Using Agile Based Strategic Planning Across Your Enterprise

Posted by Steve Elliott on Mar 11, 2016 5:00:00 PM


What does it mean to have an “Agile” strategic planning process?

With a rapidly growing frequency there is a case being made for scaling Agile in the Enterprise. As a starting point, think of all the activity that occurs above the Portfolio layer and ask do thosechange in an agile world.  I will take the position that to drive business agility, planning Alignment.pngabove the portfolio level does in fact need to evolve.  In fact, the new SAFe 4.0 framework addresses enterprise scaled agile, almost as if making it official that enterprise agile is here to stay.

One key component of scaled agile success is Agile Strategic planning. Agile strategic planning in the enterprise is dramatically different from the traditional strategic planning conducted in most organizations today. In this post, we’ll take a look at the pitfalls of the traditional strategic planning process and discuss how Agile strategic planning creates opportunities for today’s organizations to execute as efficiently as possible in alignment with corporate goals.

How Traditional Strategic Planning Falls Short

Traditional strategic planning, otherwise known as “what most people are doing,” typically includes one or more of the following:  a one, three, or five year plan with budgeting done on an annual basis. There are three key problems with traditional strategic planning:

#1: Matching capacity to demand is costly and inaccurate.

As the budget planning process takes place, executives compile their “wish list” or projects to be worked on during the following year(s). Commonly more projects are scoped than are realistic. Each year these newly-funded projects must be resourced. Often, organizations are incredibly resource constrained, which means that a tremendous amount of resource planning is required in order to match capacity to demand on a skill-set basis. Bring on the Gantt charts and collective groans of professionals tasked with “making the impossible possible” from a resources perspective. A common saying within the industry, as it relates to resource planning is “the only thing we know for sure is that our plan is wrong.” The constraints and complexities at hand make it difficult to come up with a reasonable projection of resource supply and demand against deliverables, leading to a lack of confidence in the true ability to execute the plan.

#2: Budget allocation is excessive, which drives irresponsible spending.

The unrealistic scope mentioned above often results in unused budget based on funded projects that were not completed. This “extra” budget leads to a scramble toward the end of the year, as unspent funding risks scrutiny in terms of the follow year’s budget allocations. We’ve all seen this happen. The common solution? Spend the money! In order to prove to executives that the funding is necessary the following year, unspent budget is spent on non-ideal items, rather than returned to company.

#3: There is little to no flexibility, making it impossible to account for “knowing that you don’t know” or to measure value frequently to make quick investment decisions.

Traditional strategic planning lacks a fluid ongoing review of projects’ relevance to an initiative as well as the ability to change course without major roadblocks. If, for example, certain projects no longer make sense as the year nears its end, one of two things typically take place. Option one is to complete a change order, which means a high level of overhead, hassle, resource shifting and the risk of losing budget the following year. The other is to avoid the hassle by doing the project, even if it doesn’t make sense based on the initiative at hand. As you can see, neither scenario is good for the individual or the organization.

Enterprise Agility Solves the Problem

Agile portfolio planning at scale implies that the strategy is defined by the enterprise and decisions on how much to invest are driven by value measurement as projects are incrementally released. Teams complete work based on what strategically makes sense for the company on an ongoing and continuous basis. How much? As much as they can, based on resource allocation with a continual eye on what is paying off as expected.

Given the resource allocation complexities that exist within the traditional framework of strategic planning, Agile strategic planning shifts focus to funding the value stream and executing projects from there. Agile strategic planning takes the overhead out of constantly having to refactor capacity/resource management, simplifying the process and empowering the portfolio level to make decisions. Also, it brings the lean startup mindset to projects where it is required / allowed to build, measure, learn and pivot if needed at the strategic level.

Commonly this happens at three levels of cadence. A typical programming cadence is three months long, which is enough to create a long range plan against initiatives that take 6-12 months to build out. Scaled agile planning is a rolling annual planning process, comprised of 4-6 program increments (each program increment is typically three months long matching up with fiscal quarters). Each program increment is planned at one time. Therefore, there is visibility into the strategic direction that should be achieved 12-18 months out. The near term program increments are well defined, medium and long-term less so. Instead of a fixed plan, the Agile strategic planning process is flexible and revisits the long term plan every three months to validate priorities and confirm that work to be completed in upcoming program increments is correct and aligned with the strategy. There are continuous opportunities to make adjustments to the 9-12 month plan based on game changers and lessons learned. Simply put, Agile strategic planning is funded value streams combined with a rolling long-range annual plan.

The approach of Agile strategic planning is to loosely manage to guidelines that align with the corporate strategy. Portfolio Managers are empowered to determine which projects to work on, so long as there are monthly check-ins with executives to make sure that the organization is on track and in alignment. Imagine a monthly check in where the conversation quickly moves from where are we with a project to how much value have we captured so far?  If we have captured 80% of the value and only spent 50% of the budget should we stop there and go for something with a higher value to effort ratio?

Organizations are moving away from traditional planning in order to capture maximum value for the dollar and avoid unnecessary overhead / budgetary spending.  Strategic planning with an agile mindset can provide a transformational shift in an organization engaged in scaling agile that truly changes the game.  Then and only then will you see improved operational effectiveness through the continuous alignment of the business and technology teams.

Have you conducted Agile strategic planning in your organization? Share your insights in the comments section below.

Topics: Bi-Modal, SAFe 4.0, Strategic Planning, Enterprise Scaled Agile