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Bridging the Gap between Corporate Strategy and Agile Practice

February 21, 2015

Corporate leadership in technology organizations is struggling with a dilemma. As leaders of large organizations with many stakeholders, they have a duty to shareholders to ensure their investment is used wisely in a manner that ensures reasonable returns and hopefully long term sustainability. Doing this also enables them to serve the interest of other stakeholders such as staff and broader society in general. To do this they need to understand the very complex technological, social, environmental, economic, political and legal context the organization operates in and design strategies that enable the organization to compete successfully within the constraints of that operating context.  This describes a traditional view of the role of leadership and management in corporate life. The problem and source of the dilemma for corporate leadership is that the operating context today is complex, dynamic and defies predictions about long term and even medium term trends, thus making traditional strategic planning approaches obsolete [1], [2].

In response to this lack of understanding of the causal effects chains in the external environment, organizations look to their people, processes and information technology-based solutions for greater agility in the face of the ever increasing pace of business model innovation [3] and technology disruption [4],[5].  For technology organizations, the promise of agile methods and practices to enable better engagement with customers and transform their ever-changing needs into working solutions is very attractive. Agile organizations push decision-making in the organization to the level at which it is best made. For software development this may be at the level of the product owners and the self-organized development teams [6], [7]. The paradox for corporate leadership is that they need to enable a greater degree of choice and self-organization, devolving short-cycle operational decision-making to the edge of the organisation [8] while still providing long-term guidance to the organization as a whole.

Organizations are experimenting with many different approaches to doing this from radical forms of self-organization such as practiced by Semco in Brazil [9], to attempts to incorporate the best of two worlds into one approach, as described by John Kotters “Dual Operating System” [10].  However no   “off-the-shelf” solution to the paradox for simultaneously needing stability and agility will satisfy every organization. Contingency theory reminds us that solutions are always context-embedded. Thus any solution for any corporation or for divisions of a corporation will, of necessity, be specific to the context of the organization.

Gap agile and strategy 001

The diagram above, attempts to synthesize the levels of context, strategy, structure and control organizations need to think about when designing their own solutions. The complexity context of the organization [11] needs to be analysed and understood and this analysis needs to be repeated for different parts of the organization depending on their function. A financial function is certainly complicated but will not necessarily benefit from practices better suited to a complex operational environment.  The structure relevant for well-established product lines that are in the maintenance phase of the product life-cycle will certainly not suit research and development departments whose role in innovation and market-disrupting breakthroughs may better be served in more experimental, self-organized ecosystems where failure is an option and seen as an opportunity to learn.  The organization also needs to consider how learning is transferred between these two types of structures.

At a strategic level, leadership needs to ensure that the strategy embraces both planned strategy and emergent strategies [12] and that fast learning-mechanisms ensure the planned strategies are changed as the experimental, self-organized organization structure imagines new futures, business models, products and even new ways to lead the organization.

Whether large technology organizations will ever become fully experimental and self-organized is not foreseeable at present.  Leaders need to think about the context, strategies, structures and control mechanisms they will employ to ensure that the organization may adapt appropriately as the business challenges evolve. That those leaders will not be at the top of a corporate hierarchy but at the edge of the organization is a possibility that also needs to be considered.

References

[1] Schwartz, P., (1996), The Art of the Long View: Planning for the Future in an Uncertain World, Bantem Doubleday Dell Publishing Group, Inc. New York.

[2] D’Aveni, R.A., Gunther, R., (1995), Hypercompetitive Rivalries, Competing in Highly Dynamic Environments, The free press, New York.

[3] Gassmann, O., Frankenberger, K, Csik, M., (2013), Geschäftsmodelle Entwickeln, 55 innovative Konzepte mit dem St. Galler Business Model Navigator, Carl Hanser Verlag, Munich.

[4] Christensen, C.M. (1997), The Innovator’s Dilemma, Harvard Business School Press, Cambridge, MA.

[5] Christensen, C.M. and Raynor, M.E. (2003), The Innovator’s Solution: Creating and Sustaining Successful Growth, Harvard Business School Press, Cambridge, MA.

[6] Cohn, M., (2010), Succeeding with Agile, Software Development Using Scrum, Addison-Welsey, Upper Saddle River, NJ.

[7] Appelo, J, (2010), Management 3.0: Leading Agile Developers, Developing Agile Leader, Addison-Welsey, Upper Saddle River, NJ.

[8] Alberts, D.S., Hayes, R.E., (2003), Power to the Edge: Command and Control in the Information Age, CCRP Publication Series

[9] Semler, R, (1993), Maverick! : The Success Story behind the World’s most unusual Workplace, Random House Business Books, London

[10] Kotter, J.P., (2014), Accelerate: Building Strategic Agility for a faster-moving World, HBR Books, Boston, MA

[11] Snowden, D.J, Boone, M.E., (2007), A Leader’s Framework for Decision Makin, Harvard Business Review, November, pp. 69-76

[12] Mintzberg, H., Waters, J.A., (1985), Of Strategies, Deliberate and Emergent, Strategic Management Journal, Vol. 6, pp. 257-272

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