Article

Agile Strategy Management – Part I

Why ‘Strategile’ is the new Strategy Management!

Author: David Huque

Nowadays, Agile methodologies have well and truly arrived in most organizations. The complexity of digital opportunities and the unpredictability of customers and competitors are both on the rise, making it impossible to predict what businesses will need in the future. That is why Agile is such a decisive factor to enhance organization’s responsiveness towards volatility.

Accompanying them on their Agile journey, we have supported our clients in the challenge to push conventional single-speed delivery models within their operations aside. Today, a lot of our support is focused on addressing organizational agility even on a tactical level with scaling pilots based on methodologies such as the Scaled Agile Framework (SAFe). That being said, what are the challenges our clients are facing on a strategic level?

Challenges of traditional Strategy Management in the digital era

When it comes to digital transformation, many organizations presently express deficiencies and limitations to respond to changing conditions in order to make the right decisions about digitalization at the right time. On the one hand, they sense missed opportunities and innovations too late as they move to scale their digital initiatives. On the other hand, they fear to miss hidden risks and threats, which challenge or prevent their initiatives from successful execution. Simply put, they are struggling to keep up with the pace of omnipresent change.

In this context, it is arguable whether organizations can only attempt to achieve a temporary competitive advantage rather than a long-term benefit. This indicates a fundamental rethinking whether conventional strategy management can assure a digital transformation at all. We hereby refer to approaches that cross-check the current business situation with a predesigned target state (believed to achieve long-term competitive advantage) in an interval of 2-5 years. Ultimately, a roadmap is derived consisting of several strategic initiatives to reach the targeted state. Not only is the process itself a tedious undertaking, but each initiative can take several years. Nonetheless, even the most sophisticated, thoroughly planned and commonly aligned strategy will miss its purpose if it is already obsolete when it is released into an environment with new challenges. In that sense, future strategies will be rather fragile than constant and have to be seen as an evolving entity rather than a final strategy paper. Therefore, strategy management has to evolve as well, which is where Agile concepts come into play.

Key Features of Agile Strategy Management

In contrast to traditional strategy patterns, an Agile approach to strategy capitalizes on Agile procedures, mindsets and ceremonies. Strategic opportunities are discussed, evaluated, broken down into sizable and manageable constituents, prioritized, executed, constantly monitored and revised by a strategy team or dedicated function. In doing so, the strategic direction is frequently checked towards strategic impediments and reviewed in terms of changing needs. In light of this, we consider six coherent differentiators and features of Agile Strategy frameworks: transparency, continuity and consistency as well as flexibility, feasibility and engagement.

1. Transparency: As one of the basic three pillars of scrum, raising constant visibility and tangibility is vital. It sets the foundation for good decision-making. A collective view of the strategic progress that factors in all interdependencies will make organizations more aware of emerging events, risks and issues but also potential synergies between existing initiatives. This can be achieved by commonly using Kanban boards, strategic backlogs and sprint plans as basic tools. Further, monitoring activities and feedback loops supplement the understanding whether the organization’s initiatives are aligned with the strategic vision.

2. Continuity: Since Agile Strategy is using an incremental approach, strategic initiatives are divided into various, manageable sizes fitting into one iteration. In doing that, each part builds on the previous one leveraging new attained insights and learnings. For instance, an initiative that usually takes one year can be divided into four to five pieces (each for one sprint). This helps organizations to build strategies from different angles using these new insights and increases momentum on a frequent pace. The same applies to the overall governance of agile strategy management: in a retrospective at the end of each iteration, conclusions for identified improvements are evaluated. Consequently, this promotes a relentless optimization of strategy planning and execution. This stands in contrast to traditional plan-build-run approaches, where the delivered outcome, such as organizational changes, can only be verified at the very end.

3. Consistency: This feature goes hand-in-hand with the previous one: after each sprint, the outcomes can be verified and measurements for the next steps investigated. By releasing a steady stream of strategic artifacts (initial and ongoing outcomes of initiatives), organizations can build and maintain sustainability as well as predictability. This has two benefits. Firstly, short-term and long-term needs can be addressed more effectively. Secondly, strategic plans are not treated like single artifacts anymore but as growing strategies that are continued and optimized. Closely interlinking (re)design, execution, monitoring and adaption can help achieve this as part of the strategy development and execution process.

4. Flexibility: The main motivation behind adopting an Agile Strategy framework is the ambition to adjust and adapt more quickly towards the strategic impact of changing environments. After each iteration, it is either to pivot or to preserve: by conducting regular reviews at the start of each iteration, the value contribution of an achieved strategic artifact is evaluated against the present situation. Practitioners can either continue to work on it or they can stop and tackle more critical matters that have emerged in the meantime. The same applies to any new risks or issues that need to be solved beforehand. Previous initiatives hereby will be set back to a strategy backlog until the next iteration. Not only does this iterative proceeding defy the rigidity and flaws of traditional strategic management. It centers the view on business value and increases the focus on managing strategic initiatives in a predefined time.

5. Feasibility: Unlike tremendous planning activities, dynamic decision-making methods such as hypothesis-driven and scenario-based planning help to explore and test complex and uncertain environments. They lead to repetitively new assumptions or selective options until a fitting solution has been narrowed down. One level beyond, experimentation-based ‘trial and error’-activities, piloting and data-driven automation procedures lead to alternative conclusions that can change a previously anticipated status quo immediately. In any case, organizations need to familiarize themselves with an insight-driven ‘Fail and Learn fast‘ mentality in order to increase the success rate of strategic realization.

6. Engagement: Organizations are advised to empower self-organized, interdisciplinary strategy teams dedicated to put these strategies into practice. They should consist of senior managers representing all affected organizational areas – business as well as IT – who are committed to shape and contribute to strategic discussions. In doing that, they maintain a mutual exchange of information between Top Management and the engaged staff. Latter provide their subject-matter expertise and consult the strategy team on the feasibility of planned initiatives. The Top Management oversees that the strategic team adheres the strategic direction while promoting the team in its autonomy. In the end, this encourages a higher dedication by all involved parties including a broad knowledge base for decision-making and an increased buy-in from all relevant stakeholders.

If business agility is the ambition, why stop Agile on the strategic level?

Agile Strategy Management is another paradigm shift that requires organizations to come to terms with volatility as the norm in the digital age. Admittedly, it heavily challenges past success factors and long-standing orthodoxies of the C-suite, a target group that is usually rather distant from Agile methodologies. Most of the organizations we advise on this subject struggle with its tangibility.

Our Strategy and Agile Service Offerings help executives take their first steps towards establishing an Agile environment for strategy management. We are more than happy to co-create strategic initiatives during the initial Agile Strategy meetings, to evaluate them together and to point out common obstacles in the process.

Early next year, we will publish the second part of this article discussing the subject of Agile Strategy Management based on our multi-disciplinary Enterprise Value Delivery (EVD) method and the essential requirements to adopt such an approach.