At Intellyx we break down business agility into three core business drivers: responsiveness, resilience, and innovativeness. This perspective on business agility, however, is not universal. In fact, most people separate innovation into its own category.
On the one hand, leaving innovation out of the business agility equation misses the strategic importance of agility, as resilience and responsiveness are only tactical benefits. Innovativeness, however, means the ability to intentionally introduce change into the business environment in order to achieve strategic advantage.
There is more to this connection between responsiveness and resilience on the one hand and innovation on the other, however, depending upon your point of view. I came to this conclusion during a conversation with a consultant who focuses on providing innovation to her clients. The challenge she faced wasn’t providing innovative products and services for her clients. The challenge was how to get them past their fear of the change that such innovations represented.
Fear of change, of course, is the primary roadblock to business agility in any organization. Many organizations, unfortunately, have no effective means for dealing with such fear. Management consultants speak of developing a “culture of innovation” or some such, but fail to provide an effective means for fostering such a culture. Bloomberg Agile Architecture can help.
Considering innovativeness to be one facet of business agility provides a different route to resolving the fear of innovation conundrum, as innovativeness is only part of the agility story. Resilience is also essential for business agility. We define resilience as the ability to respond to adverse change in the business environment – essentially, being able to bounce back when bad things happen. To increase your organization’s resilience, the first step is analyzing the sorts of bad things that might happen and how likely they are – in other words, you must conduct a risk analysis.
In the case of the fear of innovation, you must analyze the risks inherent in making the change under consideration as well as the risks of not making the change. The second part of this analysis is the most important, as you cannot create a risk profile unless you consider all sides of a decision, including the risks inherent in not making it.
Risk profile analysis, of course, is a central part of traditional information assurance – the risk management that goes on all the time in those parts of organizations that are familiar with quantifying risks. Credit card companies, for example, know how to calculate the risk of fraud, and balance that risk with how much it costs to combat fraud. The analysis should lead to the local optimum: the right balance between the cost of fraud and the cost of fighting it.
Just so with innovation. Calculate the risk of introducing a change – maybe customers don’t like the new product, maybe it cannibalizes existing revenues, etc. And then calculate the risk of not introducing the change – the competition’s innovations take your market share, the opportunity cost of leaving money on the table, existing product lines reach their saturation point or lose favor among customers, etc. Run the numbers and make your best guess as to the optimum balance between action and inaction (or in practice, among all the alternatives under consideration).
Fair enough, but what does this approach have to do with Agile Architecture? Remember, such architecture should focus on organizational, process, technology, and information design choices that support the agility drivers of the organization. The discussion up to this point has focused on organizational and process change. But without the appropriate supporting technology and information, it would be impossible to calculate an accurate risk profile analysis. The “running the numbers” step above is easier said than done, after all, as the necessary data might very well be the result of the appropriate application of Big Data analytics. Supporting the business agility goals of an organization by connecting them to the technology and information required to achieve those goals is the purpose of Bloomberg Agile Architecture. Make sure you’re not missing any of the pieces.
risk management, agile development, innovation plan