My trainer at the gym tells me that the plank exercise increases my core strength. Core strength is also essential for agility in the digital era. Without agile core strength, an organisation cannot flex and rapidly align with market trends. In short, an enterprise becomes fat and unable to change direction quickly.
For centuries, organisational success was measured in terms of the size of turnover and market share. Now in the digital era, different criteria are being used; namely customer satisfaction combined with the ability to respond to market changes rapidly, or act swiftly if new opportunities appear. Enterprise agility is created by having the ability to change direction while maintaining high levels of customer service.
How does an organisation exercise to develop its core agility strength? Like adopting new routines in the gym, some exercises will cause organisational pain at first – the no gain without pain statement. The activities could involve a radical rethink of corporate lifestyle, choosing new ways of working and the application of Lean principles, including continuous improvement.
The first exercise impacts how the enterprise provides products and services to customers. Since 1985 and Michael Porter’s book “Competitive Advantage”, we have seen how parts of the organisation link together to create value for customers. Porter called this generic concept, the Value Chain. Since 1985 we have realised with the advent of Value Stream Mapping used in Lean that rather than using a generic model, enterprises aim to create a unique signature of differentiation to customers when delivering value. These unique workflows in Lean are called Operational Value Streams.
Operational Value streams deliver the strategic intent of an Enterprise. They are the practical manifestation in terms of tasks and processes of the strategic plan. The first agile core strength exercise is to manage and improve operational values streams. This action ensures that the value stream provides the desired customer experience and efficiency, in terms of a low cost of function for the enterprise.
As market conditions change, new products or services are required or new opportunities identified. The enterprise finds that it needs to alter or create new value streams. The act of changing or creating new values streams also have a set of tasks; known as delivery value streams. In his book Lean Management principles for Information Technology, Gerhart J. Plenert describes value stream mapping as a tool to increase IT efficiency.
In short, an enterprise has two sets of value streams. The operational value streams enabling the strategy and development value streams which create agility; the ability to change direction rapidly. The second exercise to improve core strength is to manage the delivery value streams so that they develop new capabilities and produce high-quality results as quickly as possible.
Increasingly digital era enterprises are turning to agile techniques to create new capabilities. Scrum is by far the most popular agile technique, yet its use may not provide all that is needed. According to the Scrum Guide, the customer is represented by a Product Owner. The product owner in scrum has the responsibility of maximising the value created by the development team for the customer. Value is created by the delivery of solution components or business requirements by a development team.
The Scrum Guide identifies the Product Owner as being solely responsible for optimising the work of the development team. Scrum is essentially and internal-to-the-team empirical control process. It does not define how the Product Owner decides upon the work items needed on the backlog. If an Enterprise is to extract maximum value from the efforts of the development team, then these efforts need to be linked to value stream optimisation. If an enterprise is to become genuinely agile, then the third exercise is to proactively join up the actions of the product owners with the process of refining the operational value stream. There is a risk of operational waste when alignment is absent.
In their book “Learning to See” Mike Rother and John Snook suggested that an enterprise required someone to undertake the role of a value stream manager. In some organisations, this function is called the Enterprise Architect; responsible for value stream efficiency and optimisation.
In a recent book “Accelerate” John Kotter identifies that often it is the traditional hierarchical structure that inhibits enterprise agility. The traditional functionally orientated organisational structure creates inefficiencies in both the operational and delivery Value Streams. Kotter proposes that a new network-like structure is required comprising or teams of teams using agile principles. Kotter calls this network a second organisational operating system which creates enterprise agility.
Kotter states that an organisation should contemplate both a hierarchy and a network operating system. For some senior executives, this suggestion may infer bolting something on to the side of what they do now. A quick fix would be to miss the point. Kotter is proposing a fundamental rethink to the way enterprises are traditionally operated.
If enterprise agility is the goal, then senior management should focus on the network organisation. Execs should enable operational value streams to be as efficient as possible. The network is also instrumental in deciding how the enterprise implements changes to the operational values streams. Leaving the hierarchical structure to provide shared services and governance to the network; acting as a servant leader. It is clear that with a duel operating system that the network organisation requires core strength.
In agile development, It is widely recognised that a team should have within it all the skills and capacity needed to deliver value to its customer. The same is true of Kotter’s network organisation. In this instance, a value stream should have all of the capabilities within it to deliver high-value services or products to its customers. Operational value streams can be designed around customer journeys and personas. Having operational team members and change delivery teams aligned to value streams enables an enterprise to compare operational costs and revenues directly. Linking operational costs with incomes at the value stream level is the next exercise of Enterprise Agility core strength.
So why is Enterprise Agility Core strength necessary? Having core strength allows an Agile Enterprise to rapidly respond to changing market circumstances or opportunities while delighting its customers. The strength results from the organisational capability it has built adopting a structure, policies and processes which facilitate its speed of change. An agile enterprise will lose these capabilities if it doesn’t recognise the importance of operational and delivery value streams. Failure to place value streams under control will result in the enterprise become more dysfunctional. As the rate of change in the digital era increases, a dysfunctional enterprise will find its ability to provide high-quality products and services will decline over time.
If the enterprises delivery value chains are inefficient, then it will fail to meet challenges and opportunities in the digital era, and will quickly become irrelevant!
