In the digital world, stay obsessed with changing customer wants and embrace agile ways of working
Leaders must constantly re-focus the attention of the team to look at non-customers
There’s a quip doing the rounds in business conference circuits these days. “In today’s context, it is not the big fish that eats the small fish. It is the fast fish that eats the slow fish.” Agility, in other words, is the name of the game in the digital age. From project management and new product development to creating new business models, companies are constantly tweaking the status quo to up their game.
Spotify is a classic example of an “agile-born” company. The 2,500 plus employee organization, that streams music to more than 100 million people globally, has organized itself into 100-member teams that continuously deliver innovations that customers love. It’d be fair to say that companies like Spotify are not just innovative, they are iterative.
Ericsson, the 140-year-old Swedish firm, manages networks for the world’s telecom companies. Before 2011, the company used to build systems in long five-year iterations. Now, the company has embraced agile methodology and has organized itself into 100-member teams that deliver to client needs in three- week cycles. This has led to rapid development of systems leading to faster realization of revenue.
Why have relentless iteration and agility become so important? In the physical world, a product or a service can be labelled as “done” once the production is complete and the consumer has consumed the offering. In the digital world, however, products and services have become real-time and are constantly improved in short bursts. As Kevin Kelly, the founding executive editor of Wired magazine, puts it: “In the digital world, everything is in a constant state of becoming.” Consequently, in the digital world, there is no concrete state of “doneness”. Products and services are constantly living and breathing data and are continuously creating new opportunities for improvement. Companies, as a result, must embrace agility to make the most of these opportunities that emerge on a continuous basis.
What can leaders do to help their organizations become agile? There are broadly two types of agility that leaders need to think about: operational and strategic. Operational agility is all about building and delivering the right products and services faster, cheaper and better. Strategic agility, on the other hand, refers to the ability of a company to produce breakthrough innovation in a flexible, seamless manner.
Leaders can drive operational agility in their teams and projects by doing three things well.
First, leaders must encourage their teams to stay obsessed over customer needs. In the highly successful book, The Lean Startup, the author Eric Ries brings principles from lean manufacturing and agile development to the process of innovation. He presents the build-measure-learn cycle for companies to build minimum viable products that test their hypotheses about customer demand without wasting much resources, measure key metrics and learn continuously from the users and eventually scale the product.
Second, leaders must eliminate bureaucracy by operating in small teams. At Amazon, Jeff Bezos famously instituted the “two pizza rule” as a guideline for limiting the number of attendees at a meeting. Agile teams typically have 7-10 members, just enough that can be fed with two pizzas.
Third, leaders must leverage a fluid network of people and resources, both inside and outside the organization, to get things done at a rapid pace.
Driving strategic agility, on the other hand, is a completely different game. This is not about doing something faster, cheaper and better. Strategic agility is all about game-changing adaption, wherein a company seamlessly pivots to new business models, new strategic positions and radical innovations. Such an adaptation is more likely to come from focusing not on the existing customer base, but the non-customer base. Obsessive customer centricity alone cannot do the trick. Leaders must constantly re-focus the attention of the team to look at non-customers to pursue radical innovation.
Strategic agility requires an organizational clarity and the will of the leadership to deal with the conflicts between the “now and the next”. Uber, for instance, is talking about driverless cabs by 2030 while, at the same time, trying to expand its network of drivers across countries. This is a great illustration of a company that simultaneously focuses on the “now” and the “next”.
Game-changing adaptation is a risky endeavour as it has the potential to cannibalize the existing business model. It requires commitment and courage from the senior leadership to place a big bet on the unknown and enable their teams to operate well in the face of uncertainty.
To achieve agility, operational or strategic, leaders must focus on building a culture that embraces continuous learning, experimentation and openness to change. Without these cultural pillars, organizations run the risk of becoming the slow fish and getting eaten up by the fast fish.
This article is part of a series on leadership in the digital era. Rajiv Jayaraman is the founder and CEO of KNOLSKAPE, an end-to-end learning and assessments platform.
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