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Can strategy de-scale?

We’ve been looking at Scaled Agile over the past couple of weeks, and have reached two tentative conclusions:

1. Scaled Agile drains a lot of what makes Agile agile out of Agile.

2. In some cases it might make more sense to incorporate Agile principles into the business than to try to scale Agile to support waterfallish approaches to setting and implementing business strategy.

Businesses establish strategy by figuring out how they expect the future to be different from the present and how the business should respond to the changes. Strategy gives companies guidance regarding what to invest in, and, even more important, what not to invest in.

By extension, strategy means using a process of successive decomposition to develop a roadmap for turning strategic intent into a coordinated program of action to deliver the desired changes.

Strategy requires a roadmap. Roadmaps mean inter-project dependencies. Inter-project dependencies mean inter-project coordination and a PMO (program management office) to do the coordinating. If the individual projects are still to be Agile, this is why businesses are looking for ways to make Agile scale.

And it’s why last week’s column suggested the better alternative might be to reverse this whole equation: Instead of getting Agile to scale, find a way to build strategy on Agile principles instead of on large-scale strategic roadmaps.

Here’s how I think it can work, step by step:

Step 1: Business leaders clearly establish the heart of the business. It’s mission as the term ought to be used — the social value the business provides, as opposed to the mission statement, whose usual translation is “Blah, blah, blah.” The term “core business” fits this concept, too.

Step 2: Eliminate big strategy. Big plans that take a long time and a lot of labor and budget to implement have too much risk. They might turn out to be bad bets even if they’re successfully executed, and the bigger they are the less likely they are to be successfully executed.

Step 3: Encourage incremental improvement in the mission. These are projects whose goals are to make the company more competitive. There should be a way to tell if projects in this category have achieved their intended business improvements — they should be measurable in the broad sense of the word — and they should have a logically sound connection to revenue, cost, or risk.

Step 4: Encourage intrepreneurship (not a word, but I needed something suitable) — small-scale investments in opportunities that don’t hit the mission dead-center, but are closely related enough that they can take advantage of many or most of the company’s current capabilities.

It’s the business equivalent of an amoeba sending out pseudopods. The ones that encounter food … or that find customers when we’re talking about businesses and not amoebas … get more protoplasm (budget), and if at some point in the proceedings most of the food supply is where the pseudopod is, that’s where most of the protoplasm will end up too.

Intrapreneurial investments are a great way for a business to hedge its bets — they’re small and low-risk enough that a modest success rate is enough, and because they’re close to the core mission they don’t have a lot of ripple effect, either.

Because each one is small, relatively simple, and takes advantage of existing capabilities, you can use un-scaled Agile to make them happen.

Also, each time one succeeds it adds to the company’s base of capabilities future intrapreneurial efforts can take advantage of while broadening the company’s mission and diversifying its product portfolio and customer base. Do this enough times and over time the company might find itself having transformed into a completely different business.

Understand, there’s a big difference between this being a way to successfully de-scale strategy and recommending it as “best practice” (hah!) all companies should follow.

Quite the opposite. While this “amoeba strategy” can work, it’s hardly the only strategy that will work.

One thing it does have going for it is that we have a pretty good model that shows how an accumulation of individually unplanned changes can turn into very different and highly successful new forms. It’s called the theory of evolution by natural selection.

Not that natural selection results in infallible success. Quite the opposite. In nature, many species fail to adapt: Evolution’s successes drive less successful adaptations to extinction.

There’s a term for this in capitalism as well — creative destruction. In its own way capitalism is as red in tooth and claw as nature is. It’s just that with capitalism, what’s red isn’t blood.

It’s ink.

A couple of decades ago, when I joined Perot Systems, I greatly admired the weekly employee newsletter.

It was entirely prosaic — a text-only email layout-and-design tragedy where bold-face and italicized letters were the boundaries of formatting sophistication.

It was concise and readable, told employees the essentials of what was going on, and, every edition included a story. Not a tale of Ross and how brilliant and fabulous he was, but of a team that had done something that exemplified the company’s aspirations, goals, and values.

Which was far more effective in making sure all employees understood what constituted “how we do things around here” than any mission statement posters, values cards, or other empty gestures.

Perot Systems wasn’t a cognitive enterprise, but its employee newsletter was a step on the right path to making sure whoever made decisions on behalf of the company made decisions Ross Senior and his inner circle would agree with.

It’s no small challenge, and the bigger the company, the harder it is to push and prod the organization so it acts like an organism — a single entity with a single purpose. Large enterprises tend to be more like ecosystems than organisms. Why? Like ecosystems, the component parts of an organization are diverse, self-interested individual organisms — those pesky human beings you’ve probably had to work with once or twice in the course of your career.

Just in case you still aren’t convinced: Your brain, stomach, kidneys, and spleen all have different functions, but they all have the same goal — your survival and success.

Your company’s supply chain, IT, accounting, and manufacturing departments also have different functions, but there’s no reason to assume their managers and staff even care about the survival and success of anything beyond their little silo, let alone agree in any way, shape or form on how to achieve the survival and success of the enterprise as a whole.

One place to start is the golden rule of design: Form follows function, which is to say, understand the problem you’re trying to solve before you start designing solutions.

With a cognitive enterprise, one of the problems you’re trying to solve is how to give customers the impression they’re interacting with the equivalent of a person that acts with intention, not the complex, hard-to-navigate bureaucracy that’s the underlying reality.

There’s no single magic bullet for this. Creating a cognitive enterprise is a tough, tough challenge, as Scott and I discovered while writing the book. One starting point among many: Design the default sequences through which you expect typical customers to pass, and the mechanisms for exiting the default sequences when they don’t fit the situation.

Doing so enumerates what the customer touchpoints are. The next step is deciding what the customer experience should be within each one, for each channel through which customers can interact.

There are, as you might imagine, quite a few different variables to take into account. For example: Should you maximize the number of required touchpoints so as to create a soft, we-care-about-you impression, or should you minimize them so you don’t waste your customers’ time?

The answer, and you knew this was coming: It depends.

For example: If you’re an Emerald Club member and rent a car from National you can walk right past everyone, grab a car, and drive out. National caters to customers who appreciate convenience.

Enterprise, on the other hand, which is part of the same car-rental conglomerate, takes the opposite approach: Someone accompanies you to your car, walking you through every step of the rental process up to and including looking for dings and dents.

Enterprise figures its customers want the personal touch.

Which company is right? They both are. Different kinds of customer have different preferences. What the two companies have in common: Both started with what they wanted their customers to experience, then designed their processes and systems … and educated their employees … to provide that experience.

What else? Three rules:

  • If something interrupts the flow, what changes is the touchpoint sequence, not the touchpoints themselves.
  • Touchpoints are functionally identical, regardless of the channel. What customers do doesn’t depend on whether they’re using the phone, the web, or a mobile app.
  • Touchpoints might initiate or rely on back-office processes, but they do everything possible to hide those processes so customers don’t know anything about them.

Once you escape the one-dimensional mindset that everything is about cutting costs, creating the appearance of cognition really isn’t all that complicated.

In principle, that is. Making all this work in practice is as difficult as business gets.