Skill development has the learner and the company as its addressees.

On the part of the learner, the focus is on:

Building knowledge, skills, and expertise

• Pursuing interests and inclinations
• Career planning
• Improving personal opportunities on the labor market

On the part of the company, it is important to

strategically develop personnel

• build the right mix of skills, strategic personnel development
• ensure the implementation of the strategy
• align with portfolio and technology expertise

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Which ever organization you form, it is not the right one… Adapted Architectures

Once you know the basics of your business strategy, i.e., how the business will generate revenue and profit, you can start designing an architecture that supports the business requirements or aligns them with the capabilities to technologies and the architecture.

Example: If one of your company’s main offerings is to supply emission control systems to passenger cars, the transition to electric-powered vehicles would require new products, a very different technology base, and profound adjustments in organizational and employee capabilities.

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• Aligning with the business, not managing current operations
• Portfolios – With the help of portfolios, a company can concretize its strategy and make it feasible. Portfolios help to focus on the right priorities.

If you look at the term portfolio in general, it is a selection of topics and an allocation of resources.

Based on this, we introduce three types of portfolios that are central to the concretization of a strategy:

• Products: the classic portfolio of products, customers and markets
• Architecture(s) or technology: the set of technical solutions available to a company.
• Skill: the capabilities of individuals and groups

Tools

• Conway’s Law: and the inverse Conway maneuver
• BAPO: The BAPO model by Jan Bosch describes four aspects of a development activity and also suggests a sequence for processing them. 

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The Boston Consulting Group portfolio divides a company’s various products into four categories based on their relative market share and market growth, depending on their position in the product life cycle: question marks, stars, cash cows and poor dogs. The product portfolio is a subset of the corporate portfolio that can be defined down to the level of the individual product (share of sales, profit, growth rates, etc.).

Source: Wikimedia

Three Horizons

The idea of the three horizons is based on the observation that different development phases require different control mechanisms:

• Horizon 1 (0-12 months), also known as the operational horizon. Operations relate to the present and the immediate future:
  the focus here is on current day-to-day business. Horizon 1 ranges from daily to a few weeks to a few months into the future. Execution is often not affected by grand strategic visions that are to become reality in a few years.
• Horizon 2 (12-36 months), also known as the tactical horizon:
  Tactics is what moves us from today’s portfolio to tomorrow’s portfolio, i.e. connecting execution with strategy, i.e. providing guidance on how to develop today’s operations into tomorrow’s state.
• Horizon 3 (36-72 months), also known as the strategic horizon, determining the direction of future business:
  Strategic considerations and decisions live in horizon three. They determine the future direction. We need a vision of where we want to be in the future in terms of market, customers and environment.

The original formulation of the three-horizon model focuses on fixed time horizons. This rigid view is considered outdated; modern developments are more interesting.

Our personal preference is Simon Wardley’s integrated view of the evolution of products, practices,

Consequences

The three-horizon model suggests a distinction of goals, metrics and tools according to horizon.

The three horizons model is attributed to Mehrdad Baghai, Stephen Coley and David White, “The Alchemy of Growth”, New York: Perseus Publishing, 1999.

Lean-Agile Portfolio Evolution

Portfolios at SAFe

The portfolio level is the highest level considered by SAFe. In a large enterprise, there may well be several portfolios, each defining its own value streams and solutions. However, all these portfolios are considered in the context of the corporate strategy: the enterprise strategy drives the portfolio strategies, and the portfolio owners in turn inform the corporate strategy owners.

The important concepts are as follows:

• Value streams are longer-term development efforts that create a continuous flow of new products and services. Value streams are implemented through one or more programs or (also known as) Agile Release Trains in a solution.
• Lean budgets are provided for solutions or Agile Release Trains. The budget for an iteration of a solution or a release train (program increment) is available to product management.
• Portfolio Kanban systems. SAFe suggests a Portfolio Kanban system for Business Epics and for Enablers. They ensure that the number of initiatives in which investments are made is limited.
• Epics are large initiatives in a portfolio. Business Epics describe new functionality, while Enabler or Architecture Epics encompass overarching technological changes that keep a system operational and future-proof.
• The portfolio backlog is the top-level backlog in SAFe and contains the prioritized epics that have passed through the Kanban system and are waiting to be implemented by a release train.
• Strategic topics are specific driving elements that link the portfolio vision with the company’s overall strategy.

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There are a lot of such established approaches for structuring and visualization like

• SWOT analysis
• balanced scorecard

We do not attempt here to cover the multitude of approaches to strategy development. You can’t miss them. We highlight two concepts that provide specific additional benefits for an adaptive organization:

1. Organizational archetype and strategy development:
2. Strategic Gameplay as part of Simon Warley’s mapping method.
   

   Simon Wardley is one of the critics who dispute the usefulness of these methods. Unlike most others, he presents an alternative concept.

   
   

Your strategy needs a strategy

Strategies that would work in predictable environments like the oil industry have virtually no chance of working in the far less predictable and less settled arena of Internet software. And also the skills strategists need in the respective industries have little to do with each other. Companies operating in either of these environments should plan, develop, and deploy their strategies in distinctly different ways. But research (BCG) shows that all too often they don’t.

Managers are well aware of the need to adapt their strategy development processes to their competitive environment. Still, the study found, many in practice rely on approaches that are better suited to predictable, stable environments, even when their own environments are known to be highly volatile or changeable.

What prevents these leaders from shaping their strategy to fit their situation? Perhaps they lack a systematic approach: a strategy for strategy development.

Here we present a simple framework by Martin Reeves that divides strategic planning into four styles, depending on how predictable your environment is and how much power you have to change it. Using this framework, business leaders can adapt their strategic style to the unique conditions of their industry, business function or geographic market.

Source: BCG

The Strategy Palette proposes five different strategic approaches:

• Classic strategy: Achieving a competitive advantage through optimal positioning. Example: Shell
• Adaptive strategy: achieving an advantage through rapid adaptation. Example: Zara.
• Visionary strategy: inventing an industry with some degree of predictability, single-mindedly pursuing an opportunity. Example: Tesla
• Shaping Strategy: Shaping firms shape or reshape an industry by influencing the development of a market in their favor through coordination with other players.
• Renewal Strategy: A renewal strategy approach renews the vitality and competitiveness of a company when it faces a crisis or a harsh environment.

Strategic Gameplay with Wardley Maps

We have introduced Wardley Maps as an indispensable tool for situation analysis.

But that’s not the end of it: the second step, if not the core, of Wardley Mapping is the development of a concrete strategy, the “strategic gameplay” or “stratagems”.

Most of these actions are typical business activities, but some involve deception, misdirection, or even things that could be considered an abuse of power. Wardley used a value system from the gaming world to rank each action.

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Decisions are made on the basis of existing knowledge and gain clarity with ever shorter learning cycles.
At the beginning of an initiative, it is rarely possible to know all the conditions completely. Obstacles and new unknowns can and will arise at any time as the initiative progresses.
Empirical process control is an essential feature of agile working methods: decisions are made on the basis of existing knowledge and ideally at the latest possible time.
Empirical in this sense means reducing uncertainties and ambiguities through concrete experiences and fact-based insights – gaining more clarity with the shortest possible learning cycles.

Sense Making

The prerequisite for a short learning cycle or feedback cycle is an effective way to understand the situation or “sense making”. Without a solid understanding of the situation, efforts to be more adaptive are just useless exercises.
There are a number of effective and proven tools at all levels:

• OODA by John Boyd at the tactical level
• The “Art of War” by the ancient Chinese general Sun Tsu for strategy and tactics
• Wardley Mapping for strategy and product development (Simon Wardley also draws heavily on Sun Tzu and John Boyd)
• Lyssa Adkins’ famous question to coaches: “can you read a room?” to draw attention to the importance of situational awareness in teams.

Agile Evolution also provides central tools:

• The GOOD (sense making) Cycle, which builds on the tools mentioned above
• Visualization of a transformation through Focus Maps

In Steve Bungay’s “Art of Action”, a version of mission-type tactics, a sense-making process is used explicitly for alignment (see strategy implementation).

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If we go through these steps, we will find that they are closely interrelated: the intention of an organization is linked to the external situation, its history and the expectations of the various stakeholders – from customers to employees. The vision cannot exist without an assessment of the possibilities and options.

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However beautiful a strategy is, you should occasionally look at the results.

Strategy starts with finding yourself as an organization.

This includes

• Identity: who we are, what we want, what we stand for
• Perception of the situation: how is our environment
• Based on that, you can develop a strategy: What is our mission, our goals, our direction

Then: refine and concretize the three blocks. At this point, the orientation is still very abstract and not well suited for robust implementation. In the course of refinement, prioritization issues arise that are typical of budget discussions. We distinguish three types (or three budget dimensions):

• Products / product families (“what do we sell”)
• Architecture / Technologies (“what can we do”)
• Strategic personnel development (“who produces it”)

And: implement. Strategy implementation is as important as strategy development in achieving the desired clarity and alignment.

• Creating the climate in which everyone can participate
• Set target operation model(s)
• Roll out and alignment

The connection is not as linear as it looks in this diagram:.in reality, these steps are interwoven, are iterated through. They are partly fractal and also not exclusively the tasks of (top) management. A collaborative management model links strategy with management and day-to-day tasks and involves all employees.

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