Digital Transformation

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This lesson is from Digital Transformation Handbook by John Palfreyman

Strategic Agility

‘Five to ten years ago, you would set your vision and strategy and then start following it. That does not work anymore. Now you have to be alert every day, week, and month to renew your strategy’ Pekka Ala Pietil ä , Nokia Chairman, 2006

  • Strategic agility
    • is about how organisations can respond to
      • changing external (exogenous) and
      • internal (endogenous) forces,
    • building a strategy that can
      • adapt to situations of increasing uncertainty which make the future more difficult to predict
  • This uncertainty can result from
    • longer term market turmoil
      • experienced by companies making major investments in post-communist Russia in the 1990 or
      • sudden jolts or shocks such as the Covid-19 ‘lockdown’ in 2020.
  • The threat of uncertainty in any form makes organisational strategy formulation more difficult
    • strategic agility is a powerful way of dealing with this difficulty.
  • Strategic agility has the paradox of
    • strategic commitments and
    • flexibility at its core.
  • A paradox is a situation that is difficult to understand because it contains two contradictory elements.
    • Each element seems logical when considered in isolation but irrational when considered together.
  • Organisations must make strong strategic commitments
    • whilst also having the awareness, the will, and the flexibility to change these commitments as needed.
  • In the early 2000’s Nokia were described as a ‘knowing organisation’ who were able to see many aspects of the future correctly but not a ‘doing organisation’ able to convert this insight into operational reality.

The Reinvention of NASA , HBR article, 2018

  • NASA, the US Space Agency has undertaken an amazing change since the Apollo program in the 1960’s embracing many aspects of strategic agility.

    • This change has been necessary to respond to radically reducing budgets and competition from commercial space and other nations.
  • Traditional NASA in the 1966

    • consumed some 4.5% of the US federal budget, but this plummeted after the moon landing in 1969.
    • At this time, NASA were the
      • prime contractor and exclusive customer of
      • space technologies which were developed from scratch by specialist contractors.
    • Government procurement processes at the time meant that NASA could issue ‘cost plus’ contracts and would own the resulting technologies.
    • Traditional NASA’s approach to contracting could have been described as ‘command and control’ adopting an authoritarian and hierarchical relationship with their suppliers.
    • They would issue precise engineering specifications and closely monitor and strictly enforce compliance.
  • During the transitional years between 1993 and 2006,

    • NASA needed to collaborate with other nations to design and construct the International Space Station (ISS).

    • Transitional NASA’s technological superiority was eroded by other players with their cultures, technologies and operating models.

      • Politicians questioned NASA’s budgetary needs, forcing them to focus on efficiency and sharing.
    • Networked NASA

      • emerged around 2006 with the Commercial Resupply Services program.
      • NASA needed to find suitable commercial partners under budget pressures against a backdrop of government promotion of commercial space with their rapidly growing technical expertise.

      • learnt how to work efficiently with commercial partners,
        • becoming more outward looking and
        • recognising the capacity of their partners to innovate.
      • Their contracting model changed accordingly,
        • embracing fixed price efficient contracting with shared ownership of the resulting technology.
      • embrace Open Innovation, posing challenges online and crowdsourcing solutions to complement internal innovation efforts.
    • exemplary use of strategic agility positions them well for challenging future goals such as deep space exploration and a manned journey to Mars.