To transform or create any Agile organization, you need to fully understand what your specific organization wants to gain from agility.
There are two distinct forces at play: business drivers and delivery efficiency. By understanding how they impact your organization, you can align your teams around them, and focus on the right challenges.
Because you are not just looking for a change, right?
Change for the sake of change itself is always a bad idea. Change is not useful to an organization if the needs behind the change are not recognized, or are misinterpreted. As management guru Peter Drucker famously put it:
“There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”
Furthermore, if you don’t have valid reasons for the changes, that can even be dangerous. Especially if you are able to make the changes fast. Therefore, your organization needs the discipline to analyze and validate the drivers behind potential changes, both in your products and in changing your ways of working.
Let us start with the business-driven forces.
1. Business-driven forces
These forces — the business drivers — are related to the business rationale behind your need to change.
First, a note about one of the most common business-driven forces behind adopting agility: cost efficiency.
Cost-efficiency is not a reason to be Agile
When people talk about cost efficiency, they see it as the means to reduce costs by achieving the outcomes faster and more efficiently, and to use an organizations' professionals and resources more efficiently.
But in the context of Agile development, this is counter-intuitive.
As an Agile organization, your aim is not, for example, to maximize your utilization rates. Instead, you focus your organization on creating the most valuable outcomes at any given time — which also includes your resources and personnel.
Therefore, instead of cost-efficiency, it is more appropriate to discuss cost-effectiveness as a business driver for agility.
With this in mind, let us define what we mean by business agility.
Business agility — and why you want it
As with agility in general, there is no uniformly agreed definition of what business agility constitutes. Here, we define business agility as the “organization’s ability to align its financial and operational resources to meet the needs of its current and future business environment”.
What this means is that your organization needs to be able to respond to emerging market changes, while simultaneously being able to anticipate the future scenarios of what will happen there. As with agility in general, business agility is as much about the organization being nimble enough to respond fast, as to be vigilant about what is likely to happen in the future.
Here are the most common business reasons why organizations want to adopt agility:
Cost-effectiveness - Exactly what we discussed above. Optimize and align your organization's resources to create the best possible value for the customers and users.
- Shorter Time-to-Market - Provide products to the market faster than you currently can, to get a faster Return on Investment. Maybe you are responding to competition, or you learn about the customer needs and the market.
- Seizing new opportunities - Provide new products to the market faster to explore new markets, or to gain new customers.
- Improved customer experience - Provide products that serve customer needs better, improve customer retention, or gain new customers.
Make sure everyone understands the Why
Regardless of why your organization needs to change, the people within it need to understand those reasons. Then it is easier to identify and focus on the challenges you need to tackle to succeed with your change initiative.
Please note that your business drivers change over time — as do their relative importance compared to each other.
Therefore, these business drivers do not exclude each other. You will likely recognize several important business drivers, but only one of them should be the current “North Star”, which you align yourself around, based on what is needed.
Deal with the uncertainty
Business-driven forces are about building the right things for the market. The market is always volatile and uncertain, and you cannot predict the future (sorry). Agility is about managing uncertainty. It is about building resilience in your organization, to compete in the constantly changing environment.
In the big picture, uncertainty is about accepting unknowns. Customers can't tell what they need, and only the market can tell what will succeed. There are always uncertainties in all the strategies and business opportunities.
In practical terms, this means that plans are not commitments. They reflect your best understanding of something at any given moment. Understand and accept that your plans have flaws, and accept the uncertainty in them. This also means that you must be willing to change when you gain information that tells you that you need to change.
2. Delivery efficiency
By now, it should be abundantly clear that business drivers are important in an Agile organization. But equally important is delivery efficiency.
This concept has more to do with the effectiveness discussed earlier, rather than the maximal utilization of resources. As an Agile organization, you understand that value is delivered through outcomes instead of outputs.
To achieve this, you need to profoundly understand what the most important things (i.e. outcomes) are, that you need to achieve in a given time frame. If not, you can easily lose sight and focus on merely completing tasks (outputs) that often do not create a cohesive whole.
Therefore, delivery efficiency is about doing as few valuable things as possible at any given moment.
From the business perspective, this enables your organization to maximize the impact of your development efforts to get the proverbial “best bang for a buck”. But it also lets you analyze and respond faster to the needs that emerge, for example, from the market.
The four principles of delivery efficiency
Limit the Work in Progress (WIP)
Focus on value over quantity in your work. Actively prioritize work items, which leads to a limited set of assets to be developed, delivered, and maintained. This in turn improves both focus and the flow of work.
Always think about the next delivery
How you deliver today is not important — how you deliver tomorrow is.
Technological changes will emerge in the future, but you don’t know yet what those are. Therefore, build the capabilities to support these changes in your products from the beginning, or start considering building them immediately.
The pace of technological development is immense and at some point, the current technology will kill your competitiveness. Just don’t adopt new technologies before evaluating them and their suitability in the long run.
Use efficient ways to deliver
To operate efficiently and effectively, you need appropriate frameworks and practices to conduct the work. These range from individual actions to the level of the whole organization.
You also need to carefully analyze the different roles, their goals, and level of decision-making authority. On the practical side, for example, automating everything that can be automated is an example of increasing efficiency and effectiveness.
Further, you need to make a conscious effort to actively improve your ways to deliver products by removing and mitigating wasteful activities as much as possible.
Move from sub-optimization to total optimization
To improve the organization, it is essential that you view it as a system where individual parts impact others. Change one part, and it eventually cascades to the rest of the organization in some form.
Since the organization is a system of interconnected parts, you should make your optimization on a system level instead of sub-optimizing certain parts of a process. Value Stream Mapping is an effective tool for understanding your organization as a system of flow and identifying wasteful actions.
Both sides of the story
When organizations take steps toward agility or aim to improve their Agile approach, their focus is often on operations.
Examples of starting points for embarking on the journey toward agility include:
- Implementing Agile frameworks
- Getting the backlogs in shape
- Re-evaluating roles and responsibilities
- Selecting and evaluating tools
These are perfectly valid and important aspects of an Agile organization. But you also need to consider what your main business driver is behind this transformation, and why it is essential to your organization.
Having this set up, everyone in the organization has a clear understanding of why you are making the transition. If you skip this important step, your Agile transformation may likely remain yet another pointless exercise done for the sake of change itself.
Delivery efficiency is an equally important factor in a successful transformation. The four principles of delivery efficiency will help you align the organization operatively so that it can best respond to the requirements set by the main business driver.
Both the business drivers and the principles of delivery efficiency are the key components of business agility, which is essential for thriving in a turbulent environment.
This blog is the second entry in a series that explores organizations’ transition to true and lasting agility. Read first blog from the series: The truth about why your organization needs agility
Published: February 26, 2023