An Agile Future – Framework for Discussion

The business world and the IT world are both faced with changes on a scale neither has seen in a long time (if ever). The business world is trying to figure out how to operate and compete in a world that is so unpredictable and fast-paced that the tried and true industrial models of the last century just don’t work like they used to. Companies try to respond by cutting costs and hunkering down, but that just risks letting the world pass them by. At the same time, the IT world is trying to figure out how to cope with a torrent of change caused by cloud computing, SaaS, social media and consumer IT devices like iPhones, Androids, iPads, etc. The CEO of Intel, Paul Otellini, said in 2008 that for the first time in computing history the consumer IT market, not the corporate IT market, is the main user of semiconductors.

What to do? The centrally controlled corporate hierarchy doesn’t work in the business world any better than the slow-moving waterfall process works in the software development arena. And rapid technical change in the form of cloud computing, social media and consumer IT is leaving the old model of corporate computing departments in the dust. Looks like it’s time  to get agile and reinvent ourselves!

Agile IT Practices can Drive Business Operations

The future of agile is to expand beyond the creation of software and expand beyond the confines of the IT group. Just about every company you speak to says they are going to adopt Agile IT practices. The opportunity is to take what the Agile movement has learned about organizing teams and collaborating on complex projects and continuously responding to changing requirements and apply these principles to redesign the way whole companies operate.

Perhaps the greater value of IT agility is its ability to drive business agility. Perhaps the future of the agile movement is more about business than about IT. Companies that succeed in our real-time economy will learn to apply agile principles to the way they structure and operate their business units. And they will embed IT into their structure and operations so as to drive a process of continuous focus and response to new opportunities and threats as they arise.

A simple model of the system dynamics used by such an organization is shown below. Agile operating principles and agile IT would be employed to drive three simultaneous feedback loops that make real-time operations possible. The first feedback loop provides awareness of a changing environment and identifies threats and opportunities (I use the Yin-Yang symbol to denote awareness). The second loop continuously adjusts existing operations and processes to fit changing circumstances (I use a sunflower because of how it constantly adjusts itself to follow the sun across the sky). And the third loop provides agility in how companies create new processes and products to seize new opportunities (I use the leaping panther to symbolize agility). The figure below illustrates how these three loops work together (excerpted from my book Business Agility: Sustainable Prosperity in a Relentlessly Competitive World).

Agile Operating Dynamics of the Real-Time Enterprise

Organizational strategy happens in Loop 1, and operating tactics happen in Loops 2 and 3. So, clearly, the activities that occur in Loop 1 are central to the success of any organization, because if they are not done well then the actions carried out in Loops 2 and 3 will not be effective. Loop 1 is about figuring out WHAT to do.

Once a decision is made, one or both of the other two process loops are engaged; Loops 2 and 3 are about figuring out HOW to do what has been decided. Loop 2 is for improving existing operations. People in this loop find and fix root cause problems in business processes that generate errors and thus create nonstandard input; this is what delivers operating efficiency. We’ll call it the “Balance” process because it requires people to constantly adjust and fine-tune standard operating procedures so as to get the best overall performance as operating conditions change. This process is continuous; it happens all the time, every day.

Loop 3 is for creating new operations. People here design and build new procedures and systems to deal with the appearance of something new—a new threat or a new opportunity. That is what delivers effectiveness. We’ll call this process “Agility” because it requires people to move quickly when situations call for it. Creating something new is different from the process of improving existing operations. It is also an intermittent process; it does not happen all the time (as the balancing process does). It happens only when a new threat or a new opportunity arises.

Through the combination of these three feedback loops, the 21^st century real-time organization is born. Together, they produce a dynamic that enables an organization to navigate through its environment and continuously adjust as situations change. What do you think? Is this a useful framework for discussing how Agile can expand into the wider business world? Does it give you ideas for how to incorporate cloud and social media and consumer IT into the new IT model?

[In my thinking about how an agile organization is structured, how it operates, and how it comes into being, I am much influenced by two books. One is written by Kevin Kelly, Out of Control: The New Biology of Machines, Social Systems and the Economic World. The other is written by Peter Senge, The Fifth Discipline: The Art and Practice of the Learning Organization.]