Advice about how to achieve business agility seems to be everywhere these days. If you believe the hype, business agility is the silver bullet solution to all of an organization’s strategic challenges and it can be achieved with just a few minor tweaks and the purchase of the right piece of software. But of course, there are no silver bullet solutions. So, what exactly is business agility? What are the elements, how do you achieve them, and what are the pitfalls? This guide explores those questions, and while it can’t promise an easy answer to all your strategic challenges, it can offer a framework that will help.
What is business agility?
Business agility is the ability of an organization to quickly adjust and adapt direction, strategic priorities and/or goals and objectives in response to emerging opportunities or threats. It’s also critical to implement responses effectively, efficiently, and with the minimum amount of disruption.
Think of an agile business as a jet ski, turning at a moment’s notice and responding to rider requests instantly. Then compare that with a traditional organizational model that is more like an oil tanker, taking a long time to respond to changes in direction. By the time you’ve seen the dangers ahead, it’s too late to do anything about it.
What is agile execution?
Agile execution is the delivery of work using one or more of the agile practices that have become common in recent years – Scrum, Kanban and similar techniques. Agile execution is focused on the projects, products and related structures that generate the outputs which enable business outcomes and is a less structured approach to work that focuses on progressively elaborating the solution based on customer and user feedback.
The development of a new software application, the enhancement to an existing one, sales and marketing campaigns, research and development initiatives and similar are all examples of work that may be delivered using an agile approach.
Does embracing agile transformation give an organization business agility?
The success that agile has delivered in recent years has resulted in many organizations pursuing agile transformations. This encourages the use of agile principles and practices, the development of an agile culture, and the embracing of an agile mindset across multiple business teams and functions.
These lean and agile practices bring a number of advantages – change can be easier to embrace, they encourage empowered, autonomous teams who have a better sense of ownership over their work and are more engaged with their employer. And they can often improve work delivery in areas where agile has not previously been practiced.
However, agile transformations rarely result in the creation of an agile business. Not every investment or piece of work can be delivered using agile, there needs to be an ability to embrace and accept the tri-modal reality of how work is delivered. Additionally, many of these agile transformations are bottom-up initiatives that fail to engage with leadership.
True Business Agility is a Competitive Advantage
Effective, enterprise level agility is an essential capability for organizations to have in today’s world. The need to change is constant, driven by competitors, customers, environmental factors, emerging technologies and many more. The COVID-19 pandemic showed just how essential it was to be able to pivot immediately, adapting to hybrid and remote work and evolving operations to the requirements of a fundamentally different environment.
Unless organizations can identify when they need to adjust, define those adjustments accurately, implement them quickly and leverage them to optimize benefits, they will be unable to consistently deliver exceptional performance. More significantly, they will be able to deliver business transformation, an essential aspect of modern business which must continuously evolve and transform itself to stay relevant.
The problem is, this level of agility across the business can be difficult to achieve.
UMT360 Framework for Business Agility
UMT360 has developed a comprehensive framework to help organizations deliver an agile business. It encompasses all elements of the business, and delivers a centrally managed, top-down approach that will allow your organization to deliver on the promise of business agility. Combined with our experienced consultants and our proven VIC framework, you can deliver true agility across the enterprise.
Market Forces & Strategies – These are what drives the need for business agility. The external environment evolves rapidly with shifting customer expectations, competitor activity, emerging technologies and an evolving regulatory framework. These changes create threats and opportunities that must be responded to rapidly and with minimal disruption.
Components of Business Agility
- Budgeting & Forecasting – A top-down view of all planned expenditures to support traditional annual planning and continuous and adaptive planning. The ability to adjust forecasts based on proposed changes and actual expenditure.
- Strategy Definition & Communication – Collaborative, continuous strategic planning, evolving to a product/program approach and ultimately a business capability based approach. The effective communication of strategy to all stakeholders consistently and in a timely, contextualized manner.
- Business & Enterprise Architecture – Definition of business capabilities, understanding of all business processes, accurate, complete, and actively maintained inventories of business and technical assets, and a clear definition of the desired future capabilities for the enterprise.
- Strategic & Technical Roadmapping – Simple, intuitive visualization of the strategic roadmap, with the ability to drill down to appropriate levels of details. Actively managed, regularly communicated and including details on dependencies, sequences, etc. to ensure that every area can align strategy to work consistently.
- Innovation & Demand Management – The ability to capture all intake and demand, from all areas of the business in a central place. Enterprise-wide prioritization and scheduling aligned with strategic plans and roadmaps to ensure the right focus on the right innovative business solutions.
- Work Management – Accurate and complete management of all work across all structures and each element of the tri-modal reality. Continuous focus on the delivery of value, not simply on work outputs.
- Resource Capacity Planning – The ability to understand, manage and forecast demand and utilization requirements for human resources across the enterprise.
- Portfolio Governance – Lean governance at the investment level that ensures alignment of funding and work with strategy but provides work teams with the freedom to deliver in ways that work for them.
- Benefits & Outcome Management – Effective benefits estimation, the definition of appropriate benefits measurement criteria, reliable forecasting and accurate measurement to ensure that value is being optimized, and to drive timely adjustments where needed.
- What-If Analysis & Reporting – Portfolio modeling and understanding of impacts of different approaches and adjustments. Decision support to help ensure that the right changes are made, and reliable and contextualized reporting to ensure that expected outcomes are being achieved.
Improved Business Performance – When each of the above steps are carried out collectively, organizations will quickly see improvements in business performance. They will have created an environment where all people at all levels and across all functions are able to understand how work connects to strategies and value. They will have created an agile business with the ability to pursue relentless improvement constantly.
Strategic Portfolio Management: Addressing The Key Imperatives
Download our eBook to learn about the key imperatives every organization must address in order to drive business agility and deliver strategically across all investments.
Challenges to achieving business agility
While the challenges and barriers to business agility are significant in many organizations, they can be overcome. And while the solution isn’t easy, it is relatively straightforward. Many organizations are finding success in finally attaining business agility through the use of strategic portfolio management tools and processes. Gartner and Forrester have recently recognized this as the missing piece of strategy execution in many organizations, and it serves to address many of the barriers to business agility while also enabling many of the benefits of the approach.
1. Aligning Strategy with Execution
While many think the key to an agile business is adopting bottom-up approaches to execution, it’s actually more important that they drive everything from the top of the organization down. Everything starts with the strategic priorities, goals and objectives, with investments derived and funded directly from those strategic priorities. With a single source of all strategic work the process of communicating those priorities and investments across the organization becomes easier, helping to ensure that every stakeholder is managing to a common set of priorities and can take the appropriate action at all times.
This single, integrated approach to strategic planning and funding also makes it easier to respond to emerging opportunities and threats. Any adjustments to priorities, goals and objectives are immediately reflected in the investments derived from those adjusted priorities. And agile work teams are able to elaborate their solutions not only to customer needs, but to evolving business needs. With all areas of the business working from this single set of priorities the impacts and required actions become better understood and the likelihood of misalignment is virtually eliminated.
2. Connecting all silos
Most organizations are little more than a series of disconnected silos. Without a connected map of every element of your business, you will never be able to create and sustain true business agility. Unless every element of that business is integrated there is no visibility into how every investment you make – in any initiative or asset, is connected to other parts of your business. This is particularly important for each agile team. These teams can often feel disconnected from the ‘bigger picture’ driving their work.
By prioritizing the role of enterprise architecture, you can provide visibility into all the moving parts of your business while holistically designing an integrated approach that optimizes the ability to execute on strategy by combining people, process and technology. This visibility spans not just discretionary investments, but all portfolios of work, assets, capabilities, technologies, and so on.
Having this integrated view of everything, combined with the focus on aligning all business aspects to deliver the organizational priorities, breaks down the silos in your organization and connects previously disconnected business areas with a common purpose and approach. All business areas share a common understanding of what needs to be achieved, and how to achieve it. When things change, as they inevitably will, that common understanding shifts across those same business areas as a single, integrated evolution. This delivers benefits in all areas – simplifying the management of dependencies, eliminating disconnects between work, and improving visibility into all work at all times.
3. Aligning and optimizing resources
When all investments are derived from a single place – your strategic priorities, it becomes much more straightforward to align all of your financial and people expenditures. By having a consolidated and centralized view of all work – discretionary and operational, no matter how it’s executed – you can ensure that the right work is scheduled at the right time to optimize the ability to leverage your resources.
At the same time, the process of refining and adjusting allocations of people and money to investments as assumptions and projections are replaced with actual data and updated forecasts, becomes more straightforward because again, everything is managed from one place. This results in a streamlined resource management approach that minimizes wastage caused by adjustments and disruption and maximizes the ability to generate an optimal return on every asset. As agile increasingly structures around products, with less resource turnover, this minimized disruption is critical to success.
4. Orchestrating strategic roadmaps at the macro level
Roadmapping tools help all levels of the organization communicate – from business leaders to agile work teams. They are intuitive, can convey a lot of information in a single visualization, and are easy to create and update. However, they must be integrated across your entire organization. To optimize the ability to convey information and understand everything from relationships, dependencies and milestones, your roadmaps must be generated directly from your strategic priorities and updated to reflect actual performance.
When that is achieved you have a single source of truth and are able to manage the communication of all strategy related information to all stakeholders, ensuring a common understanding. At the same time, you have the ability to set relevant context for specialized stakeholders – financial focus for Finance for example, without having to generate additional material.
Further, you are enabling the ability to deliver work using any of the tri-modal realities, leaving your delivery teams with the freedom to deliver in ways that work best for them, without compromising the ability to manage that work effectively. Regardless of how work is being delivered by execution teams, the strategic roadmap keeps everyone aligned with the strategic priorities and ensures a common understanding of not just what is being done, but also why.
5. Managing to clearly defined outcomes
Having the right strategic priorities is critical, and being able to define all work directly from those strategies helps build alignment across all of your organization. But you still have to deliver, no matter how much your priorities and investments evolve. This helps ensure you are defining appropriate metrics for all strategies, defining and applying appropriate measurement criteria (both financial and non-financial), and tracking actual performance.
This is an area where even the best organizations struggle. Measurement of actual performance, especially for non-financial metrics becomes little more than guesswork, if it even happens at all. And agile teams frequently lose alignment with required business benefits in the pursuit of a better output. But performance measurement is the only way of ensuring your investment decisions are generating the expected return and you cannot pursue business agility unless you are sure that it is generating optimal performance for your business.
6. Responding to any disruption
Your organization will need to adjust to changing circumstances. There will be new opportunities and emerging threats that demand a response. That’s the entire purpose behind a successful business agility environment. But you need to be able to respond in the right way, at the right time. It’s this ability to deliver strategic scenario planning or what-if analysis to understand and assess the various options available to evolve your portfolios that will enable you to make better decisions, faster.
You need to be able to apply this discipline to all assets – products, capabilities, projects and any other portfolio that needs to be managed. And you need to be able to make decisions quickly, and implement those decisions, confident that they are the right ones and that the impacts and implications are understood. The execution side of this is often handled well – just look at how agile principles allow teams to adapt and adjust to feedback. What is often missing is the ability to ensure the right adjustments are made to optimize strategic performance.
Business agility isn’t achieved just through a piece of software, though many vendors would like you to think so. It requires a structured approach to guide your investment in people, processes and tools and we have that framework to support our world-class software solution. But it also requires a tangible commitment from you – a commitment to embrace agility at the enterprise level, and a willingness to invest in leading capabilities that will evolve over time to a series of best practices that deliver and maintain business agility, in turn providing you a springboard to transform your business.