Achieve real change through enterprise adaptive agility
15 April 2020
Posted by: Travis Klinker
Each year, more and more organisations are struggling to compete in the ever-changing landscape that we now live in.
According to Forrester, “Seventy percent of the companies that were on the Fortune 1000 list a mere ten years ago have now vanished –unable to adapt to change.” A contributing culprit is the ongoing use of traditional thinking, processes and practices, which are inadequate to meet the new demands organisations are facing every day.
Organisational leaders are seeking new ideas to adapt to this new reality and are pursuing deep change.
The two most common are Business Agility (often defined as “an organisation's ability to respond to change”) and Adaptive Enterprise (often defined as “an organisation that adapts to change and evolves with the change”).
While different in some ways, the combined core principles behind these ideas make up the necessary elements for any company to effectively compete and win in today’s market. However, applying the principles requires deep commitment across an organisation's entire enterprise to succeed. This article describes how to achieve this.
But first, why has responding to change become so important now? Hasn’t this always been true? Yes, but lately the rate and breadth of change has increased at an exponential rate. In addition, organisations need to respond to more than just their direct competitors; they need to be adaptable to the changes occurring on the fringes and even outside the boundaries of their business model.
There are many contributing factors, but I will summarise them this way:
- Demographics and economic conditions are changing rapidly
- Technology & innovation is driving new consumer behaviours
- Consumer spending is shifting towards socially responsible companies and products*
- Competition is increasing rapidly with specialised offerings (e.g. airbnb, stitch fix, coinbase, payoneer)
- Employee engagement and retention is no longer just about compensation and benefits
And yet, responding to change is insufficient. By the time most organisations identify and respond to new market conditions and opportunities, it’s already too late. The market has evolved. Therefore, organisations need to become proactive in identifying trends in order to lead instead of following the market. They need to develop the capability to quickly reconfigure themselves to stay ahead of, or at least closely aligned to, their market and customer to consistently drive valuable business outcomes.
Many organisations have started to transform in one or two areas, such as Information Technology or Marketing. This is a good start, but to really address the factors noted above, they need to embrace new thinking and ways of working across the entire enterprise. Doing so will enable the organisation to make and quickly implement better-informed decisions.
I refer to this as achieving Enterprise Agility through Adaptive Leadership or Enterprise Adaptive Agility, defined as “the ability to effectively identify and rapidly adapt to market changes in a cost effective way while maintaining alignment and cohesion across the organisation.”
In a series of articles, I will detail out the core concepts for achieving Enterprise Adaptive Agility (EAA) and how it can be implemented at multiple levels across a company. Agile and Adaptive Leadership (aka Sense & Respond) are woven into the core concepts of this article series, but since there are plenty of books and articles on both topics, I will not be detailing the fundamentals of either one.
Levels of Agility
For the remainder of this article, I will introduce the EAA diagram and the main levels of agility.
The EAA diagram (Figure 1) represents the shifts in beliefs, capabilities, behaviours, and environment that need to mature within an organisation to achieve EAA. These are the core concepts that each company needs to learn and adopt. The foundation for real change begins with mindset and works it way up from there.
Figure 1: Enterprise Adaptive Agility Diagram
- Mindset — a shift in thinking that aligns to the agile manifesto and guides individual behaviours.
- Outcomes — a clear vision with business objectives that are centred on the customer, employees, and business debt.
- Ways of working — adoption of new concepts with minimal process to increase the effectiveness and efficiency of delivering outcomes.
- Cross-functional collaboration — self-organisation where individuals connect with one another, regardless of hierarchy or location, to co-create and deliver valuable outcomes.
- Decision making — timely and informed decisions at all levels in the organisation.
As you move up and out on the diagram, each inner ring influences the actions taken by the outer rings. But the steps to mature are not purely sequential.
To demonstrate, let’s draw two horizontal lines (Figure 2). The first line is just below the word ‘mindset’ and the second line is just above the word ‘ways of working’. At either line, a company can leverage new ways of working, but the outcomes associated with adopting the new ways of working will vary between each line.
An organisation whose mindset adoption is at the lower line will likely demonstrate results that are similar to their traditional ways of working (i.e. output with unclear or no value-add to the customer or organisation), because they adopt a set of practices (ways of working) without embracing the guiding principles (mindset).
Whereas a company at the higher line is more capable of delivering more value to the customer and organisation, because the maturity with mindset, outcomes, and ways of working is much greater. At this level of maturity, the organisation embraces guiding principles over step-by-step practices and establishes a clear vision with well-defined business outcomes that teams can effectively deliver against.
Figure 2: EAA maturity example
While the EAA model is not inherently sequential (action can be taken within any ring in any order), success in outer rings is greatly enhanced by the maturity of the internal rings. For example, maturing the mindset may actually require people getting in the routine of new ways of working.
Therefore, both are active at the same time, because ways of working may help mindset mature, but in the end, ways of working will not reach its full potential until the desired new mindset has been adopted.
I will elaborate more on each ring of the EAA diagram and their correlation to one another in a subsequent article, but the key take-aways are that the EAA diagram outlines where the organisation needs to focus and how the inner rings impact the effectiveness of the outer rings.
Now let’s talk about how these concepts can be applied.
For the purpose of this article, I simplified the organisational landscape into three target levels: team, product (aka team of teams), and strategic, along with a cross-cutting band of operational support (items like Finance, HR, etc). Developing agility at all three levels, along with the operational support, can enable a comprehensive organisational state of EAA (Figure 2).
At team agility, outcomes are achieved through the delivery of work by individuals that reside on a team. The outcomes themselves may be derived from goals and objectives defined by the team, from a complex product, and/or from organisational strategies defined above the team. This means that — just as the EAA core concepts can be adopted in different sequences — these concepts themselves can also be embraced at multiple agility levels in different orders. Below is each agility level defined in the desired state.
Figure 3: Agility Levels
Team agility: a small group of people, with shared accountability, who adopt and apply agile values and principles to increase their ability to better understand customer needs, develop and test potential solutions, and adapt to feedback.
The foundation for success begins with the teams that do the work. You will notice I don’t reference the words “practices” or “skills”. Instead, the key to driving behavioural and capability changes begins with a shift in the teams’ mindset.
A working understanding of the various agile practices is extremely important, but all too often organisations force a given framework upon teams. Teams should have a choice in what practices they adopt based on what works for them. Each team is different and needs to be able to leverage the practices that bring efficiency to their work and effectiveness in delivering on their target outcomes.
Product agility: a collection of durable teams focused on a common set of capabilities (i.e. the product), who delight the customer with relevant, stable, and valuable solutions that deliver on intended business objectives.
There is a lot packed into this definition, so let’s break it down. The first part of the definition, “A collection of durable teams” refers to multiple teams working together, which is essentially a team of teams. In addition, these teams are durable, meaning they stay together and are not disbanded as you see in a traditional project delivery model. With product agility, we move away from the traditional project approach towards a product and/or business outcomes approach.
The second part of the definition, “focused on a common set of capabilities (i.e. the product)” refers to a body of work that delivers against a common user need or opportunity. For example, if a consumer is making a payment for the purchase of goods, the act of processing a payment is a capability (aka a product). How the payment takes place, such as online, mobile device, or in store, doesn’t matter; instead, it is the execution of the payment that matters.
The final part of the definition, “who delight the customer with relevant, stable, and valuable solutions” refers to the expectations of the product. A product that is not relevant should not exist. A product that is not stable is destined to die. And a product that does not provide customer value is bound to become stale.
Strategic agility: the act of experimenting and innovating across the enterprise to create new markets, reach new customers, and provide new products or services that delight existing customers.
In order to execute against enterprise strategies, multiple teams from across the organisation need to work together to deliver the desired outcomes. This requires clear priorities and committed alignment from leaders, which is no easy task in a large organisation. In addition, strategic agility also incorporates the importance of successfully innovating and experimenting together while keeping the customer at the centre of all decisions. This differs from traditional approaches where experimentation and innovation are isolated to one department. Instead, the responsibility belongs to everyone.
Operational Agility: the act of identifying and embracing opportunities to improve operations and processes at all levels, so as to make existing products better, faster, and cheaper.
The team, product, and strategic agility levels all represent a state of operational agility, but there are other factors inside and outside an organisation that can get in the way of achieving successful agility in those levels, especially at the higher levels (product and strategic). Here are two sides to operational agility:
The improvement of operations and processes for the teams that are executing against their respective outcomes. In a minor way, this is already being addressed with Team Agility, Product Agility, and Strategic Agility.
Identifying and improving enterprise-wide policies and procedures that impact the way teams do their work. These policies and procedures tend to surface from departments like HR, Finance, Legal, Audit, etc.
These departments manage various regulatory decisions for the organisation, which result in policies and procedures that either support or detract from teams’ ability to work in a more agile way. The goal of operational agility is to identify the operations that are detractors and convert them into supporters, so that the enterprise can truly embrace agility.
To summarise, the EAA model (mindset, outcomes, ways of working, cross-functional collaboration, and decision-making) describes a set of new/improved organisational capabilities that can be applied at different levels of agility (team, product, strategic, and operational).
How you want to start your Enterprise Adaptive Agility journey depends on what problems your organisation wants to solve first. For example, if you believe problems in delivery execution are your biggest impediment, you can drive team agility across your entire organisation first and then wait to scale into product and strategic agility. Or if you believe the ability to pivot quickly to new strategic imperatives is tantamount, you may choose to start with strategic agility, which automatically initiates team agility but only for those teams contributing to the specific strategy you start with.
In a subsequent article, I will dive into each of the agility levels in more detail and link it to the Domains of Business Agility framework from the Business Agility Institute as well as the EAA diagram, which will help round out the picture of Enterprise Adaptive Agility.
While I am using certain models and terminology like Business Agility and Adaptive Enterprise here to outline the thinking, executive leaders are rarely asking for them by name. Instead, they are seeking ways to improve their strategic and operational effectiveness — becoming more able to identify trends sooner and quickly flex to deliver faster.
The challenge is recognising the changes needed to achieve those results and being willing/able to make them. How organisational leaders embrace and deploy change will dictate how effective the organisation will be in achieving Enterprise Adaptive Agility.
Guest blogger bio
Travis is the Director, Agile & Engineering Enablement at Target. He is Responsible for leading the Agile Transformation at Target, promoting a Learning Culture and building an exceptional team of Agile and Technical coaches who educate, support and accelerate learning and adoption of Product Management, Lean-Agile principles and practices, and DevOps.
"Achieve real change through enterprise adaptive agility" was originally published on on 25 February 2020 on Medium, and the original article can be viewed here.
Please note that this article is Travis Klinker's personal point of view and not advocating a stance by Target.