“Agility is the ability to adapt and respond to change … agile organizations view change as an opportunity, not a threat.”
—Jim Highsmith

 

Organizational Agility

The Organizational Agility competency describes how Lean-thinking people and Agile teams optimize their business processes, evolve strategy with clear and decisive new commitments, and quickly adapt the organization as needed to capitalize on new opportunities.

It is one of the seven core competencies of the Lean Enterprise, each of which is essential to achieving Business Agility.

Why Organizational Agility?

Without organizational agility, enterprises simply cannot respond sufficiently to the challenges and opportunities that today’s rapidly changing markets present. Without it, employees and the enterprise associate an individual’s value with their functional skills, rather than business outcomes. Delivering value is subservient to organizational hierarchy. Changes to strategy are not obvious nor welcomed. Even when they are, the organization is too inflexible to adapt to the new opportunity. In the digital age, many enterprises will struggle; others will cease to exist.

SAFe helps businesses address these challenges with a core competency of organizational agility, expressed in three dimensions (Figure 1):

Figure 1. Three dimensions of organizational agility

Lean-Thinking People and Agile Teams – Everyone involved in solution delivery is trained in Lean and Agile methods and embraces and embodies the values, principles, and practices.
Lean Business Operations – Teams apply Lean principles to understand, map, and continuously improve the business processes that support the businesses products and services.
Strategy Agility – The enterprise is Agile enough to continuously sense the market, and quickly change strategy when necessary.

Each of these dimensions is described in the sections that follow.

Lean-Thinking People and Agile Teams

Lean-Thinking people and Agile teams represents a state where everyone involved in business solution delivery—business and technology leaders, development, operations, legal, marketing, finance, support, security, and others—are trained in Lean and Agile methods. They embrace and embody the principles and practices. This takes the core practice of team Agility, extends it with Lean thinking, and applies both to everyone involved in developing the software applications, the digital systems, and most importantly, the full business solution.  (Figure 2).

Figure 2. Extending Agile and Lean thinking to the enterprise

It starts with a new mindset. The Lean-Agile Mindset article describes the SAFe House of Lean in some detail. Figure 3 highlights the primary elements, which are summarized below:

Figure 3. The SAFe House of Lean

The roof represents the goal of delivering value in the shortest sustainable lead time. This goal unites the organization around a single unifying purpose, which is supported by the four pillars of the House of Lean:

Respect for people and culture – People come first. A motivating and performance-oriented culture requires the right people working in the right environment. Performance objectives, feedback, incentives, and workspaces must be conducive to motivation, engagement, and retention.
Flow – The principles of Lean and flow are applied to optimize business operations. Teams apply SAFe Principle #6 to ‘visualize and limit Work in Process (WIP), reduce batch sizes, and manage queue lengths.
Innovation – A continuous learning culture (See the competency article) thrives on creating innovative new solutions, as well as improving the existing processes and workflows that provide and support current products and services.
Relentless Improvement – Relentless improvement characterizes all aspects of Lean business operations. People invest time and energy to relentlessly eliminate waste and delays to improve the flow of value.

Leadership is the foundation of the Lean enterprise. More on leadership can be found in the Lean-Agile Leadership competency article, which embraces the SAFe House of Lean; ‘Lean-thinking manager-teachers’ provide the leadership and training needed.  

Lean-Agile Principles

“While the problems may be different … the principles that will help to improve the quality of product and service are universal in nature.
—E. Deming

The right mindset establishes the standards, but it is the principles that guide the behaviors and inform day-to-day practices. The SAFe body of knowledge is based on ten underlying principles (see the article series here) that drive Business Agility, as illustrated in Figure 4.

Figure 4. SAFe Lean-Agile Principles

These principles help the people who do the work by arming them with the thinking tools and behaviors they need to understand the flow of value and empowering them to implement the necessary improvements. They are the fundamental characteristics of organizational agility and the Lean-Thinking people who deliver it. Some are specifically highlighted in various sections below.

Agile Technical Teams

As described in the Team and Technical Agility competency article, the emergence of Agile development is fairly advanced and well understood in the software development domain. Inspired by the Agile Manifesto almost two decades ago, the wave of adoption will likely reach most all developers over the next few years. Indeed, Agile software development is the cornerstone of all things Agile. Now, with the advent of the DevOps movements, the Agile team construct is rapidly proliferating into IT operations. It’s easy to see that soon, most workers responsible for defining, developing, deploying supporting business systems and their technology will apply Agile values, principles, and practices. These include disciplines well outside software, including networking systems, hardware, electrical and electronics, optics, fluid dynamics, propulsion, and all the other technical domains. After all, Agile teams typically reach a degree of unprecedented performance. Who doesn’t want to be on a high performing team?

Agile Business Teams

Once the business side of the organization is trained in Lean and Agile principles, they recognize the benefits and typically start creating cross-functional Agile teams within their domain. These teams may be involved in many of the functions necessary to support business solutions, including:

  • product marketing
  • finance, security
  • contracts, procurement
  • supply chain
  • legal
  • training
  • business process engineering
  • manufacturing engineering
  • compliance
  • support

These business teams are ‘on the train’ and participate in delivering and supporting innovative business solutions. They also adopt the Lean and Agile values, principles, and practices that are relevant to their responsibilities and adjust their existing processes accordingly. And while Agile teams are typically ‘long lived’, they are also comfortable forming and re-forming as necessary to address the current flow of work, and to better address challenges and opportunities that naturally emerge.

Agile HR Operations

All this new ‘agility’ puts substantial pressure on the systems enterprises use to recruit new employees, establish suitable and safe personnel policies and procedures, and manage compensation and career growth. But addressing the needs of a contemporary and increasingly Agile and knowledge-based workforce challenges many traditional HR practices. In its place, ‘Agile HR’ brings an Agile mindset, values, and principles to hiring, engaging, and retaining people. The advanced topic article, Agile HR with SAFe: Bringing People Operations into the 21st Century with Lean-Agile Values and Principles, describes ‘six HR themes for people operations for a new generation.’ They are summarized below.

  1. Embrace the new talent contract – This agreement recognizes the unique needs of knowledge workers and provides the engagement, empowerment, and autonomy they require to reach their full potential.
  2. Foster continuous engagement – Continuous employee engagement occurs when everyone in the enterprise understands the business mission, is engaged in meaningful work, and is fully empowered to do their part.
  3. Hire for attitude and cultural fit – Lean-Agile organizations identify, attract, hire, and retain people who will be most successful in the dynamic team environment of an Agile culture.
  4. Move to iterative performance flow – Many Lean enterprises have eliminated the traditional, annual performance review. Instead, leaders and managers offer fast, continuous, feedback and also solicit and receive feedback in return.
  5. Take the issue of money off the table – Replacing traditional, individual incentives with ‘the right’ incentives helps tailor compensation and motivation to the differing needs of roles and individuals in the next-generation workforce.
  6. Support impactful learning and growth – Modern careers are fueled more by personal choices and meaningful growth than by climbing a hierarchical ladder. Successful employers need to respond by providing rewarding work, more fluid roles, and personal growth paths.

Agile Working Environments

In addition to more contemporary HR practices, experience and research have shown that working environments and physical spaces are vital to highly productive Agile teams [1].  Physical space considerations include:

  • Providing focused individual areas that enhance the state of mental flow
  • Supporting the need for constant informal team collaboration
  • Supporting the need for occasional privacy
  • Providing room for Daily Stand-ups, whiteboards, and walls to post objectives
  • Dedicating communication channels to support remote team members and other teams

In addition, PI planning is a critical event in SAFe. As such, a semi-dedicated physical space for PI planning is recommended and will pay for itself over time. This topic, including some recommendations for physical space design and accommodations, is further described in the advanced topic article, Agile Workspaces: Facilities that Enhance Business Agility.

Tooling and Automation

Lean-Thinking people and Agile teams have specific training and insights on how work flows through the system. They understand that optimizing one activity does not optimize the whole, and that delays in the process (see ‘mapping value streams’ below) exert more control throughout than the efficiency of any one step. To combat this, they implement the tooling necessary to see the work as it flows through the system and to identify bottlenecks and opportunities for improvement. This tooling include:

  1. Agile Lifecyle Management solutions instantiate and connect the various backlogs and Kanbans teams use to manage their local work and provide enterprise-wide visibility.
  2. Continuous delivery pipeline tools support the large number of artifacts—primarily code, tests, scripts, metadata—and provide the automation that is needed to efficiently build and run the system.
  3. Integrated development environments provide the tools developers need to author, edit, compile, and debug software.
  4. Collaboration tools support local and distributed development and the intense degree of interaction and cooperation that is required.
  5. Systems engineering tools support the modeling and information requirements of large systems and establish traceability across the elements supporting of quality assurance and compliance.

There is no clear boundary between these categories, and some environments support multiple categories. Most of these tools, toolchains, and environments are available in open source and commercial products at a relatively advanced and mature state. Applying them comprehensively is yet another critical factor in achieving Business Agility.

Lean Business Operations

The right mindset and principles arm the enterprise with the advanced thinking tools individuals and teams need to enhance business processes. Applying these tools to continuously map and improve the value streams is key to unlocking hidden potential and improving flow the flow of value.

Mapping Value Streams

The construct of value streams is one of the most powerful concepts in all of Lean thinking. For every Lean Enterprise, identifying value streams is a critical step. Once identified, Value stream mapping [2] is used to analyze and improve business operations. Figure 5 illustrates a simplified example of value stream mapping, in this case, for a marketing program launch.

Figure 5. Value stream mapping showing processing time, total lead time and time efficiency of a process

Teams look for the opportunity to improve the efficiency of each step, consequently reducing the total lead time. This includes addressing process time as well as the quality (percent complete and accurate) of each step. The higher that number, the less rework is required, and the faster the work moves through the system.

As is the case in the figure above, the delay time (time between steps) is often the most influential factor. Delay time represents handoffs, waiting, and other non-value-added activities. In the example above, if teams wanted to deliver a campaign faster, they would need to reduce the delay times, as the processing steps constitute only a small portion of the total lead time. Reducing delays is typically the fastest and easiest way to lower the total lead time.

Implementing Flow

Mapping each business process is essential to Lean. Process times and delays between steps become apparent; certain actions to improve throughput become obvious. In addition, the entire process can then be visualized and monitored as a means to continuously improve performance and identify bottlenecks. SAFe Principle #6 – Visualize and limit Work in Process (WIP), reduce batch sizes and manage queue lengths, is applied to optimize flow. Visualizing and limiting WIP is readily accomplished via Kanban. Figure 6 illustrates a simplified Kanban system for a set of marketing campaigns associated with a new product launch.

Figure 6. A simple Kanban system for promotional campaigns for a new product launch

Each ‘campaign’ (a single card in the system) works its way through the system from the backlog (want to do it, but not doing it yet) to done (finished and validated). Kanban systems limit work to the actual capacity of the system and exposes bottlenecks and problems with flow. WIP limits (in parenthesis above) reduce the batch size (number of items being processed) and control the amount of work in the system.

Strategy Agility

The right mindset, principles, practices, and lean business processes provide the foundation teams need to achieve Strategy Agility, the critical third dimension of organizational agility. Strategy Agility is the ability to change and implement new strategies quickly and decisively when necessary, and to persevere on the strategies that are working—or will work—if given sufficient focus and time.

Figure 7 illustrates how strategy must respond to market dynamics. Enterprises that have mastered Strategy Agility typically exhibit a number of capabilities, including those described in the sections below.

Figure 7. Strategy responds to market dynamics

Market Sensing

Market sensing represents the culture and practice of understanding changing market dynamics based on:

  • Market research
  • Analysis of quantitative and qualitative data
  • Direct and indirect customer feedback
  • Direct observation of the customers in the marketplace

Savvy, lean-thinking leaders ‘Go See’ and spend significant time in ‘Gemba’ (a term from Japanese that means ‘the real place,’ i.e., ‘where the customer’s work is actually performed’). They return with current, relevant, and specific information about the realities of their products and services, instead of opinions filtered through other perspectives.

Innovating Like a Lean Startup

After sensing opportunities, the Lean enterprise visualizes and manages the flow of new initiatives and investment via a ‘build-measure-learn’ Lean startup cycle. These initiatives are often new digital solutions, but they may also be new business processes and capabilities that use existing solutions. Testing the outcome hypothesis via a Minimum Viable Product before committing to a more significant investment reduces risk while generating useful feedback.

Implementing Changes in Strategy

Finding and defining a new strategy is only the first step. Once determined, the strategy must be communicated to all stakeholders in a new vision, and of course, be implemented. This is where SAFe’s constructs have a direct impact. Certainly, significant changes to strategy affect the enterprise’s products and services. Most require new Epics to assure the work is performed. These changes make their way through the various visible backlogs and Kanban systems used to manage the work of creating and supporting these systems, as Figure 8 illustrates. In the normal course of cadence-based events, all the backlogs are continuously reprioritized based upon the relative Weighted Short Job First (WSJF). If the change in strategy is indeed important, it will quickly make its way through the system.

Figure 8. A strategy change makes its way quickly through the network of dynamic backlogs

This way, execution is aligned—and constantly realigned—to the evolving business strategy.

Innovation Accounting

It takes a long time to evaluate the results of a strategy. Unfortunately, traditional financial and accounting metrics have not evolved to address the need to support investments in innovation. As a result, lagging financial indicators, such as profit and loss (P&L) and return on investment (ROI), are typically used to measure results. However, these results occur far too late in the life cycle to inform the evolving strategy. In their place, Innovation Accounting uses leading indicators—actionable metrics focused on measuring specific early outcomes using objective data, which is available before it’s too late. This becomes an essential part of the economic framework that drives Business Agility.

Ignoring Sunk Costs

Sunk costs are expenses incurred during the course of business operation. As a result, they cannot be recovered or changed and are independent of any future costs a business may sustain [3]. Because strategic decision-making affects only the future course of business, sunk costs are absolutely irrelevant. Instead, decision-makers should base all strategies solely on future costs. This way, Strategy Agility provides the opportunity for the greatest economic benefit, without the need to defend past spending.

Reorganizing Around Value

Finally, SAFe Principle #10 – Organize around value guides enterprises to align their development efforts around the full, end-to-end flow of value. This principle introduces  a ‘dual operating system’ (Figure 9), one that leverages the benefits of hierarchy but also provides a network directly organized around value. That network assembles the people who need to work together, increases quality, and minimizes delays and handoffs.

Figure 9. The network operating system of SAFe can be reorganized quickly around changing strategy

As strategy moves, value moves with it; new people and resources must be applied. Indeed, in some cases entirely new value streams are formed (i.e., new products or services). Others are modified (changes to product or services). Some are eliminated (decommissioning of product or service lines). Strategy Agility requires that the enterprise adapt the value network operating system as necessary to better facilitate that new flow of value.

Fortunately, the people and teams of an increasingly Agile enterprise see those changes coming through the portfolio. They can then use their new knowledge and skills to naturally reorganize Agile teams and ARTs to better address the new opportunities. The hierarchy is no longer the hindrance.

Summary

Organizational agility is one of the seven core competencies of Business Agility. It requires a trained Lean-Agile workforce that understands and continuously optimizes business processes, both those that create new business solutions, as well as those that support the current ones. It requires the ability to sense and respond to changes in the market, to evolve and implement new strategies quickly, and to reorganize if and when necessary to better address emerging opportunities.

As a result, ‘change is an opportunity, not a threat.’


Learn More

[1] Hesselberg, Jorgen. Unlocking Agility: An Insider’s Guide to Agile Enterprise Transformation (Addison-Wesley Signature Series (Cohn)) Pearson Education. Kindle Edition.

[2] Martin, Karen. Value Stream Mapping: How to Visualize Work and Align Leadership for Organizational Transformation. McGraw-Hill Education. Kindle Edition.

[3] https://www.investopedia.com/ask/answers/042115/why-should-sunk-costs-be-ignored-future-decision-making.asp

Last updated: 24 September 2019