Strategic Agility: Part 1 - Strategic Direction with Network Intelligence

Strategic Agility

Strategic agility comprises of two major capabilities of an organization: (1) the ability to adapt strategy to a changing situation (I refer to this as Strategic Direction) and (2) to execute on these strategy adaptations in an efficient and agile way (I refer to this as Strategy Execution). This is done in order to protect and extend competitive advantage in a complex and ever-changing environment, including uncovering ways to provide value to stakeholders, renewing business models and driving innovation.

Strategic Direction with Network Intelligence

Strategic Direction is about insight, a powerful decision process, and ultimately guiding the organization to the right direction at any time. Understanding the environment by establishing an efficient "early signal system" is probably the most overlooked leadership capability in regards to strategic agility. Agility only pays if a leader knows which direction he has to go (viability and desire), and is capable to go (feasibility), at a given point in time. Classical executives are often trapped in the kind of thinking they apply with the operational duties, successes of the past and in static plans. Strategy agility requests to expand these borders anytime and make strategic planning an ongoing shared activity.
Typically opportunities and threats occur outside the organization and are experienced at its borders. "Early signals" are generated either by the members and or by related stakeholders outside of the organization. It is important to facilitate a "network" of agents that is well connected and that can act as a "hub" for this kind of critical insights. Looking from this perspective the organization is in a reactive mode responding to change from the outside. Which has to happen with speed. In addition there should be a focus on the opportunities and threats (challenges, options) that are most important. Focus is defined by saying "No" to the majority of options.
In some cases the well connected executive is able to innovate in a way that he is able to change the outside world from within his own organization. In this case a network of agents with high authority can help drive this kind of internal change management and external adoption. The beginning of such a journey is the declaration of a vision/Strategy Direction (1st creation) by the executive following the strategy execution (2nd creation) to make it reality.
So a mature "early signal system" has the form of an "authority-hub-network". The "hub" network side that is listening to change from out- and inside and the "authority" network side that is capable of influencing the out- and inside. In many cases both flavors of the network are needed and have to be functional. The power of this network is one measure of how agile an organization is.
The "language" of the network has multiple forms ranging from leading KPIs to informal negotiations/conversations with agents. Every executive has to choose how her decision process looks like for decisions on strategy and how and what to formalize. I personally find the CynefinFramework especially useful in complex situations. The Cynefin approach here is "probe / sense / respond". It means starting a "test balloon" (probe) in a representative fraction of the environment in order to early understand if the chosen approach works by receiving feedback (sense) on this test. This can be done multiple times in an iterative way until we feel sure about the approach. Then we are ready to respond large scale on the challenge. In the software world we know about such approaches as alpha- and beta-testing. I think the most important parts here are to act with speed and to facilitate feedback as one part of the process. This means to follow an aim-fire-aim-fire approach rather than a classical aim-aim-aim-fire approach.

Key questions to be asked in the context of the Network

(A) How to identify and develop "hub-" and "authority-agents"?
Criteria for agents are motivation and loyalty, influence (authority) or perception (hub) and connectedness. Criteria for the network overall are diversity and activity level. The more diverse the network is the more robust are its outputs. The higher the acitivity level is the stronger are the bonds between the agents.
One first step of establishing such kinds of networks is to build internal and external communities. Examples are talent-, alumni- or user or customer-communities. However the community is not the network.
(B) How to facilitate and formalize the "Network"? Especially in conjunction with the "Hierarchy"?
The most informal way of getting to a strategy decision is via negotiations between agents. Typically this kind of decision process works very well in a multi-level hierarchy. The network has no such structure and it is especially the idea not to implement a second hierarchy. The general idea is to empower network agents to influence the hierarchy on all levels and influence decisions this way. However the network is not only about decision but even more about "insight" and "conversation". In this way the network is capable of renewing the hierarchy constantly. So the network is also important for Strategy Execution.
I believe that hierarchies alone are not capable of dealing with the level of change in our fast-paced globally connected world. They have to be supplemented by other means. By that hierarchies will be flattened and penetrated. In addition the borders of organizations will become thinner and perforated and the connectedness across organizations will further increase, especially driven by the fact that "membership" in organizations will be subject to increased fluctuation. Employees are changing companies more often. Inhabitants are moving more often. Citizenship will change more often.
Capabilities of an individual versus the capabilities of an organization will further increase. On the other side ownership and influence about the networks will impost tremendous power. Organizations will especially/only be influential and powerful as long as they own network power.
With following posts I will mainly focus on Strategy Execution based on a given Strategy Direction.