What is Agile Governance? Strategy Execution & The Transformation Lighthouse
In our last blog, we discussed the fundamental principles of Agile Governance. If you’ve read our book or other blogs, you may be familiar with our Transformation Lighthouse concept and practice. In this blog, Laurent and Pascal discuss the three walls of the Lighthouse, focusing on the macro picture of a company. They also relate the Lighthouse to key principles of Agile Governance, our powerful planning and execution system. Agile Governance helps the senior leader team understand the big questions of strategy and performance. What’s our Aspiration and winning logic? How are we performing right now? What are our biggest blockers, and what are we doing about them? What’s the status of our countermeasures?
Laurent Simon:
Hi Pascal, today we are going to continue our discussion on Agile governance, focusing on the Transformation Lighthouse. So, what is a Transformation Lighthouse?
Pascal Dennis:
A Lighthouse is a big room, wherein we meet as a senior team on a regular basis, with a standard cadence, and standard agenda. Thereby, we seek to answer and develop a shared understanding as a team around the big questions of strategy. We dedicate three walls to these questions:
- Wall one is our Strategy and planning wall
- Wall two is our performance wall. How are we doing right now?
- Wall three is about fixing the blockers. What is blocking us? What are we doing about it? And what’s the status of our countermeasure?
Our senior level Lighthouse is replicated throughout our tiered management system down. At the front line it’s typically a daily standup meeting or ‘team huddle’ at the beginning of the day.
Laurent Simon:
I see. To confirm, you’re saying that at each layer of the organization, we’re going to have an Obeya which has the same logic but a different resolution, is that correct?
Pascal Dennis:
Yes, different levels of magnification, if you will. At the frontline we’re looking at tactical issues related to our specific team. At the most senior level, we’re zooming up to see the entire chess board. But we’re asking the same questions fundamentally: What’s the plan? How are we doing? What’s blocking us? What are we doing about it?
Laurent Simon:
So the Lighthouse or ‘Obeya’ (Japanese) of the frontline teams might be a daily huddle around the team board. And the Obeya at the top of the pyramid may be thought of as the mother Obeya or the macro Obeya, would that be correct?
Pascal Dennis:
That’s a good summary, yes.
Laurent Simon:
So, let’s describe the macro Obeya – can you give us an image of the Lighthouse? Wall by wall.
Pascal Dennis:
Wall one is our strategy and planning wall, wherein we seek to answer the most basic questions of strategy. First of all, what is our aspiration? What are we trying to achieve as an organization? And secondly, what is our winning logic? For example, in our book, Harnessing Digital Disruption, we describe a major bank in the APAC region, Asia Pacific Bank and their Transformation Lighthouse. Their first wall describes their aspiration and winning logic. Their aspiration is to be the best digital bank in the world, and their winning logic comprises of three key elements. Number 1, we want to digitize our key customer journeys. Number 2, we want to deploy New Ways of Working, which has a very specific meaning for the bank, as our readers will know. And number th3, we want to simplify and modernize our IT and data infrastructure through targeted investment.
Pascal Dennis:
Wall one tells this story. Of course, in real life you would articulate and breakdown the winning logic in a little bit more detail. For example, deploying New Ways of Working, you probably would include elements that you’ve thought about as a team and had seen work. For example, we want to build an accelerated innovation program. We want to deploy Agile software development, we want to develop an academy wherein people will learn the fundamentals of new ways of working, lean startup, design thinking, et cetera. We want to build a network of capable entrepreneurs and so on.
Laurent Simon:
Very good! Before we move to Wall two, let me emphasize that the critical element of Wall one in my experience is to articulate an Aspiration and Winning Logic that addresses both hearts and minds. The heart is the aspirational vision, something that people can find compelling, something that goes behind individuals. The mind part entails turning that Aspiration into a success measurement – very practical targets expressed as the gap between where we are now versus where we want to be. Would you agree?
Pascal Dennis:
Yes, a good summary. Something for the head, and something for the heart. Clear targets you strive for. But you also need something for the heart. Remember we’re asking people to commit to something extraordinary. So we have to define a ‘Noble’ goal, something which will bring out the best in people. The triple bottom line speaks to this. We seek to honor and respect for the environment, our community, and the humanity of our team members and customers. Our heart goal entails finding the words and images that supplement and support our head goal.
Laurent Simon:
Thank you so much. So should we move to the description of Wall two then?
Pascal Dennis:
Yes, so in wall two, we seek to answer the question, how are we doing right now? And subordinate questions, are we winning the game? Are we executing our plan well? What’s stopping us?
Let’s illustrate using our book, Harnessing Digital Disruption. The first element of Asia Pacific Bank’s winning logic is ‘Digitize key customer journeys’. So on Wall two, you might imagine a visual tool, perhaps a funnel, showing the key customer journeys we intend to digitize, the key tactics entailed, and the status of each tactic. For example, our tactics may include setting up and training cross-functional teams, setting up a so-called model process. What’s the status of these tactics?
Pascal Dennis:
Similarly, Asian Pacific Bank might have to reach out to our FinTech ecosystem and engage partners to clean up our data, to make sure it’s end-to-end. Or perhaps we need a partner who will help us band-aid our IT vulnerabilities. Each of those activities would be made visible on our performance wall. Our stand-up meeting around Wall two would entail reflecting on questions like: Are we meeting the expected timelines, quality and cost? Are we hitting Customer Experience milestones? And also, how well are we implementing our plan? Are our FinTech ecosystem partners happy with us? We know that’s been a problem in the past because we have tended to be very bureaucratic and disrespectful etc. we want to answer those questions with visual management so everybody understands what’s happening at a glance.
Laurent Simon:
That’s very good, so Wall two, is really the control tower of the transformation, would you agree?
Pascal Dennis:
Yes, and as in a control tower, we identify abnormalities, so we can fix them. For example, two planes are too close to one another. Or planes are coming into the same airspace. Or we don’t have enough people on the ground to service this incoming flight. All these are abnormalities, the control tower sees them and implements countermeasures. In the same way, our control tower helps us identify abnormalities and trigger countermeasures.
Laurent Simon:
Exactly, Wall two seeks to reconcile the gap between where we want to be versus where we are.
Pascal Dennis:
Bingo. Let me also add that Leadership and culture are essential to enabling Wall two. We have to be comfortable making problems visible. That entails a ‘discovery culture’, and leaders who talk the talk – “I want to know where the problems are” – and then commend people for making the problems visible, and fixing them.
Laurent Simon:
Let’s move on to Wall three now. Once we have identified the issues, what do we do with them?
Pascal Dennis:
Blockers are gold because they show us our key weaknesses. If we fix the blockers, we’re going to be in a very good condition. Our performance wall highlights the most important problems, the biggest blockers. We post our blockers on Wall three and find root causes for them. Let’s go back to our Asia Pacific Bank example from Harnessing Digital Disruption. We want to digitize key customer journeys. On our performance wall, we see some journeys are really lagging. What’s the root cause? Well, it turns out the legal and regulatory team is slowing down adoption of key innovations. For example, they say, you cannot have digital signatures, you have to have ink only.
Pascal Dennis:
Or perhaps our ecosystem partners are very unhappy with us because we’re not living up to our contractual obligations. We had promised them a seamless, respectful experience but our Purchasing people hassling them. Our Wall two innovation funnel makes these visible – both of them are potentially fatal to digitizing our key customer journey! So we put them up on Wall three and get to work. This means a root cause analysis as well as countermeasures. Wall three makes all this visible, and also how well the countermeasure plan is working.
Laurent Simon:
Very good. So in our book, what were the counter measures to those root causes identified?
Pascal Dennis:
Well in our book, the countermeasure to the bad experience of FinTechs was to address each hassle, minimize surprises, and make sure they feel like part of the team. Another countermeasure was to reach out to the Chief Risk Officer, and the Regulator, build a good relationship and sort out the legal issues together.
Laurent Simon:
Well thank you Pascal, you’ve done a good job at describing and illustrating the content of each wall. Let’s conclude with an overview of the founding principle of Agile governance. In other words, how do we make it work in practice?
Pascal Dennis:
Very good, let’s begin with leadership. The kind of interactions and discussions we just described require leaders who walk the walk, and understand the fundamental principles of Agile Governance. They’re comfortable making problems visible, and recognize that leadership is a process of discovery. It’s normal to have problems and blockers. So let’s surface them so we can fix them. Secondly, our leaders provide clarity of purpose. Wall one describes our aspiration, our noble goal, as well as, clear targets that the team can get behind. Our leaders also provide is a clear winning logic validated and embraced by the senior team. Interestingly, this alignment is based on having honest disagreement and ‘radical transparency’. We do not want some superficial ‘consensus’!
Pascal Dennis:
Leaders respect our team members’ humanity and trust them to translate the winning logic into specific tactics. Leadership also requires a core competence, which means understanding the work at a basic level, and understanding lean and Agile principles at a basic level. Leadership means getting out of your office, going to see with your own eyes. ‘Get out of the building’, as the great Steve Blank says. Go see blockers, customer pain points, jobs to be done, FinTech partners and the rest – with your own eyes.
Laurent Simon:
Very good, thank you so much Pascal. It’s another splendid blog. See you soon for the next one.
Pascal Dennis:
My pleasure.
