Develop Agility That Outlasts the Pandemic
July 5, 2020
by Darrell K. Rigby, Sarah Elk and Steve Berez.
There’s nothing like a crisis to ignite innovation. American soldiers in World War II created homemade patches for planes and Jeeps when standard replacement parts couldn’t be found. Following the explosion on Apollo 13, NASA engineers devised ingenious solutions to bring the astronauts safely back to Earth. The current pandemic has already led to countless innovations. Dyson designed a new ventilator in 10 days. Alibaba and retailer Zhongbai teamed up to build an unmanned store for essential items and disinfectant supplies. Chick-fil-A developed more than a dozen changes to its drive-through process to maximize both safety and efficiency in the face of skyrocketing demand for take-out food.
Frankly, these examples don’t surprise us. We have studied and consulted with many companies on the principles and practices of agile management, and we have repeatedly seen how quickly a company can innovate when it sheds the constraints of bureaucracy and adopts agile methods.
Today, many companies seem to be discovering agile on the fly. Executives tell us that the innovations their companies are creating weren’t part of a strategic plan. They weren’t built into anybody’s compensation system. They weren’t led by senior leaders or by a program office, and they didn’t go through the usual stage-gate process. Typically, a small group of people spotted an urgent need, dropped lower-priority activities, broke typical bureaucratic procedures, and transformed from everyday workers to real-life corporate MacGyvers, surprising themselves and their bosses in the process. Sounds a lot like agile to us.
Another sign of today’s agility: a rapid increase in many companies’ metabolic rate. One senior executive with a major retailer told us that he now holds daily 30-minute meetings with cross-functional stakeholders to attack the day’s challenges. His team sets key principles, such as safety, while delegating operating decisions to line managers. “We’ve gone from making five big decisions a month to sometimes making five a day now,” he says. “And I’m not sure we’ve lost a lot in the quality of those decisions.”
Take note, though: This spur-of-the-moment agility is fragile. Innovations happen sporadically rather than systematically. And when the emergency fades, people typically return to traditional command-and-control innovation until the next crisis arises, when they must reinvent agile approaches all over again. So how can companies maintain their agility once the crisis is over? Here are the keys:
Build an agile system in agile ways.
Business systems have a greater impact on long-term performance than individuals do. That’s one reason why athletes and business executives perform so differently in different organizations. So why not capitalize on times when agile innovations are highly successful to make the business system itself more agile? Create more agile teams charged with generating innovations. Begin spreading the principles of agile throughout the organization, even to the parts of it that must remain bureaucratic.
The key here is to build an agile system using agile methods. Engage people in changing the system through testing, learning, and adaptation. Don’t copy some other company; it rarely works, and it keeps people from developing the skills they need for adapting, customizing, and harmonizing all the elements of agility. People need time to create — and then to get accustomed to — a new operating model.
Increase the speed of innovations.
During crises, executives often marvel at how the speed of innovation in their organizations accelerates. Agile enterprises focus on speed during normal times as well. One common measure is how much time elapses between the identification of a problem or opportunity and the delivery of an innovative solution.
Tracking response times can lead to surprising insights. The time it takes an agile team to release an innovation is determined by two factors: the time required to work on the innovation and the time spent waiting on others. Waiting times include delays caused by operating processes, such as strategic planning calendars, approval processes, budgeting and funding cycles, and dozens of other factors. Most teams spend only 15% to 20% of their time working and the rest waiting. So reducing wait times has five times the impact of making teams work faster.
One way to reduce wait times is to break big, lengthy programs into smaller batches with rapid feedback loops. Smaller batches allow people working in complex systems to start, stop, or pivot their activities quickly in response to changes or new demands. Breakthrough innovations don’t have to be big, five-year gambles of the sort that terrify bureaucrats; they can become a series of short bursts that are regularly reviewed and adapted. Similarly, cumbersome planning and funding activities don’t have to happen in annual cycles, cycles that force innovation teams to delay their start or postpone the death of floundering initiatives. Breaking a long, monolithic planning and budgeting process into quarterly sprints minimizes wait times and increases flow efficiency.
Reset the balance between standard operations and innovation.
To sustain success in dynamic environments, companies must balance two vital activities. They must run the business reliably and efficiently, and they must change the business rapidly and effectively. Too little focus on innovation leads to a static enterprise that will fail to adapt. Too little emphasis on operations leads to poor quality, high costs, and dangerous risks to customers and to the business. Most large companies today have tilted too far toward bureaucracy, starving innovation. Crises make this deficiency painfully obvious but only for a while. The trick is to maintain the urgency, anticipate the next crisis, and create a system that emphasizes innovation as much as operations.
The current pandemic is surely the worst calamity most business leaders have seen, but it is hardly unique. The past two decades have witnessed a startling series of crises and black-swan events, including terrorist attacks, murderous local conflicts, fatal-disease outbreaks, and unprecedented weather events, such as hurricanes and wildfires. And all that is on top of “ordinary” business disasters: data breaches, trade wars, digital disruptions, and so on. The future, in our view, won’t be all that different: It is likely to present companies with a series of unexpected challenges and opportunities, and business, as usual, will no longer be sufficient. An agile business system can help companies create the innovations they will need to survive in these uncertain times.
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