Operational Agility enables a firm to survive; in order to thrive you need Strategic Agility says Steve Denning
Steve Denning, one of the keynote speakers on the Business Agility Day at #AgileIndia2018 is a renowned author of several books on management, leadership, innovation and organizational storytelling. He is the former program director of knowledge management at the World Bank. Steve writes a column on Forbes.com about radical management, leadership, innovation and business storytelling and is a member of the board of directors of the Scrum Alliance.
Steve’s new book – The Age of Agile: How Smart Companies Are Transforming the Way Work Gets Done (Amacom, 2018) has been published recently.
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In this interview with the Agile India team, Steve tells about Strategic Agility and the need to continuously Innovate.
Can you please explain Strategic Agility?
Strategic Agility involves generating innovations that create entirely new products and markets, and that turn non-customers into customers. Strategic Agility is the next frontier of Agile management. The profit margins are bigger, and the value to society is often larger. To achieve Strategic Agility, firms need a playbook for systematically generating market-creating innovations and the necessary shift in culture that is required.
What does it mean for leaders to move their organizations from Operational to Strategic Agility?
Operational Agility has become necessary to survive, but it’s not enough to thrive. Many organizations have embraced Agile management on the assumption that if they upgrade existing products and services through cost reductions, time savings or quality enhancements for existing customers (i.e. operational Agility), they will realize financial gains. Owing to increased competitive pressures, and the shift in power in the marketplace from producer to customer, this assumption often proves incorrect and consequently top management support for Agile often flags. It turns out that major financial gains are more likely to come from Strategic Agility
How does Agile help in fostering innovation in organizations?
Agile is a mindset involving three core principles or “laws”: the Law of the Customer, the Law of the Small Team and the Law of the Network. These three laws create relationships that are interactive, both vertically and horizontally, and both inside and outside the organization. Customers and partners become part of the organization, as active participants in creating value. With the push for continuous innovation, there is a recognition that ideas can come from anywhere. In the ensuing interactions, the boundaries between the organization and its context tend to dissolve.
How can organizations inspire its employees to continuously innovate?
The main elements are first, having a clear goal of adding value to customers (the Law of the Customer); second, working small teams in short cycles with feedback from customers at the end of each cycle as to whether value has been added (the Law of the Team) ; and third, making sure that the whole organization operates as a supportive network to the teams adding value to customers (the Law of the Network).
Can you tell us a little about your new book The Age of Agile?
The publication of the book signals the dawning of the “Age of Agile”, in which it is recognized the basic concept of management as we knew it in the 20th Century is transformed— a veritable Copernican revolution in management. The transformation is being driven by globalization, deregulation, knowledge work and new technology, particularly the Internet. This leads to a shift in power in the marketplace from the producer to the customer Firms need to master the three Laws of Agile to survive. But to thrive, they will also need to master Strategic Agility and deal with the strong headwinds facing change, that encourage firms to preserve the status quo.
What are the key takeaways from your talks for the attendees?
- Agile is a mindset, not a process.
- The Agile mindset reflects the three Laws of Agile: the Law of the Customer, the Law of the Small Team and the Law of the Network, which create Operational Agility.
- Operational Agility enables a firm to survive: in order to thrive, a firm needs Strategic Agility, i.e. the ability to generate market-creating innovation.
- Agile is an ongoing journey: a firm never finally arrives.
- Agile firms have a hierarchy of competence, rather than a hierarchy of authority.
- The advent of Agile reflects an unstoppable revolution in management that is now underway in our society, affecting almost everyone.
- The customer, not the firm, is now the center of the commercial universe.
- Success in today’s marketplace requires the capability to generate instant, intimate, frictionless value at scale.
- To prosper in this marketplace, people, insights, and money must interact quickly, easily and cheaply. In a word, firms must become Agile.