Things you should know About Agile and Innovation

Hugo dissects the key essential elements of Agile and Innovation as key drivers in today’s volatile and uncertain market that is constantly disrupted by startups and technological advancements. 

I’m reading Eric Ries, ‘The Startup Way’ for the second time. The book strikes me as one of the best books about ‘modern enterprise management every written. I did an MBA and read loads of (old) books about management. In today’s volatile market, disrupted by startups and technological innovations, we need a new paradigm. Managers that have gone through the same books as I did 20 years ago need to reinvent themselves.

Are you Caesar or Scientist?

An interesting passage:

‘I asked him (Jeff Immelt) to imagine the following: If I selected an employee of the company at random, from any level or function or region, and that employee had an absolutely brilliant idea that would unlock a dramatic new source of growth for the company, how would he or she get it implemented? Does the company have an automatic process for testing a new idea, to see if it is actually any good? And does the company have the management tools necessary to scale this idea up to maximum impact, even if it doesn’t align with any of the company’s current lines of business? That’s what a modern company does: harness the creativity and talent of every single one of its employees.’

From a leadership perspective it’s about this difference, also described by Eric: ‘It’s the difference between ‘playing Caesar (deciding which projects live or die) and ‘playing the scientist (being perpetually open to search and discovery).

The past few years, I have helped many Indonesian enterprises to become more ‘agile’. Through training and coaching, we change the way their people work. And that’s in my perspective what Agile at its core is about: changing the way people work. What Agile doesn’t address is what those people work on.

Agile helps to create self organised, cross functional teams; but it doesn’t help those teams to create breakthrough innovation.

One of the role models of ‘Agile as Innovation’ in Indonesia is Jenius. BTPN recognised the opportunity in becoming a digital consumer bank. PeterJan, in my view ‘the father of Jenius’, joined BTPN and got his own playground to build a digital banking app. He got his own budget, his own floor in the bank and could hire his own team. Based on the success of that way of creating innovation, BTPN tried to replicate this model with other products and departments. Unfortunately today, the leadership team that initiated Jenius and the entrepreneurial program have left the bank.

The top executive who sponsored Jenius didn’t play Caesar. He told Peterjan ‘if your assumptions and plan are correct, we can create a new way of banking in Indonesia. You have my blessing, now go out and prove it works’. 

Creating a Startup Engine

If you are in a leadership position, you’ll probably think ‘yes that sounds great but how to replicate the model of BTPN in my own enterprise?’. What I recognise is that most executives will think of all the reasons this worked in BTPN but won’t work in their environment. For this to start, we obviously first need someone who believes this can work. And then sets out to clear the way. While we don’t need Caesar to decide what different teams work on, we do need Caesar to drive this change towards a modern company, clear obstacles, change policies, create new ways of funding and take risks.

One of the things I have learned about Indonesia is this: when it comes to execution, things can move very quickly. When I speak to an executive who likes the ideas I share, the thought on his mind is ‘great, how do we start tomorrow?’. That is: if the start is clear and is a ‘small step’, things move fast. When it comes to bigger change, especially in big enterprises, things slow down pretty quickly after that initial quick start.

This means that to get started with creating a startup engine, we need 2 things:

1. A simple process to kick of 1 or 2 startup pilot teams
2. A more detailed, ‘startup transformation roadmap’

For the pilot teams, we need to teach them the lean startup ‘toolset’. They need to be coached on the principles of exploration, learning, metrics, build-measure-learn loops and iterative work. At Ekipa, we have developed a 90 day innovation challenge for this. For more details on this, download our pdf here.

Creating a more detailed startup transformation roadmap requires an executive sponsor along with one or more ‘startup champions’ who can act as change agents. In the early stages, we need to develop a new way of working for the enterprise. This is based on the first pilot team(s). As these teams learn how to develop new products and markets ‘the startup way’, a new way of working can be created that can be spread to future teams.

A few core areas need to be addressed in the transformation roadmap:

1. How will we fund the new startups? (budgeting process)
2. Who will make the funding decisions? 
3. What will happen to people’s career when they make the leap to join an internal startup team?
4. What type of innovation do we want? What type of innovation we don’t want? 
5. Who will drive the change program? 
6. How do we ‘select’ people to join startup teams? 
7. What type of metrics will we use to decide whether the startups are successful? (innovation accounting)

While the above are pragmatic questions we need to answer in order to get the change process started, the most crucial aspect of such change program is the way leadership gets involved. As Eric describes:

Pulling of a transformation is very challenging to pull off. It requires:

> leadership skills of a most distinctive kind, since transformation puts its leader against the hostile reactions of experienced people whose lives and careers are deeply invested in the status quo

> Audacious experimentation, since beyond the general framework of the startup way, every organisation has to find its own distinctive shape, its own unique adaptations to the specific context in which it operates. 

> the boldness to invest in sweeping, company-wide change and the patience to wait until just the right moment to make this commitment. The discipline to start with small experiments. 

> the most difficult kind of cross-functional collaboration: enlisting functional leaders in the creation of new and competing functions, thereby breaking down old functional silos and requiring old enemies to make common cause. 

Most large enterprises are rich in politics; people love reporting; people spend most of their time in meetings; people are fond of their current role and status and resist change. All these forces work against the change. In order to change this, the effort to become a startup engine needs to be on the C level agenda. Someone in the board or maybe the whole board needs to show ‘leadership skills of a most distinctive kind’. They all need to be ready to do ‘audacious experimentation in launching innovative products; but also in changing policies, budgeting and company culture.

And this type of change cannot be done hands off. It can not be delegated to 1 person and then be left alone. It needs a board wide support. And it needs a dedicated Caesar who commits him or herself to changing the way the company functions in order to make the startup engine possible.