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.

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 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. 

Strategy change is very disruptive to an organization that is well-tuned to reliably deliver to existing customers. 

Overall, the strategy needs to be clear, with defined direction but without blinders or unnecessary constraints to market changes on the periphery. 

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:

1. 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)
2. Initial agility and survival instincts drives early growth.
3. Learnings, customer loyalty, formalization of key processes and enhanced reliability lead up the profitability curve.
4. At market leading position, organization becomes well-tuned to deliver to current customer demands – Focus, investment, awareness recedes away from niche, less profitable customers.
5. 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).
6. 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.

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. Myridius 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

Every organization needs to have a strategy that is not “set in stone”