Recent years have been all about digital transformation. Now is about continuous change, about building capabilities to ensure resilience and sustainability of a business.
Current challenges of large-scale companies are in low digital maturity, disproportionate focus on short vs. long-term goals, frequent shifting of priorities, lack of discipline and focus in implementation, abandoning instead of adapting strategic plans, opinion vs. data based decision making, pyramid organizations instead of network of teams.
Technology is the least of the problems, although one can still encounter an opinion that implementing CRM or big data and hiring a few data scientists will solve all business problems. Majority of challenges lay in fundamental business processes such as setting the vision, proper culture and way of work and strategic planning and execution. These need to be rebuilt to create resilience through adaptability and that means embedding agility, flexibility, collaboration and experimentation into them.
To understand how adaptable a organization is, revisiting a company’s vision, culture and strategic planning and execution process is required.
Is the vision set with an infinite mindset?
There is no final destination of a business, but it is a journey and the with the goal to keep playing. Hence, the vision of the future needs to be set with infinite mindset (The Infinite Game, Simon Sinek) to ensure:
- people in organization feel safe, inspired and fulfilled,
- an organization can survive its current leaders.
In unpredictable times it keeps organization and its partners together and it can spark creativity and innovation to find new ways to stay in the game. Which emotions your company’s vision brings in people?
Do culture and way of work support adaptability?
The question is actually if there is a strategic plan to transform mindset, and if the right competencies for implementation exist.
You need to set up development plans for individuals, teams, the whole organization and especially leadership team. It all starts from them – the culture of the company cannot be changed bottom up. You are probably using individual coaching for many years but it is time to start doing team coaching for the leadership team, to ensure their alignment around vision, full support for strategic plan and help them transform towards agile leadership style.
You probably need to bring in partners such as agile coaches/trainers, innovation managers to help you, and you need to connect every training to business capabilities. But just doing trainings will not make you more adaptable – that is not a measure of success! After training is over, teams need to practice new knowledge with the supervision of their coaches. Only after they become autonomous you can say you built some part of business capability and embedded some adaptability in your culture and way of work. That is your measure of success.
Is an agile strategy planning business process based on business capabilities in place?
You want changes in your organization to be aligned to the overarching strategic vision and underlying strategic plan and at the same time you want your business to adapt rapidly and cost-efficiently to external changes in the business environment. That requires agile strategy with capability-based planning.
Agile strategy development and execution
Agile strategy assumes shorter development and execution cycles of strategy, continuously assessed through the lense of the vision. In a volatile, uncertain, complex and ambiguous (VUCA) world traditional strategic planning process has become ineffective and both leadership and employees have lack of confidence in those strategic plans because they become irrelevant quickly. That can lead to lack of confidence and trust in management but also to demotivation of employees who might feel they are losing time and energy on initiatives that are not needed.
There are several repeated issues with traditional strategy planning:
- strategic goals not aligned throughout organization,
- no connection between activities performed and success metrics – people do not understand how they contribute to achieving goals,
- no communication and feedback loops and
- no systematic lessons learnt to be used to improve strategy and execution.
The solution is a shorter cycle of strategic planning and execution, monthly or quarterly. In each cycle an organization needs to:
- develop/adjust strategic plan and execution and connect it with objectives and key results (OKRs) – do not do it only on managerial level but involve people,
- develop and execute communication plan towards people in organization,
- launch new initiatives or stop/put on hold existing ones as frequently as possible – you need to have strong governance from agile portfolio management here,
- measure achievements to track progress towards set goals,
- propose adjustments based on measurements and prepare for the next cycle of agile strategy process.
This way your strategic planning process stops being a convenient excuse for management to organize two days of team building in some nice location for themselves, but it is becoming a transparent process which is taking advantage of the collective intelligence of the organization, and in that way is bringing organization closer to becoming adaptable.
Business-capability based strategy development
Agile strategic planning and execution process is not enough if it continues to support functional planning based on systems and organizational silos.
Many companies are still prioritizing activities based on individual contribution of single activity, or even worse based on the loudness of certain people and corporate politics. They are shifting their priorities too often, without clarity and connection to capabilities. That leads to ending up with implemented tools which no one uses because of lack of competences and business value, lack of understanding how it contributed to overall strategy, or to missing opportunities and falling apart during crisis.That is where capability-based planning helps.
A business capability comprises a process involved, tools needed/used (physical and virtual), people and machines (AI, robots, RPA), roles needed (with the rise of AI tasks in business processes we need to consider AI roles in business capabilities) and soft and hard skills required to achieve it. This approach gives an opportunity to understand better which kind of capabilities might be needed in case of crisis and by addressing them in your strategic and corresponding implementation plan organization will be a step closer to achieving adaptability.
Business-capability based planning is executed as part of development of strategic plan in agile strategy and is further supporting cross-functional collaboration in the company and shared goals. It requires five steps:
- creating a business capability map of your organization, identifying existing and needed capabilities,
- assessing changes that should be applied to some capabilities to improve them,
- defining a group of initiatives connected to a capability, their business value and connecting them with strategic goals and objectives,
- prioritizing activities holistically with understanding how they fit to together to form a business capability,
- creating an implementation plan and roadmap for building/improving a business capability.
There is no measure an organization can take to guarantee success in the VUCA world, but implementing adaptable organization practicing agile strategy with capability-based planning will for sure increase your company’s chances for thriving and surviving.