The Agile Strategies ToolkitTM white paper addresses the shortcomings of traditional strategic planning methodologies in achieving ... outline lofty goals, ... biggest fish set out

www.agile-strategies.com Agile Strategies ToolkitTM – January 2014 – ©Agile Strategies LLC

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The Agile Strategies ToolkitTM January 2014

Dan Montgomery

Chief Strategist, Agile Strategies, LLC

This white paper addresses the shortcomings of traditional strategic planning methodologies in achieving what they are meant to do — adapting to changes in the market with new products, services, and organizational behavior. This topic is being addressed by a number of authors, but there remains a need for a practical set of tools that will help organizations bring greater agility to the implementation of strategy, using customer value creation as a compass. In advance of a longer-term book publishing project, this paper is meant to generate discussion among leaders and professional planners, as well as feedback on best practices.

The Trouble with Strategic Planning Your organization probably has a strategic plan. It might even be a great plan. Yet, even the most well thought-out strategic plan often falls short when it comes to execution. Do you see any of these problems in your organization?

• We don’t have a clear plan, that everyone understands and knows how to take part in • We have a clear plan, but we cannot implement or stay focused on it • Employees and other stakeholders follow the plan, but aren’t engaged with it • The right hand doesn’t know what the left hand is doing • We cannot demonstrate results, to ourselves or our stakeholders • We cannot change direction as quickly as we need to These problems cost untold millions to most organizations today —in lost opportunities, in not dealing with risks, and in losing the support and engagement of employees, customers, and other key stakeholders. There are four fundamental problems with the way most organizations conduct strategic planning, problems that have serious consequences for strategy execution: 1. Most human beings make plans assuming that the future will be more or less like the past.

It won’t be — especially in industries like technology, manufacturing, higher education and health care, but in many other sectors as well.


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2. Strategic planning is often a top-down process, developed as a one-time or annual event, often at an off-site “retreat” attended only by senior management and consultants, with little if any input from employees or customers.

3. Strategic plans outline lofty goals, but aren’t doable — or maybe even understood — by the people who actually do the work.

4. Strategic plans are not easily adaptable to changes in the market, or new information about projects that are underway.

A New Paradigm for Planning A new concept for strategic planning is needed, one that addresses these problems directly by creating a more flexible model that: • Accepts and embraces the uncertainty of important trends affecting your organization and

its goals • Engages stakeholders in the conversation • Translates strategy into practical, day-to-day action • Adapts nimbly when it’s time for course correction

The Agile Strategies Toolkit™ builds on the best tools and insights from diverse management disciplines including lean manufacturing, agile software development, and balanced scorecard. It is a unique approach that keeps the focus on customer value and provides the means for everyone in an organization to live, learn, and adapt strategy on a practical, daily basis.


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Why Agile? Imagine a school of fish. Have you ever noticed how quickly — and collectively — they pivot and head in a new direction in response to opportunity or threat? Do you think they did this according to a plan that the biggest fish set out for them? What makes them so agile?

Agile practices (known collectively as “Agile”) originated in the world of software development — but have big implications for the practice of strategy and the rollout of all kinds of initiatives, not just information technology. Agile emerged as a creative response to common failures — cost overruns, missed schedules, customer needs that changed faster than the developers could keep up, and software that just didn’t work once it was rolled out. In 2001, a group of industry-leading software developers got together and created the Manifesto for Agile Software Development. The key values of agile they outlined include: Individuals and interactions over processes and tools. While moving logically through a sequence of process steps is necessary, effective collaboration is even more important. Most approaches to either software development or strategy have been developed with an engineering mindset. They are big on specific process steps and quantitative analysis, and light on culture and values. In agile, there is a strong emphasis on facilitation and consensus-building tools (such as Open Space Technology, World Café, Fist of Five, and Ritual Dissent) that create a healthy, open, engaging group dynamic where everyone is encouraged to have their say without fearing negative consequences, and where everyone can live with the resulting consensus. Working product over comprehensive documentation. What’s important is creating a product that works and provides value for a customer, not a lengthy requirements document. Non-value-adding activities are reduced. Teams work in short, highly focused sprints as little as two weeks long, and provide something of value to a customer in each sprint.


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Customer collaboration over contract negotiation. Contracts provide long-term commitments within which people can work, but ongoing conversation — rather than a fixed agreement — with the customer is essential to understand what is of value to them. This happens according to a cadence that links long-term commitments with short-term feedback. Cadence is an ongoing, planned cycle of conversations and decisions that links day-to-day activities and improvements to strategic priorities. Responding to change over following a plan. Rather than providing a static map, long-term planning provides a dynamic compass that helps the team quickly change its processes, schedules, or even its goals in response to new information. Customer requirements often change even while extensive planning is occurring, and may keep changing after the plan is complete. New products or services emerge from internal conversations and customer feedback. Agile has its roots in the world of lean manufacturing, exemplified in the Toyota Production System and adapted by thousands of organizations across the world, not only in manufacturing but increasingly in lean startups as well as health care. The terms “lean” and “agile” have come to be used almost interchangeably in many sectors, but wherever they are used, the approach has these common characteristics: • Engaging the collective intelligence of employees, customers and stakeholders in evaluating

issues and choices for moving forward • Building a persistent focus on improving customer value • Using actionable performance metrics to set the goalposts for success and evaluate

alternatives • Pivoting quickly as these metrics reveal either dead ends or unanticipated opportunities


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The Agile Strategies ToolkitTM Many strategy approaches make the mistake of developing multiple, detailed steps for every possible nuance of the strategy. Our experience has been that these approaches overly complicate the process — especially if most of the time and energy is spent at the front end, defining high-level elements like mission and vision statements. Often, these approaches demand large investments in multiple workshops by people who are already too busy. And, the detailed plans often get in the way of responding nimbly when change is needed. Our work developing customized strategy management frameworks for large and complex organizations suggests that a more usable approach is to utilize toolkits that support just-in-time training and facilitation for the pieces that matter most to your organization at the time. What ties all the tools together is what we call radical customer focus. No matter which tools your organization uses, the key is to focus on customer value at every level of the process: • The overall value proposition that defines the mission of your organization • A vision for developing products and services based on that value proposition • Understanding how your organization participates in a value exchange among all its

customers and stakeholders — your “business ecosystem” • Building a strategy map that shows how you will put the right resources, partnerships, and

processes in place to deliver value • A regular cadence of project portfolio review that ensures continuous communication with

customers about what product and service features they value What would it mean to your organization if you could develop strategies that: • Create a continuous focus on improving customer value • Use the right metrics to align action and inspire innovation • Act nimbly to rebalance project commitments in response to new

information and priorities The Power of Collective Intelligence These three overlapping areas — focus, alignment, and action — rely on a common thread: they engage the collective intelligence of the team, which makes strategies more achievable and flexible than strategies that are imposed top-down by executives and consultants. The reason for this is that collaborative organizations are inherently better at sharing information, imagining new possibilities, making strategy practical, and identifying emerging risks. Every program, department, and job is part of a strategy that contributes to customer value.


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This is not “change management.” The idea of change management is an oxymoron, and betrays a top-down approach to strategy that doesn’t truly engage the hearts and minds of people in the organization. Actively involving them in the development and execution of the strategy does. With collective intelligence as its foundation, the Agile Strategies Toolkit is a new, unique set of value disciplines — practices and tools for engaging your organization in the three areas of focus, alignment, and action.

Value disciplines included in the Agile Strategies Toolkit

Focus on Customer Value You already know the importance of customer focus. And you know that providing customer value precedes financial success. Are you continuously innovating and improving your customer value? How closely are you watching your business ecosystem and its competitive forces? Is customer value visible to every member of your organization? The Agile Strategies Toolkit helps all levels of your organization continually re-align around customer value. As Peter Drucker said, “The purpose of business is to create a customer.” Understanding how you create value in your business ecosystem is important: how your organization fits in, what the competitive forces may be, how to maximize customer loyalty, and where you can innovate and provide greater value. Understanding the trends and uncertainties in your marketplace prepares you to recognize and plan for change when it happens.


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A brief, inspiring and measurable vision — that focuses on customer value — is the compass for everything you do. Align Your Organization with a Balanced Scorecard In order to maintain strategic agility, your entire team needs to be able to measure the progress and results of your strategy. The Agile Strategies Toolkit includes a balanced scorecard, which is a proven tool for creating truly strategic performance metrics and for aligning action in the organization; two-thirds of Baldrige Performance Excellence Award winners use it.

The Balanced Scorecard shows a cause-and-effect relationship unique to your organization, communicating how investments in organizational capacity and internal processes produce customer value and financial results

Using the balanced scorecard, alignment can be cascaded down through the levels of the organization, and can also be horizontal, involving other players in your supply chain. The backbone of organizational alignment, the balanced scorecard uses highly visible and frequently tracked strategic performance measures. These measures tie back to the high-level strategic imperatives and objectives, and serve as an objective basis for decision-making and improvement efforts. Organizations that manage according to transparent, agreed-upon measures have been shown to generate better ROI, create better teamwork, and manage risk and foster innovation better than those that don’t. Take Action: Managing Your Agile Project Portfolio Strategic portfolio management begins with a list of prioritized initiatives tied to strategic objectives, designed to “move the needle” on strategic measures. Good start. But as you already know, even the best prioritization of people and money to strategic initiatives will change. The strategic assumptions behind the choice might be proven wrong. There might be more risk or cost than anticipated. Change can come at us from multiple directions — political, economic, technological, and social. As an agile organization, you not only anticipate change and dynamic information, you welcome it! Your strategy includes paying frequent attention to the external signals that tell you if the assumptions underlying your strategy are


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still true. Agile organizations review their strategic project portfolio at least quarterly, looking at the balance of progress, risk, cost, and anticipated benefits, and fund projects incrementally.

Quarterly portfolio review is used to rebalance investments in various strategic initiatives based on

up-to-date information about customer values, revised costs and risk assessments, and projected benefits

At the end of the day, your strategies remain agile by employing what we call Strategic CadenceTM. Strategic Cadence is a calendared, ongoing cycle of conversations and decisions that link day-to-day activities and improvements to strategic priorities. High-level strategies may be reviewed and updated annually. Project portfolios are reviewed and revised quarterly, and scorecard results are reviewed monthly. Agile project management techniques offer a daily and weekly cadence, ensuring commitment, progress, and course correction.

Annual Strategy Review

Quarterly Scorecard & Portfolio Review

Biweekly Iteration Review

Daily Scrum

Strategic Cadence makes the strategic plan more sustainable and adaptable by scheduling regular conversations that explicitly link

high-level strategies to day-to-day activities.


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Where Do We Begin? The Agile Strategies Toolkit is designed to adapt easily to your needs, and to get your team up and running quickly. We offer a collaborative, high-impact, two-day workshop designed to clarify your strategic focus, teach you how to align your organization, measure the most important outcomes, prioritize initiatives, and sustain momentum going forward.

About Dan Montgomery Dan has been training, coaching and facilitating in the areas of strategic planning, leadership development, and balanced scorecard for nearly 20 years, following a 15-year career in information technology. Prior to founding Agile Strategies, Dan was Vice President of Professional Services for the Balanced Scorecard Institute and led the company’s consulting practice. He is co-author of The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard (The Institute Press, Cary, NC, 2013). Dan’s experience and perspective covers many sectors including health care, technology, human services, higher education, natural products, utilities, government, financial services, social entrepreneurship, economic development, and construction. You can contact Dan at: Agile Strategies LLC 2525 Arapahoe Avenue, Suite E4-545 Boulder, Colorado 80302 [email protected] 720-641-3048 www.agile-strategies.com www.linkedin.com/in/montgomerydan The Agile Strategies Toolkit © 2014, Dan Montgomery, Agile Strategies, LLC. All rights reserved. Intellectual Property This document and all of its contents, including but not limited to photographs, images, illustrations, graphics, Agile Strategies logos, titles, characters, names, and icons (collectively “Intellectual Property”), are protected by copyright, trademark, and other laws of the United States, as well as international conventions and the laws of other countries. The Intellectual Property is owned or controlled by Agile Strategies.

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The Agile Strategies ToolkitTM white paper addresses the shortcomings of traditional strategic planning methodologies in achieving ... outline lofty goals, ... biggest fish set out