A last word (for this Part) on budgeting. We can establish highly flexible, adaptive and iterative working practices but they will fail if not supported by suitably flexible, adaptive and iterative budgeting.
As we discussed in Part Two, traditional accounting methods may work well for established propositions but new ventures characterized by increased uncertainty, iterative value, and test and learn should not be shackled to short-term targets, over-burdensome reporting and inappropri-ate measures. Like Eric Ries’s ‘innovation accounting’, we need instead to focus on actionable, early stage metrics that can show value before revenue, and demonstrate sufficient progress towards the ultimate goals of customer satisfaction and profit. But more broadly financial resourcing needs to support an orientation towards experimentation, and the fulfilment of not only short-term objectives, but longer-term, breakthrough goals.
The politics of budgeting can act as a drag-brake on agility. Overly hierarchical decision-making on financial controls slows progress. Overly bureaucratic budget setting processes act as a time-suck for management.
Siloed control of financial resources reduces flexibility and manoeuvrability.
As Rita Gunther McGrath expounds, it is about investing in flexibility:
Firms built to thrive under transient-advantage conditions handle resources differently from firms designed for exploitation. In an exploitation-oriented firm, reliable performance, scale, and replication of processes from one place to another make a lot of sense because you can operate more efficiently and gain the benefits
of scale. Resources, therefore, are directed to support these goals, and changing these resource flows is painful and difficult. A transient-advantage-oriented firm, on the other hand, allocates resources to promote what I call deftness – the ability to reconfigure and change processes with a certain amount of ease, quickly.10 Financial resourcing that is oriented not only towards efficiency and opti-mization, but towards finding the next star product, the next breakthrough, the next curve. Financial resourcing that supports the mitigation of risk through investment in multiple test-and-learn scenarios to explore new opportunities, rather than the ‘Bigger-Higher-Faster-Farther’ school of financing. Financial resourcing that is fast and flexible enough to support the truly agile organization.
key takeouts
In this Part we have focused on building a heightened momentum within the organization through enhanced velocity allied to a reinvigorated focus, brought to life in new ways of working. Key takeouts include:
1 Map out the organizational purpose, mission, vision and values. Make them unique, compelling and easy-to-grasp. An ambitious, motivating call-to-arms.
2 Create a positive sense of urgency to drive continuous change towards that compelling vision. Communicate the vision repeatedly, bring it to life at every opportunity, live it, breathe it, exhibit it in leadership actions and behaviours.
3 Create the space to pursue that long-term vision, to solve the big prob-lems, to enable breakthrough innovation. Fight the suck of resources to short-term targets and priorities.
4 Have a point of view on the future. Pay attention to what doesn’t change, as well as what is changing. Work back from that vision of the future to empower different thinking and shape near-term priorities towards long-term goals.
5 Create clarity in strategy through making definitive choices shaped by consumer, competitor and company contexts.
6 Be stubborn on vision, but flexible on detail. Combine emergent strategy with highly fluid, iterative planning.
7 Orient strategies, processes, resourcing, operational priorities and execution towards the customer. Don’t sacrifice customer experience
for efficiency gain. Use short, fast customer feedback loops inherent in processes such as agile and lean to embed customer focus in develop-ment and operational working. Put user need at the centre, start with the customer and work backwards, but design with vision and opti-mize with feedback. Use data in the design process to validate and drive decision-making.
8 Be ruthless about prioritization. Know your competitors but don’t follow them. Balance importance to the organization with impact to the customer. Fix flawed customer experiences before investing in shiny innovation.
9 Use a three-timeline strategy framework to align short-, medium- and long-term strategy and planning. Work to remove as many assumptions as possible. Ask what needs to be true in order to achieve a desired outcome.
10 Link strategy to execution at every level of the organization using strat-egy and tactic trees and OKRs.
11 Build organizational momentum by using sprint working as a driver for change, to shift behaviours and mindsets as well as processes, and to catalyse innovation, new ways of working and transformation.
12 Develop a robust data strategy to support transformation and performance.
13 Take a user-centric approach to technology, guided by principles of flex-ibility, adaptability and scalability.
14 Support change with fast, flexible budgeting that enables the space to experiment and the adaptability to manoeuvre fast.
notes
1 Roger L Martin (May 2005) Five Questions to Build a Strategy, Harvard Business Review, [Online] https://hbr.org/2010/05/the-five-questions-of-strategy [accessed 25 October 2016]
2 Roger L Martin (May 2005) Five Questions to Build a Strategy, Harvard Business Review, [Online] https://hbr.org/2010/05/the-five-questions-of-strategy [accessed 25 October 2016]
3 Eli Goldratt, Rami Goldratt and Eli Abramov (2002) Strategy and Tactics, Washington State University, [Online] https://public.wsu.edu/~engrmgmt/holt/
em534/Goldratt/Strategic-Tactic.html [accessed 25 October 2016]
4 Google Ventures (2016) The Design Sprint, Google Ventures, [Online] http://
www.gv.com/sprint/ [accessed 25 October 2016]
5 Jennifer Rowley (April 2007) The Wisdom Hierarchy: Representations of the DIKW hierarchy, Sage Publishing.com, [Online] http://jis.sagepub.com/
content/33/2/163.abstract [accessed 25 October 2016]
6 Diya Soubra (5 July 2012) The 3Vs That Define Big Data, Data Science Central, [Online] http://www.datasciencecentral.com/forum/topics/the-3vs-that-define-big-data [accessed 25 October 2016]
7 John Burn-Murdoch (December 2012) Study: Less than 1% of the world’s data is analysed, over 80% is unprotected, theguardian.com, [Online] https://www.
theguardian.com/news/datablog/2012/dec/19/big-data-study-digital-universe-global-volume [accessed 25 October 2016]
8 Tom Read (13 November 2013) Technology at Least as Good as People Have at Home, Gov.UK, [Online] https://cabinetofficetechnology.blog.gov.
uk/2013/11/13/technology-at-least-as-good-as-people-have-at-home/ [accessed 25 October 2016]
9 William Bruce Cameron (1963) Informal Sociology: A casual introduction to sociological thinking, Random House, ASIN: B001A9FCWQ
10 Rita Gunther McGrath (4 June 2013) The End of Competitive Advantage:
How to keep your strategy moving as fast as your business, Harvard Business Review Press, ISBN-10: 1422172813, ISBN-13: 978-1422172810
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PART FouR Flexibility
In this Part we consider the role of people, culture, structures, resourcing in enabling and facilitating change.
Flexibility – adaptable, able to be easily modified to respond to altered circumstances, to bend without breaking, workable, malleable, supple, ready and able to change.