Adapting during a crisis using Agile Strategy

Ralph Fernando Agile Strategy, Consumer Industries, Opinion, Travel, Leisure & Entertainment Leave a Comment

In a time that is unprecedented in its use of the word “unprecedented”, it has never been more important for organisations to be responsive and adaptable, and to be so with purposeful control. As COVID-19 creates a whirlwind for every organisation, adopting an Agile strategy mindset has never been more important. But what does this mean in practice?

Facing the pace of change

So much of what traditionally passes as business strategy tends to focus on “fixing” an organisation on a particular path. However, market and organisational changes quickly make that path unsuitable. This is precisely what many businesses are experiencing today. Just a fortnight ago, the Confederation of British Industry stated that the pace of change “is too fast to play catch up.” I couldn’t agree more.

Consider the US cinema industry as a perfect example of this. The stark chart opposite shows the precipitous fall in box office revenues over February and March. “Catching up” is indeed incredibly challenging, and rapidly turns to “cutting out” – aggressively reducing cash outgoings in the face of forced closures and trying to ride out the storm.

Figure 1: Year-on-year change in US box office revenues, seven day rolling average
(Source: Box Office Mojo / Financial Times)

Why is Agile strategy so important to adopt?

It would be beyond fanciful to claim Agile Strategy could single-handedly solve the current dilemma facing the cinema industry. However, its focus on building options that allow organisations to defer decisions “to the last responsible moment” can certainly help to mitigate the impact of such challenging times when they occur.

If I were to summarise the difference between traditional strategy and Agile Strategy in one idea, it would be the shift from “setting direction” to “managing direction” – developing real options to enable an organisation to adapt quickly, and putting in place effective and responsive governance and performance management to determine when to do so.

Continuing our cinema example, the UK’s Curzon Cinemas, acquired in December by US indie distributor Cohen Media Group, has a long-established Home Cinema Streaming Platform to which it is redirecting its customer base whilst it shutters its physical sites. Does this close the gap? No. Will it be the difference between being a going concern and not? Maybe.

Amid this pandemic, leaders should consider how to apply the following four Agile Strategy principles in their organisation in order to be able to respond, adapt and thrive in the long term.

(1) Design

The first principle is to design optionality into the organisation where it matters. To do so, strategy, operations and technology must be designed and managed together.

This is all about designing adaptability into the organisation to meet rapidly changing circumstances. First, identify where responsiveness and adaptability could and should be designed into your organisation today. From there, prioritise your backlog of changes to people, processes, technology and data to make this optionality real.

We are seeing plenty of examples of this already as organisations face up to the challenges of this pandemic. For example, the British government’s temporary relaxation of competition law has enabled rival supermarkets to share data on stock levels and even share distribution depots and delivery trucks. This was unthinkable (and illegal) three weeks ago. Now it is helping to “feed the nation”.

(2) Process

Having designed optionality into the organisation, experiment and iterate purposefully.

Successful experimentation requires two things: direction and control.

Your Strategic Horizon – a clear set of statements defining where the organisation will play and how it will win – provides the direction.

Define these using the Five Key Questions. Consider your Horizon as a set of hypotheses to test and refine and on which to pivot; the Horizon keeps shifting as you move towards it.

The control – what prevents you wandering off course as you make changes to your Horizon – is your organisation’s Unifying Purpose (“UP”); if the change is not in line with your purpose, you do not do it. The only way is UP.

Any pivot and new response to this crisis should still be in line with your organisation’s purpose, and should still be developed iteratively in order to maximise value and minimise risk. Now more than ever, resist the urge to proliferate business models and initiatives that are neither sustainable nor viable given your existing resources. Remember, experimentation comes down to direction and control: be decisive in addressing what you can control and design in optionality and experiment to prepare for what you cannot.

(3) Data

Define and implement your organisation’s Minimum Enterprise Data Set

In most cases, an organisation’s greatest data challenge is not access but focus. To combat this, an organisation must define its Minimum Enterprise Data Set or “MEDS” – a focused, integrated set of strategically critical quantitative and qualitative data and insight.

A MEDS focuses on three core areas:

  • Tracking market, competitive and organisational dynamics: This can range from monitoring demand indicators through to understanding competitive responses.
  • Managing your Strategic Horizon: This includes typical lagging and leading performance indicators, but also “anticipatory” measures. This latter group requires the ongoing validation of assumptions, risks and consequences underpinning your Horizon, with the recognition that if the assumptions are no longer valid, the strategy may well have to change.
  • Driving operations: An organisation is typically answering four questions to drive its operations. Anticipation: What, if changed, would require a shift in our Strategic Horizon? Control: What do I need to evaluate and control performance? Improvement: Where can I make the most meaningful improvements? Communication: What do I need to communicate, and to whom?

In black swan events such as this, there is a natural hierarchy of activity that starts with survival (i.e. cash flow and being a going concern), moves through stabilisation (managing commercial and operational factors as the market bottoms out) and then culminates in strategic shift (positioning to thrive on the upturn). Your Horizon should reflect this, and correspondingly so should your MEDS – gradually shifting emphasis from cash to profitability and finally to growth.

(4) Governance

Having the right data is irrelevant if it does not drive better decision-making.

Now is the time to instil a governance model that cuts across levels, functions and organisational boundaries, and sets a faster rhythm to organisational performance management. To do this, create a core group that reflects this mix, including customers and suppliers where appropriate, and which is set up to evaluate and make decisions on the back of the experiments being run across the organisation.

Many organisations already have a “war room” in place, but does it contain the right participants from inside and potentially outside the organisation? The supply chains of some of the most heavily affected sectors – travel; hospitality; food and beverage – are also some of the most integrated and interdependent. Working towards collective network goals, in many cases supported by exceptional government or regulatory activity, and governing that effectively may mark the line between success and failure.                                               

Conclusion

We do not need another blogger’s retrospective wisdom on how much better the world would be if only s/he had been in charge. For the avoidance of doubt, I am not that blogger. I do propose, however, that there are changes that YOU can make to your organisation in the areas of design, process, data and governance that will leave it better prepared to address such challenges in the future.

Leave a Reply

Your email address will not be published. Required fields are marked *