How Agile Development Helps Create Business Strategy

There is a conflict between agility and strategy: either we set a long-term goal and move towards it, or we constantly adapt to changing conditions. This thesis can be heard at conferences or in conversations with entrepreneurs. In fact, the strategy can be based on agile principles. Vladimir Aleshin, head of the educational initiatives department of VKontakte, spoke about how the principles of agile development help create a strategy that does not become obsolete in a rapidly changing world.

Strategy is not a golden pill or a universal tool. You need to understand why you need it and what you want to achieve with it – and you need to understand this even before you start doing something. Perhaps, in order to achieve business goals, you just need to look for ready-made solutions or the founders have already come up with everything, and you need to structure their thoughts and convey to all employees – that is, to implement and legitimize a ready-made strategy. It is also quite often that the strategy is perceived as a kind of obligatory formality: “Of course, we need a strategy. How are we without her? After all, everyone has it. ”

So, first, talk to key stakeholders and understand why your company needs a strategy. If it turns out that you have simpler tasks, then you should not “shoot sparrows with a cannon” – the implementation of the strategic process will entail a complete transformation of the company.

We conduct research on how companies work with strategy and have prepared interview – it will take no more than 20 minutes, and as a bonus we will send you a large selection of useful materials about the strategy. We will share the results of the survey with everyone.

How the strategy was created before

  • The leaders gathered for a strategy session and imagined some kind of bright future – in fact, they were hallucinating.

  • After the strategy session, they decomposed tasks into different structural units for several months.

  • Decomposed tasks were collected into one document, a strategy was synthesized.

  • A few months later, the board of directors approved the strategy.

  • As a result, the implementation was approached only six months later – and during this time the context changed a lot.

As we can see, the standard process is outdated and no longer meets the current market challenges.

How can we do otherwise? Let’s look at the classic – Waterfall has been around for a long time in IT. It consists of five steps:

  1. Requirements. Definition of requirements.

  2. Design. Design.

  3. Implementation. Embodiment.

  4. Verification. Testing and debugging.

  5. Maintenance. Support.

This is how you can move in the strategic process – and many have done it in practice. But in fact, the following happened more often: they took a strategic vision, quickly decomposed it and then immediately put it into operation, began to consistently implement the strategy. In this process, the feedback loop was lost – communication with real users and customers, the learning loops of the system. As a result, the company could find itself in a completely different bright future in which it wanted to come. Again, not that.

Read also: Anti-patterns of building strategy in the company

Where does the strategy begin

The strategic process should always begin with a vision and a mission, that is, with an answer to the question of why your business or product exists. Unfortunately, founders often end the strategic process at this stage – especially in small and medium-sized companies. It seems to them that this is the strategy. In fact, such a “strategy” is just a hallucination, because there can be no strategy without normal goal setting.

In different businesses, I have often observed the same mistake: the strategic goal was “multiple growth in revenue with break-even, taking into account the focus on product quality”. Such a goal is useless – it is necessary to carry out normal goal-setting, and the goals should be:

  • understandable;

  • achievable;

  • not contradicting each other and themselves.

And ideally they should be SMART – this is not necessary, but it is definitely worth striving for.

When the goals are set, you need to figure out whether they are achievable or not, test them, check with the market, compare your picture of the world with reality. Without this, you should not start a strategy.

Best of all – agile techniques

To prevent the strategy from becoming a clumsy colossus, it is necessary to make an internal transition from consistent implementation of the strategy to understanding the strategic process as a process of constant increments. And such a process for IT is not something new and unknown – lean startup and agile methodologies are based on this logic. They prioritize customer satisfaction and are encouraged to change requirements even at later stages of development.

The Agile Manifesto states that the highest priority is customer satisfaction (in the case of a strategy, all stakeholders). The manifesto also describes a changing system in which our task is to find answers to the challenges of each specific moment. Then a natural question arises: why develop a strategy at all – you need to act immediately, without planning anything. But this approach doesn’t work.

When I talk about agile, I mean the logic behind the strategy, in which increments, a feedback loop, and a backlog appear. In this case, the process of working with the strategy completely changes: we collect sprints from the strategic backlog, implement the strategy through iterations, and quickly get increments in the product. And if something changes, we adjust the methods of forming the next iterations to the new context.

In agile strategy, the Product Owner becomes the strategist and is responsible for ensuring that there is some kind of business outcome at the end of each sprint. And not just a feature or a piece of code, but exactly what affects the business: entering a new market, a new product line, an optimized business process.

Agile role transformation is required to implement this approach.

  1. Product Owner is a strategist.

  2. Stakeholders are all users of the strategy, not just users of the product.

  3. User stories include the needs of all stakeholders.

  4. Sprint brings business results.

  5. At the end of the sprint, the system learns and receives feedback.

In the strategic process, the sprints should be longer than in the classic SCRUM – up to three months. But this is not the most important change in working with the strategy: if the strategic block is clear, aimed at specific goals and is consistent with the vision and mission of the company, then the strategy should be immediately taken into work, and the strategy itself becomes a kind of backlog, from which tasks can be performed in parallel …

Previously, strategy was a monolith, and the proposed concept involves change, similar to effective agile mechanics. The strategy is transformed into a process of working with a strategic backlog – alive and connected with the actual needs of all stakeholders.

How an agile strategy works

  1. The strategist is responsible for the strategic backlog and cycles.

  2. As prioritization proceeds, teams are given blocks of strategies or goals that are immediately put into operation.

  3. Business sprints are closed in short cycles up to a quarter and feedback from stakeholders is collected.

  4. Each closed block of the implemented strategy is a new S-curve round.

In this case, the organization’s task is to add S-curve loops, this will be the implementation cycle of the strategic backlog.

If a company has different product areas, then it is necessary to decompose the strategy to their level: to make sure that each has its own strategist who fills the strategic backlog. Another good solution is to create mobile teams to quickly launch product strategies.

Read also: Why strategic sessions in Russia hardly work

For an agile strategy to actually work, it’s not enough to just “do your homework” and write everything down. There are two prerequisites for this.

  1. It is necessary to completely transform the company and move from understanding the organization as a mechanism to understanding the organization as an organism.

  2. Synchronization at the leadership level. If the priorities are set correctly, then you no longer need to constantly distract the manager with approvals and questions, because the logic of decision-making is included in the process and everyone should synchronize with each other and understand where they are now.

Five elephants of agile organizations

  1. Strategy. Unified vector and goal setting. North Star Metrics, shared vision, assistance and resource allocation.

  2. Structure. Net empowered-commands… Flat structure and well-defined roles. Partnership and ecosystem. Fit-for-purpose-function.

  3. Process. Fast decision and learning cycles. Short product cycles, standardized processes, transparency, continuous learning.

  4. People. A dynamic model that encourages passion. Developed leadership, entrepreneurial spirit, role mobility. Look for the best on the market or grow them yourself.

  5. Technology. Fresh architecture, latest development and implementation processes. You cannot make an agile organization with outdated technologies and infrastructure.

How to get into agile

Transformation is part of the strategy. We need to start with a vision and correct goal setting: what will happen if we find ourselves at the end point? A manager must boldly take responsibility and say that the world has changed, that it is necessary to move towards something new, to become an evangelist of new approaches, to constantly swing the system, to change it to meet the demands of the time.

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