Every Executive understands that the ability for an organisation to adapt to change is critical. Radical change has forced many organisations to unexpectedly make fundamental shifts to their business models over a very short time period. Those who can’t pivot, fail. Whether change comes from stakeholders, disruptors in the marketplace, changes in government policies, or even industry standards, having an internal capability that can not only decide what to change but then rapidly execute end-to-end can save millions in lost revenue, as well as uphold customer satisfaction and market share.
What is pivoting?
A “pivot” is a change in direction when there’s a change in circumstances regarding what is valued by customers, stakeholders, users or the wider market. The main goal of a pivot is to avoid failure –because, if the current direction is continued, effort will be wasted in delivering something that people no longer want or need. The term tends to be heard in the startup world, yet very few organisations can do it successfully. What separates the successful pivots from the failures? What does it take to pivot? How do you know when to pivot?
Lead time metrics are key
Lead time is a critical metric in understanding how quickly change can be executed. It’s the amount of time from when an idea is proposed and its strategic initiative is endorsed until value is received by the customer. When a pivot is needed, knowing how fast you can react, execute and deliver new and emerging product goals is key.
Lead time metrics are easiest to elicit from value stream mapping. This technique from Lean Manufacturing helps to analyse, design, and manage the flow of materials and information required to bring value to a customer. Also known as "material and information-flow mapping", it uses a system of standard symbols to depict various how value and information flows to customers. Items are mapped as adding value or not adding value from the customers’ standpoint, with the purpose of rooting out work that doesn’t add value. Its use of cycle time at each step of the flow of value creates a view of how much effort is expended to deliver value, and importantly, the total time it takes from idea to delivery.
[Above: Value stream map visualised using a Kanban board]
For traditional organisations, value stream mapping tends to reveal that their lead times are months or even years. This is due to traditional annual budgeting cycles, project scoping activities, lengthy business cases processes and approval stages. When a change is needed, the process tends to start all over again. When a change is needed in delivery, resistance is often met simply because of the amount of time and money already spent. Going back to re-plan is often considered inconceivable – planning alone in many organisations can consume 50% of a project’s budget.
Improve lead time through shorter work cycles
Shorter work cycles are a critical part of improving lead time. Referred to as “Sprints”, large strategic initiatives are broken down into smaller parts, much like a jigsaw puzzle, and delivered in cycles of no more than 30 days (typically 2-weeks). Unlike traditional project methods, where large initiatives are broken into stages or phases of activity, Sprints break up solutions into smaller pieces of value to the end-users. Importantly, when a pivot is needed, only those pieces affected need to be changed.
Shorter work cycles have other significant advantages over traditional phased work
activities. Re-planning can occur each Sprint without impacting the overall solution and the broader strategic initiative. Data can be examined and learnings applied immediately to subsequent Sprints to course correct to ensure value is delivered. This type of continuous learning accelerates opportunities to make small changes to reduce waste, improve flow, and see lead time reduce.
It’s not only teams that need to move to Sprints to deliver in shorter work cycles. Budgeting and executive planning also must move to shorter cycles if they are to pivot an entire organisation’s focus. Those organisations who switch to Scrum, but don’t change any of their other operating models, quickly discover that while delivery is faster, and solution delivery can pivot quickly, the upfront processes designed to create a sense of certainty on risk and budget quickly hamstring agility and impair the ability to pivot. In a COVID-19 world, getting data on new customer needs and new market opportunities, but having to wait 3-12 months for the traditional budget approval process, may mean the difference between being able to survive and thrive in unpredictable environments or failure.
Implement faster learning loops about your customers with Evidence Based Management (EBM)
We’re all familiar with the “lessons learned” activity at the conclusion of a project. Learning what’s happening with stakeholders and the market helps inform if a pivot is needed and the best time to do it. Rather, though, than leave assessment of learning to the end, metrics from customer satisfaction data, feedback, and customer usage index, should be accumulated and assessed often. Evidence based management is an invaluable framework to structure this activity.
[Above: Zen Ex Machina’s Canvas for EBM / Product Goals]
Each Sprint at Sprint Review, Product Owners use Toyota Kata to inspect the progress of their product goal – how are initiatives progressing toward a budgeted outcome based on objective metrics – as a way of formalising feedback.
[Above: Toyota Kata for EBM]
Learnings from the changes in metrics Sprint-to-Sprint build knowledge about the nature of change in the market, that can then build out projections of what customers are likely to value in the future. Importantly, any adjustments are then made to the Product Backlog to pivot next Sprint.
As metrics such as the time-to-learn about customer needs and expectations decreases, the organisation’s ability to pivot will improve. In turn, this empowers executives to act faster when they need to promote changes to operations and change the priority of the strategic initiatives of a product’s goal.
Enterprise agility is key to successful pivots
An improved ability to pivot ultimately comes with improved enterprise agility. Reducing lead times of months down to mere weeks is achievable when executives through to their teams have an agile mindset – a set of values, actions and behaviours that promote a structured, empirical, and strong customer centric and value-centric view that in turn drives decision-making in the organisation.
[Above: An organisational culture perspective of enterprise agility]
Enterprise rituals of cyclic inspection and adaptation with Evidence Based Management over activity-based reporting give transparency to the true customer focus an organisation has. The key factors that will support this behaviour are sprinting, continuous improvement, agile values, and self-organisation. Where sprinting creates a heart-beat of enterprise-wide set of short feedback loops, continuous improvement helps drive innovation and find smarter, simpler solutions that can be implemented in shorter timeframes to deliver value sooner. Agile values promote improved quality, continuous attention to reduce defects, waste and rework that, in turn, reduces product cost ratio to refocus effort elsewhere. Strong self-organisation reduces decision-making time by creating explicit boundaries in which teams can make decisions for themselves instead of escalating them through the corporate hierarchy to the highest paid person. And when change is needed, enterprise agility helps rapidly refocus attention of entire business units for change.
Conclusions
The world is shaped by the impacts of unexpected change. New startups emerge quickly that disrupt their larger, slower competitors. The pace of technology change creates strong demand in the market for new, improved products, and changes to customer expectations of services. An organisation’s ability to pivot to these unexpected demands is critical to its survival and relevance. Traditional project methods that focus on deliverables aren’t sufficient to support the enterprise. Value – building new value or investing time and money in products and services that deliver current value – is key to understanding what to pivot, how fast it will take today, and how to improve it for tomorrow.
