Friday, July 7, 2017

Strategic Agility with a top MT team and weekly pizza sessions

With agile, we often talk about operational agility, an approach and a mindset that will help you survive in a competitive and changing market. To be successful you need innovations that create markets. Carlson, the former CEO of SRI, points the way to strategic agility with a top team at MT level. This approach lets you build collective intelligence with each other; such as Barcelona's football team, a top chef team in the kitchen, the operational team on an aircraft carrier or a top jazz orchestra. Operational agile teams work with sprints and top agile MT-teams organize weekly an informal meeting, call it a pizza session, week in, week out, month in, month out. It's a mindful conversation about the business model, proposition and value creation, etc. And as you explore the unknown, you will occasionally use methods for sensing or becoming aware, which may help to for something new to emerge. Aligned with the agile mindset you involve the whole organization; after the review meeting with the customer, all teams organize a meeting about value creation. 

In my previous blog I wrote about 'customer delight' in an agile learning ecosystem. I wrote also about an agile work environment based on values and culture, where trust and autonomy of employees and teams are of paramount importance. In my second blogpost I wrote about the three leadership roles in teams. In the third blog I wrote about the so-called tribe leadership team (TL-team). In my last blogs I discussed leadership development and the role of HR in the transformation process and in an agile learning ecosystem.

Operational agility
So far, I have written about Operational Agility and that generates the ability to realize improvements of quality with more efficiency, faster. Operational Agility in the team or team-of-team level enables an organization to respond to the rapid changes in the market. Focusing on value-added work for customers and eliminating systematically impediments can lead to cost-effectiveness (efficiency). Providing all employees a clear view of the customer and working in small teams in short cycles can make continuous improvements in existing products and services (quality improvements) possible.

Figure 1 Carlson 

Nowadays, most (large) organizations are still learning how to manage operational agility in the team and in team-of-teams, as shown in Figure 2.
Figure 2. Denning 

The profit from operational agility can ensure short-term survival of the company in an increasingly competitive and fast-moving market. However, efficiency gains and quality improvement will not often lead to huge financial gains. To achieve that, companies need to look beyond their existing products and services and open up for new markets. This is also called strategic agility. Operational agility is just a part of the Agile story.
Figure 3. Denning 

Innovations that create new markets usually do not come from solving customer complaints or existing customers asking what they want. As Henry Ford once said, if he had asked the customers what they wanted they asked for a faster horse. Market-creating innovations come from imagining and delivering something like an unexpected treat for new groups of customers.

Strategic agility takes place in two ways:
1. As a by-product from operational agility;
2. As an explicit initiative to generate market creating innovations.

Strategic agility as a by-product 
In conversation with Steve Denning, Spotify reports that teams investigate if users really want the product proposal now, does this really solve their problem? And that goes beyond the review meeting at the end of every sprint. Then they make a story, which extends the benefits to the user extensively. The stories are then linked to the strategic goals of the organization. When the team has confidence, they build a minimum viable product to make an image of the story. This also means that you do not only formulate customer stories (stories) in the backlog based on customer conversations; it also offers teams the opportunity to add customer stories. In the review meeting, the team collects information and, based on the feedback, they modify the product.
This by-product approach has a number of disadvantages (thanks to Steve Denning):

  • Non-users do not come into view; 
  • You tend to add new features instead of removing some; 
  • You are less likely to threaten your own product (cannibalizing); 
  • Working on existing products is sometimes a solution that requires substantial technical innovation or financial investment; 
  • The approach to small profits can squeeze out slow-moving investments, which may even generate huge profits
Market creating innovations 
Curt Carlson, former CEO of SRI, the developer of Siri's personal assistant, sold to Apple, illustrates the customer focus dilemma. Looking back, Carlson admits that the management team of SRI had little understanding of innovation and value creation. Carlson understood that inventive ideas were not enough. It took him 2 years to make a good working hypothesis for the product and business model, without making a significant investment in technology. A million dollar investment has finally both conceptual and experience sides. If both of them are not experienced in practice, the results will lack depth. In order to take time, the CEO needs a lot of courage and stakeholders need to be confident that he/she is busy with the good things as a CEO. It helped Carlson to earn its traces from other companies. He was not in a hurry, it was crucial to have everyone on board, everyone had to agree that there was a need for change. It's a huge challenge to 'embed' your ideas and practices into your organization.

SRI comes up with four essential questions in its quest to realize as much customer value as possible and to present a value proposition for innovation:

  1. What are the important customer and market needs? 
  2. What is your approach to address this need? 
  3. What are the benefits that will convince your customer of your approach that goes with lower costs? 
  4. How do your benefits compare to those of your competitors and alternatives?
Carlson called the answers to these questions a value proposition; summarized: Need, Approach, Benefits per Cost and Competition (NABC). Indeed, this is about the basics of marketing! It seems so simple, he continues, it may be too simple, but it does deliver the required depth. It is fascinating that a top company like SRI has struggled with these questions for more than a year. Carlson introduces five disciplines to create what customers want. I have already described above the important needs and value creation. In addition to the importance of innovation champions, he still has two disciplines that we know from agile: innovation teams (trust and empowerment) and organization alignment.

Working method
He put together a smart team with the desired capabilities, values and credibility. Every Monday evening, he organized a pizza session with the core team of about 15 people, each evening a team member presented a value proposition and then the discussion began. It was a big learning process and the first 18 months did not really work out, he says in retrospect. Carlson was working hard to build collective intelligence with his team. You see a management team that tries to create the agile mind-set. For the major strategic issues it is obvious that also the management team will start and work with the agile mind-set.

You see something remarkable; in an agile approach, teams interact with their customers and at MT level they do the same but with major strategic issues. It is then crucial that management shares its experiences with the entire organization and retrieves information from the team’s interaction with customers. The SRI's MT was convinced that everyone should be involved in the business proposition development. And then you will see that the teams will also apply the NABC approach. This also means that the team, whether in team-of-team or not, is focused on market-creating innovations and teams share their experiences with the MT.

In my third blog I wrote about the tribal-lead and the tribal leadership team as a spider at the centre of a web the network of autonomous teams. This servant leadership is based on competence and not on hierarchy and Bakke's advisory process (see also Laloux) is leading. With strategic agility, there is an extra dimension in which the MT and the tribe leadership team play an important leading role.

All employees were invited to join, everyone is expected to be a champion. Earnings and passions were measured, not the position. Carlson set a good example as the CEO; he talked with all the teams in the organization and he ate in the canteen and interviewed all the staff. Throughout all, he was tested by employees whether he was serious about it, you would have to tell it many times, have a good listening attitude, and again and again. Finally, the entire organization was working on NABC and focused on value for customers. An essential principle in motivating the professionals was to build on existing expertise and values. He focused on early adopters or innovation champions within the organization; they bear the new principles and try it out, they become the role models.

Collective intelligence or collective meaning structure
The iteration or repetition of the pizza session on Monday evening offers the chance that the team will interact with each other; that team members can become increasingly sensitive and react more responsibly, sometimes speaking without words. The conversation in the informal setting offers such an intensity that members really feel the customer needs. Then something may develop, that you also see in top teams: collective intelligence (MIT) or a collective meaning structure (Weick, 1983). As if you were a team like the Barcelona football team with her tikkie-takkie football, a team in the kitchen of a top chef or an operational team on an aircraft carrier. You start with implementing certain interaction patterns and that's just what Carlson did at SRI too; every Monday evening, the pizza talk was about business propositions and value creation.

In sprints, teams meet regularly and especially in the review meeting they invest time into customer needs. Inspired by SRI, teams will be more focused on customer needs and benefits (NABC) and build a collective intelligence or meaning structure. The agile learning advisor creates a psychologically safe climate, which invites team members to pay attention to each other and to respond mindfully. The product owner has the exclusive task to collect information about customers. Together with the product owner the NABC discussion is prepared and the methodology is introduced. Also, with a review meeting of 1 hour, you usually have insufficient time; at last the pizza session of SRI also lasted longer than an hour.

Also ask yourself if you would conduct NABC conversations with or without customers. It may be justified to conduct such conversations without customers. In this case you have room to identify properly the customer needs and to give words to the business proposition. Also keep in mind that the product owner is responsible for prioritizing customer stories and with NABC all team members are intensely involved in the customer subject matter.

On becoming aware 
Such meetings also give the chance that the unknown can be perceived. Market-creating innovations often concern things you do not know yet, it's about exploring the unknown. Meanwhile, we also know that people are unaware of many things. In his book Presence, Peter Senge broke a lance for awareness, building on Varela's thoughts and concepts. He argued that you should prevent to be caught in your own system. Varela describes three key gestures of the process to become aware: suspension, redirecting and letting go and let emerge something new.

Figure 5. 3 Gestures Varela 

Otto Scharmer has highlighted for a wider public the core process of Varela by means of theory-U. Varela emphasizes that it is also a social process and that you will find yourself close to methodologies of building collective meaning structures. To confine Theory-U to mindfulness does not do justice to what on becoming aware is all about. I would suggest that you organize occasional theory-U sessions, to let the unknown emerge with an mindful open-ended reflection and also to reinforce mindful interaction between team members.

All this was only possible at SRI because Carlson had already proven that he could build a flourishing business; you need courage for waiting and waiting (and reassuring shareholders) until you are convinced of the right business proposition for customers. Carlson did everything in order to involve everyone and he himself set a good example. He visited all teams, made sure there was alignment and he was at the office every day, lunched in the canteen and talked with everyone. And at length his employees tested whether he was serious about it, indeed as CEO you should do that a thousand times. Language is crucial in such a process; he spoke about making a significant impact, working smarter and learning faster; in 2017 these are also the keywords that match the agile mind-set.

The transition to agile is difficult in companies where senior executives themselves are still learning to embrace and create the agile way of thinking. Too often senior executives consider agile merely as a set of tools and processes that are needed to control people in the IT department in the organization, rather than a mind-set that they must learn to understand, self-create and live on a daily basis. In the end, agile is a mind-set and strategic agility will only have a chance when the MT applies the agile working methods themselves.

For market creating innovations you need strategic agility. You also need time and dedication to let emergence a promising business model. This is at first work for the management team and it is crucial that management shares its experiences with the entire organization and retrieves information from the team’s interaction with customers. The clue is to organize iterative weekly sessions in an informal setting to give collective knowledge building a real chance. To explore the unknown and the three gestures described by Varela, known as the theory-U methodology, will strengthen the needed mindful interaction among team members.

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