What is ‘business agility’ and why is it critical?
Business agility is an organization’s focus on creating a culture of innovation, flexibility, and speed. Its typical metrics of success are improvements to employee productivity, time to market, product quality, and employee engagement. Business agility means customer-centricity in all decisions and activities. Many organizations turn to business agility as a response to the speed of change in the marketplace, where digital opportunities, customer loyalty, employee motivation, and macroeconomic trends move at a speed where traditional methods for running a business fail to keep pace.
For hundreds of years, people have evaluated how best to invest their time and money and predict the outcomes of those investments. Business agility is the result of the natural progression of risk management and the necessity for increased accuracy.
Does that mean implementing an agile methodology?
Not necessarily. Business agility is a mindset, a way of leading, and an approach to running the organization as a system. The basic ingredients are people, processes, and tools, with the recipe for each organization being unique. It is sometimes healthier to look at implementation from the perspective of a framework rather than a methodology: ‘methodology’ can imply rigidity; ‘framework’ implies flexibility, something you can borrow from and tailor.
Did you say ‘Agile?’ isn’t that for running IT projects?
This is true. But what many people overlook is that today, organizations are managing all kinds of work using Agile with excellent results. Furthermore, beyond approaches for managing work, there are also Agile frameworks for running an enterprise. The OnePlan team and our customers have found that the Lean Portfolio Management framework is frequently a valuable resource.
Tell me more about Lean Portfolio Management
Lean Portfolio Management (LPM) is one of the seven core competencies of the Lean Enterprise. It is relevant to any organization or department that manages a portfolio of products or services. It aligns objectives and execution by applying Lean and systems-thinking approaches to strategy and investment funding, Agile portfolio operations, and governance. Within the Scaled Agile Framework (SAFe), there are competencies that are of great relevance to team members managing their work. The LPM competency focuses on leaders and business decision-makers.
In short, it is a set of tools for optimizing a business, including a rethink of how to: run business planning, manage internal investments, lead and motivate, manage a complex pool of human resources, and streamline operations. One of the several things we like about the LPM framework is that it is built upon many successful business practices from recent years, including Lean and Agile manufacturing principles. LPM is a framework to borrow from; it is not mandatory to embrace it in its entirety.
What does ‘implementing’ business agility look like?
OnePlan has a tried-and-tested framework for improving business agility. It is a framework, so it is not essential to do everything on this list in a specific order. Many of the following steps can be done in parallel:
This step typically focuses on improving visibility and removing cost and time from today’s business processes. This reduction can be made using a facilitated workshop format, taking a holistic, high-level view and walking through the customer journey or business workflows, and highlighting areas for improvement. The output is a preliminary roadmap of actions.
Identify the leaders and change agents you need along the journey. Have them trained in Lean Portfolio Management and ask them to review, prioritize, and update your enterprise roadmap and the tactical plan of near-term actions.
Determine your metrics
For example, suppose the goal is to improve productivity. What are some leading indicators of productivity we can use to assess whether our initial actions are going in the right direction? It is not acceptable to blindly wait to see if our roadmap hypothesis bears fruit to determine whether we should stop, keep going, or change direction. Leading indicators are key.
A visualization of all proposed and active work across all portfolios helps significantly improve decision-making.Provides guardrails and drives the right behavior.
Your tools are one of the most powerful assets you have for aligning people around a common approach and driving the adoption of processes. Good tools take theory and make it real and actionable.Enables people to use the work management tools and methods that make sense to them.
An enterprise has different kinds of work and diverse people executing it, so don’t get heavy-handed and centralize everything: connect your portfolio system to a selection of work management tools.Workflows and automation.
Having the right tools in place means avoiding manually moving the same data around and holding numerous expensive review and approval events – a productivity improvement by itself. It also improves flow (throughput) and avoids costly surprises when important data fails to get communicated between teams.Supports different personas.
For example, Executives may want to focus purely on objectives and key results (OKRs), team members on their assignments, and the finance team on the detailed cost information.Supports a range of business capabilities that can be switched on or off at the right time.
For example, your business agility roadmap’s initial step may be visualizing and limiting work in progress. While establishing that, there may be no benefit in distracting people with financial management capabilities.
Business agility should be embedded in the behaviors, roles, and decision-making patterns of the enterprise. There are undoubtedly critical milestones in your roadmap, such as achieving a tipping point of adoption. But the work is never finished because the external business environment never stands still. There are some proven ways to maintain momentum, including the establishment of a center of excellence for overall business agility leadership, as well as communities of practice for particular roles or specific areas of focus. Some of the key processes that will benefit from attention are:
Enterprise Objectives, Key Results, and Funding.
At some stage on your roadmap, not necessarily in the near term, business planning and budgeting should be revisited and modernized. Lean portfolio management recommends specific ways to move from annual to biannual planning, simplifying the budget allocation process, and making prioritization more inclusive and transparent.
This includes improvements to the cadence, visibility, communications, collaboration, and support mechanisms for teams, portfolio owners, and business owners. If the organization already has a project management office, consider reinventing it as an Agile portfolio management office.
Inspect and Adapt.
The ceremonies for periodically reviewing and making decisions on portfolios are critical events to ensure there is a continuous focus on measuring business value and making adjustments as needed.
What is the future of project management and project portfolio management?
Projects are a means to an end, and the end is typically a product or a business capability. When viewing investments, it is important to connect all projects and work to the products’ costs and value, business capabilities, or value streams they support. Additionally, traditional PPM often fails to engage the role of the business owner fully.The business value challenge.
Waterfall and stage-gate processes, where things must happen in a prescribed order, often mean that activities such as testing, user feedback, and adoption all happen very late in the sequence. This approach defers considerable risk to the end of the project. Agility is often described as a ‘shift left,’ meaning that value to the customer must be surfaced much earlier. Not only does this get you to value quicker, but it mitigates quality issues that quickly turn into cost and time overruns. There is a misconception that anything ‘Agile’ means ‘anything goes.’ On the contrary, the principles and practices of any established Agile way of working require a great deal of structure, discipline, and focus.The capacity challenge.
When project teams are constantly assembled, disassembled, and reinvented as an attempt to meet project start and end dates, a huge amount of time and opportunity is wasted. The knock-on effects are also significant. The organization expends much effort, often unsuccessfully, to piece together an understanding of who is working on what and when they are available to pursue other tasks. Furthermore, without a solid understanding of this complex web, nobody can prove how much work is practical, so the organization takes on too much work, leading to cost and time overruns alongside diminished project quality.The people challenge.
PPM roles and career structures can make it hard for people to achieve autonomy, mastery, and purpose. With traditional project-based structures, there are limits to individual performance, personal growth, and the collaboration between siloed teams.Business agility is not a departure from traditional project and portfolio management; it is merely the next iteration. Practice the growth mindset, be open to new ideas, and keep the things that work well. Change the things that do not. For one example of traditional versus business Agile, take a look at how business cases are used in the enterprise today. A traditional business case may appear very solid: lots of detail, months of research, and precise numbers on the five-year payback. Although this may feel reassuring, how many organizations actually measure that five-year payback and hold someone accountable for it? And in a fast-paced world, can we really predict five years ahead with the desired level of specificity? What if things change in the middle of executing the business case? Alternatively, a Lean business case pushes you to identify leading indicators of value. And the cadence you establish for the organization means routinely demonstrating those leading indicators of value.
This may sound revolutionary or threatening to some people in my organization.
Yes, it might. It may be a simplification to say that all people fear change, but most people fear sudden and unexpected change. Consider removing ‘sudden and unexpected’ from the equation.
Business agility is the natural evolution from where you are today. How you communicate this change and the selection of your change agents are both critical. This is a classic case of needing leadership both at the top and from within the organization. People need to feel in control, empowered, and excited by such a change, which often comes through a well-executed adoption and change management program.
Take things one step at a time. Don’t commit to a revolution; commit to learning and educating more. Train some hand-picked change agents and ask them to start on a customized roadmap. If that goes well, take another step. Have a hypothesis for each step on the roadmap, prove or disprove it, and then continue moving forward.