MIT 8699: Organizational Agility · moves and conditions of play. This requires swift interpretation of now, optimal execution of practiced playing capabilities, and capability to

© Richard Welke 2002

Mike Gallivan

Lars Mathiassen Richard Welke Duane Truex

MIT 8699: Organizational Agility

© CEPRIN (2007) MBA 8125 Organizational Agility 2

Agenda ! The agility challenge ! Sense-and-respond ! Response ability


Topic one

© CEPRIN (2007) MBA 8125 Organizational Agility

Why do we need agility?

4

Art: Jamcracker


Agility in Football “I don’t just want to know what everybody has to do; I want to know

why. When you know why, you know more … You play faster” Marshall Faulk, Running back, St. Louis Rams

! Resources, e.g. the players, should know-how & know-why ! Processes, e.g. practiced patterns of play, contribute to know-

how ! Values, e.g. priorities and outcomes, contribute to know-why

! The challenge of the players is to respond in-flight to opposition moves and conditions of play. This requires swift interpretation of now, optimal execution of practiced playing capabilities, and capability to improvise.

! The challenge of the coach is to create and maintain an environment in which players become empowered to execute. This requires continuous practicing of individual and collective patterns of play combined with cultivation of individual and collective capabilities to adapt.


…and Other Sports “I skate to where the puck is going to be”

Wayne Gretzky

“I get the rebound before the shot is taken”

Bill Russell


! An operating strategy? ! An embedded culture? ! A business-engineering discipline? ! An IS development methodology? ! A business-systems architecture? ! A broad competency across the enterprise?

! Agility is Risk Management: decreasing vulnerability and risk by increasing options and predictability

What Is Agility?

From Dove


Cats are the icon of agility

We agree that cats are agile. Why?

Aware, Nimble, Focused on value.

But on a hot tin roof they're out of control. Why?

- Info overload. - Lost awareness. - Inability to create options.

Up a tree they're catatonic. Why?

- Paralyzed with fear. - Lost awareness. - Inability to create options.

From Dove


What drives agility? “There is no singular agile organization design. Each organization must

design itself to be appropriately agile in response to a unique set of external and internal forces”

Economic forces

Business forces

Organizational forces

IT forces

Work forces

Globalization

Emerging Markets

Employment

unrest

Cost Reduction

Shared

Processes

Distributed buyers

Sourcing options

Funding models

Changing Competencies

Leadership

Distributed decision making

Enterprise Architecture

Real-time

Infrastructure

Priority projects

Distance Collaboration

Virtual

learning

Global diversity

Ambrose & Morello, Designing the Agile Organization, Gartner 2004


What Enables Agility?

! Provide continual feedback ! Build contextual orientation ! Communicate meaningfully ! Invest in knowledge networks

Awareness Do people know that

significant change is afoot and the impact it will

have?

! Encourage reassignment ! Develop new competencies ! Assemble diverse teams ! Use multiple service providers

Flexibility Are people equipped to

respond to a wide variety of business conditions?

! Reward collaboration ! Build learning portfolios ! Expand decision-making ! Adopt consistent processes

Productivity Can people operate

effectively and efficiently as conditions change?

Organization agility

Ambrose & Morello, Designing the Agile Organization, Gartner 2004


How to design agility? ! Executives as architects ! Systems design complements

process design ! A system is a collection of

elements that interact to produce an effect that cannot be produced by any subset of the elements

1.  Top-down 2.  Synergy 3.  Relationships 4.  Environment 5.  Event-driven

Plan-driven Event-driven

Firm forward Customer back

Predict & optimize

Know early & improvise

Know-how Know-why

Best practice Next practice

Activity focus Outcome focus


Topic two


Sense-and-Respond Organizations

! Processes that learn.

! Responsive governance.

! Dynamic commitments.

! Modular processes and outcomes.

Haeckel, Adaptive Enterprise Design: The Sense-and-Respond Model, Planning Review 1995


Learning

Mission and Policy

Command& Control

Management system

Structure functional hierarchy

Strategy •  Objective •  Plan

Context Purpose and Bounds Adaptive structure

A closed system

External Signals

Internal Feedback

COMMAND-AND-CONTROL Assumption: Predictable change

Goal: Efficient enterprise

SENSE-AND-RESPOND Assumption: Unpredictable change Goal: Adaptive enterprise

Coordination of capabilities

Commitment management


Command-Control vs. Sense-Respond Mindset Command-Control Sense-Respond

Context Efficient system in a semi-stable environment

Adaptive system in an unpredictable environment

Know-how Embedded in processes Embedded in people & processes

Process Mass production Modular customization

Performance Efficiency and predictability Flexibility and responsiveness

Profit Margins on products ROI and economies of reuse in modularization and response

Organization Functional and sequential activity Networked and parallel activity

Information Functionally managed and optimized vertical views

Focused on information needed to respond to requests

Market Sustain share of market Sustain individual customers

Execution Strategy executed through plan Strategy executed through adaptive business design


People in Roles

Accountable for

Outcomes

Processes that Learn

Sense

Decide

Act Interpret

• What does each of our external customers need?

• What does each of our internal customers need?

• What are the emerging market opportunities and needs?

• Which technological innovations are available?

• How is the competition changing?


Responsive Governance ! Ensure local autonomy ! Facilitate overall

coordination ! Provide a context for

business behavior (Know-why) ! Share organization’s

“Reason for Being” ! Share governing

principles ! What will we

always do ! What will be never

do

• Autonomy to respond to external and internal customer requests

• Shared strategy across processes

• Explicit will do and will never do to support process execution

• Coordination mechanisms across processes


Dynamic Commitments ! The organization

must know how to effectively execute its core processes

! The organization must dynamically manage who does what when in response to its environment

• Processes that respond to external and internal customer requests

• Processes that improve core capabilities

• Dynamic resource allocation across processes


Modular Processes and Outcomes ! Products and

services must be modular to facilitate swift customization and innovation

! Processes must be adaptable to suit different contexts and needs

• A component-based architecture of core products and services

• Customized solutions to external and internal customers

• Dynamic configuration management

• A minimal set of shared core processes

• Complementary processes for collaboration with key customers


Assess business and process agility ! What kind of sense-and-respond mechanisms are

in place to address environmental changes? ! Do these mechanisms effectively address predictable as

well as unpredictable changes? ! What kinds of governance mechanisms are in place

to ensure process performance, coordination with partners and other processes ! Capability to identify process innovation opportunities?

! How are commitments managed and adjusted to accommodate process performance and change?

! To what extent are processes and outcomes designed to allow for local adjustments and easy reconfiguration?


Topic three


Response ability

! Knowledge portfolio management (KPM) +

Collaborative Learning Facilitation (CLF) Knowledge Management (KM)

! Change Proficiency (CP) + Reusable and reconfigurable Structure (RRS) Response-ability (RA)

! RA + KM Agility

Dove: Response Ability: The Language, Structure and Culture of the Agile Enterprise, Wiley, 2001


Agility

Knowledge Management

consists of practices and processes for

to have awareness to enable response

Concepts That Enable Agility

Response Ability

•  in time to select actions •  of what markets (will) need and why •  of what customers (will) value and why •  of what partners (will) value and why •  of what you (will) need and why •  of your capabilities/competencies/talents •  of what has to be learned/unlearned •  of who needs to learn/unlearn something •  of the risks •  of the dynamics •  of reality and how it bites •  ... KM fuels effective decisions

Enterprise Agility

From Dove 2005

Value Propositioning

to select actions


Agility






to select actions

Response Ability

•  in time to respond effectively •  establish/change value targets •  establish/change excellence definitions •  build new business processes •  evolve business process framework •  which standards to adopt •  seek/abandon/align with new partner •  seek/abandon/align with new market •  assemble new configuration •  prioritize/reprioritize development •  how to mitigate risks •  ... VP-ing fuels effective response

Enterprise Agility

From Dove 2005


Agility






to select actions

Response Ability

•  in time to innovate and react •  in systems that have to respond •  to the unexpected •  to the anticipated •  to internal situations •  to external situations •  with systems designed for response •  with systems managed for response •  ... RA fuels viability and leadership

Enterprise Agility

From Dove 2005


Change proficiency ! Measured by: elapsed time to change, cost, predictive

quality, latitude for change (scope)

Innovative Fragile

Agile Opportunistic

Response-ability States

Proactive proficiency (Leadership)

Rea

ctiv

e pr

ofic

ienc

y (V

iabi

lity)

Maturity Stage

General Characteristics Example: HR

Accidental Stumble through change

Hires what’s available; hope they work out

Repeatable Set of rules for achieving change emerge

Common hiring ritual to get new skills

Defined Rules broadened; metrics in place

Knowledge-based recruit and screen

Managed Objectives clarified, rules refined, accountability

Individualized employee development program

Mastered No longer rule-based; actions by principles

Environment enables self-development


Reusable-reconfigurable-scalable ! Agility is accentuated or inhibited by the design of

key enterprise systems ! Balance between rigidity (where nothing happens in

response to change) and chaos (where changes are not discriminated)

! Ten RRS principles: ! Self-contained units (separable, self-sufficient) ! Plug compatibility (share defined interaction) ! Facilitated re-use ! Flat interaction (peer-to-peer communication) ! Distributed control (directed by objective, not method) ! Deferred commitment (commitment late-binding) ! Evolving standards (standardized inter-component interact) ! Redundancy and diversity (duplication for capacity;

failsafe) ! Elastic capability (component population can be incr/decr)


Collaborative learning mechanisms Disagreement Others can challenge concepts and

conclusions individuals take for granted

Alternatives Others will offer alternative concepts and conclusions to individual perceptions

Explanation Externalizing internal thought transforms tacit knowledge into explicit knowledge

Internalization Participative dialog conveys concepts that integrate with internal knowledge

Appropriation How one’s concepts are adopted by others puts the concepts in new perspectives

Shared load Multiple levels of thought are explored and integrated simultaneously

Regulation Consistency is monitored and discussed from multiple viewpoints

Synchronicity People tend to help each other achieve a mutual level of understanding

Indi

vidu

al

Col

lect

ive


Intelligent Enterprise System Framework

An Intelligent Enterprise … exhibits goal seeking behavior, exercising its potential for agility by understanding the business situation it is faced with, learning and adapting continuously as the situation changes, and demonstrating sustained achievement of purpose.

Systemic Goals• Recognize opportunity• Take advantage of opportunity• Recognize threat• Minimize impact of threat

Key Principles/Concepts• Knowledge management• Response ability• Reactive and proactive• Dynamic integrity

Key Subsystems• Change proficiency• Adaptable structure• Knowledge portfolio• Collaborative learning• Decisive action• Competency and talent

Intelligence is related to the volume of the pyramid. The depicted framework is influencing the strategies developing at Silterra, a new semiconductor foundry. Intelligent Enterprise is being investigated by The INTENT Alliance (INTelligent ENTerprise, www.intentalliance.net) starting in 2002. Those interested in participation may contact Jack Ring at [email protected]

ResponseAbility

DynamicIntegrity

Reactive andProactive Balance

Competencyand Talent

CollaborativeLearning

DecisiveAction

Resource Portfolio Chang

e Prof

icien

cyAdaptable Structure

KnowledgeManagement

Documents

MIT 8699: Organizational Agility · moves and conditions of play. This requires swift interpretation of now, optimal execution of practiced playing capabilities, and capability to