Twenty managers were looking at me expectantly. One of them had just told me about the many ways in which their organization was trying to transform itself. The company’s increasingly demanding customers made business life a significant challenge. And the executives in this large business still insisted on annual budget cycles and innovation pipelines that were not allowed to fail. “How do we deal with all that, Jurgen?”
The pleading looks in the eyes of the managers confirmed to me again that every business justs wants to survive and thrive in an increasingly complex environment. We can go all high and mighty defining broader purposes and deeper meanings, but at the most fundamental level, an organization is a complex adaptive system that aims to exist in its environment. That’s all there is to it, really. It’s business life as usual.
Like any other complex adaptive system, the organization does this through feedback cycles. Its environment consists of stakeholders such as customers, users, shareholders, employees, and more. And all these stakeholders participate in value exchanges with the organization. Some trade money for products and services. Others trade labor or working capital for cash. But they are all participants in organizational feedback loops, producing and consuming value.
The challenge, as indicated above, is that business environments are changing faster than ever. The rate of change people face nowadays is unprecedented. And complexity science teaches us that, when environmental change speeds up, systemic change will have to keep up. To survive and thrive, organizations must change as rapidly as their environments, or else they might die. (The inverse is also true: when environments slow down and stabilize, complex adaptive systems benefit from slowing down as well.)
Interesting fact: when natural environments are stable, species tend to grow bigger and bigger organisms. Because a large size often means more food and more mates. But when environments are unstable, species have a tendency to reduce the size of their organisms, because a smaller size means faster regeneration and adaptation. In other words, species adapt their rate of reproduction to the environmental pace of change.
Every manager seems to agree that business lifecycles are steadily speeding up. This means that feedback cycles with stakeholders must speed up as well. And this means that organizations must speed up the rate at which they regenerate themselves. They do so by offering and consuming new forms of value in the value exchanges with their stakeholders. In other words, new products and services. This neverending pursuit of new value is called continuous innovation.
And where do Lean and Agile fit in this context? Notice that I didn’t refer a single time to business agility or scaling agile. That’s because the goal for organizations is not to be lean or agile. The goal, as indicated by the twenty managers who were looking at me expectantly, is for their business to do well in a changing environment. To survive and thrive, an organization requires continuous innovation.
Business agility is about responding to change. Continuous innovation is about causing change. I prefer my businesses to be active and reactive: continuous innovation over business agility.
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