Updated: Mar 31, 2021
Core business means delivering the P&L promise. The units and processes at the core ensure that the company is moving towards the vision, mission, and long run strategic objectives, as promised by the CEO to the financial markets and all other stakeholders. Investors provide resources to the companies who have a clear vision on how they can serve important social needs and make a profit.
To deliver on their strategic promise, companies need to have a clear strategy on what to do, why, and for what customer segments. On how to build and retain the competitive advantage. Strategy, new products, marketing proposition, channels’ structure, sales operations and part of the admin functions are the backbone of the company. They enable clarity, focus, consistency, visionary innovation, and they need to stay “solid” to avoid chaos.
At the same time, companies, especially in mature industries (red waters), face two megatrends: (1) extreme commoditization of products and (2) a generational change in the workforce that creates a difficulty in attracting and motivating the appropriate talent into hierarchical bureaucracies. Active gen X are fewer and more expensive to hire while integrating and motivating millennials & gen Zs (typically raised by their parents with a silver spoon in their mouth) proves difficult if they are offered junior bureaucratic roles.
Enter Agile. Agile provides an opportunity to ride and take advantage of both megatrends.
Building the Agile muscles on top of the core structural backbone means creating Agile execution teams that deliver the how for the strategic why, what & when. These agile teams operate as reversed hierarchical pyramids where team members own the objectives, thus providing hundreds of appealing protagonist roles for the generations M & Z. They can be enabled by experienced Yodas - supportive leaders - repurposed from the experienced middle managers that were trained to switch their leadership styles.
This hybrid structure is cost effective & easy to staff, easy to grow, as it leverages the energy and momentum of the inherently self-learning (“google-it”) generation. It also maintains the clarity and strategic focus of the whole company, as the traditional leadership continues to provide the whys, what’s, and when’s.
The Agile teams deliver the how, iteratively, in their territories. But, due to the short cycled mechanics of their way of working, they not only deliver the strategic blueprints handed over to them, they also stay in contact with the customer and gradually heal the “1000 cuts” that typically kill any good top-down strategy & proposition: bad customer experience, poor service, ergonomics, complexity, awkwardness, old fashioned design, lack of third party integration, and other unacceptable customer annoyances.
With their self-learning, and iterative improvements, agile delivery teams typically end up building a seamless experience, that is costing the customer less time, less effort, and less learning. That means a no friction, enjoyable relation. Which is the new way of differentiating and gaining enduring competitive advantage.
One may think that doing agile without touching strategy and disruptive innovation, is less impactful because it only improves execution. Wrong. Today, seamless execution defines the new competitive advantage.
Agile is therefore nonavoidable. Once one competitor does it, you must do it as well. Hopefully, you already started, and you are not too late.
Adopting Agile to the delivery parts of the core business is not trivial and not risk free. How to do it safely, without blowing up the P&L delivery machine? Easy. Keep your backbone: Keep strategy, segmentation, positioning, product, proposition as is. Keep some units hierarchical. Define your whys & what’s roadmap. And hand over the execution, the how’s, to your new agile muscles.
This requires a few basic prerequisites:
· Educate top leadership about the agile opportunity,
· Prepare to repurpose middle management,
· Ensure hierarchical units are not clashing with the agile teams (process-wise),
· Transform the culture to enable the survival and eventually thriving of agile microcultures.