This issue of Agile Journal is themed Agile Strategy, so you may presume it focuses on the strategy of implementing agile in your organization.  Let’s mix it up a little and look from another point of view: Rather than applying a strategy to agile, let’s apply the principles and values of agile to business or organizational strategy.

This idea was generated by Walter Kiechel’s article in the May 2011 Harvard Business Review Balanced Scorecard Report, titled “Strategy, Risk, and the Global Financial Crisis.” We have all, to a person, been affected by the global financial crisis, and so its relevance becomes immediately tractable.

In the article, Kiechel defines strategy as a set of conceptual responses to the issues facing an organization.  He relates how one of the big-five consultancies’ in-house think tank on strategy suggests that “adaptive” strategy is replacing the standard practice where headquarters dictate strategy based on the ordered triplet of “analysis, prediction, and deduction,” with

…setting “optimal conditions for the continuous emergence of superior strategies through an adaptive— or evolutionary—process.” In concrete terms, this would mean giving more responsibility for strategy to the people on the corporate “periphery,” the troops in daily contact with customers, competition, and changing market conditions. They would be encouraged to probe and experiment, even if this meant the occasional failure, with their findings being continuously fed back to the corporate center for incorporation into its strategic consciousness.

Kiechel goes on to remark that this concept of adaptive strategy would require evolution of the skills within the company (and its periphery), in particular, what the think tank italicized as “learning how to learn.”  He quips that this in itself is interesting because the parent consultancy has never been “a font of interest in the human dimensions of the discipline.” 

In reading Kiechel’s article, the parallelism between his recommendations and agile methods becomes apparent However, a truly agile strategy is a step beyond adaptive; it is dynamic and proactive.

From the construct of the strategy-focused organization, as well as the familiar tag line—executing strategy,” many strategy consultancies are beginning to investigate the agile methods as they pertain to the development and implementation of strategy. Organizations in the strategy consulting space are now differentiating themselves through their willingness and ability to embrace agility and its inherent value in strategy execution and evolution. Clients find they are moving farther, faster, and aligning more quickly to stakeholder imperatives with agile methods in place.  Without agile methods, both clients and consultancies find they are puzzled by the lack of progress and the inability to create lasting transformation.

Traditionally, the implementation process associated with strategy creation (or even strategy clarification) and its execution within an organization is a Taylor-esque waterfall—a prescriptive and sequential approach to strategy definition and execution.

However, the world moves so fast that fully defined, tested, and approved annual plans become obsolete even before the teams can initiate projects to implement them.  What is worse, these annual expeditions are hobbled further by the prescriptive techniques used to develop and track the initiatives

Over recent years, we are seeing companies—be they Fortune 100 stalwarts or speculative startups—no longer having the luxuries previously afforded their predecessors.  Those who cannot make rapid adjustments to the vagaries of the business world—due to the disintegration of their previously stable financial system or to the rapid shift of the interests and buying power of their dominant demographics—simply succumb to the oppressive weight of their guiding principles and the planning and execution practices.  Though a good portion of these issues typically reside outside of IT, they are quite analogous to issues that traditionally befall Project and Product organizations.  Incredibly, though, where IT has been using agile methods to address and resolve these types of issues for a decade now, the realization that less prescription and more adaptation in the organizational strategy and execution arena has been slow to materialize. For example, as the financial crisis deepened, General Motors sought to ignore the increasing conservativeness in its base.  Executives missed many of the strategic signs that Ford saw and, ultimately, was nowhere near as quick to divest languishing brands that diluted its institutional presence (Volvo vs. Saab, Mazda vs. Saturn).

Driving forward in this post-financial-meltdown decade, our clients are seeking the same traits from their strategy initiatives as we have historically seen from their development initiatives.  The pressure to change is starting to build—from the market and from shareholders.  In fact, a recent multibillion dollar client undertook a major initiative to overhaul its strategy execution based on its shareholders’ “recommendation.” The client found that agile principles created great value throughout the organization even in its historically slow-moving industry where strategic plans can last for decades. The ability to charter, self-organize, and continually review and adapt plans has started to create a culture of value creation and responsiveness that is helping to redefine its strategy and performance in the marketplace. 

The most effective way to implement strategy—just like the most effective way to implement software—is an iterative process.  It’s simple to visualize if we separate the process into four phases: clarify strategy, drive performance, execute process, and optimize data. Once the cycle starts, the basic idea is that the strategy is designed to drive performance that is realized by implementing the processes that are measured and monitored so that they can inform clarifications to the strategy. The cyclic process rapidly establishes a cultural shift toward a governance program that continuously focuses organizational performance where the company needs it most during each successive reporting period.

Integrating the tenets of agility into the process provides a substantial additional “premium” to this approach.  The cycle is now completed more rapidly, allowing the organization to be more responsive to its market.  Strategic choices can be assessed more rapidly—providing the ability to realize value more quickly and completely. 

The organization’s ability to align and respond to strategy changes improves dramatically, and strategic missteps can be pruned before significantly damaging the bottom line. Agile methods are no longer limited to developing software or products. Agile is the new way to compete and the new way to win at every level of the organization—from development to strategy.

[1] See Robert Kanigel, The One Best Way: Frederick Winslow Taylor and the Enigma of Efficiency, Penguin, 1999

After a rather controversial strike, Taylor and his findings were subjected to a congressional investigation of “Scientific Management”, which concluded that Taylorism was not in the best interest of the workers. Never the less, business leaders widely adopted the system, though most organizations who had hired Taylor as a process consultant fired him for inability to produce promised results.