AGILE BUSINESS MANAGEMENT

Transcription

1 TOP 10 POINTS OF AGILE BUSINESS MANAGEMENT

2 Contents Top 10 Points of Agile Business Management Introduction to Agile business 1 1. Agile Business Management in a Nutshell 2 2. Strategy Work In Agile Business 3 3. Are You Leading Or Managing? 4 4. Organization and Competences in Agile Business 5 5. Making Decisions 6 6. How To Deal With Competitors 7 7. Team Management And Reporting 8 8. Running Development Projects (Including R&D) 9 9. The Role Of Partners And Sub-contractors IT systems In Agile Business Environment 11 Finally - Be an Agile Business Manager 12 About The Author 13

3 Introduction to Agile Business Management Agile in the business world can mean several things. For instance the Cambridge Dictionary describes it as a method used for describing ways of planning and doing work in which it is understood that making changes as they are needed is an important part of the job. The diagram on the right gives an alternative explanation. Agile Business Management can be seen as a way to manage people and work in certain business situations. In the picture there are two axes the vertical axis tells how much information you have available to make the decisions while the horizontal axis indicates how much time you have available to complete actions. For instance, if you have enough time but you do not know the business case well (top -left corner), the best approach is the water fall -method, meaning you first make the analysis and specifications and then get into results step by step. But if you have tight deadlines and you do not know the case so well (e.g. acquisition, post-merger implementation or a new revolutionary product), you just have to start working even if much uncertainty about of the case remains. INFORMATION SHORTAGE TRANSFORMATION IN THE WAY WE WORK When having time but not enough information. RESEARCH/ ANALYSIS DRIVEN Best approach when having enough time and knowledge. RESOURCE DRIVEN Unclear situations with extreme deadlines. ACHIEVEMENT DRIVEN/AGILE Optimum throughput when having profound understanding of the case. PROCESS DRIVEN URGENCY 1

4 1. Agile Business Management in a Nutshell In agile business management you set-up targets and milestones and then create areas (work packages) for your work then begin making concrete actions. You will need resources to complete the actions but the driver is not how much resources you consume but how well you complete the actions. In this way, the process will become iterative and learning. In the IT industry, agile methodologies (like SCRUM) are popular and they can be very efficient in IT production and IT project work. Unfortunately they have been originally planned for strict IT work and cannot be easily adopted for target driven business management work. MANY WORK PACKAGES WITH LIMITED SCOPE AGILE MANAGEMENT MILESTONES AND QUALITATIVE/ QUANTITATIVE GOALS COLLABORATIVE NETWORK OF BEST COMPETENCES PLENTY OF SMALL TASKS WITH SHORT TERM DUE DATES ACHIEVEMENT AND PERFORMANCE INDICATORS 2

5 2. Strategy Work In Agile Business The new perspective of the agile business environment (lack of time and information) has a deep impact on how companies should create, manage and implement their strategy. The good old days - methodology was to create a strategy (3 months) and then implement it (9 months). This meant that you created a specific strategy process or annual cycle with definite deadlines for planning, budgeting, action planning etc. This is not applicable anymore. This rigid model does not work as it is too slow and expensive. You could set financial targets (and you should) but that is not a strategy. Targets are financial goals that should be achieved by implementing the strategy. It would be much more beneficial to discuss the goals and set the development agenda. Also allowing people to bring their own ideas and contribution to the process. This way you could get valuable information for target setting as well. (this is of course highly dependent on the culture of the organization). 4

6 3. Are You Leading or Managing? In agile business, the question above (Leader vs. Manager) is not valid anymore. There is an on-going war in business management literature of which management style is preferable? The truth is that both are needed because it is people who complete tasks. From a people perspective, you need collaboration and discussions but if you think that it will lead your organization into goals, it won t. It is like rolling a dice too arbitrary. On the other hand, if you create a cold measuring system, where the human factor is ignored, you do not truly understand that it is ultimately people, who form the organization and hence get results. So what you can do set the goals, make experiments, find deviations and make changes to goals (and competences) whenever necessary. It is learning based on facts and experiences. 3

7 4. Organization and Competences in Agile Business If your business is stable and predictable, you should have a clear and documented structure of your organization with definite roles and responsibility charts (for example RASIC = Responsible, Approval, Support, Informed, Consulted). This is the best way to maximize the performance of pre-defined tasks and activities. The problems arise when the business is unpredictable and fast moving. You may lack the competences or in a worst case, you hear people in your organization saying, Well, this does not belong to my responsibilities. In agile business you should avoid all unnecessary fixed costs in your balance sheet including costs of staff. This means that you should out-source as much as possible. But then you ll face a new problem how to manage workflows and projects, that are inherently distributed outside the organizational structure? The answer is that the measurement systems and KPI s should be the same for all participants and the ultimate KPI should be how well the promises are kept. This enables you to manage networks rather than organizational silos. 5

8 5. Making Decisions The process of making decisions is probably one of the most misunderstood topics in agile business. Many agile business cases are start-ups with parties and pitchings, resulting in decision-making being an unpopular subject. When emphasizing collaboration, networking or swarming, many of us have forgotten the fact that if there is a verb decision making, there should also be a subject called decision maker. We should remember, that teams or crowds do not make decisions, they only vote. In democracy, there are certain rules how to interpret a share of votes, but how many times you have seen this happen in the business environment? Let s vote whether we increase our sales 15% or 50%! The point here is that before the decision has been made, people have had different opinions on the topic and there are different ways what kind of attitude people take to the topic. (See picture on the right). In every team there are some who are for (13%) and some who are totally against (20%). The rest of are conditionals meaning, that I might be for, if there is something for me. However, from the decision-making perspective, someone has to take responsibility and make decisions and it is you. In a 10-person team there are always at least two persons, who do not like the decision, but this is something that you just have to put up with. CO-OPERATIVE TYPES IN HUMANS Altruists 13% Conditionals 67% Free riders/antagonists 20% Experiments investigating cooperative types in humans: A complement to evolutionary theory and simulations (R. Kurzban, D. Houser/2005) 6

9 6. How to Deal with Competitors You cannot survive in your business unless you have a good understanding of your competitors and their offerings. That s for sure. Another question is how much effort you should put into getting competitor information and what kind of actions you should take. The players your company and your competitors work for the same target: to get deals with the customers. And customers want the best product with best price. If your business operates in an agile business environment, you cannot have 100% knowledge of what is happening. By following the competitors actions, product releases and news, you only get information that your competitors want you to have and that s not probably enough for you. The problem is that this way you ll always be too late! The driver cannot ever be what others have done, because you ll loose the best advantage you have: your own mission and understanding of your unique competitive edge. 7

10 7. Team Management and Reporting Like decision making (See point 5), team management and leading people are probably the most challenging jobs in the organization. Companies are willing to get rid of fixed costs (See point 4 Organization and Competences in Agile Business), which means that there will be an increasing number of projects or programs where people come from different organizations (internal end external). In agile environments, people work in temporary collaborative networks rather than in rigid organizational units. Reporting does not have the same value for collaborative networks as it has for conventional, hierarchical structures. While you have to be fast and agile, there is no time to report formally what has happened (past) and what will happen (future). Managers become more deeply involved into the work process, rather than being external actors who are waiting to get reports from other people. The point here is efficiency and resource utilization: If you have managed to get good people, you should utilize everyone s contributions. But in the network of professionals where all the flowers can bloom, it is important to keep in mind that you still need managerial discipline and guidance to keep people and projects on track. HIERARCHICAL Increase Control Of The Few NETWORK Boost Collaboration Of Everyone 8

11 8. Running Development Projects (Including R&D) A significant proportion of the work in agile business belongs under the term projects as they can be big transformation programs or tiny tasks that have to be completed at certain due dates. This idea originated from the IT world. Already in the 90 s we noticed that certain types of IT projects go wrong if we follow stubbornly the so called Water Fall or V-model in project management.* The problem was that if the project was a bigger one, there seemed to come lots of change requests in all stages during the project. The more changes that came, the more complicated the project became and the final outcome inevitably was too costly and too late. The answer was we had to accept that there will always come changes and that is why we should not create a big plan and then try to implement it. Instead we should plan something smaller and at the same time make sure that at least something will come out in the end. This is some kind of prototyping, where you will see soon whether the outcome is viable or not. (In start-up world we talk about MVP or Minimum Viable Product). Experimentation means that you admit that you do not know everything. It follows that even in the very beginning and especially you and your people should estimate the value of the project and it s outcome. It is amazing how efficient this early valuation can be, because people are not yet too deeply involved and they are more prone to bringing up important points to be taken into consideration. It is also worth to think about how much effort to put into finding brand new fancy killer products. In many cases. there may already exist killer ideas that can be produced by making incremental changes to existing products or services * There are lots of variations of the model basically it means that first you make the specifications and planning and then carry on with implementation and testing and finally you check that actual outcome is what was specified in the first place. In IT development there exists various agile methodologies (like SCRUM) but for the business development projects with the most valuable being the idea of experimentation. 9

12 9. The Role of Partners and Sub-contractors As mentioned earlier in points 4 and 7, many business projects and collaboration workflows are distributed people come not only from inside the organization but also from outside the organization. In many industries, it is important to valuate the sub-contractor pool somehow for instance, based on costs, quality, timing, etc. By this way, you can force the contractor to do their best just by comparing them to their competitors. This works especially well in material flows and product supply networks. When it comes to collaborative work with partners or subcontractors, the picture changes. In agile business processes and projects, the value of the work is the same where ever in the network it has been carried out. It does not really matter who will complete the task as far as it fulfills the requirements like due date, quality or costs. In these cases, sub-contractors are more like partners who belong to the same collaborative network as people in your organization. Therefore, management of partners should be based on the same methods as the management of your own staff. Everyone to whom you pay should be measured in the same way based on how well they complete their actions and keep their promises. (There are of course confidential, security and agreement issues that make externals role a bit different, but finally there should not be any reason not to valuate their work and outcome in the same way) 10

13 10. IT Systems in the Agile Business Environment There are lots of different IT solutions to make business more efficient and valuable. For an ordinary business manager, there is one thing that he/she appreciates above all: One-stop-shopping point: only one easy place or access point, where you can find all essential information of what has happened, what is going on and what will be happening. The problem in business management solutions is that either they have been designed for IT people and IT projects, or they focus only on a certain part of the business management process. In agile business management the problem is even bigger. In order to be agile, you have to catch all relevant actions, decisions, issues or ideas in the place where they are born and at the moment they are created before they start to escalate further. Documenting and filing as such do not give you any benefit. You have to manage tasks and performance of the people not only in well-defined projects but also in complex collaborative programs. Most importantly, in order to see the big picture, you need a dashboard where you can see how your business is going. However, in agile business, the n-dimensional BI reporting only increases the information overload you have to see how people s daily activities correspond to your business performance and what are the next actions you ll have to do. You need an actionable dashboard! Catching up actions and decisions in meetings & workshops. Managing tasks and people s achievements. Running complex business projects. Driving new business and better performance with collaborative networks. Foresight and insight by actionable business dashboard. 11

14 Finally Be An Agile Business Manager There is a saying You are what you eat'. In agile business it means, 'What you do daily, is what you going to get in long run'. A couple of years ago, I discussed with one CEO about management teamwork in their company and how to make it better. We discussed about processes, work flows, etc. and then I suddenly asked him: Do you actually know what your people are doing in the coming 2-3 weeks? He frowned and said:. Hmm.. Margaret is responsible of Marketing Activities Wrong answer! Why? In old good times it was common, that you organized your work areas by giving people different roles and responsibilities. Then you set up (most often numerical) goals and expected people to achieve them. The problem is that this will lead to overwhelming reporting. People report to you and most probably you report to someone else. If you are an emphatic leader, you should support your team when there are problems. But by the end of the day, this is not your primary task. Where you should put your attention is are your people doing practical actions that drive your company step by step to success? 12

15 About The Author Pekka Ylisirniö, M.Sc. (Math) is the head of Akselworks Oy, the developer of Powermemo ( and has over 20 years of experience in managing difficult and complex projects - both in global companies and in public administration programs. 13

16 powermemo AGILE MANAGEMENT TOOLSET FOR BUSINESS PEOPLE