Thinking like a fox: The agile innovation mindset

Agile methodology has shifted from software labs and startups to pervade all aspects of organisational innovation. But what does it really take to create game-changing, scalable ideas? This was the subject of Professor Mohanbir Sawhney’s address to the World Business Forum in May 2017.

For Sawhney, the key is to start thinking like a fox. “A fox knows many little things, and is always sensing and responding, curious and restless,” he says.

Embedding agile methodology into other business functions – from marketing to HR or purchasing – is as much a mindset shift as it is a structured process. Sawhney describes this process as a move away from ‘hedgehog thinking’.

“A hedgehog moves in one direction, and knows one big thing,” he says.

Move faster, learn sooner, collaborate smarter

Agile methodology takes the focus away from the risk of failure to the cost of failure. The faster you fail, the cheaper it is and the more you learn for the next idea. This is startup thinking.

But why do we need this new approach to innovation?

“We’re operating in a VUCA reality,” Sawhney explains. VUCA is a military term for volatility, uncertainty, complexity and ambiguity. It describes a world where the enemy is no longer a large enemy state but a decentralised ideology.

And just like the military, businesses need to adapt and be agile. “The world is moving faster because technology accumulates on other technologies,” Sawhney points out. “You can generate enormous value from the infrastructure already available; you just need creativity and execution.”

Old innovation paradigms are slow, expensive and rigid. In-house big bets and long projects are designed to minimise risk of failure.

“The waterfall (or sequential) process of software design makes it hard to reverse the process. In this process, change is the enemy and adaptability is avoided.”

The agile process

“Agile innovation improves the speed, predictability and adaptability of innovation,” says Sawhney. “It moves us from sequential execution to iterative planning and testing with small collaborative teams.”

Instead of taking one giant initiative, agile chunks the process into four week sprints that involve bringing all stakeholders – customers included – into one room.

“Engage customers early, and get continuous input from them. Their preferences are changing, so at the end of every sprint, touch base with them again.”

Known as the scrum, this process underpins the agile framework and allows the project to move forward through regular cross-functional work. Each sprint picks up the highest priority of project backlogs – the task with the potential for largest impact with the least effort.

The scrum master manages daily scrum meetings to identify what the team worked on yesterday, what's happening today and what is getting in their way.

“These rituals and structures are important. You can’t dilute them, or it becomes dysfunctional,” says Sawhney. “If a sprint can't fit into the four week envelope, break it down into something that can.”

He also suggests that size of the scrum team follows Amazon’s ‘two pizza rule’ - never have a meeting where two pizzas can’t feed everyone in the room.

Sawhney also notes that it can be challenging to manage the process for larger, global teams.

“Time zones make daily meetings harder, and you need to be sensitive to cultural and work style differences. Tools like whiteboarding, video conferencing and spark boards help connect remote teams.”

“You also need people who can self-manage and self-lead. And they need to accept they will not know the future and will have to keep adapting as they go along.”

The ambidextrous organisation

Larger organisations face an ongoing tension between exploitation and exploration – between meeting KPIs for performance and efficiency, and disrupting the core business with new initiatives.

For Sawhney, the fear of cannibalisation makes it important to create “a home for disruptive ideas, at arm’s length” so another part of the business can constantly look for disruptive thinking.

He uses IBM as an example. By looking at innovation across three horizons – mature, growth and future businesses – it developed the EBO model (emerging business opportunities) to place bets, and take risks on innovation away from the immediate horizon.

“IBM launched 25 EBOs between 2000 and 2006 and within six years, 22 of those produced annual revenue of $15billion.” Examples include pervasive computing, Linux services and new markets in China, India and Brazil.

IBM recognised when to abandon an idea and has three failed EBOs under its belt. It also created an extended team for advice, and mentored staff. This approach led to high-growth new businesses, that would otherwise not have existed, and a significant impact on the bottom line.

It’s a compelling business case for agile methodology and a great example of how large organisations can create a model for thinking like a fox.

“It doesn't happen overnight, but it’s imperative if we are to learn faster, compete, survive and thrive in our VUCA world.”