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Effective, Agile Risk-Taking in Today’s Competitive Business Landscape

July 31, 2023

The post-COVID business landscape is pushing companies to strategically position themselves and seek new opportunities. Now, they must discover innovative ways to deliver enhanced value to customers while differentiating themselves from competitors. That means taking calculated risks that can lead to either success or failure.

Meeting the Moment

While companies may have been in similar situations in the past, what sets the present apart? The key difference lies in the scarcity of resources such as money, talent, and feedback from end-users combined with the pressure from customers and competitors to continuously innovate.

Merely adjusting your operations to be cost-effective leaves you vulnerable to being outpaced by competitors. Similarly, making incorrect choices can deplete your resources without yielding the desired results.

Embracing Experimentation

Given the circumstances, you must explore new avenues to optimize your return on investment (ROI) and expand revenue streams. How can you find opportunities to propel your company forward while also effectively utilizing your resources?

In my view, it boils down to embracing a mindset of relentless experimentation. Failure is expected and accounted for in this model until you find something that effectively meets your business goals.

The faster you iterate between field-tested hypotheses and feedback, the sooner you’ll uncover valuable insights. Agility enables you to refine and cycle through this process repeatedly, eliminating flawed assumptions and optimizing those with a greater chance of producing favorable outcomes.

Identifying (and Eliminating) Silos

Many companies are actively pursuing innovation but often fall short in how they approach it. What I’ve observed is a lack of alignment and collaboration among existing “silos” within organizations. These siloed structures are designed to hinder collaboration.

Take a moment to assess the environment at your company. Observe how departments, teams, decision flows, KPIs, and other elements are structured. Reflect on the potential for collaboration and alignment and what prevents your organization from realizing that potential.

Leadership and Scrum

True agility for companies goes beyond fancy methodologies and rituals. It begins with clear leadership, providing a definitive direction for the business. Based on this vision, teams can collaborate to explore potential avenues and collectively prioritize their focus.

These teams can then choose what to work on in the upcoming days or weeks, enabling them to swiftly validate their hypotheses against market feedback. If the anticipated return is promising, they can proceed to optimize and refine their approach. However, if the results are unsatisfactory, they have the flexibility to step back and select another option.

Does this sound familiar? Indeed, many methodologies employ similar principles, whether fully or partially, to expedite testing and improvement of strategies.

Personally, I favor Scrum as our primary framework, as it provides a solid foundation for exploring various pathways, integrating teams, fostering transparency, and achieving alignment. We can also leverage Kanban, PMBOK, and other supporting methodologies to enhance these fundamental elements.

In my view, Scrum extends beyond being a mere tool for programming teams. Instead, it becomes a larger entity—an essential component of a feedback cycle. With Scrum, teams becomes a value-creating unit, comprising cross-functional members who contribute diverse and cohesive perspectives.

Think of these teams as "micro" companies within the larger organization. Each one collaborates and adapts to produce the necessary outcomes aligned with the presented goals, vision, and direction.

Rallying Around a Shared Vision

In terms of management, many companies continue to operate based on outdated practices, relying on metrics that were created without considering the current business realities. These metrics can create a false sense of control and foster unhealthy comparisons. It can also result in what’s known as the Cobra Effect, where limited transparency results in slow adaptation and poor results.

Worse yet, leadership in these organizations is often fragmented between teams or departments as each one looks to protect itself. This approach makes optimal outcomes next to unreachable, as teams give in to internal conflict instead of staying focused on company-wide goals.

The good news is that a well-established vision and a self-managed, cross-functional team supported by the organization can eliminate fragmentation. Collaboration becomes the norm, and everyone aligns themselves towards a shared direction.

Even if they perceive the chosen direction as less than ideal, they adapt and self-correct, continuously seeking new ways to progress thanks to the inherent feedback cycle. Moreover, the team can continuously enhance their process by introducing elements that support enhanced decision-making, such as quality standards, governance procedures, and communication standards.

When combined, self-managed teams, a clear vision, and a rapid feedback loop maximize value and allow you to experiment effectively during a period of increased competition and tighter budgets. Everyone within the organization is focused on working towards initiatives that bring the most value, allowing for a powerful and cohesive alignment of efforts.

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