynamic and adaptive processes to allow more course correction without the need to change the overall strategy. The benefit of this approach is to enable continued alignment and minimize disruption by “building-in” change into business processes. This often requires an organizational culture that is generally more adaptable.
Balanced Strategy approach
Equalize the demands across employees, shareholders/ stakeholders, as well as customers to incorporate higher business purpose and value to ensure future changes are still aligned to overall direction. The benefit is to minimize unnecessary disruptions unless there is clearly aligned benefits and achievability. A defined roadmap and measurement strategy can keep these interests aligned and balanced when handling or adapting to changing directions.
Losing track of the desired outcomes
Another cautionary tale involves companies losing track of their organizations’ desired business outcomes when considering new, immediate, potential business opportunities.
As is commonly the case, assessing new opportunities is inherently challenging. There are problems with accurately valuing the new opportunity, predicting future impacts, or understanding what future opportunities my follow / result from these opportunities. Added to this is the difficulty of assessing and planning the full scope of cultural and structural changes necessary to make this new opportunity feasible. This is often compounded by the inability to effectively evaluate the priority of the pursued opportunity in comparison to other initiatives, opportunities, or transformational efforts underway. All in all, there is difficulty in being agile enough to successfully address a new strategic direction without the formalized strategy definition and roadmap to guide the process.
RCG’s approach to a Responsive & Agile Business Strategy
RCG has a strategy development and roadmap process that is based on alignment around strategic awareness. Decisions about opportunity priorities, initiative execution, and outcome measurement are all based on core set of Strategic Drivers that derive directly from the goals and strategy of the organization. This is a key feature in adapting to disruptive changes or potential new opportunities. By defining and aligning around these drivers in advance, all subsequent adjustments will have a way to objectively measure impacts to established goals.
Strategic Drivers are identified, refined, socialized, and aligned before any initiative or action is recommended or undertaken. The intended application of the strategy is clarified by additional analysis of the drivers.
RCG’s approach to providing a Balanced Strategy
Customers are a very important, but not the sole driving concern of a balanced strategy. Enablement of team members, demands on data and insights to support effective dynamic decision making, and operational impacts should be included in evaluation, adoption, execution and monitoring of successful transformation strategies.
Communicating the strategy depends on understanding how the strategy will be implemented.
This is often difficult because a comprehensive strategy requires coordinated activities across groups. RCG utilizes a roadmap and initiatives map to aid in the communication of strategy and its implementation to the larger organization. The roadmap is then built upon the underlying strategic direction, so each action has strategic context. The benefits of this type of roadmap is to ensure that various parts of the organization are continually working toward the same outcomes despite being responsible for different “swim-lanes” of activity
Establish a Living Strategy
Every organization needs to have a strategy that is not “set in stone”
A strategy has to adapt to both external and internal changes. An effective strategy needs to enable the organization to adjust to new threats without losing sight of their primary business goals and objectives. Agile methods are a capability that can be leveraged to enable change in a controlled manner with clear principles and methods. The danger is with overreliance on these agile methods to avoid the critical work of laying down a firm, but responsive strategic foundation. The foundation should enable, not hinder, reliable strategic change without abandoning strategy. This is a hard task, but one that is possible and ultimately more likely to ensure long-term success.
About the Author
Thomas Clarke is a Principal at RCG who focuses on business strategy and information technology alignment. His industry experience includes telecommunications, business services, manufacturing, retail, and healthcare. In addition, Thomas has a proven record of implementing solutions architecture for various processes and systems that optimize business performance and enable critical initiatives. Some of his specific contributions and accomplishments include leading design, development, and architecture of solutions that provide key business operational metrics and transformation strategies that deliver business success to RCG’s clients.