August 31, 2022
Agile ways of working have become extremely popular since 2001 when the Manifesto for Agile Software Development was published. But does agile work in all contexts? Would traditional project management approaches be a better choice for some contexts? This blog outlines the factors to consider when choosing one approach over another.
Context Counts! Experts agree that context counts when choosing the approach to managing work.
Previously I touched on this topic in Agile is Better than Waterfall and How to Succeed with Hybrid and Blended Agile Approaches. That second blog post included the relatively popular Stacey Complexity Diagram as a possible way to choose which approach works best for your particular context (see below).
The idea is to look at the certainty you have around the “What” is to be built (the vertical axis) and the “How” we are going to build it (the horizontal axis) and then choose the correct approach based on that. Work that falls into the simple domain would leverage traditional approaches, while complicated and complex work would leverage agile methods.
Harbott contends that all organizational activity can be broken down into two categories. Exploit activities are those that are used to maintain existing products. Explore activities are those that are used to generate new ideas and businesses.
Exploit work is not new or innovative. It is the maintenance of products or services that have already been developed. For exploit work, more traditional project management approaches with upfront planning and control work well. This works also lends itself nicely to annual budgeting cycles.
Exploiting activities are those that relate to current products and services. The focus is on predictable delivery of those products and services, incremental improvements, and a focus on reducing costs, and improving efficiency. For these types of services, the work is known and predictable:
These activities are largely understood and predictable, and success relies on effective execution toward a known goal…An example of effective exploiting is Amazon’s implementation of algorithms to improve the efficiency of the efficiency of picking and shipping items from its fulfillment centers.
— Karim Harbot, The 6 Enablers of Business Agility
Exploring activities are a different animal.
Exploring is the act of seeking out new products, services, customer segments, and even entire business models. The strategy here is to compete through innovation and sometimes the reinvention of the entire organization. It is an uncertain, unpredictable pursuite that tends t involve a lot of trial and error. As such, making predictions and detailed plans is often not possible. To return to our Amazon example…it continously explores new products, services, and business models.
— Karim Harbot, The 6 Enablers of Business Agility
Explore work is that innovative work that organizations due to launch new products or find new markets and customers. For Explore work, the number of unknowns makes traditional project management approaches ineffective. Instead, organizations that are tackling Explore work need to run many small experiments with uncertain outcomes. Annual budgeting cycles, large upfront planning, and long timelines would be wasteful and inappropriate for Exploring work. Instead, organizations should use lightweight agile techniques such as those described in Eric Reis’s Lean Startup to make many small bets with minimal upfront planning.
Both Exploiting and Exploring are happening within all organizations at the same time. However, the approach and focus of each are very different. The skills required to execute them and the outcomes being sought are also very different. This highlights the importance of choosing agile over traditional approaches for Explore work.
Let’s look a little more closely at some examples.
For Exploit work, let’s take a look at Amazon building a new warehouse. Maybe you have seen one of these going up or in operation. I’ve seen them outside the Chicago area and they are ginormous!
The things that make Exploit work effective are those things that your organization is probably pretty good at. The focus is on control and predictability.
An example of Explore work from Amazon is the Amazon Pharmacy. Amazon Pharmacy was an entirely new business and a great example of Explore work. When Amazon Pharmacy launched in November of 2020, it was hailed as “arguably Amazon’s broadest push into the healthcare business to date”.
So what are the characteristics of this work? Innovation, new business models and delighted customers. You don’t get those by using the command and control approach described above.
So how do you create entirely new business models? Here are some ways”
Why is this distinction between Explore and Exploit so important? Well, it can determine the success or failure of an organization.
Exploiting is about wringing the profits out of a product or service. Activities are predictable which means that plan-driven, predictive approaches will succeed. We can set up annual budgets for exploit projects and likely succeed. When we execute those plans, we can expect tight controls.
Exploiting has been the successful model for the last 100 years. It has its roots in the work of Frederick Taylor and Scientific Management, Henry Ford and the Assembly line, and Max Weber’s bureaucratic management.
These concepts and approaches worked great for the manual work of yesterday. But they simply don’t work today unless you are shoveling coal. It doesn’t work when you are trying to grow market share or fend off a competitor like Amazon.
Those that don’t see the importance and priority of innovation and creativity, should consider the increasingly shorter lifespan of companies today. 60 years ago, the average lifespan on the S&P 500 was over 30 years. That number is trending down below half of that today. That means that on average, companies are only living half as long.
Why? Well, you can blame it on various market forces. The shift to digital photography caught market leader Kodak flat-footed and you can see where they have landed. They were founded in 1888 and they dominated photography for over 100 years. But they missed the opportunity to embrace digital photography. And in 2012, at age 124, they declared bankruptcy.
Borders Book store was 40 years old when it went out of business. They were displaced by Amazon in 2011 when Amazon was 17 years old.
Blockbuster was 28 years old when it went out of business, displaced by Netflix in 2013 when Netflix was 16 years old. Netflix, who at one time had proposed that Blockbuster buy them, had the last laugh as Blockbuster shuttered.
The key takeaway here is that competition is increasing. If you are not innovating, you are rolling the dice on your longevity. Some portion of your focus needs to be on the Explore domain.
This may be obvious after reading the previous sections, but don’t mix agile and traditional approaches in the same initiative. Don’t ask people to use Scrum and then micromanage them or hold them to the project plan that was created during your annual planning cycle.
Why would you even consider this? Well, there are many reasons that people pursue this:
Whether you call it Water-Scrum, Scrummer-Fall, or the most accurate label, Waterfail, these approaches are bound to fail as I outlined in What is Hybrid Agile. Still, I know people are going to do it even though it is not recommended.
Letting go can be tough.