Is it Agile Decision-making? Or Inadequate Planning?
Even in a well run organization, it may be necessary to cancel a project in response to new information. A new competitor may have already introduced a game-changing product. Market pricing may have changed, making a new product economically infeasible. It may be necessary to reduce capital outlays to keep the business afloat. Cancelling a project under these conditions may be a great example of agile decision making. But it could also be a sign of inadequate planning.
Whenever a decision is made to cancel a project, it is worth taking some time to reflect on the project and ask a few questions:
- What were the flaws in the original planning premises?
- Do these flaws indicate shortcomings with access to market intelligence?
- Was the project clearly tied to a strategic objective?
- If the project was tied to a strategic objective, should that objective be evaluated?
- How was the decision made to launch the project?
- Would there have been a different outcome with a different project team?
Cancelling a project is a very painful decision and it is human nature to want to move on quickly. An agile leader must ensure that the organization first learns from the pain, and then moves on.
The Trouble with Flat
When designing the structure for an agile organization, flatter is better. A flat organization can speed decision-making, limit time wasted on turf battles, and adapt more quickly to changes. There is one problem with flat organizations – they may limit the career aspirations of your best employees.
In the April 2011 edition of Inc. magazine, Jason Fried writes about a recent situation at his software firm, 37signals. One of Fried’s best employees left because she wanted to move into management and 37signals has no managers among its 27 employees. Fried did not want to begin to introduce layers of management, so they parted ways.
To limit attrition of your star employees, start during the hiring process. Make sure the potential new hire understands that there are limited opportunities to move into management. Design your compensation structure to allow your employees to grow their income while remaining on a technical career path. Provide a considerable level of autonomy to your best technical staff. Finally, get comfortable with the idea that, no matter what you do, you will occasionally lose a star employee.
Trust – a prerequisite for agility
Organizational agility requires a high degree of trust. Decisions must be made quickly, which requires authority to be delegated to the level at which the relevant knowledge exists. Communication must flow freely among workgroups, without a great deal of filtering. Team members must trust that, when a particular deliverable is produced, it has been adequately tested and reviewed.
In the absence of trust, organizations substitute extensive requirements documents, excessively detailed test plans, and exhaustive procedure guides. These ancillary documents may be viewed as more important than the final products. While some documentation is necessary to facilitate communication and ensure auditability, much of it serves no purpose other than to defend against potential criticism. However, excessive documentation is not the problem. It is merely one symptom of a low-trust organization. Other symptoms include hyper-critical managers, unnecessary escalation of decisions, and internecine battles among departments.
A low-trust organization cannot be improved by team-building workshops, motivational posters, or personality profiles. The lack of trust is a direct result of the behavior of the leaders of the organization, and only the leaders can change that. Until they do so, the organization will never achieve agility.
Becoming both a quitter and a winner
Agile organizations must be prepared to adapt quickly to changes in the market. To pursue a new opportunity, they must be willing to re-deploy scarce resources by abandoning a product, service or activity that already exists. The decision to abandon is painful and is typically delayed far too long, thus depriving the new opportunity of resources.
In his book, Management Challenges for the 21st Century, the late Peter Drucker proposed that abandonment decisions must be practiced systematically. Drucker described an outsourcing firm that scheduled abandonment meetings on the first Monday of every month. At each these meetings, all levels of management complete a comprehensive review of one aspect of the business and identify what should be changed or abandoned. Twice a year, all levels of management must report on the actions taken as a result of these meetings.
Without a formal review process, unnecessary work and unprofitable business will drain resources and impede progress. If you periodically review your operations, you will find projects that should be canceled, services that are no longer profitable, and reports that no one reads. Such work should be identified and eliminated. Your competitive edge could very well result from the work you don’t do.
Life in the fast lane
You see them on the freeway, driving in the left lane, 5 feet behind the next car, staring at their cell phones and eating breakfast. Their driving style limits their ability respond to changes in road conditions or to react to the actions of other drivers. They take an excessive amount of risk in order to save a couple of minutes. There is a good chance that, if they make it to the office safely, their driving style will carry over into their work.
Excessive speed is standard operating procedure in business today. Staff levels have been cut but workloads have not, leaving no resources to maneuver around obstacles and pursue new opportunities. There is an excess of activity and a shortage of results. As the Eagles (the band, not the football team) would say, life in the fast last will “surely make you lose your mind.” Is it time to back off the throttle? Following are a few thoughts how to slow down and still improve performance.
- Challenge the thinking behind deadlines. Is there a business need for to hit this particular date? Or is the date merely a means to create a sense of urgency?
- Adjust your project portfolio to make sure it is complete and matches your capacity. It is common for people to work on projects that have not yet been identified, approved and prioritized. Even if they are working on approved projects, the sequence of those projects may result in bottlenecks while awaiting the availability of key subject matter experts. Try to stagger project start dates to minimize the risk of colliding priorities.
- End a project and declare victory. When employing an agile project approach, business value is delivered incrementally according to priorities set by the business owner. After a point, the incremental business value for a given project may be lower than that of a competing project. You do not need to complete every deliverable on the backlog list. Take a look at the entire portfolio of projects and identify those that can be considered complete, then close them out and free up the resources for other work.
- Partner with business process outsourcers for new products. Why develop new systems and processes for an unproven new product when an outsourcer is already supporting that type of product? If the product takes off, the outsourcer can scale to handle it. If not, the risk of new product launch is limited.
- Work with your suppliers to identify ways they can be of greater service to your organization. For example, the retail segment utilizes Vendor Managed Inventory (VMI). With VMI, the manufacturer, not the retailer, manages the inventory and reduces inventory costs.
- Develop a flexible staffing model. During the recession, internal staffing was trimmed to levels that were barely sufficient to keep the lights on. There is no capacity to expand, so you will need to develop relationships with a manageable group of staff augmentation firms and consider these firms as extensions to your own staff.
Help Wanted – Adaptable Executives
The August 9, 2010 Wall Street Journal includes an article titled, “Top Recruiter Finds Adaptable Executives in High Demand.” The article features an interview with recruiter Clarke Murphy, who has found that corporate boards are increasing their executive search efforts, but they are not interested in a “grand vision.” Instead, they are searching for CEOs who can “… adapt quickly and gain the confidence of employees and shareholders.”
Why are boards interested in adaptable leaders instead of visionaries? Blame it on the times in which we live. A long term strategy is based on assumptions regarding the economy, customer preferences, regulation, taxes, and trade. Today those assumptions change quickly. Long term plans require a level of certainty, and certainty has been in short supply in recent years.
In the current environment, leaders who are able to anticipate and respond to the next obstacle will inspire confidence and help keep their companies in business until the marketplace stabilizes.
No need for a crystal ball – a rearview mirror is sufficient
A plan must be based on certain premises, among which are assumptions about the future. This can be frustratng for planners because there is no crystal ball to provide a view into the future. The late author and consultant Peter Drucker recommended that planners look for “the future has already happened” rather than attempt to predict the future. Drucker proposed that there can be a significant time lag between the “appearance of a discontinuity in the economy and society and its full impact.”
What is your future that has already happened? Do your key customers include baby boomers who are slashing their spending in preparation for retirement? Or are your key customers the millenials who prefer texting to talking? Will your next-generation software product be designed around a cell phone rather than a computer? Will your customer-service team need to become bi-lingual?
The future is in the rearview mirror and your plans must adapt to that future that has already happened.
It’s hard to grow when you’re inside that box
As the economic recovery plods along, what are your plans to handle growth? Will you hire new staff, upgrade systems, and streamline processes? In other words, will you increase the size of the box that defines the capacity of your current organization? That is a logical response to growth, but it assumes that your customers will continue to demand your current products. If your current customers demand different products or if you identify new market opportunities, you may find yourself limited by your organization’s box. Your systems may lack the flexibility to quickly adapt to new products and your people may lack expertise in new technologies. Further, expanding the box raises fixed costs and increases financial risk if growth prospects do not materialize. Is it time to de-couple the growth of your business from the size of your box? Here are a few tactics to accomplish this.
There are numerous tactics that you can add to this short list, but the key point to remember is do not allow your business to be constrained the “box” of your existing capacity.
Are those storm clouds ahead?
Cloud computing, which allows users to rent software applications rather than buy or build, has been the subject of myriad articles recently. Publications that target software developers and system integrators position cloud computing as the next big opportunity for the software industry. They focus on the business benefits and the fact that the sales process can bypass IT decision-makers. On the other hand, publications that target corporate IT managers focus on the technical challenges associated with cloud computing and say very little about the benefits.
In order to make well-informed decisions about cloud computing, you will need both perspectives. Consider the following as you collect data and opinions.
1) Business needs drive technology solutions, not the other way around
2) Technical issues need to be translated into risk events
3) Risk mitigation plans must be developed for the risk events
If you come to the conclusion that cloud computing makes business sense, start small, proceed incrementally and be prepared to adapt. The IT department will need to adapt its processes, services and culture. Security processes will need to be revised. The focus of the development teams will transition from processing to data integration. The service philosophy will need to change from being a control point to becoming a trusted advisor. IT professionals have adapted to new technology trends in the past and they will adapt to cloud computing if necessary. But it may be a bit stormy for a while.
Excuse me, but is this elevator going up or down?
Is your company growing? Or is it in a state of decline? According to Jim Collins’ book, How the Mighty Fall: And Why Some Companies Never Give In, the answer to that question may not be so straightforward. In the book, Collins identifies the following five stages of corporate decline.
- Stage 1 – Hubris born of success
- Stage 2 – Undisciplined pursuit of more
- Stage 3 – Denial of risk and peril
- Stage 4 – Grasping for salvation
- Stage 5 – Capitulation to irrelevance or death
Collins’ findings are based on research on companies that were once great, but declined. Some survived and others failed completely. He provides “markers” for each state of decline and describes how some companies executed a turn around.
If you are not certain about the direction of your company (or elevator), the book is certainly worth reading.
