Building A Better Enterprise Through Agility And Agile Human Resources As Supporting Factors

CHAPTER I

INTRODUCTION

• Background

A dynamic and uncertain environment can affect the enterprise’s activities because they will continue to interact with its environment. However, companies have long been faced with technological advances, globalization, rapid information dissemination, intense market competition, and changing consumer needs that are increasingly complex. Experts and leaders have emphasized that we are currently in the realm of VUCA or the acronym of volatility, uncertainty, complexity, and ambiguity (Bennett & Lemoine, 2014). Agile work practices and the ability of organizational structures to react flexibly and quickly in response to economic changes due to changes in consumer preferences, technological leaps, or even social lockdowns are one of the answers for VUCA (Ganguly et al., 2009). Leaders in the enterprise are advised not to view VUCA as a common thing, because each of the VUCA situations has unique challenges so that they are handled differently. Companies must be able to understand each environment and the challenges that exist within VUCA so that resources can be properly invested to address the real problems. The approach that can be used to manage and solve problems in the complexity of VUCA is the Cynefin framework which categorizes the handling of problems according to the environmental context. The framework is designed based on causal relationships to help companies to diagnose situations and act accordingly on contextual basis (Snowden & Boone, 2007).

The increasing situation of VUCA will encourage enterprise to seek a more agile management practice approach and the Cynefin framework can help manage VUCA. The traditional organizational approach that is like a machine and views human resources as something that is exchanged will be replaced by a new paradigm of agile organizational practices that view organizations as living organisms. The results of Mckinsey’s analysis of 22 organizations in six sectors identified three main outcomes of agile transformation. They refer to the three as “agile impact engines”, including increased customer satisfaction, employee engagement, and operational performance that have an impact on improved financial performance (McKinsey & Company, 2020).

Figure 1.1 Agile impact engine

Source: Mckinsey & Company (2020)

Therefore, many enterprises use agile organizational practices, where according to Kidd & Karwowski (1994) the essence of agile enterprise is how they can find and use opportunities in the market environment with their main asset – knowledge. Therefore, in building agility, human resources with their knowledge to support agility are also needed in enterprise. Agile enterprise embraces change on an ongoing basis to create value, quality, and a logical and efficient framework. Yet many of the companies that try to be agile fail to transform, that’s because there is no agile organizational culture, lack of executive participation, lack of cooperation from product owners, no plans to measure improvement, lack of collaboration, and overrides the capabilities of human resources. So, in this paper, the author will discuss further how to build agility through three critical levers supported by agile resources within the enterprise.

• Review Of Literature
  • VUCA

The acronym VUCA which stands for Volatility, Uncertainty, Complexity and Ambiguity was adopted by the US Army War College based on ideas from the writings of Bennis and Namus in 1986 to describe the strategic environment (Barber, 1992). A detailed discussion and elaboration of VUCA occurred in 2002, the growing understanding is related to the dynamic corporate world and strategic leadership ideas with the aim of offsetting the negative impact of the four VUCA variables (Sinha & Sinha, 2020). The picture below describes the characteristics of each VUCA variable where they have different handling strategies between each other.

Figure 1.2 VUCA Framework

Sources: Designed by authors from various sources (Sinha & Sinha, 2020) (Bennett & Lemoine, 2014) (VUCA-WORLD, 2021)

• Cynefin

Cynefin (ku-nev-in) meaning “place” or “habitat”, was used by scholar David J. Snowden to describe a framework based on the concepts of knowledge management and organizational strategy that he developed in 1999. The Cynefin framework is useful to help make decisions in context by understanding the challenges of each domain or subsystem on a causal basis. Every situation is not the same and we won’t use the same decision-making approach either, so Cynefin directs us towards being adaptive, flexible, and understanding what actions need to be prioritized. Domains in Cynefin include simple, complex, complex, chaotic, and irregular.

Figure 1.3 Cynefin Domains

Source: Designed by authors from various sources (MindTools, 2021) (Snowden, D., J., 2007)

The Cynefin framework is primarily used to understand the dynamics of situations, perspectives, risks, changes, as a basis for decision making. Cynefin gives decision makers a powerful new construct to understand various undefined problems and helps them to break out of old ways of thinking to move on to new ones (Kurtz & Snowden, 2003).

CHAPTER 2

DISCUSSION

• Three Critical Levers as agile business strategy
  • Building the right thing

Doing the wrong thing will never get the job done. In addition, building the wrong thing can ultimately waste resources such as time or money, even if it continues, it demoralizes the intelligent, creative, and in-demand team members who are working on the products (Gower, 2017). So, to eliminate this waste, implementing Agile strategies helps enterprise to focus on finding and meeting customer needs quickly and affordably. The focus is none other than to provide value to customers, which can be executed through exploitation and exploration.

• Eksploitation

Exploitation Refers to how we build products that can provide value to customers.

Figure 2.1 Combination of design thinking, lean startup, and agile

Source: www.gartner.com

Before building the product, we start with the development of an idea where we must be able to identify and map customer problems appropriately. Design thinking will generate ideas that will enter the lean start-up process, where the ideas that have been created will enter the product development plan stage. In lean-start up there is a continuous learning process and the cycle consists of Build-measure-learn. Lean startup will continue during product development, and it is integrated with customer feedback. Furthermore, integrating Agile methods will help product development adapt in the face of continuously changing situations with the adoption of innovations to remain relevant to customer needs (Nachiket, 2019).

• Eksploration

In the exploitation process above, there is an exploration process in it because it is practiced simultaneously. The exploration process aims to dig up information about customers in advance so that we know what to invest in product development. We need empathy to get closer to customers (Gower, 2013). Exploration can help improve products and create opportunities for differentiation and innovation.

The activities of Exploitation and Exploration are separate activities, but they are united with the aim of strategy in business. If the entreprise can involve and allocate resources to both, it will bring them to ambidexterity.

Figure 2.2 Achieving Ambidexterity through exploitation and exploration

Source: Processed by the author (2021)

Organizations or enterprise will be considered ambidextrous when they are “aligned and efficient in managing business demands, while still being quite adaptive to changes in their environment in which they will exist tomorrow” (Gibson and Birkinshaw, 2004).

• Building the thing right

Building the thing right is important for building quality and usually teams focus on that. Rushing to work by making prototypes into usable products will indeed be good in the short term but in the long term it will sink into technical debt (Fiorini, 2019). Therefore, it is important to get feedback from customers besides that we improve quality by paying technical debt on a regular basis – the technical debt should be carefully managed. Here’s the things to be considered in balancing technical requirements and goals in order to build quality (Lanyon,2018):

• Choose technologies (tools) that are vetted, agreed upon and accepted based on business needs, as each technology has trade-offs.
• Create a roadmap that scales to needs and engages in all trade-offs, including costs.
• Make sure the company selects a team with appropriate skills and their roles and responsibilities are clearly defined.
• Make sure everyone is sure that they are doing the right thing to reduce mistakes and increase speed.

• Building the right speed

Agile has become a mainstay for increasing efficiency and a focus on efficiency is used by companies that want to be more agile. Efficiency in agile comes from limiting the number of jobs or projects by doing the right things (Dame, 2019). Efficiency is defined as the ability to do something without wasting time, energy, or materials (Buder & Felden, 2012). There are two forms of efficiency, namely Resource efficiency which states that resource utilization helps to achieve efficiency and flow efficiency associated with rapid adaptability by shortening waiting times. Ideally both resource and flow efficiencies can be achieved in balance but achieving high scores on both forms of efficiency is very difficult. There is an efficiency paradox where when the company is too focused on resource utilization, what will be seen is only a group of people who are busy, even though busy does not mean efficient because there are queues that accumulate and provide bad customer value. Customers don’t buy busyness but features, so optimizing features done with flow efficiency and “a focus on flow efficiency can eliminate waste thereby increasing resource efficiency” (Åhlström & Modig, 2021). Optimizing flow can be implemented by visualizing workflows, calculating flow efficiency, and limiting work in progress (WIP). Both forms of efficiency are important, but some need to be prioritized if you want to have an agile business and these priorities don’t override the other but are supportive. The degree of variability, VUCA, and business strategy determine how the two efficiencies are balanced.

• Agile human resources as a supporting factor

Agile human resources are very important to support enterprises to be more agile and able to support them in VUCA situations. Previously it has been explained how the three critical levels help enterprise to be oriented towards being more agile, but it will not work if it is not supported by agile human resources as well. Human resources are the main efficiency factor in the enterprise’s agility. Customers pay a fee which depends on the person who fulfills their needs through knowledge and technology (Goldman et al., 1995). Human resources must have the expertise to be able to provide value faster but with more humane practices.

Figure 2.3 Lean-Agile HR Practices

Source: joshbersin.com

The image above shows how agile human resources are built to focus on individual potential (human-centric). Agile principles have been adapted into the domain of human resource management in companies, where they become the basis for designing employee experiences and conveniences. That is why agile human resources are a practice that has the potential to push in a more humane direction and support agile enterprise strategies.

CHAPTER 3

CONCLUSIONS AND SUGGESTIONS

• Conclusion

Companies have been faced with a dynamic environment full of changes whose dynamism is described in the scope of VUCA (volatility, uncertainty, complexity, and ambiguity). To deal with VUCA many companies end up adopting work practices that are more agile and adaptable. The approach to managing the VUCA situation can use the Cynefin framework which provides a perspective in handling problems according to the environmental context so that companies can diagnose the situation and act appropriately in making decisions. In this VUCA situation, agile enterprises strive to create value, quality, and work design that is fast but logical. To build agility within a enterprise or business, there are three critical levers that can be considered, including building the right thing to provide value to customers which is executed through exploitation and exploration, building the right thing to build quality and manage technical debt, and building the right. speed by balancing efficiency between resources and flow. Agile human resources are also a supporting factor for companies to transform to become more agile. Making human resources technically agile gives them the opportunity to learn, develop, and get more humane work practices.

• Suggestion

The enterprise agility is indicated by the enterprise’s ability to quickly adapt to the environment in the hope of increasing operational effectiveness, quality results, faster task completion and increasing employee engagement. Agile human resources is an integral part of agile enterprise’ operations and helps them survive in a competitive environment. According to Goldman et al. (1995), an agile competitive environment is the skills, knowledge, and experience of people. So, here are my recommendations on how to increase enterprise agility through agile human resources practice:

• Develop performance frameworks into cross-functional teams and empower them by investing in the right technology and data so that they can support their work more quickly and precisely. The team must be nurtured to have a good communication strategy to make it easier for their ideas to be conveyed, the ability to collaborate, and optimize the use of digital infrastructure so that their abilities can improve. Building cross-functional teams can train employees to apply their knowledge (skill growth) in a variety of situations but they stay deep in their field of work. In forming the team, the role of Agile HR is to place talent based on their skills and willingness so that it no longer follows pre-determined relationships or jobs.
• Invest in employee training and development so that the enterprise gets good quality performance. Usually, agile human resources will always provide continuous learning and provide opportunities for learning to develop. Through training and development, human resources can manage knowledge to respond to speed, problems, and reach solutions to work.
• Motivation and engagement of human resources is important to increase agility, this can be achieved by giving them respect, authority, transparency, connect goals, collaborative interaction, adaptive leadership and support their development.
• Build a growth and agile mindset where human resources in the enterprise dare to take considered risks, continue to learn, can adapt to change, and are committed to growth. This is because the Agile HR mindset is not just a scrum board or post-it notes, but rather learning to create and deliver value. This mindset is the key in agile human resources so that if human resources have this mindset, it will help improve enterprise agility.
• Make the people who work in a corporate environment extraordinary, create an environment with systems that empower not control – Being Extra with empowering.
• Build a user-centred deployment of a cloud-based HR software solution system on an application. It is impossible for an agile enterprise not to have an agile HR system as well.
• Equip managers to have agile leadership skills through experiences outside the professional comfort zone but still within the capacity of ability. These agile leadership skills are necessary because those who have these are usually people who can overcome ignorance, discomfort, can deal with complex problems, always apply, or execute their values and experiences, and are able to make changes.
• Always evaluate performance management to keep it relevant with the goals of the agile enterprise – Evaluate for the best.

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