Dr. Michael Thiemann atStrategy-Lab™is a bilingual Business Model Strategist, Key Note Speaker, and Innovation & Agility Fascilitator.
So that companies can act faster, more resiliently and more successfully in an increasingly complicated, and insecure world, different ways of thinking, as well as management models and methods, are required.
What is agility about?
Rapid changes require companies to develop and test ideas at an early stage and prepare them for the market. Preferably before the competition. Doing the right thing really well and, above all, in good time is not an easy task and fraught with a lot of uncertainty.
Without the willingness to fail early and the creation of a fail-safe environment, not only are groundbreaking innovations difficult, but many projects also fail. Scarce resources are simply wasted. Agile methods can help prevent misallocation in the organization from the outset.
How does agility work?
Agility starts with productive meetings. Companies need a healthy conflict culture in order to find the best solution for their needs. The direct inclusion of all stakeholders in an end-to-end view of the entire customer value stream is an important characteristic of agile companies. This also means saying goodbye to largely uncoordinated silo strategies, as these hinder the timely introduction of new products due to the high coordination and correction costs.
What are the dimensions of agility in a company?
• Technology: These are all the tools, techniques and methods that companies can use to become more agile.
• Organizational design: This is the workspace and the organization that enables cross-functional, creative and effective work.
• Employees: Agility enables employees to work across functions using techniques, coaching, advanced training and development paths. Diversity is an opportunity to think outside the box and achieve solutions quickly.
• Leadership: Management goes beyond budgeting and controlling performance targets and sees change as an opportunity. It's about trust, empowering employees and giving decision-making power to the people with the best assessment of the situation.
• Culture: The purpose of the company takes precedence over the mission. The culture should enrich and fulfill all those involved. It should encourage experimentation and mistakes within clear boundaries in order to learn and improve. It is a humane, trusting and respectful culture of conflict about the best solution for everyone.
What characterizes an agile company?
As mentioned earlier, agility is about optimizing the flow of value creation for the customer. Therefore, it differs from traditional companies, which, as a machine-like concept, try to optimize the use of input resources in functional silos. Agile companies are characterized by cross-functional collaboration from start to finish, with no waiting times for the handover of work or internal decisions. All necessary resources and decision-making powers are available when required.
A well-known example.
You make an appointment with your family doctor about back problems in a week. At the appointment, the doctor will examine you for 15 minutes and then refer you to an orthopedic surgeon. This appointment in five weeks also takes 15 minutes, during which the doctor prescribes physiotherapy.
This system is optimized for the physician resource, but not for the flow of creating value for customers. The result is that a medical consultation of just 30 minutes lasts a total of six weeks for the customer. Many customers neither have the time nor the inclination to wait that long. This offers value stream-optimized companies competitive advantages, and customers can be won relatively easily.
In a value stream-optimized practice, doctors from various disciplines already work together on-site and can advise patients quickly and flexibly across disciplines, thus significantly reducing the overall process time.
What does that mean for companies?
The optimization of resources makes sense in stable systems that are self-contained, are not subject to significant changes and in which cause-effect relationships are clear and unambiguous. However, today's markets and economic systems are subject to major destabilizing or disruptive changes and, above all, have become much more complex. Classic resource optimization can even be harmful here.
Companies that have been optimized for a stable system are hardly resilient or adaptable to destabilizing changes. Like tankers, it takes them a long time to realign their direction. In addition, the unintentional bias blocks their view: You don't see what you don't expect. Flexible and imaginative companies seize the opportunity of the moment and attack the old front runners — the dinosaurs — who do not even notice that they are being attacked. And by the time they notice, it will be too late.
We have seen these moments many times in history. The dinosaurs are kicked out of the market by agile companies that optimize the value stream and thus offer the customer the right product in good quality at the right time.
What do companies have to do to become agile?
Every company has to determine its level of agility itself. It's about the people with whom the company is related. It's about sharing a meaningful idea of how a company wants to help potential customers improve their lives and experiences. They are only willing to pay if they see added value in it. Agility starts first and foremost with mindset.
What shouldn't you do to become more agile?
Agility has become a consulting business. The businesses with certifications for methods and frameworks are also running at full speed — take Scrum, Kanban or SaFe for some useful examples. However, the blind and inexperienced use of these approaches carries risks: No drug can cure all diseases. Unfortunately, agility recipes based on a certification framework often go wrong. Agility is individual and context-dependent, it should not be regarded as a standard off-the-shelf product.
What does that mean for managers?
Managers should enact the following shifts in order to allow their companies and the culture within them, to adopt more agile strategies.
• Embrace change and see it as an opportunity.
• Enable autonomy with sensible guard rails.
• Decisions should be fact-based.
• Concentration on a few, but ambitious, clearly formulated goals with measurable key results at the company, team and individual level.
• Peer accountability with feedback cycles replaces command and control.
• Encourage collaboration and remove barriers.
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