TERMINOLOGY

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Agile ready

To be agile-ready the operational plan must meet these criteria:

  • A logically sound causal tree of conditions to be met
  • Conditions to be expressed as results (DoDs), not action
  • Ready for execution = delivery of key projects
  • Ready for agile adaption = review and modofication of each element

Agile business management

  • To manage a business in short operational sprints, adjusting content of the operational plan continuously.
  • Sprints driven by the PEC (plan-execute-check) cycle.

Business strategy

Traditionally we view the relationship between strategy and operational plan in pyramidal and top-down fashion: first you need strategy, the you implement it.

For agile business management we need to abolish the traditional view. Instead, the relationship changes to “non-pyramidal”: first, you need the operational plan, and then the elements of strategy provide (on request) information required to design effective operational plans.

Commitments

  • DoDs by which we will overcome an obstacle.
  • "If all commitments are delivered, then ..."
  • Focus the operational plan on the vital few actions required to achieve the operational goal.

Competitors

  • Competitors are those businesses with whom customers compare us to make a purchasing decision.
  • In essence, they create hindering factors, obstacles, for our successful flow of income.
  • We must understand these obstacles and include them in our plan - to either neutralize them or ignore them (if we believe we can do so)
  • When defining our plan's necessary conditions we must include how these will cope with our competitors' initiatives

Critical success factors

  • The vital few conditions under which the operational goal will be achieved.
  • "If all critical success factors are achieved, then we will reach our operational goal".
  • Focus the operational plan on the vital few factors to address.

Multiple unit plans

  • Many however need more than one plan - for instance by product line or by geographic unit.
  • Each of these will have their specific critical success factors, competitive obstacles and key projects to achieve their goal.
  • Plans designed for agility are specific by business unit. 
  • The only link to the business in its entirety is by the goals, which need to be tracked locally, and summed up for the business

Necessary conditions (NC)

  • Definition of Done (DoD) of a key project.
  • "If all necessary conditions are achieved by their key projects, then the critical success factor will be reached, so we will achieve our goal."
  • Focus the operational plan on the vital few operational results (changes in the business systems) to be achieved.

Obstacles

  • Somethings that prevents us from delivering a necessary condition.
  • Must be overcome, eliminated or “walked around” to be resolved.
  • "If all obstacles are overcome, then we will deliver all our key projects, so then we will achieve our critical success factors and in return will achieve our goal."
  • Focus the operational plan on the vital few actions within key projects.

Operational goal

  • One single indicator measuring the flow of energy coming in from customers. In accounting terms either income or contribution margin.
  • For effective and efficient agile business management we must focus on one and only one overriding goal.
  • For a business this typically is contribution margin – income minus variable cost.

Operational plan

  • The centerpiece of agile business management. 
  • Comprising the list of vital few initiatives required to achieve the operational goal.
  • Formatted as logic (causality) tree of critical success factors, competitor's initiatives, necessary conditions (DoDs of key projects), obstacles to deliver these projects and commitments to deliver to overcome these obstacles.
  • Best practice is to summarize the entire operational plan on one single page.
  • Shows everyone in the team their contribution. "No I finally know how I can contribute to the company"

Top-down planning fails

  • In traditional management we plan top-down: strategy is defined at the top and then deployed downwards to units.
  • This approach ignores the operational specifics of units, for instance constraints
  • "local" unit management faces two options: "Say yes and do nothing" or "Follow top command". In both cases the outcome are waste and failure.