03.11.2017 | News
Edge execution: how projects make an organization agile
The increasing complexity and dynamics of today’s business environment challenges established structures and ways of working. To become more agile and responsive to customer demands companies are moving their execution to the edge of their business and work directly with customers in projects to develop products. Projects are becoming the new mode of operation and project management is becoming a core capability.
In the past, organizations could optimize and automate their structure, processes, and systems for a stable outcome. Even if it took years. In the dynamic VUCA world of today, it is much harder to predict business outcomes. It requires a higher degree of agility and organizations that:
1. Recognize change earlier, for example with a continuous strategic foresight process.
2. Assess and prioritize the change and make faster decisions, e.g. with enterprise portfolio management.
3. Define powerful responses to the change, e.g. with design thinking and agile approaches.
4. Assign resources flexibly, e.g. by using rolling budgets and zero-based budgeting and leveraging the gig economy.
This sequential process from early change recognition to an effective market response is one possibility to tweak an existing organization to become more agile.
Is tweaking enough?
But some organizations think that tweaking is not enough. They believe that their existing business cannot be changed quickly enough in response to the growing speed of change resulting from the fourth industrial revolution.
One such example is ANZ Bank in Australia. They have re-organized themselves into 150 smaller and agile teams called "tribes" and have abolished a traditional structure made up of silos.
ANZ has moved execution and decision-making closer to the customers and works with them directly. This is called edge execution. It moves your execution to the edge of your business.
Edge execution was pioneered as OODA by the US military in the 1990 to empower their front-line units to respond quickly to sudden threats that do not allow for enough time to call the generals for guidance. At this time, the US military moved away from classic battle field scenarios to guerrilla warfare with more players like civilians and competing or collaborating groups.
Sudden and unforeseen developments became more common and the fighting units needed to be equipped to make their own decisions quickly. Edge execution was the answer.
Edge execution requires:
- Implicit guidance and control principles that define the framework within which your independent teams are allowed to operate in. E.g. under which circumstances am I allowed to harm a civilian?
- Flexible resourcing that equips teams with supplies, capacity and money to act quickly.
- A supportive culture that empowers and trusts individuals, and rewards risk-taking.
In our work with customers we see edge execution becoming more and more common. Front-facing staff are increasingly working with customers in projects to design and develop individual products and solutions. Projects are becoming the new way of operating. Here are some recent examples we encountered in our day-to-day work:
- A traditional light-bulb company in China is producing customized light-modules to "light up" the products of their customers.
- A German automotive company is creating customized components for integration in new electric and autonomous vehicles.
- A telecommunication provider has moved the development of applications and websites to the business units so they can develop them themselves in direct interaction with their customers. The IT department just provides the platform, APIs, tools and training.
- A German insurance firm is empowering and training their account teams to work directly with their customers to develop customized insurance products.
An extreme form are asset-less companies like include Uber and AirbnB. They execute on the edge with assets they do not own and work with freelancers instead of their own staff.
Edge execution not only revolutionaries customer interactions and product development. It also challenges traditional ways of managing.
Complex decision-making, top-down/bottom-up annual budgeting processes, hierarchies with many levels, and hordes of middle-managers. Too slow, complex, and costly. Edge execution favours flat organizations and self-organizing teams. Examples include teal organizations that replace hierarchy with self-management and holocracy, a self-management practice for running purpose-driven, responsive companies.
In B2B companies project-based organizations and edge execution are already entering main stream. But this is a perfect storm that also affects B2C businesses. Here are the underlying drivers:
- Globalisation has created an abundance of choice that gives power to the consumer. We can shop from and ship to everywhere. 24 hours a day, 7 days a week. Delivery moves to same day and is becoming predictive.
- Abundance nurtures individualism. It is easier than ever to find the products and lifestyles that match me. So I can define myself by what I do, wear, or eat.
- Industry 4.0 is the enabler. It aims at producing individualized products at the same cost as mass-produced ones at a "lot size one". For example, Adidas is building individualized shoes in a fully automated factory in Germany, and no car leaves the BMW factories like another.
- The highly individualised consumer ushers the era of post-demographic consumerism where no-one fits any category anymore. The old are young and the young are listening to classical music. A serious challenge for traditional marketing approaches.
- Abundance also gives rise to the expectation economy. If we can get the best version of a product regardless where it is produced in the world, this best product sets the expectation for everybody else. Amazon is the gold standard for online retail, Uber for mobility, and Facebook for social media. Everybody knows those. You must meet or exceed these standards to be successful, regardless where in the world you are located.
How do organizations cope with this?
We can diversify, move from products to services and from services to solutions. Often, this requires partners.
In a global, virtual and open world, finding partners is becoming easier than ever. The platform economy makes the creation and integration of joint solutions easier than ever. An airline can partner with an insurance, hotel and car rental companies to provide a more comprehensive travel solution and experience.
But solutions are not the final call because they do not consider the trend for individualization. Knowing that I may need an insurance, hotel or car when I travel is not as powerful as knowing what I want the do there: watch an opera, attend a conference, or go scuba diving. These are more things you can sell me. I say: "I want to go scuba diving in Ambon.", Alexa responds: "When and how long do you want to go?" and sends me a customized plan for my next vacation. My next vacation project.
In search for the next level of individualization also B2C will aim at running projects with their customers in order to maximize the revenue from a specific individual scenario or situation. Big data allows us to detect and understand this better than ever before. And if you have ever spent days configuring your "best time of the year", you will appreciate the help.
Projects are already becoming the primary way of operating in B2B and are starting to make inroads in B2C. They enable organizations to execute on the edge, engage customers directly, construct individualized experiences, and work with partners and external talents effectively. Projects help organizations to become more agile and responsive to customer demands.
Projects are a universal language and standardized way of working that is understood and spoken by professional around the world. They enable you to work efficiently with a diverse set of external stakeholders, talent and customers. Globally and virtually. Project management is a key capability of individuals and organizations to succeed in today's complex and dynamic business world.
Change is rampant and projects are universal vehicles of change. So it comes as no surprise that demand for project managers is increasing rapidly. People who are skilled in project management understand how change is implemented, It also allows them better to accept and support change. Project management is agility inside-out and outside-in.
Transforming an organization to operate more on projects does not come without challenges.
Here are some examples we have encountered:
- Production line and R&D staff are in internal roles that are rarely in contact with customers. Now, edge execution gives them customer-visibility.
- It requires them to deliver against tight deadlines that are often enforced with contractual penalties.
- Often, they have to work in up to 10 different projects in parallel.
- Resources like test labs, paint shops, or graphics designers are becoming bottlenecks.
- Stress levels and resignations are rising.
How can you address those issues?
Here are examples from our work to establish project management as an organizational core capability:
- Projects are only led by trained and certified project managers.
- The progression of project managers is defined by a career model.
- Everybody working on projects is trained in the fundamentals of project management.
- Project sponsors are trained to understand their responsibilities to optimally support their projects.
- One or multiple Project Management Offices (PMO) support the projects, manage the resources, and own and evolve the overall system.
- A Project Portfolio Management function oversees the value delivery of all projects and provides transparency to management for better decision-making and prioritization.
- Resource allocation from Finance, HR, Procurement and IT is configured to optimally support the projects
These are just some examples how you can leverage projects and project management to execute on the edge and make your organization more agile. Please contact us to explore how project management can help you to become more successful.