How organizations can improve their product performance and overall performance is as important to product managers as it is to senior leaders. Making improvements has become more challenging as the business environment for most organizations is changing more quickly and contains greater uncertainty than in the past. Organizations that better respond to these changes can create a competitive advantage and one way to accomplish that is through Strategic Agility.
Dan Montgomery is a practitioner of Strategic Agility and shares with us simple and practical tools in this interview. He is also the co-author of The Institute Way: Simplify Strategic Planning and Management with the Balanced Scorecard. He has helped several organizations create strategic plans and add agility.
Here is a summary of the topics discussed and a link to the interview:
[2:57] What is Strategic Agility? It’s the ability of an organization to sense and respond to changes in its environment in near real-time. The change could be opportunities, risks, threats, disruptions, etc. Traditional strategic planning began when the business environment was more predictable. A 3-5 year strategy could be created and organizational resources aligned with it with few uncertainties. Today the level of uncertainty and disruption is much higher than in the past. This requires much greater agility.
[5:39] What are the symptoms of an organization that lacks Strategic Agility? There are three:
- Plans quickly become out of date. Top-down strategy approaches believe that you can predict the future with enough data. This has been called predictive hubris. Such plans are often authored by just a few people and lack diversity of thought. These plans rapidly become obsolete.
- No true buy-in. With only a few people creating the plan, the vision is not broadly held to create buy-in. Many people in the organization may not understand the plan or even be aware of it. Senior leaders or the “experts” create the plan and the rest of the organization is not invested in it.
- Taking on too many projects. I call this initiative overload. There are too many projects for the available resources. Employees quickly get overwhelmed by not being able to accomplish what is expected and progress further slows. The answer to this is to…
Start less, Finish more, Pivot fast.
[8:44] What tools are helpful for this? Start less and finish more requires having a clear and effective project selection process that is aligned with organizational objectives and then uses effective project management. Pivot fast requires understanding what is and is not working and how the business environment is changing. Tools such as PESTLE are very helpful for this.
[11:30] What are barriers to creating Strategic Agility? Some are bureaucratic that have become part of the processes of the organizations. Others are aspects of the culture of the organization, such as feeling safe to express a differing opinion. For effective Strategic Agility to exist, psychological safety must be part of the culture and fear must be driven out of the organization.
What are tools product managers and innovators can use to influence their organization towards Strategic Agility? Two key tools are:
- [15:39] OKRs — objectives and key results. These are a lightweight approach to strategy deployment. Each quarter (or another reasonable interval) a team goes through a review of their assumptions about what is important, what they know about their strategy, and what may have changed. Then they set one or two targets for the next quarter. A target is expressed as an objective with key results that support it. Objectives should be aspirational; for example, “make our customers love us.” Key results must be something measurable. As an example, measuring an increase in Net Promoter Score results from a score of 5 to a score of 8. The target is a desirable business outcome, not a plan. The plan for reaching the outcome is left to the team. OKRs recognize that the environment and rules of the game change quickly. Many large product and service-focused organizations such as Google, Intuit, Adobe and others have adopted OKRs.
- [22:15] Conversation. Day-to-day team members need to be in frequent conversation. They discuss problems, consider alternatives for solving problems, reach agreement of actions to take, provide accountability for actions, and retrospectively review how the actions addressed the problems. Effective conversation and dialogue are essential for Strategic Agility. Product managers have a huge role to play in this, providing the voice of the customer and sharing trends they are learning from their customers.
Listen to the interview with Dan Montgomery on The Everyday Innovator Podcast for product managers and innovators.
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Chad McAllister, PhD. is a product innovation guide, innovation management educator, and recovering engineer. He leads Product Innovation Educators, which trains product managers to create products customers love. He also hosts The Everyday Innovator weekly podcast, sharing knowledge from innovation thought leaders and practitioners. Follow @ChadMcAllister