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BUILDING ORGANIZATIONS FOR SPEED, AGILITY AND ADAPTABILITY
- 1. BUILDING THE ORGANIZATION OF THE FUTURE WITH SPEED, AGILITY, AND ADAPTABILITY NG PAN WEI, PH.D 12 JULY 2019 © Copyright National University of Singapore. All Rights Reserved 1 OVER GRADUATE ALUMNI5,900 OFFERING OVER 130 ENTERPRISE IT, INNOVATION & LEADERSHIP PROGRAMMES TRAINING OVER 130,000 DIGITAL LEADERS & PROFESSIONALS LinkedIn
- 2. Unleashing Business Agility © Copyright National University of Singapore. All Rights Reserved 2 Finance 财务 HR 人力 IT 技术
- 3. Unleashing Business Agility © Copyright National University of Singapore. All Rights Reserved 3 Finance 财务 HR 人力 IT 技术
- 4. Some Annual Budgeting Problems • Very time consuming • Assumptions quickly outdated • Stimulates unethical behaviors • Creates illusions of control • Decisions made too early with too much uncertainty • Often weak link to strategy • Can prevent value adding activities • Cannot see beyond the fiscal year end • Complicates performance evaluation •4 - Strategy Budgeting (Finance) Performance Target Sep à Oct Nov à Dec Jan à Feb
- 5. Separate and Improve Financial • Reporting • Target Setting • Forecasting • Resource Allocation What happened What we want to happen What we think will happen What will it take to happen How can behaviors be better How to motivate better behavior Taking action on very bad behavior Performance Management • Feedback • Rewards • Legal Same number, same process Conflicting purposes Different processes Different numbers Separate Improve Using the timing and approach that makes most sense. Timely, accurate, right level of detail Inspiring & challenging, VUCA robust Unbiased, limited detail, updated quickly Dynamic, based on measures and trends Honest and actionable feedback More team based, to inspire the team Exception handling; don’t punish everyone
- 6. Traditional Budgeting and Forecasts Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Traditional Annual Planning (and Budgeting) “Budget” the illusion of control
- 7. Continuous Planning over Annual Planning Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Traditional Annual Planning (and Budgeting) Continuous/Rolling Planning and Forecasting “Everyone” Department Finance Forecast This requires changes both in processes and technology (reporting, measurement, decision making, collaboration, feedback) Monitoring Forecasting
- 8. Different Practices Different Rhythm # Practices Annually Quarterly Monthly Weekly 1 Use multiple sources of customer data to assess unmet needs 2 Business leaders dedicate time to learn about digital technologies 3 Share test-and-learn findings across the organization 4 Assess business model for digital productivity opportunities 5 Reallocate digital talent among business units or functions 6 Use scenarios to time and size potential shifts in industry economics 7 Evaluate portfolio opportunities to add/divest businesses in light of digital 8 Evaluate profit pools based on competitive landscape shifts 9 Reallocate capital expenditure across business units 10 Use rigorous process to defund underperforming initiatives © Copyright National University of Singapore. All Rights Reserved 8 https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/the-drumbeat-of-digital-how-winning-teams-play
- 9. Beyond Budgeting Principles Leadership principles 1. Purpose - Engage and inspire people around bold and noble causes; not around short-term financial targets 2. Values - Govern through shared values and sound judgement; not through detailed rules and regulations 3. Transparency - Make information open for self-regulation, innovation, learning and control; don’t restrict it 4. Organisation – Cultivate a strong sense of belonging and organise around accountable teams; avoid hierarchical control and bureaucracy 5. Autonomy - Trust people with freedom to act; don’t punish everyone if someone should abuse it 6. Customers - Connect everyone’s work with customer needs; avoid conflicts of interest Management processes 7. Rhythm - Organise management processes dynamically around business rhythms and events; not around the calendar year only 8. Targets - Set directional, ambitious and relative goals; avoid fixed and cascaded targets 9. Plans and forecasts - Make planning and forecasting lean and unbiased processes; not rigid and political exercises 10. Resource allocation - Foster a cost conscious mind-set and make resources available as needed; not through detailed annual budget allocations 11. Performance evaluation - Evaluate performance holistically and with peer feedback for learning and development; not based on measurement only and not for rewards only 12. Rewards - Reward shared success against competition; not against fixed performance contracts
- 10. Unleashing Business Agility © Copyright National University of Singapore. All Rights Reserved 10 Finance 财务 People 人力 IT 技术
- 11. Some People Challenges © Copyright National University of Singapore. All Rights Reserved 11 1. Low Engagement 2. Poor Motivation 3. Functional Silos – KPI Driven 4. Office Politics 5. Too Much Administration 6. Too Many Corporate Initiatives 7. Pay Too Low
- 12. Extended Maslow © Copyright National University of Singapore. All Rights Reserved 12 Individual Interactions
- 13. 360 Degrees KPI 13 - …..and more Short Cycle Long Cycle Making the 800 over ”Ambition to Actions (KPI)” transparent across the company and connect them
- 14. 360 Degrees Performance Evaluation • From narrow measurement to a holistic assessment 14 B e h a v i o u r D e l i v e r y Living the values • Day-to day-observations • 360°/ 180°/ 90° surveys • People survey 50/50Pressure testing KPI results: • Deliver towards the strategic objectives? • How ambitious KPI targets? • Changed assumptions, with positive or negative effect? • Which risks were taken? • Delivered results sustainable? Ambition to Action •Development plan •Rewards
- 15. Handelsbanken Winchester © Copyright National University of Singapore. All Rights Reserved 15 The Branch is the bank. Branch empowered. Decentralized. No central annual budgeting
- 16. Consistent Performance For 40 years Handelsbanken
- 17. Handuyishe 韩都衣舍 © Copyright National University of Singapore. All Rights Reserved 17 Established 2008 as online stall Highest turnover for 2014 singles day - 45 million USD Amoeba operating model • Cross functional teams • Product manager, Web Designer, Inventory Three stages of growth • Group ordering • Pre-Ordering • In-house Design
- 18. Unleashing Business Agility © Copyright National University of Singapore. All Rights Reserved 18 Finance 财务 HR 人力 IT 技术
- 19. What is the view of Traditional IT © Copyright National University of Singapore. All Rights Reserved 19 慢 贵 难 Slow – Expensive - Difficult
- 20. What is your choice? • When building a new big application? © Copyright National University of Singapore. All Rights Reserved 20 Understand Requirements Establish capability to iterate quickly Or
- 21. Traditional to Agile Traditional Development Iterative Development Iterative Delivery Continuous Delivery Inception Requirements Development Delivery Inception Inception
- 22. Traditional to Agile Traditional Agile1 Release Every 100 days 1 Release Every 10 days 1 Release Everyday 10 Releases Everyday 100 Releases Everyday Branching Testing Architecture Release Approach Infrastructure Database Feature Branches Develop on Trunk, Release on Branch Pull Request to Release Branch Separate QA Department Fast Comprehensive Automated Test in Deployment Pipeline Developers and Testers maintain automated tests Monolithic Architecture Deploy Everything Together Service Orientation Microservices Release Trains Dark Launching, Blue-Green Deployment Canary Release Developer Push Changes Applications Managed By Operations Automated Deployment Scripts Infrastructure as Code Cloud Architecture With Standardized PAAS and SaaS Manual Database Upgrade Delta Database Scripts Apps and Databases Have Forward and Backward Compatibility
- 23. Traditional to Agile Architecture and Processes Microservice Architecture Monolithic Process Monolithic Architecture Monolithic Process Development Integration Test Production Monolithic Testing Microservice Architecture Microservice Process Monolithic Testing Microservice Testing
- 24. Unleashing Business Agility © Copyright National University of Singapore. All Rights Reserved 24 Finance 财务 HR 人力 IT 技术
- 25. Unleashing Business Agility © Copyright National University of Singapore. All Rights Reserved 25 Finance 财务 HR 人力 IT 技术 Separate and improve processes Apply the right rhythm/beat Continually align the organization Connect teams to the customer & empower them You cannot be agile without being fast De-scale your complexities