The 6 Enablers of Business Agility

How to Thrive in an Uncertain World

Karim Harbott

• Publisher: Berrett-Koehler Publishers
• Year: 2021
• ISBN:
  9781523090075
• Edition: 1
• Topic: Business
• Subtopic: Project Management
• Index: Business

Installing agile tools and practices won't be enough to respond to rapid market change unless you lay the groundwork with six key enabling factors, identified by the United Kingdom's leading agile consulting firm, Agile Centre. An ever-growing pile of frameworks and tools falsely offer an “easy route” to organizational agility. However, responding to rapid market change requires you alter so much more than just your way of working. Your work style is only one of six factors that the Agile Centre's research identifies as the key to success. From years of experience certifying people in agile leadership, product ownership, and scrum mastery, Karim Harbott has created a model that will help your organization achieve all six factors required for success: leadership, culture, structure, engagement, and governance as well as ways of working together. Drawing from Harbott's famous Business Agility Canvas, this book will help leaders get realistic about the scope of the changes needed in their organization and show them how to get started.

CHAPTER 1

The Changing Business Climate

We are in one of those great historical periods that occur every 200 or 300 years when people don’t understand the world anymore, and the past is not sufficient to explain the future.

—PETER DRUCKER

IN THIS CHAPTER, WE WILL EXPLORE

■ the key differences between exploration and exploitation

■ the concept of VUCA (volatility, uncertainty, complexity, and ambiguity) and its implication for the business climate

■ the main drivers behind the emergence of agile ways of working.

Exploring and Exploiting: Two Key Organizational Activities

Think of the most commercially successful organizations around today. What makes them so successful? A superior product or service? Great business model? Efficient operations? The ability to continually innovate and create successful new products, services, and business models? For the most successful, it’s likely to be all of the above. At the highest level, most organizations are undertaking two main types of work—exploiting current products and services and exploring new ones. Most will be more focused on one than the other, but both will be happening to some degree. The natures of these two activities are fundamentally different. They seek to achieve different outcomes, require different skill sets, and must be approached in different ways.

Traditional organizations tend to be designed to exploit known and understood products, services, and business models. Demand for these has been proved, often over many years. The strategy here is to compete based on the delivery of incremental improvements to existing products and services while simultaneously reducing costs and increasing efficiency. Processes are well understood, there is enough data to make accurate forecasts, detailed plans can be made, and performance can be assessed based on revenues, growth, and profit. These activities are largely understood and predictable, and success relies on effective execution toward a known goal. This pursuit is what we have come to expect from established organizations. An example of effective exploiting is Amazon’s implementation of algorithms to improve the efficiency of picking and shipping items from its fulfillment centers. It offers the same service as before, but more cheaply, which allows Amazon to pass those savings on to customers, giving it a competitive advantage.

While many organizations have mastered the art of exploiting, few can claim to be effective at exploring. Exploring is the act of seeking out new products, services, customer segments, and even entire business models. The strategy here is to compete through innovation and sometimes the reinvention of the entire organization. It is an uncertain, unpredictable pursuit that tends to involve a lot of trial and error. As such, making predictions and detailed plans is often not possible. To return to our Amazon example, while it sought to exploit its core business model of online retailing, it also continuously explores new products, services, and business models. One example of this came in the form of the Kindle e-reader, a product innovation that revolutionized the publishing industry. Another example is a business model innovation, a cloud computing platform called Amazon Web Services (AWS). Launched in 2002 and relaunched in 2006, by the end of 2019, AWS had an annual revenue of over $30 billion.¹

As we will see, the ability to effectively exploit and explore is more important than ever, but it was not always this way. Traditionally, organizations have been able to succeed largely through the mastery of exploitation. In the rest of this chapter, we will take a look at how the imperative to explore has increased over time, and the main reasons for that shift.

Reflection

What are the key areas in your organization engaged in exploiting existing customer offerings? What are the key areas engaged in exploring new customer offerings? How much focus and investment is spent on each? How does that compare with the most successful in your industry? Remember to keep your answers in a notebook for use in chapter 10.

The Twentieth-Century Organization: Exploiting with Efficiency

For most of the twentieth century, organizations survived and thrived by being expert exploiters, creating economies of scale, and relentlessly pursuing operational efficiency. Outfits that produced an as-good or superior product more cheaply than their competitors were likely to prevail. Thus, managers constantly sought to achieve the highest possible output, with the least investment of time, money, or effort. This was achieved largely through specialization, standardization, and the division of labor. In short, it was survival of the most efficient. The ability to exploit their existing products and business models effectively was the main concern, and so organizations were designed almost exclusively for this purpose.

The embodiment of the efficiency movement was Henry Ford, founder of the Ford Motor Company. On October 7, 1913, Ford and his team at the then-Ford plant in Highland Park, Michigan, launched what is arguably the greatest innovation ever in the field of manufacturing: the moving assembly line. Inspired by the overhead trolley used by Chicago packers to dress beef, the new process allowed the production time of the Model T to drop from 12 hours to 90 minutes, and for the price to drop from $850 to $300. This innovation eventually allowed for the production of a Model T every 24 seconds. By 1927, Ford had gone from just another small automobile manufacturer to selling more than 15 million Model Ts every year-half of all automobiles sold at the time.² It had masterfully exploited the Model T and had won at the efficiency game.

The assembly line method of production soon spread to other automobile companies, and then to almost every other consumer goods manufacturer. Meanwhile, Ford’s contemporary Frederick Taylor was applying engineering discipline and the scientific method to the factory floor to measure and increase worker productivity. In his groundbreaking 1911 book The Principles of Scientific Management, Taylor outlined how to decrease unit costs and maximize efficiency by identifying “the one best way” to perform a task and ensuring that everyone followed that way. Taylor would study each task, breaking it down into small steps, painstakingly optimizing and documenting each step, and thus optimizing the whole task, much as a mechanic would improve the performance of an engine by tuning each component. Taylor summed up his approach: “It is only through enforced standardization of methods, enforced adoption of the best implements and working conditions, and enforced cooperation that this faster work can be assured. And the duty of enforcing the adoption of standards and enforcing this cooperation rests with management alone.”³

The ideas of Ford and Taylor dramatically increased productivity and led to previously unseen levels of efficiency. The Ford and Taylor model of strict hierarchy and specialization resembled that of a finely tuned machine. The machine concentrated power and decision-making at the top, disseminated orders down the chain, and improved efficiency by eliminating inconsistent outputs. In order to do this, organizations sought to measure, control, and minimize variance. This gave rise to all sorts of initiatives, including what we now know as Six Sigma and Total Quality Management.

Businesses that became master exploiters by embracing the machine model tended to outperform the market throughout the twentieth century, and organizational design and almost all tools of management thus focused largely on this area.

Reflection

Which parts of your organization are optimized for exploiting with efficiency? Are those areas characterized by stability, predictability, and known outputs? How effective is your organization at exploiting existing products and services?

The Rise of VUCA: The Game Has Changed

Throughout the fifteenth century, the standard formation of European infantry soldiers was based on their principal weapon, the pike. In the early sixteenth century, the musket was introduced. Over the next 100 years, the pike slowly fell from favor and muskets and bayonets became the default infantry weapons. Rather surprisingly, however, the standard formation of infantry remained unchanged. It took two generations before anyone thought to ask the question, “Is this still the most effective formation for our infantry?” It quickly became apparent that the formation was optimized not for muskets but for pikes and bows. Soon after, the default formation was changed to something more suited to the new context.⁴

This is a phenomenon that can be observed all too often today in various contexts. The dominant paradigm is handed down from generation to generation, and very few take the time to question whether it remains appropriate in the current context. The fact that it was appropriate a century ago or more seems to be sufficient reason for it to remain unquestioned. Anyone who has ever heard, as a justification for a process remaining unchanged, the phrase “But we’ve always done it this way” will be familiar with this concept.

By today’s standards, the twentieth century remained largely static in terms of innovations, which were few and far between. That meant most organizations were able to know in advance exactly the thing on which to be worked, what to exploit. When you know with near certainty that you are working on the “right thing,” efficiency is a good indicator of effectiveness. The problem to be solved was how to produce a known output with the least possible input of resources. The cultures, structures, and policies—that is, the organizational operating systems—of many entities from this period were designed for just that.

As such, most large, traditional organizations are designed, and very well prepared, to solve the challenges of the twentieth century. But like the old aphorism about military generals always fighting the last war, the reality is that many organizations now find themselves in a very different business climate. A climate in which yesterday’s solutions do not solve today’s problems. A climate in which efficiency is rarely the most important goal. A climate in which knowing the “right thing” on which to work has become all but impossible. The organizations that will survive and thrive are the ones that recognize that a fundamentally different problem now exists; the ones that are able to reinvent themselves continually to solve those new problems; the ones that can master the art of exploring as well as exploiting.

Today’s world can be characterized by the term VUCA. Emerging from the US Army War College in the early 1990s, VUCA described a post-Cold War, multilateral world that was more volatile, uncertain, complex, and ambiguous than ever before.⁵ The term caught on in business after the 2008 and 2009 global financial crisis. VUCA, it seems, is the new normal. Here’s what it means.

Volatility

It all started on the streets of Sidi Bouzid, in central Tunisia. A 26-year-old man named Mohamed Bouazizi was struggling to find a job. Refusing to join the “army of unemployed youth,” he instead began supporting his family by selling fruit and vegetables.⁶ However, he faced constant harassment from the local police, and his cart and goods were eventually seized, ostensibly because he lacked a permit. It turned out that very few street vendors had permits at the time, and it is not clear whether one was even required. This left Bouazizi $100 in debt and unable to make a living. On December 17, 2010, enraged at police corruption and unable to pay the required bribes, Bouazizi had had enough. He went to the governor’s office in Sidi Bouzid and doused himself in gasoline, shouting, “How do you expect me to make a living?”⁷

Then he lit a match, and the world changed forever.

Nobody could have predicted the sheer pace at which events unfolded. Pictures of Bouazizi’s immolation quickly appeared online, and within hours, angry crowds began to protest. He had inadvertently tapped into the anger of many people living across the Middle East at the time. Videos of the protest, taken on smartphones, soon went viral across the globe via YouTube and other social media platforms. As the police struggled to maintain order, the protests spread across Tunisia and into the capital. A mere four weeks later, the president of Tunisia, Zine al-Abidine Ben Ali, resigned and fled to Saudi Arabia, ending his 23-year rule. After another four weeks, the 30-year rule of President Hosni Mubarak of Egypt came to an end, closely followed by the end of the 42-year rule of Muammar Gaddafi in Libya and the 22-year rule of President Ali Abdullah Saleh in Yemen. Ten years on, at the time of writing, Syria remains in a bloody civil war.

Bouazizi’s story, and that of the subsequent Arab Spring, demonstrates the volatility of the world in which we now live. Had these events happened just 10 years earlier, the effect would likely have been minimal. The most popular phone at that time, the Nokia 3310, had no video capability, and YouTube would not be founded for another four years. As it was, technology advances and the increased interconnectedness of the world supported the rapid spread of information, images, and videos and allowed the Arab Spring to build unstoppable momentum quickly.

This is just one example of how the pace of change in the world today is unlike anything we’ve witnessed before. The same phenomenon also plays out in the business environment. The Industrial Revolution of the eighteenth an...

Table of contents

• Cover
• Title Page
• Copyright Page
• Dedication
• Contents
• Introduction: About This Book
• Chapter 1. The Changing Business Climate
• Chapter 2. Introducing Business Agility
• Chapter 3. The 6 Enablers of Business Agility
• Chapter 4. Leadership and Management
• Chapter 5. Organizational Culture
• Chapter 6. Organizational Structure
• Chapter 7. People and Engagement
• Chapter 8. Governance and Funding
• Chapter 9 Ways of Working
• Chapter 10 Leading the Change
• Notes
• Acknowledgments
• Index
• About the Author