Agility as Competitive Advantage

We live in a world that is evolving rapidly. This is evident from pace at which the technology adoption curve is shrinking. In the past, it took decades for a technology to move from research to obsolescence. Today, this cycle has shrunk to years and will soon become months. In this rapidly accelerating world of change, the ability to respond quickly is the key to success.

Agility is the new mantra and is crucial for an organization's survival. Constant demand for newer, faster and better is dictating shorter life-cycles and forcing product manufacturers and service providers to constantly innovate and upgrade. Market uncertainty is further triggered by disruptive technologies, innovative business models and slick execution, creating a new array of unexpected game-changers.

Organizations must learn to adapt and respond with agility in this fast-changing world. An organization must build the culture and the capability to respond with alacrity to customer demands by creating operational flexibility and by empowering individuals.

Agility is the ability to respond with alacrity to changes in market demands, business climates and global scenarios. Organization should embrace agility as a core value to deal with the changing requirements of customers, environments and stakeholders. To be truly agile, we must inculcate agility across all aspects of the Company's culture and ethos. Agility must be all-pervasive and is fundamental to organizational principles, people competencies, process improvement programs and performance measures.

In today's dynamic world, when the life of a product is shrinking, it is important to build and evolve products to meet customer needs. Today's customers are discerning and are sharing feedback through social media. The world has become collaborator where feedback is available instantaneously and sharp reactions can make or break a product. Agile product development has become an accepted practice for building products. Agile development techniques are based on iterative and incremental development techniques, where products are built with short cycles, encouraging rapid and flexible response to change. Organization need to adopted design thinking and iterative development approach for effective execution.

Another key component of organizational agility is development of people competencies, which covers behavioral as well as technical competencies. The former include being pro-active and connecting with the big picture, while the latter include techniques such as lean Six Sigma methodology, theory of constraint philosophy & associated methodologies, techniques for waste elimination, Kanban and change management.

While embracing agility, organization should also look at its performance management system. Throughput improvement, cycle-time optimization, system effectiveness, etc. are true measures for agility.  

Agility is one of the rare ability of the organization which can create direct impact on organization as well as on its customers. It can help all the entities to grow together. It even helps the end-users for faster realization of value. In true sense, it can create win-win situation for all the stakeholders. Given all the benefits and investment parameter constant, it can help organization to create disproportionate advantage by delighting its customers.

5 Lessons from David & Goliath

'David and Goliath' story teaches victory doesn’t always belong to giants, powerful or brilliants. In the battlefield of life or business even small, ordinary or underdogs can win by being persistent, following instincts, leveraging strength and targeting competitors’ weakness.

These parable offers following learning for small and medium businesses (SMBs) in IT services industry. These learning are applicable to any IT service organization, because even the large organizations might be small or medium in certain market segment.

Lesson # 1 - Create own rules for execution based on strength and aligned with parameters of differentiation

Majority of the service providers focus on budget, schedule, best quality and fulfill value promise while delivering service. These are essential elements of predictable service delivery. Predictable service delivery helps service provider to manage its own operations efficiently. One tend to pad the execution with extra resources for smooth delivery & de-risk the execution to avoid any surprises.

SMBs should change the execution focus to best time-to-market, optimal business value and acceptable quality. Focusing on cycle-time and optimal value will force to be customer centric and prioritize customer requirements. They should embrace iterative and agile development across most of the engagements. They should negotiate with customer for broader scope, high level acceptance criteria and evolving requirements. ‘Cycle-time and business value’ are the only measurements that create win-win situation for customer & service provider. However this will be feasible when they deliver hygiene and tolerable quality.

Lesson # 2 - Strike the balance while making investment - relationship between outcome and resources is ‘inverted U’

It is feasible to explain most of result – resources relationship in form of Y = f (X). One tend to believe that as the investments and resources increase the result or outcome improves. Initially result improves directly in proportion of resources deployed however after certain threshold value rate of improvement starts diminishing. This was well proven and explained by economists thru law of marginal diminishing returns. Though this is not entirely true for increasing investments. After another threshold value, the returns starts reducing even if one tends to invest more.

SMBs need to find optimal team size that can be managed to deliver the projects in agile manner. Team size of 9-14 resources is optimal to run the engagements agile way. One may design infrastructure to facilitate close interactions with customer and within team. In case of large program one can take approach of running iterations at portfolio, programs and projects.

Lesson # 3 - Be the big player in niche market rather than average player in large market

Traditionally large markets are lucrative. Rules of engagements are well known. They are easy to penetrate. There is a room for everyone. Majority of SIs are targeting Fortune 500 and Global 1000. They are after big government contracts. These customer offers steady stream of business that supports the need of scale.

US mid-market (10 – 1000 mUS$) has 200K + organizations. Out of these 2000+ are in 500-1000 mUS$ range. US mid-market GDP is 5^th largest economy after US, China, India and Japan. Even among the EU-4 (UK, France, Italy, Germany) growth of mid-market is more than big markets.

Mid-markets are planning 12% investment in IT. Their primary challenges are to reduce employee healthcare cost and improve margin. SMBs should aim to build relationship partnership with mid-markets rather than being a fringe play for large corporations.

Lesson # 4 - Tough times are necessary to shape character

In modern day literature has advocated this enough and more. There are many quotes – ‘tough times don’t last, tough people do’, ‘the difference between stumbling blocks and stepping stone is how you use them’,  ‘what lies behind you and what lies in front of you, is pale in comparison with what lies within you’, etc. indicate that adverse times are essential to push one’s limits.

Number of big IT organizations rapidly grew during 2002 to 2008. Significant numbers of current lot of new managers have joined our industry during that period. They didn’t see adverse times till we hit the financial crisis of 2008. Majority of them struggled to cope with lack of growth, adoption of new services, no salary hike, inadequate resources, etc. They haven’t yet come to terms with single digit salary hike even after 5 years of crisis.

SMBs were small and struggling for resources during that period. They have learnt it hard-way about what it takes to innovate, be agile and develop technology prowess. These aspects are ingrained in their middle-managers. They should leverage these competencies. They should empower and challenge middle managers to take ownership. Managers should open the dialogue with customers, focusing on innovation and operational excellence. It’s a time to leverage openness, conscientiousness and disagreeableness to take bold risks. As George Bernard Shaw once put it: “The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself”

Lesson # 5 - Not all the wars of worlds are won by sheer use of power

Being # 1 or 2 in industry or market segment, having hundred-thousands of work-force, multiple billions of market capital, etc. provide comfort of being powerful, rich, wealthy and strong. It gives assurance that we can throw resources at any problem and it can be conquered. Though it is not a guarantee of success.

Being small, nimble, resource starved position has perception of lack of power. Player with these attributes need to operate by leveraging innovation, excellence, conviction in one’s ability, hard-work, talent and persistence. One need to commit to discipline, rigor and contribution.

Battles of life aren't always won by powerful, fastest, strongest, wealthy and mighty... Most of the time victory belongs to courageous and the one who believes he can.

PS – This is written based on ‘David & Goliath: Underdogs, Misfits and Art of Battling giants’ by Malcom Gladwell. I have made a modest attempt to adopt the core concepts explained in book for SMBs in IT services industry.

Beyond Traditional Quality…

This is a quite pertinent question to ask. As we are celebrating 25th anniversary of quite a few models, standards and philosophies those have shaped modern day Quality profession and professionals, it is necessary for us to look at history and learn from our evolution.

Initiation of Quality profession can be traced to ‘guilds’ in 13th century. Those were the days of individual craftsman and individual’s competence played significant role in determining Quality. During industrial revolution period, the relationship between quality, productivity and cost was established. Impact of Quality was observed not only on customer experience but also on operational performance. The early 20th century has taken quality from localized improvements to across the value chain thru ‘process’. In the post world war II era, Quality Gurus’ have shared multiple philosophies and principles. Majority of them were focusing on role of leaders and management in promoting Quality and continuous improvement in the processes in order to improve Quality and operational performance.

1987 is a tipping point for Quality. During that year, we saw emergence of multiple models and standards like MBNQA for business excellence, ISO 9000 series as standards for Quality Management Systems, Six Sigma improvement paradigm at Motorola and Process Capability Maturity Model at Carnegie Mellon University.

Based on this historical perspective, I observe 5 phases in the Quality evolution.

1. Quality as individual’s competence
2. Quality control
3. Quality assurance
4. Quality to improve business performance through process management
5. Quality for business excellence and sustainability

Though, it is difficult for me to say which phase should be termed as traditional quality.

It is essential for Quality professionals to bring all the stakeholders of Quality profession on common ground. If leader’s vision for Quality, management’s commitment to Quality, expectations of organization stakeholders from Quality and competence of Quality professionals are not aligned, that it may lead to confusion and chaos in the operations. In my understanding, Organization needs to go through all the phases of evolution till it reaches to 5th phase. 5th phase is a journey that should become integral part of culture / DNA of the organization.

Stakeholders’ expectations may vary from Quality function based on their immediate need, understanding and exposure to different phases of Quality evolution and perception of Quality professional’s competence. Quality professionals need to identify the appropriate phase for the organization based on industry maturity, competitive land-scape and leader’s vision for organization. They should understand the different competencies required for each of these five phases and invest into self-development. Quality professionals are change agents. They help organization eco-system to transition from one phase of quality to another. This transition brings prosperity and development for organization, its stakeholders and society at large.