Claims of being faster, cheaper, getting more software done are all based on anecdotal evidence and may not be true for an agile organization.
Here is a different take.
Before we dig into the key questions, let's start with a few statements that I'm not going to back up here for brevity sake.
Digital DisruptionDigitalization means a lot more than just having a corporate website, having IT systems to support your business or even taking advantage of hyperconnectivity to access business information anywhere.
It means that analogous business models are getting disrupted - and if you don't do it, someone else will do it.
There are two types of disruption which can occur:
- Business disruption: A player invades your market with faster, cheaper and more reliable processes. By the time you caught on, customers have made their move. The good news: You still have a chance to hang on to some of your business if you're fast enough.
- Market disruption: A player learns about your business model, then creates a service which renders that model obsolete. Since your business is centered around your current market, the business will die with the market. The bad news: Any attempt at returning to former status quo is futile.
Disruption is inevitable. Just to give a few examples:
- Amazon sends retailers packing (pun intended)
- Digital photography threw Polaroids off the market - and the market for digital cameras caved in to smartphones
- The Internet has removed the need for Pneumatic tubes in offices
- Outlook has eliminated office mail delivery
- How many postcards do you still receive in the age of Instagram, Facebook and Twitter?
Your business model is in danger. If you're not the disruptor, you are going to be disrupted - and when you're not up to speed, you have already lost the game.
Being agile is not about fancy stuff IT is doing. It's about remainng relevant on the market. In terms of the Kano Model, agility isn't an Excitement factor: It's a hygiene requirement. You don't win because you're agile. You will lose because you aren't agile enough.
Here are four questions you can answer yourself to see whether you are sufficiently agile:
How effectively do we meet market needs?Digital organizations cut out every possible manual activity from the value stream and focus on creating scalable business models. A no-touch automated process can serve a billion users at (pretty much) the same cost as it would serve ten users. Likewise, any activity not helpful in meeting the goal of satisfying customers on the market is up for scrutiny: if it can be eliminated, it will be eliminated.
A digital organization would think twice about having non-essential functions as part of their business operations. Any activity which can be outsourced, automated or purchased as a service with a benefit to the core business model, will be.
- Do you spend more time meeting business needs or customer needs?
- How closely are you aligned with the needs of your customers?
- Are you improving existing SOP's or are they creating new capability?
- How intertwined are software services with your way of meeting customer demand?
- Which touchpoints between you and the customer could be digital - and how many are?
- Which means are you using to recognize how in touch you are with your customer's needs?
What are we doing to learn about our market?Digital organizations don't give tasks to IT after others have discovered what is going on. They mine for information and creates business opportunities in the way a journalist hunts for the next story. Sometimes successful, sometimes unsuccessful, but always in an attempt to be the first and best. Agility is but the necessary means of jumping in early and pulling out fast.
- Who in your organization understands how the market is doing?
- When the market shifts, do you realize this early, when the symptoms arise - or too late?
- Do people understand where to look and what for? How do you cover blind spots?
- What role does IT have in generating and analyzing market knowledge?
- How do the information flows in your organization look like?
How do we sense shifts in markets?Digital organizations create markets, divert existing markets and take the profit out of current business models. As new options for customers arise, old options become unwanted or obsolete. Consumer needs change with digitalization. Can we be the first to offer options to meet the changing needs, are we trying to get a slice of the cake before it's too late - or are watching the ship leave?
- Is your market growing, shrinking, stagnating?
- How do you learn about market shifts?
- How do you know that your information about market shifts is reliable?
- How do you decide where to dig in and where to withdraw?
- What are incumbent players in the same market doing?
- What new players have appeared recently, and how are they operating differently?
- In which ways are you actively working to create market shifts?
- How would you shift the market in your favour?
How much does it cost to change direction?Digital organizations are aware that markets change. They realize that changing direction early, fast and often is the most effective way of meeting customer demand. Instead of investing heavily into retention programs to keep customers bound to a dying business model, they reshape their business model to be what customer want it to be. They constantly run experiments to find new opportunities and cut off lost opportunies as soon as a ship starts sinking.
- What happens when your activity is out of sync with real market needs?
- How much time are you spending on things you could simply buy as a service?
- What happens between the discovery of an opportunity until it is captalized?
- Which factors prevent the immediate removal of an unprofitable capability?
- How much opportunity cost do you tolerate because of late change?
ConclusionNone of the above has any specific relationship with "an agile framework" and the questions aren't even specifically linked to IT. Digital organizations are driven by technology and are inherently agile because of low cost of change and fast response times.
Do not confuse means and ends: Agility isn't a tool to get better at doing what you currently do - you can move, evade and explore new threats and opportunities better when you're agile.
Becoming agile is the active, relentless and uncompromising quest for new and better ways of meeting customer needs.