Thursday, April 4, 2019

MANAGEMENT SPECIAL ....Planning in an agile organization PART I


Planning in an agile organization PART  I
Agile organizations rely on an innovative mix of stable and dynamic elements to bring planning up to speed with their fast-paced needs.

Companies large and small are discovering that agility—the ability to quickly reorient the organization toward valuable opportunities—can improve the performance of working groups across the enterprise. Agile ways of working can also reduce risk and create flexibility, because they allow teams to test and validate ideas before the business commits to developing them. These benefits can be lessened, however, if companies don’t apply agile concepts to enterprise-wide processes—particularly the planning and budgeting processes, by which companies translate their strategy into decisions about how to allocate people and resources. When agile teams must submit ideas to a planning committee and wait months for funding, they can miss out on precious opportunities to win customers or boost efficiency. At the business-unit level, the company can be slow to reallocate money and resources to endeavors that create the most value.
Most of the techniques that agile organizations use to make planning more dynamic are not new. Rather, they’ve been tried and tested by companies across industries and geographies. What’s apparent, though, is that agile organizations can use them to match the pace of planning with the pace of agile teams. These techniques help corporate planners to ratchet up the frequency of resource-allocation decisions and to grant teams more leeway to spend their budgets, while still ensuring that money and people are deployed productively.
To achieve agility in planning, companies should combine elements that promote both stability and dynamism. The elements that lend stability to agile planning are setting clear strategic priorities and defining closely related objectives for teams. The dynamism in agile planning comes from holding quarterly planning sessions, in which funding is redistributed among business units, and providing teams with support to use funding as they see fit. In this article, we will explore these four elements and illustrate them with examples from several companies.
Focus on a small set of strategic priorities
While an excess of strategic priorities can create difficulties for any organization, it can be especially problematic for agile companies, where empowered teams enjoy the rights to make more day-to-day decisions than project teams at traditional command-and-control companies. Our experience suggests that if agile teams each have their own idea about the company’s strategic priorities, then these teams can end up pursuing endeavors that are too diverse to produce significant performance gains in any single area.
Five things agile organizations have in common
McKinsey partner Santiago Comella-Dorda explains the five trademarks of enterprise agility, which provide the basis for planning methods that enable agile teams to succeed.
Executives at an agile company must therefore agree on a small, well-defined set of priorities—ideally, ten or fewer. These priorities should then guide planning and budgeting decisions at all levels of the organization, such that business units receive extra funding if their main initiatives support the main strategic priorities, and business units assign more funding to individual teams whose work makes a demonstrable contribution to the strategic priorities. Additionally, these priorities should be updated on a quarterly basis to ensure they’re still in line with changing customer and market trends. That is not to say that agile companies should not explore and experiment. Experimentation outside the strategic goals is often accomplished by granting teams and individuals certain capacity to pursue their discretionary endeavors. For example, Google encourages its employees to spend 20 percent of their time on projects that they think will benefit the company.
A North American provider of financial and software services developed a five-year strategy consisting of three pillars and eight enablers that translated into more than 25 priorities. Since each priority would require rapid execution and frequent monitoring, leadership soon realized that it could not look after so many priorities at once, let alone explain them all to the company’s workforce. To focus its attention, the executive team chose to identify no more than five strategic priorities to pursue every year. Executives also set clear, measurable goals that they could use in quarterly reviews of the company’s progress toward its strategic priorities, a practice we explore more in the following section.
By Santiago Comella-Dorda, Khushpreet Kaur, and Ahmad Zaidi
https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/planning-in-an-agile-organization?cid=other-eml-alt-mip-mck&hlkid=9ec8f87d47a941538f39d14282faa7d7&hctky=1627601&hdpid=f6999b40-a165-4851-9463-e7a19f1a5818
CONTINUED IN PART II

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