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Business Agility and Intrapreneurship
This document discusses building business agility through intrapreneurship and innovation systems. It begins by discussing Netflix's culture of agility and the importance of trust, delivery capabilities, and an ambidextrous structure. It then discusses strategies for implementing agility through an innovation portfolio with core, adjacent and transformational projects. Key elements of an agility system are discussed like design thinking, cross-functional innovation teams, and building intrapreneurs. The importance of leadership agility across strategic, portfolio and operational domains is emphasized. Throughout examples are given of how companies like Haier have built agility as a core competence.
Business Agility and Intrapreneurship
- 1. 1 Business Agility and Intrapreneurship WilliamMalek April 3, 2019
- 2. Edward Byrn ina Scientific American article in 1896. “We have entered an epoch of invention and progress unique in the history of the world…a gigantic tidal wave of human ingenuity and resource, so stupendous in its magnitude, so complex in its diversity, so profound in its thought, so fruitful in its wealth, so beneficent in its results, that the mind is strained and embarrassed in its effort to expand to a full appreciation of it.”
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- 4. Agility is Key:Lessons from Netflix AGILITY does not exist in isolation. It must be thought of as a combination of a culture of trust, the right delivery capabilities, and an ambidextrous structure to help teams work faster and more effectively in varied conditions.
- 5. Strategy Execution INTRAPRENEUR SKILLS AGILITY SYSTEMS The cost ofpoor strategy implementation: $5 billion USD wasted globally every day $2 trillion USD wasted globally every year Closing the Gap Between Strategy Design and Delivery, World Finance, January 17, 2019
- 6. The big promiseof agility is… a shapeshifting business Speed and stability Effectiveness and efficiency, innovation and execution But without an underlying framework or system, this lofty goal will remain elusive.
- 8. Barriers to SuccessfulStrategy Implementation Insufficient or poorly managed External developments Strategy not understood/poorly communicated Poor coordination across organization Poor flow of information Lack of accountability Lack of necessary delivery capabilities Lack of developer-implementer linkage Fail to win over hears and minds Weaknesses in the strategy itself Lack of monitoring Lack of CEO/senior leadership support Source: Economist Intelligence Unit Cultural attitudes 22% Insufficient agility 21% 19% 19% 19% 17% 16% 16% 15% 15% 15% 14% 11% 24%
- 9. How Strong InnovatorsCompare with Their Peers (5-point scale) Strong Innovators Poor Innovators Source: Innovation Readiness Index: RevelX 4.1 4.2 4.1 3.8 4.0 4.0 4.2 2.9 3.4 2.8 2.7 2.8 2.5 2.9 Innovation Strategy Customer Centricity Agility Portfolio Management Organization Structure Skills & Competencies Culture & Leadership
- 10. Key Design Challenge Howmight we make business agility a core competence in the organization?
- 12. “Being Agile isKnowing When NOT to do Agile!” - William Malek
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- 15. What Is “Agility?” •Business agility is the ability of an organization to sense changes internally or externally and respond accordingly in order to deliver value to its customers. • Business agility is not a specific methodology or even a general framework. • An “agility shift” means developing the competence, capacity and confidence to learn, adjust and transform in a constantly changing world within your context.
- 16. Prediction drives winningor losing A plan made today is based on the assumption of a knowable future. How much of a “Knowable Future” do you think you have?
- 17. MICROSOFT DIGITAL TRANSFORMATION STUDY Howlong does your current business model have left to run? Various Industries: 46% said “Less than 5 years” 14% said “Less than 2 years” 4,000 Respondents Worldwide Ø Automotive, Insurance, Financial Service, Media & Entertainment, Healthcare A Question to You
- 18. •In a recentMIT survey, board members estimated that 30% of their company’s revenue were under threat from digital disruption •47% believe their industries would be unrecognizable just 3 years from now How do you know you are NOT under a Threat of Disruption?
- 19. Adapted from: JoinerB, (2017). Bringing “Leadership Agility” to Agile, Cutter Consortium Three Types of Leadership Agility Strategic Agility Framing the need for business change and the desired customer-centric outcomes delivered through organizational innovation and contextual- based leadership Portfolio Agility Implementing the enterprise portfolio investment strategy and creating systems to manage execution, contextually Operational Agility Engaging people (intrapreneurs) in analytic and creative thinking through design thinking (and other practices) for planning and delivering solutions
- 20. Culture Goal Structure MetricsStrategy Purpose IdentityVision Strategic Agility
- 21. Adapted from: JoinerB, (2017). Bringing “Leadership Agility” to Agile, Cutter Consortium Three Types of Leadership Agility Strategic Agility Framing the need for business change and the desired customer-centric outcomes delivered through organizational innovation and contextual- based leadership
- 22. Medical Delivery “Deliver medicineto homes” Tele Consulting “24 hour service by VDO Call” Tests at Homes “Take patient samples at home and send to labs” Samitivej Virtual Hospital
- 23. On-line Easy Payment “Anywhereat Anytime” Application Program Interphase “Wellness Residence” Claiming Medical Insurance “Smart Living Platform” Monitor signs and heart rate “1st Prestige Wealth and Health Experience” Samitivej Virtual Hospital (Corporate Partners)
- 25. If you attemptdisruptive innovation within your organizational boundaries, the immune system will come and attack you… - Salim Ismail
- 26. Strategic Agility inPartnerships Sources: 2015 and 2018 BCG Global Innovation Survey Strong Innovators are Increasingly Embracing Ideas from External Sources Incubators Academic Partnerships Company Partnerships Percentage of Strong Innovators Percentage of Strong Innovators Percentage of Strong Innovators 100 50 0 2015 2018 100 50 0 2015 2018 100 50 0 2015 2018 59 75 60 81 65 83
- 27. Source: Frank Diana Business Ecosystems Areon the Rise
- 28. For Your Consideration •Whatwould it take for you to be agile enough to participate in an ecosystem like this? •If you had “agility” implemented as a core competence, what possibilities might lie ahead for you?
- 30. Brand Influence ofChinese Home Appliance Brands in Eight Countries in the World 70 60 50 40 30 20 10 0 68 10 1 2 56 3 0 1 15 62 1 0 3 10 51 15 1 1 1 37 23 0 1 3 57 8 13 8 0 42 2 0 1 0 51 6 6 7 28 America Germany France New Zealand Russia Thailand India Japan Data sources: Google trends Haier Midea Cree TCL Hisense
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- 32. Strategic Contexts Complicated Sense Analyze Respond Good Practice Complex Probe Sense Respond EmergentPractice Chaos Act Sense Respond Novel Practice Simple Sense Categorize Respond Best Practice Disorder Cynefin Sense Making Framework
- 34. Organizational Innovation: 78,000 Employees– 10,000 “By eradicating our middle management layer — and laying off more than 10,000 middle level managers — we have destroyed the original hierarchical structure.” MIT SLOAN MANAGEMENT REVIEW
- 35. Rendanheyi is anAdvanced Model of Organizational Agility User Needs One-time Transactional Customer End-to-end Engaged Users Dan (goal) Ren (people) Intrapreneurial employees Employer Entrepreneur Implementer Partner Value of employees aligned with the value they create for users Heyi (alignment)
- 36. Haier adapted itsoperating model to match the evolution of its strategy = structure is enabling agility • Highest quality product • Focus on local markets • Differentiation through service • Increasing the numbers of products and countries • Stay ahead on innovation 1980s - late 1990s Late 1990s - late 2000s Late 2000s - present Strategic Imperatives Operating Model Functional Model Customer Matrix Model Customer CEO Frontline > 1,000 frontline business units Customer
- 37. “We keep sayinginternally to our employees that there’s no such thing as a successful business. There’s only a business that is compatible with the task at hand.”
- 38. Culture Goal Structure MetricsStrategy Purpose IdentityVision Strategic Agility Portfolio Portfolio Agility
- 39. Three Types ofLeadership Agility Strategic Agility Framing the need for business change and the desired customer-centric outcomes delivered through organizational innovation and contextual-based leadership Portfolio Agility Implementing the enterprise portfolio investment strategy and creating systems to manage execution, contextually
- 40. Portfolio Management Interfaces Strategy DevelopmentPortfolio Management • Charter for changes to business structure • Strategic priorities • Portfolio Zones • Product/technology road maps • Value drivers • Need for change in plans/road maps • Master project list • Performance to target • Project priorities H1-H2-H3 • Project selection & staging • Project scope decisions • New project charters • Charter for new options • Plan change requests • Project attractiveness • Resource needs • Project timing & progress • Strategic priorities • Current Operating Plan • Performance to target • Master project list • Investment targets by strategic portfolio domains • Return targets, 90 day reviews • Project priorities • Resource assignments • Resource needs Revenue Planning & Budgeting Project Execution Functional Resource Management
- 41. Difficult but Necessary Enhancing Current Business Fast Exploration Research and Development 5%15% Whatis the Right Portfolio Mix for You? 70% 10% BUSINESS UNCERTAINTY MARKET MATURITY CERTAINTY MARKET MATURITY UNCERTAINTY BUSINESS CERTAINTY
- 42. Know Your GoldenRatio 80% CORE 18% ADJACENT 2% TRANSFORMATIONAL A LEADING CONSUMER GOODS COMPANY 70% CORE 20% ADJACENT 10% TRANSFORMATIONAL A DIVERSIFIED INDUSTRIALS COMPANY 45% CORE 40% ADJACENT 15% TRANSFORMATIONAL A MIDSTAGE TECHNOLOGY FIRM Source: Managing Your Innovation Portfolio - HBR
- 43. 70% CORE 20% ADJACENT 10% TRANSFORMATIONAL Is There aGolden Ratio? Analysis reveals that this allocation of resources correlates with meaningfully higher share price performance 10% CORE 20% ADJACENT 70% TRANSFORMATIONAL How Does Innovation Pay the Bills? Among high performers that invest in all three levels of innovation. HBR reports the distribution of total returns is inverse the allocation of resources in the long run. Source: Managing Your Innovation Portfolio - HBR Know Your Golden Ratio (Cont.)
- 44. A Crisis of Prioritization Organizing yourPortfolio to Compete in an Age of Disruption
- 45. Sometimes You Needa Framework! Organizing to Compete in an Age of Disruption Disruptive Innovations Sustaining Innovations Incubation Zone Transformation Zone Performance Zone Productivity Zone Revenue Performance Enabling Investments Horizon 3 Horizon 2 Horizon 1 Horizon 1 Moore, Geoffrey A. Zone to Win: Organizing to Compete in an Age of Disruption. DiversionBooks, 2015.
- 46. Moore, Geoffrey A.Zone to Win: Organizing to Compete in an Age of Disruption. DiversionBooks, 2015. Three Investment Horizons Where the Problem Lies = H2 Current Categories Meet Performance Commitments Break-Out Categories On-board next generation for future growth Do well here too Future Category Develop options for future growth Horizon 1 ROI in 0 to 12 mos Horizon 2 ROI in 12 to 36 mos Horizon 3 ROI in 36 to 72 mos Sticking point Do well here
- 47. Source: Dealing WithDarwin, Geoffrey A. Moore, TCG Advisors LLC, 2005 Non-Internet Protocol Support • SNA • ATM Frame Relay • Novell Netware • Etc. Internet Routers • Core • Edge • Access Internet Switches • Modular • Stackable Advanced Technologies • VOIP • Security • Wireless • San Switches Home Networking • Wireless Networks • VOIP Adapters • M&As Sector Futures • Data Center Virtualization • Service Provider Triple Play • The Networked Home Problem Children • Optical Network Equipment • Service Provider Access Time Growth Market Mature Market Performance Zone Declining Market End of Life A Incubation Zone Fault Line! E D C B Transformation Zone Cisco Systems 2005 Productivity Zone
- 48. Factor Failures IntoInnovation Portfolio Value Discount 70%: Risk Adjusted Capital
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- 50. Portfolio H2-H3 Operations H1 H2-H3 H1Operations Operational Agility
- 51. Three Types ofLeadership Agility Strategic Agility Framing the need for business change and the desired customer-centric outcomes delivered through organizational innovation and contextual-based leadership Portfolio Agility Implementing the enterprise portfolio investment strategy and creating systems to manage execution, contextually Operational Agility Engaging people (intrapreneurs) in analytic and creative thinking through design thinking (and other practices) for planning and delivering solutions
- 52. Haier Builds Intrapreneurs "Weencourage employees to become entrepreneurs because people are not a means to an end, but an end in themselves; our goal is to let everyone become their own CEO… to help everyone fully realize their potential." said Haier's legendary head Zhang
- 53. Design Thinking is anAgility Mind-set Learn from Trial & Error Fail Fast and Cheaply Test Everything Often and Learn from It Lots of Small Experiments Emphasize Doing Learn Close to and From the Customer Ongoing, Happens all the Time
- 54. As you can’tpredict the future you need a system that will help you test the future and respond to change “ ”Dan Toma, Author ‘The Corporate Startup’
- 55. UNDERSTAND DEFINEEMPATHY IDEASPROTOTYPES TESTING Design Thinking = Agility System
- 56. Execution Zones à Incubation Invention Transformation Deployment Performance Optimization Productivity Transitions Type ofLeader Visionary Inventor Pragmatic Deployer Conservative Optimizer Pragmatic Orchestrator Core Competence Creativity Competitiveness Control Collaboration Project Discipline Design Thinking/NPD Lean-Agile-Scrum Sigma/Waterfall Waterfall Hybrid Core Attribute Spontaneous Tough-minded Prepared Empathetic Decision Style Intuition Experimentation Deliberation Consensus Functions Most in Alignment R&D, Creative Services Sales, Engineering Finance, Operations HR, Marketing, Customer Support Zone Execution = Operational Systems Agility
- 57. Culture Goal Structure Metrics Purpose IdentityVision Strategy H2-H3 Operations Portfolio H1 H2-H3 H1 Operations Strategic Agility Portfolio Agility Operational Agility
- 58. A bad systemwill beat a good person every time W. Edwards Deming “ ”
- 59. A Possible StrategicInnovation System to Build Agility 59 Leadership & Strategy Direction Insights & Trendspotting Exploration Decision Execution Strategic Initiatives H1 – H3 Organizational Innovation Strategy Executive Team Executive Team Sensing Team Observation & Foresight Framing Intersections Design Thinking Center of Excellence Innovation Teams Executive Team Innovation Projects Design Sprints Where to Win How to Play Portfolio Scanning Project Execution Portfolio Scanning Hypotheses Experiment Ideation Selection Biz Case Decision Incubate C om m ercialization Resources Capabilities Non-DT Projects Horizon 3 Horizon 1-2
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- 61. Strategy Execution INTRAPRENEUR SKILLS AGILITY SYSTEMS The cost ofpoor strategy implementation: $5 billion USD wasted globally every day $2 trillion USD wasted globally every year Closing the Gap Between Strategy Design and Delivery, World Finance, January 17, 2019
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- 64. Run a DesignSprint & Start Small Use Design Thinking to Realize Organization Capabilities for Agility 5 5X 5X
- 65. 1. How mightwe start defining new business and partner models to access skills and resources to respond with strategic agility? 2. How might we plan portfolio agility that will help us to optimize our investment bets? 3. How might we define, develop, and deploy the right systems, in context, for operational agility to “test the future” and respond to change? 4. With potential disruption in our industry, how might we proactively use organizational innovation to help us grow and execute effectively and efficiently? 5. How might we develop and enable intrapreneurs throughout the business? What are the 5 agility design challenges?
- 66. Leading Innovation byDesign. Driving Performance by Execution.