Building strategic resilience in an unpredictable and volatile world, using lean-agile- Part 2

This is the second blog post of a two-part series that investigates how to design, plan and implement strategic resilience, using a lean-agile techniques during times of unpredictability/ crisis and volatility. In case you missed, part 1, here is the link to the article.

Companies have developed tools to deal with the challenges of the pandemic, but the flexible muscles must be strengthened. Knock-on effects appear only after a long delay but then suddenly accelerate; others gather momentum incrementally until an emergency tipping point is reached. The objective of becoming a resilient company can sometimes be contra to the more immediate objective of value creation. Building capacity in supply chains build resilience but it also creates additional costs, with lowered returns on investment and hence makes resilience a tough ask to the Board and its business leaders.

Although resilience is not needed every hour of the day; nor do disruptions happen all the time and the past is often forgotten, specially between two events, where they are often not necessarily similar as the last one. Through the passage of time strategic resilience diminishes as new and emerging priorities present themselves. An integrated approach to handling resilience is required to prevent a siloed situation. However, inertia and biases, efforts to achieve a holistic resilience agenda fray off course back towards familiar fixed it behaviours.

The measurement of resilience can take the forms of various financial mathematical formulas used to measure risk- with no one correct answer. Instead, investment in resilience tends to then be based on qualitative reasoning. Moreover, resilience leadership requires creative thinking, characterised by problem solving to navigate the disruptions, lessons learned and the how to adjust to crises and downturns. A proactive stance with forward thinking is the answer.

The following key takeaways for building and strengthening strategic resilience are of course not a simple how-to-do check list as each strand relies upon a combination of expertise, talent, skills capabilities and deep commitment to embedding it within the business.

• Measure, report and share: Taking a business operating model view, review resilience dimensions regularly and systematically, identifying SWOT factors compared with industry/ peers. The ability to conduct these reviews is of critical importance to decision making and balancing value creation and resilience building.

• Choose your disruptions. A resilience agenda built around generic disruptions or overly specific scenarios is not particularly helpful. Instead, choose a particular type of disruption to start with, then deep dive for expected initial impact and longer-term secondary and consequent effects. Pestel or Porters 5 forces could help.

• Spurious adjustments to the planning and budgeting cycle and process: The approach can be riddled with complicated overlays, what ifs and buts. Define instead a mechanism for creating scenarios systematically. Define increasingly disruptive scenarios across a widening circle of area and or function and embed the impact of it into structural factors.

• Risk functions moving beyond the formal processes of risk assessment: Reinvent these structures, integrating their constituent activities as a business continuity, rather than just silo governance, tick the box function.

• Identify the Achilles’ heels: Test strategy retrospectively and underlying assumptions against different scenarios using quantitative scenario and even hypothesis testing using advanced statistical analysis.

• Define a portfolio of resilience investments: This step will entail revising short-term performance and corporate resilience strategies to enable longer-term profitable growth. Consciously investing in the resilience dimension with strategic options and big-ticket bets, when needed to strengthen the strategies.

• Build first-line capabilities: Get experts in to help build personal resilience and resilience within teams. These efforts also better integrate people into the transition.

• Early warning signs to monitor internal and external risks: Risk Committee should be involved.

How to make it real using Lean-agile tools and techniques¹

Just like with any tool or framework of the Agilean methodology (Agile + Lean = Agilean), the most effective, adaptable and easy to apply techniques from all tools and methodologies known are briefly described here. This is not to say this the official guide, where external expertise in this field is required².

To begin, no one glove fits all situations and to build resilience requires forethought, where the key takeaways mentioned earlier together with business leaders aspirations and motivations are important to the approach. The steps shown in the diagram above exist in any or every project. These primarily concern:

1. Everyday project activity (Zooming in: how we organise our daily work on the project);

2. Large project phases (Zooming out: Project phases that reflect strategic steps of project implementation);

3. Change management (related to stakeholder management, political aspects of organisation and related human interaction and collaboration); and

4. Project communications (Project communication plan).

Why these selected tools and techniques?

Well to begin, I have picked these to be used in such combination, as it will be very much dependent on where resilience needs to built within the organisation, be it product and services, supply chain, manufacturing, operational excellence, efficient and effective processes and systems all the way to internal controls, reporting and strategic commercial decision making.

Scrum

There is no need to advocate this methodology for its buzzword or growing popularity. SCRUM is used worldwide and not only in technology-based businesses. It has proved itself to be an effective framework that ensures speed of realisation, flexible planning and high product quality due to its continuous feedback from the Customer. Also, when the SCRUM is set up correctly it means elevated level of employee engagement, drastically decreased level of stress and absurdity (known to waterfall project managers). Putting up SCRUM-boards, using this method for planning and organising tasks for your daily project activity.

DMAIC (Lean 6 sigma)

DMAIC is an extremely popular project management framework with its own tools and detailed description of every step. This methodology while very solid should be used for standard repeatable activities due to its tendency to be waterfall-based, where it is prescriptive and bureaucratic, which makes it less viable for daily activity in comparison to other Agile-based solutions. Nevertheless, this methodology is a particularly good for strategic planning of large resilience projects. Its DEFINE, MEASURE, ANALYSE, IMPROVE, CONTROL is very much in line with plan-do-check-act cycle and is useful in breaking down project work into manageable strategic steps.

John Kotter’s 8-Step Change Model

Step One: Create Urgency. Step Two: Form a Powerful Coalition. Step Three: Create a Vision for Change. Step Four: Communicate the Vision. Step Five: Remove Obstacles. Step Six: Create Short-Term Wins. Step Seven: Build on the Change. Step Eight: Anchor the Changes in Corporate Culture. This is the major difference of Agilean approach from other project management methodology.

In contrast, to the Kotter 8-step model and a noteworthy change model embraced for its real simplicity is Kurt Lewin’s 3 step change model referred to as: Unfreeze, Change, Freeze. Some will refer to the last stage in Lewin’s 3 stage model as refreeze, but the concept is the same. Simple put it is the process of unmoulding old behaviours, training new behaviours and finally reinforcing those new behaviours so they will become the new equilibrium or norm.

Communication Plan

Does not come down to just formal e-mails and messages from your Gants chart. If the 8-step change model and even the Lewis framework is used than the communication plan stops being arduous and a formality and then becomes a living and particularly useful tool of support for each stage of the 8 steps of change advocated by John Kotter.

The sense of urgency or a need for urgency (a military term, I have often referred too) due to unpredictability and uncertainty drawing on the main themes that was mentioned in part 1 of this 2-part article is often established in many conversations that lead an organisation to ‘reaching their tipping point’ and then deciding to ‘go SAFe’ during times of pandemic crises. The next recommended course of action must be to use a Lean-Agile change agent² so that leaders can form a powerful coalition. Using some of the field-tested tools and techniques mentioned here will help successful inject organisational change into the resilient transformational change model, via a roadmap that helps leaders ‘know the way’ as they drive for successful change in an unpredictable and volatile world.

Dee Singh Kothari is a senior partner in Kothari Partners

¹ Ideas expressed in this article are solely of the authors. The author nor Kothari Partner’s accept any liability for the incorrect application of these ideas either used by companies, employees, or other individuals alike.

² At Kothari Partners, we have worked with various UK and overseas listed and PE-backed clients across various industries to consider how their business and finance services can bring them both cost reductions and performance improvement.

Our approach is to help our clients understand their current situation, identify the value and decide on the scope, vision and set of strategies for what they could achieve for their business. We help plan their implementation and support them and deliver the solution/ change needed, so it is properly and permanently embedded in their organisation.

We aim to help past and future clients by delivering high-quality work to their organisation, generate real efficiencies and free up time to support better business decisions.

For a confidential discussion please free to contact us, via our corporate website: https://dipakagkothari.wixsite.com/website