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Agility—Culture, Language &
"Long-term strategic planning is giving way to
flexible approaches. But agile planning requires powerful analytics
tools." said Business
Finance, in a February 2003 article1. "Few
sectors of the economy have undergone more dramatic changes than those
currently sweeping the utilities industry. The Enron debacle and a series
of other crises have caused major shifts in strategy, away from
deregulated markets and toward alternative profit sources, according to
Jill Israel, vice president of financial processes at Entergy Corp."
That same article quotes Michael E. Raynor, Ph.D., director at
Deloitte Consulting in Toronto, saying: "'Strategic flexibility'
sounds like an oxymoron. 'Strategy is about commitment -- to market
positions, technologies, customers. Flexibility is about avoiding
commitment, about creating the ability to bob and weave, to exploit
whatever opportunities come along...'Strategic flexibility is a way to
combine the power of commitment-based strategy with the benefits of
flexibility in the face of an unpredictable environment.'" This is a
toward enterprise agility, and developing a culture of change proficiency.
metric framework for defining and measuring proficiency will be discussed
first, then a framework for analyzing change in specific domains.
An organization's proficiency may exist in one or a few of these domains of
change and not in others—by
design or by accident. These domains form an analysis framework for
understanding current needs and values, setting improvement and strategic
priorities, characterizing solution requirements, and evaluating solutions.
discussions often confuse change proficiency with quickness—which reduces simply to cycle-time reduction. Time, as the
metric, shows its inadequacy when we test it against extreme conditions.
Would you call it proficient if a short-notice change was completed in the
time required, but at a cost that eventually bankrupted the organization? Or
if the changed environment thereafter required the special wizardry and
constant attention of a specific employee to keep it operational? Is it
proficient if the change is virtually free and painless, but out-of-sync
with market opportunity timing? Is it proficient if it can readily
accommodate a broad latitude of change that is no longer needed, or too
narrow for the latest tricks thrown at it by the business environment?
questions let us tease apart change proficiency into four metric dimensions:
time, cost, quality, and scope. Exploring the interrelations of these four
shows a need to score sufficiently well in each.
a change in a timely manner is the only effective way to respond at all in
an environment of continuous and unrelenting change. After all, we do need
some time in-between changes for a little value-added work. But the time
of change alone does not provide a sufficient metric.
can change virtually anything if cost
is no object. However, if your cost of change is too much relative to your
competitor's costs, and changes happen with any frequency, there will be a
steady erosion of working capital, or shareholder dividends, or both. Change
at any cost is not viable, else we need not restructure anything ever—we
can simply throw out the old and buy a new capability; assuming, of course,
that we can bring something new to the operational level quick enough.
after a change the result is a house of cards which requires constant
attention or repair to remain functional, the change process quality
was insufficient. If we cut corners in the process of changing in order to
do it quickly and cheaply, we end up with a brittle, fragile result.
Encompassing robustness, quality implies predictability. Proficient change
is sufficient change, accomplished on time, on budget, and on spec.
is a transitional term that implies a starting point and some new ending
point. How far away can the ending point be from the starting point, and
still be a quality, affordable, and timely change? The dimension of scope addresses this question. Are we change proficient if we can
accommodate any change that comes our way so long as it is within a narrow
10% of where we already are? Scope is the principal difference between
flexibility and response ability.
Flexibility is a characteristic fixed at specification time. It is a range
of planned response to anticipated contingencies. Change proficiency, on the
other hand, is capable of dealing effectively with virtually any magnitude
of unanticipated change. At the heart of scope is the architectural issue:
rather than design something which anticipates a bounded set of options,
design it so it can be deconstructed and reconstructed as needed—addressed at another time when we'll look at the system
response architecture element of response
term problem is used in this
discussion to describe anything in search of a solution—regardless of whether it is a new market strategy that needs
developed, an opportunity to merge with another company, a business process
that might be outsourced, or simply an intolerable integration mess that
have all observed human nature to characterize problems in terms of known or
favored solutions. Often a problem is not perceived to exist until a
solution is perceived, placing continuation of the status quo in question.
Unfortunately, the awareness of solutions tends to color the perception of a
problem's true breadth and depth. To mitigate this confusion a
knowledge-development problem-analysis framework was developed at the
Agility Forum in the nineties, and successfully disciplined the process of
problem characterization, in hundreds of diverse cases, to generate
Flexible Strategic Roadmap created by the Cooperative Research Network for
NRECA Members - October 20022 "...summarizes a comprehensive strategic planning process for the
National Rural Electric Cooperative Association...The Roadmap contemplates
significant work in four knowledge development strategies." The third
one on the list reads, in part: "Education
to help co-op staff understand how to select and/or reject
technology from an ever-increasing array of options..." Developing
solution-independent requirements is facilitated by structured
a problem space effectively requires an understanding of the dynamics that
will constantly change its nature. A problem stated in today's immediate and
static terms is a fleeting characterization, as the environment that causes
and defines the problem will continue to change. The analysis-framework
forces problems to be understood in terms of their dynamics, and results in
problem characterizations that demand solutions which will accommodate
can be structured into two general categories: reactive and proactive.
Reactive change responds to a situation that threatens viability. Proactive
change responds to a possibility for innovation. A reactive change might be
the response needed for new-regulation compliance, a proactive change might
be the initiation of outsourcing to reduce costs or provide new
General Reactive Domains:
IT is often called upon for greater agility first, even when agility is not on the corporate strategic agenda. This is caused by application integration difficulties, management's call for better data visibility, merger and acquisition rationalization, out-of-control projects, inadequate budgets, and other departments wanting more support—now. How an IT department addresses this need for better change proficiency depends on how well it understands its problems. IT vendors and consulting firms are quick with solutions, but what is the real problem? We'll look at two IT areas that are typical corporate priorities today: a better capability to rationalize merger/acquisition IT, and a better capability to add and integrate software applications within the enterprise.
The issues shown might be the initial issues one particular company senses. These issues will change as more experience and capability shift the focus to more advanced issues. Items are bulleted here, so they do not convey the depth of explanation needed in a complete issues/requirements analysis. Note that the issues are more staff and departmental capability oriented than technology oriented. The lack of a specific technology is not the nature of the issue.
What problems and potential strategies need dynamic response analysis? Influence topic coverage: Click here to answer fast check-box questions. Results will be published when 100 responses are received.
- Attributed Copies Permitted - Essay #67 -
First Published as
Utility Agility - Culture, Language & Requirements Analysis - Part 4,
12/10/04, UtiliPoint International
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