Strategic Agility and Customer Focus
START WITH THE CUSTOMER
“Digital organizations start with the customer,” Peter Sondergaard, former SVP and Head of Gartner Research said. “They don’t ask what the customer wants, they watch what the customer does”. In Sondergaard’s blog, he mentions Steve Denning’s book, The Age of Agile, and bemoans the lack of more specific direction for leaders. Thankfully, the book does not cover how corporate leaders should become Agile. I say thankfully because if it did, that would be missing the point of Agile. Agile is a mindset, which includes many different values, principles, and practices; certainly not a set of rules – there is no “manual” of “how to do Agile”. Hint – that explains the absence of such books aimed at the Head of HR, a Chief Supply Chain Officer, or CEOs. The world of work has changed, profoundly.
PARADIGM SHIFTS AND MINDSET
Steve Denning’s book is relevant to every corporate leader who is responsible for leading people and producing output. To benefit from a “paradigm shift” that Denning writes about in his book, every leader needs to wake up to the fact that the world of work has changed. The industrial revolution ushered in new approaches, such as Taylorism. The 4th industrial revolution is ushering in what Steve Denning describes as a Copernican revolution in management, supported by Agile.
Clearly, every business leader needs to understand information technology and data, how it impacts their businesses and how they can leverage it for impact. However, they don’t need to learn techie skills any more than they need to learn about how electricity works. They certainly need to understand its potential to transform their businesses but they actually have a greater need to understand and embrace Agile. They cannot “do Agile” to an organisation but they can help make their organisations Agile – this requires a significant change, mainly in the mindsets of corporate leaders. Denning’s book focuses on the latter. The three laws that Denning mentions in his book – the laws of the small team, the customer and the network – are key to understanding his real message. Rather than a command and control hierarchical approach, or indeed a more laissez faire approach based on the once fashionable “flat management structures” or “empowered knowledge workers”, Denning advocates a world of work driven by small autonomous, highly networked, teams that focus on creating customer value.
SMALL IS BEAUTIFUL, AND POWERFUL
It is now finally common knowledge that: small self organising cross-functional teams can be significantly more effective than siloed departments that hand off finished work to each other, in a slow waterfall like sequence with high potential for significant waste and rework; these small teams make faster and better decisions – relative to individual corporate leaders – obviously because the expertise and experience resides within the team; they produce small increments of potentially usable work, quickly and at regular intervals, making it possible to keep pace with ever faster changing customer requirements. Just like the Copernican revolution exposed the hierarchies of the day for what they were – perpetrators of their own self serving truths – major corporations will slowly wake up to the fact that corporate leaders in siloed departments are certainly not the value creators , their cross functional teams are. Just like the child who cried “the emperor has no clothes”, Denning is certainly on the right path and his book is having the desired impact. Think about the recent news headlines regarding the purpose of the corporation and whether the needs of shareholders or stakeholders should be the main focus. Recall the Libra hearing when Mr Marcus vehemently insisted, in his reply to a senator, that his organisation exists primarily to serve the interests of customers, not shareholders. The learned senator’s generation was brought up to believe that corporations exist to serve the needs of shareholders by making money and “maximising shareholder value”. Denning attacks this view with gifted insights and clarity by emphasising the second law, the law of the customer. Yes, the previously “radical” view, advocated by Peter Druker in the 1970s, that the customer is the foundation of a business and keeps it in existence and therefore, corporations exist to serve customers.
END WITH THE CUSTOMER AS KEY STAKEHOLDER
Denning goes on to describe how Agile leaders need to advocate for radical change, especially in the area of accounting practices, in order for organisations to correctly measure and recognise real value creation, to support “operational” Agile and thus reap its full benefits. To put this into perspective, he even advocates for a move away from cost centric accounting practices towards more customer centric ones. He also describes how short-term driven actions – often supported by cost accounting – such as share buybacks, often used by CEOs to “maximise shareholder value”, extract or destroy value, rather than create it.
In a nutshell, for corporate leaders, there is no Agile manual because Agile is primarily a mindset. They need to change their mindset – “the way we do things around here” is a problem, the way we sometimes think is the bigger problem – a whole generation has been brought up to believe that corporations exist primarily to maximise shareholder value rather than create customer value. As more organisations place their primary focus on creating value for customers, this revolution will expose many corporate leaders and layers of management who add little or nothing to customer value.
CHANGE YOUR MINDSET – STAY RELEVANT
Like the Copernican revolution before it, Agile will actually expose some emperors (read CEOs) and their underlings as having “no clothes”. Agile may spawn small leadership teams that surround themselves with equally small, but numerous, highly networked self organising autonomous teams – essential to attract and motivate your millennial workforce – that actually get stuff done, sooner, supported by a few true leaders (let’s call them coaches and mentors for now), rather than multiple layers of redundant management, who continuously encourage teams to adapt and improve their ability to create value for, and meet the needs of customers. My former boss at Gartner naturally guided myself and other team leaders by encouraging us to give our teams the autonomy they needed to achieve seemingly impossible goals. Steve Denning’s book is full of what millennials may readily accept as gospel. However, for many mature corporate leaders who wish to stay relevant, his book may become required reading, to help them change their mindsets.