In last week's blog I observed that "strategy as we know it is dead" and that the practice of setting BHAGs (Big Hairy Audacious Goals) that last for the next five, ten or even thirty years, is doomed to fail in this fast-paced world.
I then used a word to describe the new state that every organisation should aspire to: agile.
"Agile" (with a capital A) is a term that originated in software development.
But what does it mean?
And more importantly, why and how should we use it to better manage our businesses?
In this blog I will not only answer these questions but also highlight three lessons any business can learn from IT.
In the title of the article I used the two terms of speed and agility or Agile and I want to first look at them independently.
Those of you who have worked with me before will already know that I love to go back to origins and definitions of concepts to understand the meaning of and thinking behind them.
In the older "waterfall" methodology for software development, a piece of software is first fully defined and then developed in its entirety before it is released.
The methodology got its name from the cascading, single direction process – a bit like a waterfall.
At the end of a project, a team might have built the software it was asked to build, but, in the time it took to create, business realities have changed so dramatically that the product is irrelevant. In that scenario, a company has spent time and money to create software that no one wants. Couldn’t it have been possible to ensure the end product would still be relevant before it was actually finished? - http://agilemethodology.org/
Note: Doesn't this also sound familiar for many of your business projects?
Agile (or incremental) software development methodologies were developed as an answer to this problem and to break down projects into smaller, self-contained increments, often called Sprints.
The history of Agile is well-documented on the Internet, so let me just quote from the Wikipedia article on Agile software development:
Incremental software development methods can be traced back to 1957. Evolutionary project management and adaptive software development emerged in the early 1970s. During the 1990s, a number of lightweight software development methods evolved.
The term "Agile" was first coined in 2001 by a group of the foremost practitioners and developers of these lightweight methodologies:
Agile traces its evolution to a "consensus event", the publication of the "Agile manifesto" in 2001, and it has conceptual links to lean techniques, kaizen, and the Six Sigma area of business ideas. The Agile Manifesto, is centered on four values:
- communication with parties is more important than standard procedures and tools,
- focus on delivering a working application and less focus on providing thorough documentation,
- collaborate more with clients, and last
- be open to changes instead of freezing the scope of the work. - https://en.wikipedia.org/wiki/Agile_management
Agile thus represents a mindset, and encompasses a set of methodologies, with SCRUM possibly the most well-known.
The best representation as to the benefits of Agile over Waterfall can probably be depicted by looking at the resulting increased frequency of releases and overall smoother effort.
And it is especially the frequency of self-contained, “potentially shippable” releases that leads to increased agility - one gains the ability to adapt or even materially change direction after each release based on real customer feedback.
Nobody would surely disagree that the speed of change and the speed of doing business in general is greatly increasing. But even more importantly, the rate of change is also increasing.
As humans, our mind is programmed to think in linear terms, but this is no longer the truth for the rate of change we see.
If you compare the two in the following graph you can see that linear (red) initially keeps up with or even outpaces exponential (green). Very soon, the roles are, however, spectacularly reversed.
But why am I saying that in this is a lesson that business can learn from IT?
In 1965, Gordon Moore, the Co-Founder of Intel published a famous paper that described a doubling in the number of components per integrated circuit every 12-18 months. This became known as Moore’s Law. He initially predicted this to continue for another at least ten years, but it has continued unabated and even accelerated ever since (note the logarithmic scale of the graph below).
In 1999 Ray Kurzweil in turn proposed his “Law of Accelerating Returns” and in a 2001 essay of the same name he argued for extending Moore's Law to describe exponential growth of diverse forms of technological progress.
Both of those laws are concepts that are well known and have become standard in the IT industry.
IT professionals are on the whole by now comfortable with exponential rates of change.
Why this additional topic?
In a 2015 survey of global CEOs, IBM has found that technology ranks as the number-one factor impacting organizations – and has been for a few years running.
This obviously is the realm of the IT professionals in the business and they could potentially be a great asset in embracing technology for business gain.
Let’s now look at what this means for the Business-IT partnership in a business.
If the consensus is that
then we are set up for a great symbiosis.
Inside established enterprises, IT pros and developers are catching on to this trend: At last they can associate themselves directly with revenue generation rather than just answering management demands to reduce costs and increase efficiency. The success of such outbound efforts has caught the imagination of the C-suite. In a recent survey by Unisys and IDG Research, more than 70 percent of CXOs said they were committed to implementing a “digital business model”. - InfoWorld Media Group (my highlights)
Obviously, we will have to adapt some of the concepts and in particular the application of the Agile methodologies, where instead of breaking down a project into many sprints, one initially starts with independent experiments.
Many of the learnings that the Agile movement made over the past 20+ years can however directly be applied in speeding up your company’s digital transformation journey.
You need to recognize that digital transformation is not accomplished in one massive effort, like it was in the ERP and CRM days. The companies that are doing it right are doing lots of little experiments, capitalizing on the ones that work, and killing off quickly the ones that don’t. - Gerald C. Kane, associate professor of information systems at the Carroll School of Management at Boston College
Brian Solis, Principal Analyst at Altimeter, actually distinguishes between six stages of digital transformation.
Collectively, these phases serve as a digital maturity blueprint to guide purposeful and advantageous digital transformation. - Brian Solis
As you have seen, business and IT inside your organisation can not only coexist or continue the often precarious relationship of the past few decades – there is a potential for a real symbiotic relationship to improve business results.
Digitisation of every business sector is guaranteed and the speed of change is ever increasing.
If your organisation is already embracing Digital and especially Agile – congratulations! You are part of a small, but growing community.
If you are yet to start your digital transformation, here a few pointers (for stage 2 in Altimeter’s above model):
We at Xuviate are helping mid-sized companies navigate the choppy waters of their digital transformation journey. If you would like us to assist you, please feel free to contact us.
Other than that, I would also love to hear your thoughts on this topic. You can reach out to me by leaving a comment below, contacting us via our website.
Digital Sensei | Abundance Thinker | Helping Mid-Market Companies Evolve through Digital Transformation - As trained Industrial Engineer with close on 25 years' experience as IT Professional and Business Executive in the mid-market IT industry, Mathias Tölken loves to share his experiences and expertise with others.
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