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This podcast covers Chapter 12, “Small Steps To An Agile Strategy” of “12 Steps to Flow: The New Framework for Business Agility,” by Haydn Shaughnessy and Fin Goulding, developers of the internationally acclaimed workshop, Flow Academy.
The authors start the chapter by stating a good Flow workplace is one that challenges the idea of big strategy and grand plans. The new method is to build strategy from small steps. How to achieve that will be covered in this chapter.
The first problem pointed out is that the core elements that people focus on in strategy and planning are necessary but nowhere near sufficient for success. This necessary-but-not-sufficient problem is typical of the digital world. Many intangible factors, often intangible, have a significant influence but are difficult for traditional strategist to grasp. An old style of marketing is used, e.g., “Build the platform and market the hell out of it.”
The key problem is the platform is seen as a technology stack rather than a relationship nexus.
So why are the issues associated with platforms so interesting to the Flow frame-of-mind? First, platforms invented modern agility, providing the ability to roam into any space choosen with a lot of activity taking place on the network along with having the ability to update with high-frequency and low-cost. Also, products are digital, which means there is no conventional supply chain to manage. Second platforms are almost impossible to plan and this is really critical because execution needs a huge amount of iteration and a commitment to real-time executive direction. For example nobody can say what it will cost to be successful at developing the ecosystem of third-party actors. Consequently, platforms force designers to take small steps. These hundreds of incremental steps requires Flow. Business often gives the impression that there is one big solution, e.g., a new platform, or a single answer to complex problems. This is just wrong.
Success in High-Performance Teams
In delivery terms, the economy is shifting towards small. Good leaders recognize this and see the critical gains lie in the margins, in the detail. That’s why in Flow, work units are only ever a maximum of two days long. These are the micro-units where you can get 1% gains to scale up into something significant. Interestingly enough, incremental changes that scale can apply to strategy as well as to delivery. The short cycle times of two days or less force people to interact more which is good for both productivity and quality. The authors feel this is superior to long planning cycles which can drift away from providing the value required to meet the customer’s needs.
Small Steps to a Big Platform
One problem with setting digital strategy is that many people get the core ideas of agility and scale wrong. With the digital transformation the dominates the agile world companies seek network effects where there is little disruption caused by the platform. The stability or lack of disruption by the platforms is supposedly created through:
– open APIs
– two-sided or multisided markets
– network effects
– cloud infrastructure
The authors view this is flawed because:
1. Great platforms exist without having an open API
2. The idea of two-sided and multisided markets feel superfluous
3. Network effects are powerful but rare, e.g., Facebook
4. There’s nothing special about Cloud services, all companies have access to Cloud infrastructure
The real power of platforms lies in the ecosystems that grow around the successful ones. This is a real nightmare for traditional strategists because success lies at the other end of intangible investments in relationships, promotion, content, and likability. Services with no allegiance to the platform can exist on that platform thrive and do well and benefit the platform service at the same time, for example book arbitrage on Amazon services. Customers may pay more after successful in finding what they need. The successful companies are an essential part of the Amazon ecosystem yet Amazon does not prompt, support, or invest in any of them. In fact, they exist because of Amazon’s shortcomings.
The Very Basic Model for Highly Skilled Business
The platform model is deceptively simple having only a few basic components but it would be a big mistake to assume that the basic structure is sufficient. For example there is the App Store for the iPhone. Essentially it is an ordering platform. As a catalog with the transaction engine and fulfillment service. The simplicity, however, is misleading. What’s needed are the critical nonessentials in order to be successful in other words, there is all the work required to develop highly skilled relationships, many giveaway tools, wonderful content, and huge advocacy. Without that ecosystem the platform can’t survive. It’s all about having real relationships.
Many companies create platforms without realizing the content and advocacy are key aspects of the project. This means human factors are quite important, a truth that platform designers overlook. To compound things, the human factors are difficult to represent in an ROI plan. Also, with the traditional approach there is a risk of viewing everything in terms of cost savings rather than value. This can easily lead to cutting those critical human factor components. Again, relationships are important.
To compound the situation the activities that actually go with building relationships recruiting and nurturing, etc., are not easily planned. They require warmth, trust, care, excitement, and adaptability. Their cost/return is always going to be uncertain. Because businesses have been taught to expect network effects, they underinvest in advocacy, the very thing they need that could bring the benefits of being on a network.
Being on a network is only powerful if you know how to acquire great content and generate superb advocacy. People must love what you are doing madly enough to create content around it, build new services to exploiter, recommend features of your service that they will attach their reputations to, and spend their own cash on being part of your ecosystem.
The Importance of the Ecosystem
because of the challenges associated with attracting and orchestrating multiple parties for your passionate endeavor a Flow approach strategy aims at creating the dozens of small steps that allow entrepreneurs or executives to figure out where value might lie in to accelerate business activity in precisely those directions.
Simply put, to do Flow strategy, you have to accept that you cannot know. Instead, you can hypothesize frequently across many actions and be ready to capitalize on the basics truths you discover and can build upon along the way. This is far from the MVP (minimum viable product) frame of mind. Instead, what is needed is a minimum sustainable delivery matrix (discussed in previous chapter) the comprises:
– a broad set of features and hypotheses to push through to the customer
– structured feedback loops to capture knowledge
– capturing and formatting that knowledge in a way that easily translates into discussions that lead to new feature in hypotheses matrices which is where the asset discovery process described in chapter 2 comes into play. This comprises:
– customer segmentation
– asset discovery
– targeted ideation
– the ecosystem
– stating goals
Customer segmentation. In the book they use an example comprising based on a segment that the platform advocate knows to be underserved or in need of reorganization.
Asset discovery. Their assets intrinsic to the platform, however, it is important to consider other third-party assets that are critical to success, e.g., content, data, and other assets that can brought it onto the platform by negotiating with partners in the ecosystem or non-partner third parties. It is essential to take into consideration critical nonessentials such as content which are essential for success. Also, it is important to inventory any missing assets which need to be developed somewhere along the line.
Targeted ideation. With targeted ideation new services are created by repurposing assets in addressing previously-underserved customer segments. The key is building trust with customers you have and determine how the assets can be repurposed. The approach is freeform, will Wall-based, in iterative with how you see your potential ecosystem along with your goals.
The ecosystem. Essentially this is about finding missing assets which are needed to satisfy unmet customer needs. The key is providing sufficient tools for those third-party providers that encourages them to work on your platform.
Stating goals. Use an analysis of assets to provide a few goals that comprise the first small steps to a big strategy. This includes:
– identifying new customer segments to discover hidden opportunity
– identify internal assets that are relevant to those new segments
– call out the missing assets and the dark pool
– identify an ecosystem that can deliver assets that are missing from your skill set
– the eight new tools and content to support an even broader ecosystem, beyond a simple supplier base
– learn how to combine these assets in a way that is really appropriate for modern markets, using a Go to Market strategy that builds share-ability and advocacy into the product or service
– explore content and advocacy issues, e.g., social strategy, designed to share, effects of the network.
Proceed to break the work down based on the stated goals. Once done this is the beginning of an ecosystem strategy for your agile business. Does not have to be written as a strategy. Rather it gets built from the discovery of assets, the iteration of goals, areas of work in units of work, and experience and feedback.
Strategy Building from Incremental Steps
Keep in mind these key points when building a strategy:
– the critical non-essentials necessary for high performance
– efficiencies gained by optimizing across hundreds of small steps
– optimizing many marginal gains
if you apply these thoughts to digital projects than you have the ultimate modern paradox, i.e., highly skilled businesses built out of many small units of activity. To achieve the success work by:
– customer segmentation
– asset discovery
– a Customer Innovation Wall that fleshes out the segmentation. Have an inventory of assets (known, hidden, unknown-but-needed next to that wall). Also, have a chart comprising targeted ideation suggesting tools and tricks needed to engage customers third parties in the ecosystem. This approach is meant to be conversational an interactive without any big planning periods. It is an exercise in value-seeking behavior.
Conversations around these walls leads to the emergence of baseline activities. These are referred to as the best next actions for achieving the stated goals. Consequently, the strategy actually emerges from the generation of these best-next activities. This is a classic characteristic the complex situation where the solutions emerge based on the actions of self-organizing teams.
CONCLUSION
One of the main takeaways from this book should be the awareness that work at all levels of an organization is becoming less about excellence in execution more about adaptability in the face of changing circumstances. When you can accept that order is best created by allowing people to codesign multiple strands of work, and that the big plan needs to be hundreds of small units of work, then you have the capacity to adapt infinitely.
You need a passion for change to follow everything that’s been stated in this book. You need to believe in a movement built on small steps.
Here are the link for previous chapter reviews:
episode 0037 of Wrestling with Chaos. the Introduction, The Value Seeking Enterprise, and Chapter 1, Talking About Business Agility:
episode 0042 of Wrestling With Chaos. For Chapter 2, The Customer In The Agile Business.
episode 0043 of Wrestling With Chaos. For Chapter 3, Disrupting The Cadence of Work
episode 0045 of Wrestling With Chaos. For Chapter 4, Taking Advantage of Visible Work
episode 0046 of Wrestling With Chaos, For Chapter 5, Anti-Project Thinking and Business Agility
episode 0047 of Wrestling With Chaos, For Chapter 6, Creating Value-Seeking Behavior
episode 0049 of Wrestling With Chaos, For Chapter 7, The Agile C-Suite
episode 0050 of Wrestling With Chaos, For Chapter 8 216, Value, The Anti-Plan and Testing
episode 0051 of Wrestling With Chaos, For Chapter 9, Reinventing Roles
episode 0053 of Wrestling With Chaos, For Chapter 10, The Customer Wall
episode 0054 of Wrestling With Chaos, For Chapter 11, Broadening Your Personal Development Goals
For more on the various “Walls” using Post-Its refer to their excellent book, “Flow.”
In line with Business Agility and dealing with complex situations, you can download CMC’s free e-book MINDSET – 5 SIMPLE WAYS TO LOOK AT COMPLEX PROBLEMS and learn how to find a simple vantage point from which you can resolve challenges.
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