Agile and Organisational Resilience – Part 2: Beyond Agile & Lean

This series of articles examines how organisations can create opportunity following a crisis. I will argue that as the world becomes more complex and undiscernable, how organisations prepare and deal with inevitable failure can give them a competitive advantage. So much so that intentional failure can provide more upside than the downside.

Many readers will be from the fields of Agile and Lean. Following on from my introduction to this series, this article will consider the maturity of these ways of working, but then put them to one-side until the end of this article series.

Why put them to one-side, especially considering I’m an Agile Coach? Well, to be frank, their current application is becoming commoditised. Their essence and original intent are being over-shadowed by large consultancies, large-scale change initiatives, sheep-dip training programmes and certification one-upmanship. Such organisations and initiatives often pay little more than lip-service to Agile’s and Lean’s simple yet powerful approach.

Using Geoffrey Moore’s Adoption Curve, there’s a lot to suggest Agile application is travelling across Early Majority. My opinion isn’t unique; Dave Snowden and many in the agile community recognise this trend.

Where would you place the maturity of agile and lean the adoption curve?

If we consider ourselves as change-agents, co-developing new emerging ways of working to help our clients and colleagues, we need to look beyond Agile and Lean – particularly in its current commodified application. This is my intent for this series of articles.

Another reason why I shan’t dwell on Agile and Lean is that I believe they have little application during an organisation’s crisis. However, later I will argue they play an important role once a crisis has been stabilised.

There’s a great deal of literature on how Agile and Lean deliver customer value at pace in a complex environment. I’m not going to repeat it here other than to say these approaches are particularly useful when dealing with known problems and opportunities. The challenge is that knowledge and understanding do not exist during shock events and crises that will inevitably engulf an organisation.

There’s a degree of overlap and complementarity between Scrum, Lean and Lean Startup, yet each has distinct emphasis.

Putting Agile and Lean to one-side, in my next article I’ll be returning to organisational resilience. I’ll be telling the story of Nokia, a company that has fallen out of favour yet has an impressive history of resilience.

 

Beyond traditional organisational resilience

In business, organisational resilience often relates to ensuring services and operations are maintained, or return to their current state after a period of instability.

However, there is an extension of resilience that organisations can utilise to continuously evolve, find new stable states and rapidly seek novel opportunities.

These benefits can result from intended low exposure to instability that would otherwise be too brand damaging in high degrees.

Examples of types of organisational resilience

Barclays: Resilience testing used to ensure existing service & operations are maintained

Sainsbury’s: Rapidly improved proposition using customer complaints feedback after intentional closure of an in-store bakery

Netflix: Increases resilience from purposeful disruption of infrastructure – Chaos Monkey

Domino’s (USA): In 2010, recovered brand image through a self-critical ad campaign

Walmart: During Hurricane Katrina crisis, Walmart used their logistics capability to provide disaster relief to local communities; thus capitalising on this Black Swan event

Stabilise rapidly and exploit new learning

Whether instability is intentional or a result of external factors, organisations should be structured to rapidly respond, and capitalise on new understanding

References

Barclays: Reference on request

Sainsbury’s: Contact Dean Latchana

Netflix: Chaos Monkey

Domino’s (USA): How Domino’s Pizza Reinvented Itself

Walmart: How Wal-Mart used Hurricane Katrina to repair its image

Find out more

Resilient Organizations: How to Survive, Thrive and Create Opportunities Through Crisis and Change – Erica Seville (2016)

Antifragile – Nassim Taleb (2012)

My mini-series of articles on organisational resilience (2018)

I’m available to deliver a talk on Agile and Organisational Resilience.

Contact Dean Latchana to learn more about how organisations can benefit from intentional disruption and crises.
(dean@latchana.co.uk)

Agile and Organisational Resilience – Part 4: Nokia & Ericsson case study

This series of articles examines how organisations can create opportunity following a crisis and unforeseen change. I will argue that as the world becomes more complex and undiscernable, how organisations prepare and deal with inevitable failure can give them a competitive advantage. So much so that intentional failure can provide more upside than the downside.

In the last article, I explained how, by creating a wide portfolio of business interests, Nokia has remained adaptive to unforeseen change. Having a wide variation allows the organisation to weather the unforeseeable downturn in one area by offsetting it against the unforeseeable rise in another. This ensures survivability and selection.

This article is a case study of how Nokia and Ericsson handled an unforeseen incident differently resulting in the ongoing success of Nokia and the loss of market share for Ericsson.

Diverging fortunes resulting from a 10-minute incident

At the start of the century, Nokia and Ericsson were two dominant mobile phone manufacturers. Both firms were using microchips manufactured by Philips. In the year 2000, a fire in Philips New Mexico factory caused damage to the plant resulting in a halt to the chip supply.

On initial evaluation, Philips assured their customers that production would resume within a week. Nokia was doubtful of Philips assessment and so worked with Philips to find alternatives. They partnered with Philips to find another chipset design to allow manufacturing to continue in other Philips plants.

On the other hand, Ericsson believed Philips assessment that production would be restored within the week. It actually took six weeks. The extended delay caused Ericsson to suffer a critical shortage of chips during a time when handsets were in huge demand. Sales dropped, unused inventory piled up, and their market share declined.

The fire, which took Philips 10 minutes to extinguish, cost Ericsson $200 million in losses in Q2. In contrast, Nokia reported a Q3 profit rise of 42 percent. Ericsson never quite recovered, resulting in Nokia dominating the market for many more years.

Conclusion and the next article

Nokia recognised the fire created vulnerability to its operations and to its market share. It detected the problem early and responded quickly by finding workarounds with their supplier. Ericsson was blind to the threat and lethargic in response.

This capability to detect problems early, and the ability to respond rapidly, enable organisations to be adaptive to unforeseen change and proactively handle crises. To such an extent that they can capitalise on such disruptions to gain an advantage, just like Nokia’s ability to gain market share over its close competitor as a consequence of an unforeseen disruption to their supply chain.

This capability is a demonstration of organisational resilience. It’s a strategic asset that will make or break an organisation.

The concept of resilience is what I’ll be introducing in the next article.

Further reading

You can read more about the Nokia-Ericsson case in Erica Seville’s excellent book Resilient Organizations.

The Economist has written a special report on the incident: When the chain breaks.

 

Agile and Organisational Resilience – Part 3: Nokia’s adaptability

This series of articles examines how organisations can create opportunity following a crisis and unforeseen change. I will argue that as the world becomes more complex and undiscernable, how organisations prepare and deal with inevitable failure can give them a competitive advantage. So much so that intentional failure can provide more upside than the downside.

In the last article, I explained that Agile and Lean ways of working are particularly appropriate for handling known problems and opportunities. I stated that during a crisis, and during unforeseen change, there’s little knowledge and understanding, and so Agile and Lean ways of working have little application.

In this article, I’ll be telling the story of Nokia, a company that has fallen out of favour yet has an impressive history of handling crises and capitalising on unforeseen change.

Nokia has a deep history of innovation, market exploitation and adaptability. It started in 1865 with a single paper mill operation producing paper consumer goods such as toilet paper. Over the proceeding decades, it sought and found success in a wide number of industries such as cabling, rubber consumer products, and telecommunication infrastructure.

A montage of products Nokia has produced and infrastructure projects it’s been involved with since 1865.

Nokia’s broad range of pursuits is a result of active variation, where the success or failure of each pursuit is hard to initially determine. Where unforeseen changes make a particular product or service become more viable, Nokia would invest further involvement. It would de-invest involvement in activities showing less success. Success or failure, and so investment or de-investment decisions, are emergent and impossible to confidently predict up front.

For example, 1980s deregulation of European Telecommunications industries opened a new market for telephony. Since Nokia had already developed an awareness and competency in this field it was one of the first to recognise and respond to the opportunity. It produced the first fully digital telephone exchange in Europe and released one of the first car phones. Further to this investment, it de-invested and reduced focus in other activities.

The discipline to ensure a mixed portfolio of activities that adapt to unforeseen market changes is the application of Palchinsky’s Principles:

  1. Seek out new ideas and try new things
  2. When trying something new, do it on a scale where failure is survivable
  3. Seek out feedback and learn from your mistakes as you go along

This essentially means that in order to create an organisation that can handle unforeseen change, the organisation must create a portfolio that exhibits variation, survivability and selection.

The next article will be a case study comparing Nokia with Ericsson in 2000 – at the time, two major rivals in the mobile handset market. I’ll be explaining how their differing response to an apparently innocuous event resulted in a crisis that led to the demise of one and the ongoing success of the other.

 

Agile and Organisational Resilience – Part 2: Beyond Agile & Lean

This series of articles examines how organisations can create opportunity following a crisis. I will argue that as the world becomes more complex and undiscernable, how organisations prepare and deal with inevitable failure can give them a competitive advantage. So much so that intentional failure can provide more upside than the downside.

Many readers will be from the fields of Agile and Lean. Following on from my introduction to this series, this article will consider the maturity of these ways of working, but then put them to one-side until the end of this article series.

Why put them to one-side, especially considering I’m an Agile Coach? Well, to be frank, their current application is becoming commoditised. Their essence and original intent are being over-shadowed by large consultancies, large-scale change initiatives, sheep-dip training programmes and certification one-upmanship. Such organisations and initiatives often pay little more than lip-service to Agile’s and Lean’s simple yet powerful approach.

Using Geoffrey Moore’s Adoption Curve, there’s a lot to suggest Agile application is travelling across Early Majority. My opinion isn’t unique; Dave Snowden and many in the agile community recognise this trend.

Where would you place the maturity of agile and lean the adoption curve?

If we consider ourselves as change-agents, co-developing new emerging ways of working to help our clients and colleagues, we need to look beyond Agile and Lean – particularly in its current commodified application. This is my intent for this series of articles.

Another reason why I shan’t dwell on Agile and Lean is that I believe they have little application during an organisation’s crisis. However, later I will argue they play an important role once a crisis has been stabilised.

There’s a great deal of literature on how Agile and Lean deliver customer value at pace in a complex environment. I’m not going to repeat it here other than to say these approaches are particularly useful when dealing with known problems and opportunities. The challenge is that knowledge and understanding do not exist during shock events and crises that will inevitably engulf an organisation.

There’s a degree of overlap and complementarity between Scrum, Lean and Lean Startup, yet each has distinct emphasis.

Putting Agile and Lean to one-side, in my next article I’ll be returning to organisational resilience. I’ll be telling the story of Nokia, a company that has fallen out of favour yet has an impressive history of resilience.