By Sakhile Malinga

As globalisation snowballs, organisations continue to enter the exciting age of complexity, a chaotic business landscape which is different from the two prior eras in strategy development.

The Eras in Strategy Development

#1 Era of grand design and systematic planning

The desire to over-elaborate the planning was made redundant by constant strategic drift. IBM and the mainframe was the king of the castle. Management approaches included detailed strategic plans with limited support from a changing internal and external environment. The analysis of SWOT (Strength Weakness, Opportunities and Threats) created historical context with a strong sense of hubris if the previous period was successful. Remediation if challenged.

#2 Era of Strategic Positioning

The era gave us value chain analysis, which created the technology giants such as Microsoft, IBM and Cisco. This era capitalised on large enterprise solutions that were meant to facilitate delivery in a Porter Value chain, looking at the 5 forces as a key driver of value (threat of substitute, new entrance, bargaining power of suppliers, bargaining power of customers, intensity of rivalry), with clear distinct variations of stratagem, which was focus, differentiate and cost leadership.

#3 Era of Complexity (Chaos)

The new era of a connected business world, with organic rather than hierarchic tendencies has led to the rise of social architectures that gave rise to the Facebook, Twitter, LinkedIn, Skype and cloud computing. This era is where agile incrementalism raises to the fore. A complex construct with too many unknowns, where change is welcomed and not feared and ownership is shared not assigned.

Leadership in Agile Incrementalism

The main change is primarily from transactional to transformational leadership. ¹

Transaction emphasises contingent rewards, and managing by exception. Transformation exhibits charisma, developing a vision, engendering pride, respect and trust, inspires and pays attention to the followers needs.

Agile incrementalism is transformational and it is incremental and not iterative, the fundamental difference is it does not predict what you want, just builds it better and quicker.

The key principle is the fact that individuals and interactions are preferred over process and tools. Chaos if not thought through. Customer collaboration is preferred over contract negotiations. Responding to change is preferred over following a plan. Working product is preferred over comprehensive documentation. Chaos if underestimated.

Agile affects strategy

1. Capital Planning – The financial returns on investment of software projects becomes more about “fixing of the problem” rather than finding a solution package.
2. Productivity – A general prediction of 25% boost in productivity ² in software delivery.
3. Minimum Viable Product (MVP) vs Scope, you deliver what matters first and might not deliver the entire scope. The focus is working software.
4. Resources – Agile has people and not resources. The approach is more about predictable change and less stress in introducing change.
5. It’s about the Customer⁵– The time to respond to competition is swift and exciting as this becomes the focus of the team.

Software is a massive contributor to competitive advantage and any organisation that links it to an emerging strategy³ will dominate its market.

The challenges of Agile

1. You will lose a sense of control, trusting the judgement of the teams to deliver. Allocated capital to solve a problem rather than to deliver a predefined thing will require maturity.
2. Executive support and buy-in, for the existence of teams not business or IT. The concept of IT and business becomes archaic. The lines cannot be drawn, this becomes objective driven teams.
3. Requirement will not be required. This translates to business needs; the business will need to have specific needs to be solved.
4. Scope is variable; hence the power lies not with “completion”, but completing enough to enable the business.
5. Change will not be welcomed; agile environmental changes will lead to resistance. Chaos does that to people. Training will be necessary for the teams.
6. Different language, different delivery. The key to delivery will be a common language, whatever you call a thing, let it be a thing.
7. Embracing Failure – accepting this faster than later in the process is what makes it acceptable.

The age of chaos is exciting, it’s every day that you wake up and expect Apple, or Facebook, Snapchat, Google and Twitter to release a new feature. They use agile, one day we will all use it.

Conclusion

Using any method to achieve an outcome is a good reaction to environmental changes, however locating the reason why a particular method is the right method; helps clarify why the procedures and techniques are vital. Software Agile approaches are methods designed bring a logical approach to a chaotic world.

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About the Author:

Sakhile Malinga is a leader with a strong affinity to all things involving strategy, projects and digital. His purpose is to build stuff and people.

Sources:

1. Bass, B. (1990). ‘From transactional to transformational leadership: learning to share the vision.’ Organizational Dynamics, (Winter), 19–31.
2. http://www.deltamatrix.com/why-are-agile-teams-25-more-productive
3. Johnson G. Managing strategic change—strategy culture and action. Long Range Plan 1992; 25(1):28-36.
4. Ghobadian, A and O’Regan, N. “ John Lewis Partnership lessons in logical incrementalism and organic growth: A case study and interview with the Chairman, Mr Charlie Mayfield’ Journal of Strategy and management (2008).
5. Anderson JC, Kumar N, Narus JA. Value Merchants: Demonstrating and Documenting Superior Value in Business Markets. Harvard Business School Press.