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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