Agile Governance addresses perhaps the most important activities in business – Strategic planning and execution. Agile Governance thinking and methods apply in every industry, and help you a) align and focus your activities at all levels, and b) adjust them as needed so that you can do what you’re trying to do.
Pascal and Laurent sat down to discuss the core principles and practices of Agile Governance, and how to apply them. Here is the first of their conversations:
Laurent: Hi Pascal, nice to see you. So today we’re going to talk about Agile Governance, right?
Pascal: Indeed – a topic near and dear to my heart. Good to see you too, by the way.
Laurent: What is Agile Governance? Could you give us an overview, please?
Pascal: Agile Governance is a proven planning and execution system designed to A) protect your core business and B) ignite new growth – without the waste, hassle, and confusion that often accompanies corporate planning.
Many people believe that corporate planning is often painful and provides little value. As a result, many people and companies avoid it. Agile Governance, by contrast, explicitly connects strategy to value with simple and clear processes that help us navigate an uncertain, volatile, complex and ambiguous world. That clarity and simplicity help us navigate our volatile, uncertain and complex world. Agile Governance answers the core questions of strategy, and makes the business chessboard visible, at all levels. This clarity and visibility help us see and address issues quickly.
Laurent: What are the core questions of strategy?
Pascal: Where are we going? What is our aspiration as an organization or as a team within that organization? How are we going to get there? What’s our winning logic? What’s our plan? And how are we doing right now? Are we winning or are we losing? Is our process and our execution good or not? What’s blocking us? And why? What are we doing about the blockers? And how are the countermeasures working?
Laurent: These are critical questions indeed. Often, we use the human body as an analogy to describe the governance system.
Pascal: The human body is a powerful metaphor for the organization as a whole.
Laurent: Can you elaborate? And how do we connect the different elements together?
Pascal: Agile Governance serves as our brain and nervous system, focusing, aligning, and connecting the organization so that we can behave and respond like a sentient being. It also serves to engage our people in noble goals and respect their humanity, thereby and foster organizational genius. If our People systems are strong, we know we have excellent people. So we have to ask: How to motivate our people? How to engage them in something bigger than themselves, something that they can take pride in?
Laurent: Thank you for that. In your introduction, you mentioned a proven process. Could you please elaborate?
Pascal: Agile Governance is built on the world’s most powerful planning and execution systems: Hoshin Kanri and the OKR process. Hoshin Kanri, also known as Strategy Deployment, is the brains and nervous system of world-beating Japanese companies like Toyota, and helped propel Japan from utter devastation after World War II, to world leadership in in 30 years. This astonishing achievement has been called the ‘quickest U-turn in history’.
The other cornerstone of Agile Governance is the Objectives-Key-Result (OKR) system developed by the late great Andy Grove, Intel’s legendary CEO. Andy Grove helped to teach OKR to Silicon Valley. Today OKR is practiced by many of the world’s most innovative companies, including Amazon, Google, Facebook and LinkedIn. And so, Agile Governance’s foundation is Hoshin Kanri and OKR.
Laurent: Thank you for that. So let’s get into the trenches. What are the core elements of the Agile Governance?
Pascal: We’ll talk about the core elements of Agile Governments in an upcoming series of blogs. Here are some of the key elements we’ll be addressing. The Transformation Lighthouse – the pulsing heart of our Management System. Leadership behavior and thinking: entails walking the walk and creating a culture of discovery. Second is a People System that uniquely values the humanity of people and is committed to developing and engaging them. Thirdly, there is a
Work System that is focused on both a) protecting your core business, and b) igniting new growth. The foundation of our Work System is the so-called Lean management approach. This provides a stable base for proven Growth methodologies like Agile ways of working, Design Thinking and Growth Hacking. Agile Governance goes further in that we seek to integrate such methods into a robust and scalable innovation engine.
The Tiered Management System is yet another core element of Agile Governance. Our brain and nervous system requires connectivity between the various tiers in the organization. Information insight and support have to flow freely – up, down and sideways.
We’ll also discuss what we call the Agile Operating Model – new ways of working that seek to harness disruptive technology, dissolve silos, and engage everybody on improving end-to-end customer journeys. In summary the core elements of Agile Governance include Transformation Lighthouse, Leadership, People System, Work System, Tiered Management System, and Agile Operating Model. We’ll talk about them all in future blogs.
Laurent: Great. Sounds like Agile Governance is closely tied to the People and Tiered Management Systems, i.e. how people behave, and a regular and predictable meeting content and cadence. Is that correct?
Pascal: Very good.
Laurent: So you mentioned the Transformation Lighthouse as a core element in the management system. Could you describe it please?
Pascal: The Transformation Lighthouse is perhaps the most obvious expression of Agile Governance. It’s essentially a Big Room – in fact, that’s what the Japanese term, Obeya, means. Now, before I describe the Transformation Lighthouse, let me say that although it serves the Senior Leadership Team, we seek to replicate it at each level of the organization – at ‘smaller levels of magnification’, if you will. And so it’s a fractal, a pattern that is repeated over and over.
Three walls tell our Strategy story by clearly and visibly answer the Big Questions of Strategy. Thereby, the Senior Leadership Team, sees as a team, knows as a team, and acts as a team.
Wall 1, is the ‘Strategy and Planning wall’. Wall 2 is our ‘Performance Wall’. Wall 3 is our ‘Root Cause Problem Solving’ wall. Let me describe each in detail.
With Wall 1, the strategy and planning wall, we seek to answer the most fundamental strategy question. What is our Aspiration? What are we trying to achieve as an organization? I like to call this our Noble Goal. People want to be part of something bigger than themselves. And we want to demonstrate our respect for our people and their humanity by giving them that opportunity.
On Wall 1, we also want to articulate our Winning Logic. What is the logic and narrative through which we achieve our Noble Goal? And then there are the subordinate questions. Where will we play? What will we emphasize? What industries, what parts of the value chain, what technologies? What customer segments? What geographies? And what management systems and capabilities do we need to develop in order to enact and execute our winning logic? All of this should be expressed clearly on Wall 1 – a challenge!
Wall 2 is about performance. How are we doing right now? In other words, are we winning or losing the game? How well are we executing our strategy? We have to illustrate both so-called end-of-pipe and process measures in a dashboard, for example. We might also have the equivalent of a Kanban board showing the key activities month by month. Each Kanban might represent a critical initiative and include visual indicators telling us what’s happening. Are we on track? What are the blockers? Next steps and so on.
Innovation funnels can also be effective visual representations of how are we doing right now. These can include innovation funnels, which show critical customer journey improvements, or critical technology development. Are we ahead or behind? What are the blockers? And so on. In summary, Wall 2 entails using visual tools to help answer the key performance question. How are we doing right now?
Wall 3 focuses on blockers – what are they, and what are we doing about them? We need visual tools of course that make clear: What are the biggest blockers and why? What are our countermeasure? (And that entails who, what, when, where, and how.) Are they fixing the problem?
In summary, Walls 1, 2 and 3 provide the senior team with a shared understanding of what we’re trying to achieve, what’s happening right now, what the blockers are and what is being done about them. All this creates ‘radical transparency and collaboration’ and is tremendously power. Sustain it entails shared ‘Operating Rhythms’, or senior leader ‘routines’, which a standard agenda and cadence, and shared ‘Rules of Engagement’. Such alignment and focus requires continuous calibration but the benefits are enormous.
And, as I mentioned earlier, the Lighthouse metaphor is replicated level by level, by level. We simply adjust the scope in accord with our span of control. So our frontline teams will have ‘mini-Lighthouses’ if you will, focusing on their goals, processes, customers and technologies. Let’s say we’re a bank and we have a frontline customer service team. We’ll likely have a daily standup meeting, and it’ll follow a similar agenda to the senior lighthouse. What’s our Aspiration? What’s happening right now? What’s blocking us? And what are we doing about it?
Laurent: Very good. So to summarize, the Wall 1 is focusing on the strategy, i.e. the goal and the planning. Wall 2 focuses on the in-flight initiatives and the performance, i.e. how is everything going? Wall 3 is about root cause problem solving and address performance issues identified in Wall 2. And Wall 3 focusing on the countermeasures so that we can remove blockers and get back to a good condition. Correct?
Pascal: That’s a good summary, thank you Laurent.