The Agile IT Strategy (circular) method will actually reduce the reaction time on new trends to a minimum – normally to 3-4 months! Compare that reaction time to normal linear planning with reaction time of 12-18 months! Fast reaction time is a competitive advantage for the digital era – speeding up time-to-market!
In today’s digital society, it is important to reflect on an era before Facebook, Netflix and Spotify. How did we survive without instant access to information? I grew up in the 1980’s in a linear and analogue society. We had two TV channels broadcasting between 16 and 23, and beyond that – there was nothing to see. We had analogue phones, radio and newspapers distributed once a day. News and information was scares and valuable. In the industry, we talk about lean, processes, waterfall models and productivity as sources for competitiveness. In the 1990’s, the digital revolution began with Internet and has evolved quickly to the place where we are today. It has been exciting and challenging journey re-drawing the pre-requisites for many industries, societies and the way of we live our lives. Today, we are moving from a linear society to a more circular and iterative society based on customer demand for instant and valuable services and information. The main change is lack of predictability, faster time-to-market and changed customer behavior – requiring new circular ways of working. But when we look at how companies and IT organizations are managed, it is like time travelling to the 1980’s with linear management and planning. Why has not senior management adjusted to the digital era?
Definition: Linear management is based on a sequential number of activities with a clear start and end date. The purpose of linear planning is to create an efficient and controllable process that will generate a result (fixed goal). For example, linear strategic planning consists of a number of activities (trend analysis, strategic revision, budgeting, KPI/target setting) in sequence carried out during the autumn (clear start and end date).
Definition: Circular management is based on a iterating (often rapidly) key activities in cycles over continuously with no start or end date. The purpose of circular management is to quickly react to new trends and forces in the industry. The pre-requisite for circular management is an unpredictable and dynamic environment without fixed goals or market conditions. For example, agile development where applications are developed in sprints based on a business prioritized (value creation) backlog.
“It takes approximately 12-18 months for an IT organization (utilising linear planning) to react to new trends, as the linear planning process needs to be followed. How does that support business competitiveness?”
As the business environment is digitalized, I see the need for companies and IT organizations to adjust their management style to a more circular model to react quicker to new trends, opportunities and threats. It takes approximately 12-18 months for an IT organization (utilizing linear planning) to react to new trends, as the linear planning process needs to be followed. There is only window to for collecting information (trends) and that is usually during a few weeks in the spring. If a trend appears another time, then we have to wait until the next year. If I would challenge a company with linear planning, I would probably launch a new product or technology in November/December because it would take my competitors 12-18 months to react. It would give me oceans of time to work the market! Great!
One of the key areas for circular planning is in the IT Strategic Planning area. This is the area where IT defines how business value is created and delivered – and often using linear planning. Based on experience and knowledge from IT strategy, digitalization and performance management, I have developed principles (manifesto) for Agile IT Strategy to support Circular strategic planning:
- The IT Strategy planning is not time bound work (start and stop date) but rather a continuous and iterative method to ensure optimal business value.
- The IT Strategy must require a minimum lead-time from strategic positioning (SWOT) to implemented IT strategy (4-6 weeks)
- The IT strategy only includes relevant strategic information contribution to optimal business value creation.
- The IT strategy is base don generic loosely coupled strategic elements (well-defined, independent, and directly linked to environmental trends).
- The IT Strategy is part of a Performance Management framework that constantly plans, monitor and adjust the strategy for optimal business value in the current IT governance structure.
The Agile IT Strategy method will actually reduce the reaction time on new trends to a minimum – normally to 3-4 months! Compare that reaction time to normal linear planning with reaction time of 12-18 months! Fast reaction time is a competitive advantage for the digital era – speeding up time-to-market!
What is important to understand is that circular management is not something invented “just for fun” but rather a consequence of a changed business environment. It is new business pre-requisites that drive the need for more circular and iterative management of businesses and IT – not the other way around. IT is managed to support and build business competitiveness – and therefore need to be adjusted to the conditions of the market. In the market is moving fast (by digitalization), then IT need to move in the same speed – otherwise the business will boom and bust. That is not an option!
“The more complex the environment (digitalization), and the ‘tighter’ the targets (performance), the more flexibility the control system (governance) must have: ‘only variety can absorb variety’. Failure to provide ‘requisite variety’ will result in instability (boom and bust) and ultimately system failure.”
Ross Ashby’s Law of Requisite Variety, WR Ashby, “An introduction to cybernetics”, London, Chapman & Hall
When I talk to different IT organizations, I hear a need for better speed and agility in the way they produce value – to support business ambition of time to market. These are easy words to say, but so difficult to implement. When I ask – “what are your plan for improving speed and agility” – most IT executives are silence as they already given up. I often hear stories of how they tried to transform IT a couple of time without success – and now they are not so sure that it is possible. The leadership and energy for change is gone. If you do not believe in change – then nothing will happen! It is a challenge too big and requires a completely different mindset and attitude – not present in the IT organization. Digitalization is mainly a mental journey all about people and mindset where we challenge our traditional linear models and ourselves.
- Understand the pace of the industry you compete in. How is digitalization changing the your competitiveness and role of IT? Key Question: How fast does IT need to react to new trends?
- Build energy and leadership for change – that will be the greatest asset of the IT organization to create business competitiveness.
- Start talking about circular IT management and how it can be used in your organization. Please contact me for coaching you in the right direction.
Circular planning and management is the way forward to improve time-to-market and digital competitiveness. In fact, 75% of business and IT managers state that traditional governance (planning, budgeting and performance management) cannot cope with unpredictable change and add value to business and customers (www.bbrt.org). The problem is rooted in a “command and control” model and long-term performance contracts that does not support new digital pre-requisites. The question I ask is – do you dare to challenge your traditional governance to boost business performance? Are you willing to speed up time-to-market (reaction time) in the IT organization? Let me know your answer – it will change your life!
Read more from Hans Gillior – hansgillior.wordpress.com