Agile Strategy Execution is derived from the proven experience of Toyota, Lean Startup, and Agile software development. It has been said that imitation is the sincerest form of flattery and the practitioners of the Toyota Production System should feel flattered. Several methodologies have derived from lean thinking and it is worth considering their common elements.
All creativity is derivative. A creative style of painting, cooking, or managing is derived from an understanding of prior methods. It is an indication of the widespread acceptance of lean principles that they are now being liberally applied to new fields of endeavor. We should remember that lean was simply viewed as a more efficient method of manufacturing only a few years ago. Many of us now have experience applying lean principles to healthcare, government and even education.
As many of you know, I have recently been focused on the development of Agile Strategy Execution which is derived, not only from my experience in lean, but also from Lean Startup and Agile software development. I think it is worth considering the core principles that link these practices.
The following are what I view as the most important principles of lean. I am simplifying for the sake of brevity. I should note that different authors, as well as Toyota itself, have stated the principles of lean in somewhat different ways at different times. But, the following are common to most authors:
- Respect-for-people and continuous improvement are the two over-arching principles or “values” of lean. These over-arching principles are operationalized in the following principles.
- The elimination of waste: View value-adding work from the customer perspective. Activities that do not add value are considered waste. Lean practitioners constantly seek to cut waste, or non-value-adding activity while redeploying assets to more value-adding work.
- Create continuous flow to eliminate unnecessary work-in-process (inventory) and see that materials are delivered “just-in-time.” Seek to design processes to be interruption free. The flow of work is more important than organization structure. Structure and systems should be designed to facilitate continuous flow.
- The scientific method is at the heart of problem-solving and continuous improvement. Engage all in continuous improvement by applying the scientific method and practicing repeated problem solving based on the PDCA (plan-do-check-act) method. Progress in quality and efficiency are not made by big plans or great breakthroughs, rather by constant iterative experimentation and learning.
- Create a culture of teamwork in which all employees feel engaged and responsible for improving their work to meet the requirements of customers. Respect for people means trusting those who do the work to “stop the line” or to engage in the process of improvement. Motivation is the result of trust and teamwork.
For many years, when starting a company, it was assumed to be the best practice that the entrepreneur would develop a comprehensive and long term business plan before launching a business. I would like to have a dollar for every hour entrepreneurs have spent developing their business plans. Most of those hours are not worth a dollar. Why? Because if you are intelligent, within a very short time you deviate from your plan and you may ignore it completely. When Facebook or Google started they didn’t have any great business plan that they submitted to investors. Rather, they started with a great vision, a simple idea, began executing, and responded to the feedback they received from users. The market place drove their plans. This is the essence of the lean startup movement initiated by Eric Ries.
Here are the core principles of lean startup as stated by Ries. Look for the similarity with lean principles. What are the similarities?
- Entrepreneurs are everywhere. You don’t have to work in a garage to be in a startup. The concept of entrepreneurship includes anyone who works within my definition of a startup: a human institution designed to create new products and services under conditions of extreme uncertainty. That means entrepreneurs are everywhere and the Lean Startup approach can work in any size company, even a very large enterprise, in any sector or industry.
- Entrepreneurship is management. A startup is an institution, not just a product, and so it requires a new kind of management specifically geared to its context of extreme uncertainty. In fact, as I will argue later, I believe “entrepreneur” should be considered a job title in all modern companies that depend on innovation for their future growth.
- Validated learning. Startups exist not just to make stuff, make money, or even serve customers. They exist to learn how to build a sustainable business. This learning can be validated scientifically by running frequent experiments that allow entrepreneurs to test each element of their vision.
- Build-Measure-Learn. The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere. All successful startup processes should be geared to accelerate that feedback loop.
- Innovation accounting. To improve entrepreneurial outcomes and hold innovators accountable, we need to focus on the boring stuff: how to measure progress, how to set up milestones, and how to prioritize work. This requires a new kind of accounting designed for startups— and the people who hold them accountable.
(Ries, Eric (2011-09-13). The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses (pp. 8-9). The Crown Publishing Group.)
Agile Software Development
As the complexity of software grew, and the time and costs required to develop software increased, it was recognized by some that the process had become over regulated, over planned, and micro-managed. You might compare it to the bureaucracy developed in most large corporations in 1960’s and ‘70’s. The time to develop a new car became six years due to the complexity of organizations, siloed structures, and excess of control. The automotive planning process became one of the primary reasons for poor quality and excess costs. Bureaucracy, complexity and control where killing competitiveness in both manufacturing and software development.
Although agile software development was not a direct result of lean, it was a similar response to a similar problem. The design and engineering of cars was a classic project management exercise, as was software development. The traditional methods of project planning were not working in either case.
In February 2001, seventeen software developers met at the Snowbird resort in Utah to discuss “lightweight” development methods. They published the Manifesto for Agile Software Development. There are twelve principles which you can find here, however they can be summarized in the following:
- Individuals and interactions: self-organization and motivation are important, as are interactions like co-location and pair programming.
- Working software: working software is more useful and welcome than just presenting documents to clients in meetings.
- Customer collaboration: requirements cannot be fully collected at the beginning of the software development cycle, therefore continuous customer or stakeholder involvement is very important.
- Responding to change: agile methods are focused on quick responses to change and continuous development.
Agile development methodology provides opportunities to assess the direction of a project throughout the development life-cycle. This is achieved through regular cadences of work, known as sprints or iterations, at the end of which teams must present a potentially shippable product increment. By focusing on the repetition of abbreviated work cycles, agile methodology is described as “iterative” and “incremental.” In traditional project management development teams only have one chance to get each aspect of a project right. In an agile paradigm, every aspect of development — requirements, design, etc. — is continually revisited throughout the life-cycle. When a team stops and re-evaluates the direction of a project every two weeks, there’s always time to steer it in another direction.
Agile Strategy Execution
If one examines the above three methodologies, and then recognizes the difficulty of strategy execution in most large corporations, it is not hard to pull out the common principles that can speed and improve strategy execution. These are the principles of Agile Strategy Execution.
All of the above methods draw on the following common principles:
- Motivation trumps planning! High involvement, ownership, engagement of players and stakeholders is essential and best carried out by teams who are either on-the-spot (the Gemba) or are self-organizing. Control from above is the drug of power and the poison of motivation and learning. Trust and empowerment is the engine that drives the process of discovery and achievement of strategic goals.
- Agile Adaptation: At the outset of a strategic plan you cannot define the steps required to achieve a long-term vision or goal. Rather, you get started on the path and quickly and frequently assess the effect of your actions and adjust your plan and activities. The entrepreneur often discovers that his or her initial idea of how a market will respond to a product is wrong. The market may point to a different need or different market and sensing these discoveries is the key to both successful entrepreneurship and successful strategy execution.
- Whole-system change: Change requires the engagement and understanding of the whole-system. A lean manufacturing plant is not the result of great engineers designing the work flow. A great entrepreneur is not one who only understands finance, the product technology or marketing. Rather, great strategy execution and entrepreneurship require and understanding of how both the social, technical and economic systems of the organization must develop together to achieve the vision or strategy.
- Change is non-linear. Contrary to most traditional (waterfall) methods of project planning, steps do not necessarily follow a predetermined consecutive order – B, follows A, followed by C. In complex systems change, it is most often non-linear and cannot be entirely predicted. Agility is the ability to engage in adaptation to changes in both the internal and external environment, rapidly.
- Rapid cycle iterative learning: Engaging the entire organization in a culture of continuous improvement, frequent experimentation, applying the scientific method to analyzing the data, and learning from each experiment is the key achieving the long-term plan. This is the essence of lean problem solving, lean startup, and agile software development. It is also the essence of agile strategy execution.
The application of lean-agile methodologies to strategy is a new development. I would be very interested to hear your comments and thoughts on this evolution.