Agile planning – building an agile organization
Agile Planning – Creating and Reaping the Benefits of an Agile Organization
The legendary boxer Mike Tyson once said, “Everybody has a plan until they get punched in the mouth.” While Tyson has plenty of areas of personal weakness, his ability to approach a boxing match in an agile manner was unmatched. He fully understood that the best laid plan is instantly irrelevant the minute your competitor does something unexpected, which is always nearly immediately. While Mr. Tyson did not step into the ring without a plan, the plans he executed were adjusted after every round and sometimes after every punch.
In many ways, business now feels like a contact sport, and it moves nearly as quickly as Tyson’s 1986 jabs. Planning, budgeting, and scheduling used to be centralized functions, and this approach worked pretty well when the pace of change was much slower. However given how quickly business moves today, strategic long-term planning is often too slow and rigid,and plans are obsolete before they are complete.
While planning is a critical component of success, centralized, laborious, long-term planning is not responsive enough for most organizations to flourish. Therefore, the question is, how can companies plan and manage projects when everything is moving so quickly? Agile development and agile organizations are the answers for many.
What Is Agile Development and What Are Agile Organizations?
Agile development is a set of practices based on the values and twelve specific principles expressed in the Agile Manifesto. Agile development places emphasis on collaboration, self-organization, and responsiveness to changing opportunities and customer needs. Specifically, Agile values: individuals and interactions over processes and tools, working software over comprehensive documentation, customer collaboration over contract negotiation, and responding to change over following a plan.
An agile organization is one that utilizes these principles to create rapid advancements through non-hierarchical team collaboration and in direct response to changing business and customer needs.
Those who do not thoroughly understand agile concepts may merely think of agile as being fast, flexible, and without constraint. However, agility should not be confused with chaos.
Agile is not ad hoc. Rather, agile is a strict process requiring discipline and governance to do well. Unfortunately, it is easy to fail at being an agile organization, but the right mindset and understanding will greatly increase the odds of success.
This article discusses setting priorities and goals, planning, funding, and the interaction between leadership and teams within an agile organization.
Benefits of Agile Organization
The benefits of agile organization are many, including responsiveness, lower risk, better financial control, focus on business problems and opportunities, and more dynamic communication and collaboration. Much like an agile development team, an agile organization thrives on the ability to quickly reorganize based on new opportunities and requirements as they arise.
Responsiveness to new learnings, market opportunities, or customer needs is a foundation of agile. Within an agile model, business demands and new understanding will adjust the direction of the team or organization to deliver maximum value within shorter periods.
Better Financial Control
Traditionally, organizations worked diligently to predict the future in order or manage risk and to position themselves within the market. Agile, on the other hand, offers organizations the freedom to adjust course, including changing financial resource allocation by making funding allocation decisions in much shorter increments – quarterly in many cases.
Risk Reduction and Value Creation
Agile includes customers or other stakeholders in the product creation process. By sharing products with stakeholders early and often within the development process, agile organizations greatly reduce the risk of creating products that do not meet customer needs.
Communication and Collaboration
Agile demands that technology teams understand the business needs they are working to solve rather than falling into the temptation of seeing technology as the solution in and of itself. Frequent communication and collaboration among the functions central to successful product creation are essential.
Planning for Agile Organization
Agile organizations use planning techniques that are dynamic and effective; however, these techniques are not new. Many of these techniques have been tested and utilized by companies across the world in many different industries.
Through this testing, what has become apparent is that productivity is higher when teams within the larger organization are able to match their respective planning techniques. Specifically, when agile teams are given freedom and resources more frequently, they are better able to effectively utilize their budget and employees.
A combination of stability and dynamism is necessary for any company to achieve agility in planning. Stable elements should be reliable and resilient, acting as a sort of fixed backbone for the more flexible planning. For an agile team, these stable elements include clearly defined and closely related objectives and a clear hierarchy of strategic priorities.
On the other hand, dynamic elements are fast and adaptive and allow for new opportunities, but also new challenges uncovered by and ongoing learning process. Dynamic elements in agile planning include frequent planning sessions, wherein resources are redistributed, and teams discuss any possible needed redirection in development.
Managing Strategic Priorities with Agile Organizations
In agile companies, development teams have the authority to make a greater number of everyday decisions than in companies that follow more traditional planning processes. Because agile teams have these extra freedoms, individual ideas about a company’s strategic priorities can become overwhelming and create difficulties for the organization as a whole. Experience shows that these individual ideas and endeavors are often too scattered to achieve significant improvement in any one area.
To avoid confusion or divided attention, agile companies must agree on a well-defined set of priorities, ideally a manageable amount such as five or ten. Planning and budgeting should all be organized around this small set of priorities, with the most funding distributed to units whose main goals and initiatives support the company’s top strategic priorities.
Quarterly testing and updates should be conducted to ensure that priorities still align with changing trends among markets and customers. Within an agile organization, updates are often made based on the results of experimentation by agile teams. This discretionary experimentation is conducted using funding and permissions granted to certain teams or individuals–regardless of the earlier mentioned set of priorities–to benefit the future of the company.
Another planning option for agile organizations with larger or more long-term goals is to develop a strategy requiring a specified number of years to complete. For example, an agile company may choose to design a five-year strategy wherein teams will focus on no more than five priorities per year. This type of approach ensures more focused individual development teams and more easily monitored progress, allowing companies to update overall goals and priorities.
Creating Specific Goals from Established Priorities
After defining a small set of strategic priorities, the next step is to share these priorities with every team and individual within the organization. It is essential to ensure that employees at every level understand the company’s priorities, especially considering other projects or activities that may already be in progress. A clear understanding of specific priorities will allow for the largest percentage of energy and resources to be funneled into the most urgent endeavors.
Often, the most effective method of orienting agile teams toward a common set of priorities is to distribute a concise strategy memo articulating these priorities to the entire company. Strategic priorities should be translated into more specific goals, guiding the daily work of individual teams.
Establish Objectives and Key Results (OKRs)
Agile organizations often break down these strategic priorities by establishing OKRs. The objective is a clearly defined qualitative change and the key result is a specific, quantitative performance target. An OKR uses specific performance priorities and desired accomplishments to spell out the company’s overall priorities. OKRs are established annually by an agile company and assessed quarterly.
However, it is important to remember that in agile companies, individuals and teams must influence the establishment of OKRs. This influence includes the ability to outline specific budgets based on individual products, as well as the ability to suggest any changes to the OKRs. All of these suggestions would be reviewed and taken into account when setting or making changes to the OKRs. This process is not intended to create debate or conflict, but rather to make reasonable adjustments for the benefit of the company as a whole.
In addition to OKRs, most companies will set a fixed amount of funds for a specific duration, or a budget envelope, which will reduce variability and accelerate overall progress.
For example, consider an institution that has set a strategic priority of making customer service processes less costly. In this case, the OKR would involve an objective of reducing the cost of customer service with a key result being a fifty percent cost reduction. Executives and team leaders would discuss any possible opportunities to reduce the cost of customer service before presenting a single OKR to team members. Agile teams working towards achieving this OKR would examine different aspects of customer service, including policy, technology, product, and risk.
Focusing on a single OKR encourages teams to prioritize work aimed at reducing the cost of customer service and ensures a company-wide understanding of main priorities.
Agile Funding Allocation
Agile teams reallocate funds and redefine priorities continuously in order to produce minimum viable products (MVPs) in as little as just a few weeks. If funding was distributed less frequently, perhaps annually like more traditional organizations, agile teams could be at a great disadvantage considering their high rate of work. Agile teams would suffer greatly as a result of being forced to wait for annual distribution of funding before being able to develop a concept and it is highly likely that competitors would have already developed and released similar products during this waiting period.
Often, agile organizations will devote a portion of their budget to be distributed quarterly to teams who apply for funding by presenting new ideas. When a team is chosen to receive funding, they are given just enough to reach a certain milestone in development until progress can be reevaluated quarterly and the organization can decide again whether to allocate more funding for a specific project. These funding proposals are assessed by business leaders in terms of any set OKRs and with respect to plans for future quarters.
Looking back to the customer service example, a company team may have observed dissatisfaction among customers relating the cost of one specific technology. During a quarterly planning meeting, the team presents an idea to reduce the cost of this particular product. The budgeting team may initially allocate enough funding to conduct research before the next quarterly check-in, where the team will present any results and new ideas for reducing cost. After reviewing these ideas, the budgeting team may decide to distribute more funding to this team in order to develop and distribute the MVP designed specifically to improve customer service.
Empower Agile Teams
The leaders of an agile organization should focus on empowering the teams and individuals working towards a strategic set of priorities. Once a company’s priorities have been conveyed clearly in the form of OKRs, teams must be enabled to develop and execute plans without being continually directed. This allows teams to determine a course of action with minimal assistance from organization leaders who can provide funding and other resources and assist in removing any potential obstacles.
Often when a company’s leadership is too focused on micromanaging, teams or individuals miss out on ideas and opportunities that could benefit the company as a whole. Therefore, the leadership of an agile organization should restrict themselves to defining and conveying established priorities and OKRs, then enabling development teams to achieve the company’s vision.
With this support, individual teams are free to discover the best possible options for development. Almost always, these team-driven approaches prove to be the most efficient, cost-effective, and reliable methods of creating an MVP.
Every business leader can relate to Mike Tyson’s articulation of the problem, “(e)verybody has a plan until they get punched in the mouth.” This is why agile planning and organization is a high priority for many companies, leaders, and workers alike.
However, the transformation to become an agile organization still proves difficult for many companies stuck leaning on more traditional planning processes. Many individual teams at these companies are aware of the potential for greatness, but they must be allowed to fully implement agile principles throughout their planning and development process.
Agile teams thrive with organizations that clearly define and articulate strategic priorities, specific OKRs, and regularly and frequently allocate funding. These successful development teams prove that by creating the most value with support, empowerment, and guidance from executives, you can create an agile organization destined for great success.