Agility: How to Navigate the Unknown and Seize Opportunity in a World of Disruption

by Leo M. Tilman and Gen. Charles Jacoby (Ret.)

“The need for agility in business, government and warfare arises precisely from the uncertainty and complexity of the competitive environment.”

I imagine both co-authors of Agility have some battle scars—Tilman from Bear Stearns during the 2008 financial industry crisis and Jacoby from his career in the U.S. Army where he achieved the rank of 4-star general. Kidding aside, this book goes beyond military metaphors and presents a fusion of military and business thinking about risk intelligence and uncertainty as well as a leadership approach that emphasizes truth (as opposed to assumptions), trust, clear communication, and executional dexterity throughout the organization.

Complex adaptive systems “are constantly changing and evolving. They lack centralized control. They are inhabited by a multitude of stakeholders driven by distinct objectives, risk tolerances and modes of operation. These players interact in dynamic tension with one another, alternating between the urge to recoil from and engage in risk-taking and aggression. Their actions and adaptations lead to entirely unpredictable patterns and outcomes.”

Tilman and Jacoby define agility as: “the organizational capacity to effectively detect, assess and respond to environmental changes in ways that are purposeful, decisive and grounded in the will to win… An organization’s ability to treat potentially existential threats and challenges as opportunities is a hallmark of agility… Inaction is, of course, antithetical to agility. This is true not only because it hampers effective responses to threats and opportunities, but also because it yields the initiative to others, often putting us on the defensive.”

“Productive and timely responses to environmental changes involve detection rather than prediction… Because of the inherent opacity and uncertainty of our operating environments, future events and their likelihoods are unknowable.”

In contrast to uncertainty, risk refers to situations where the range of potential outcomes of an event or an undertaking is known with a reasonable degree of accuracy [and] each outcome has some probability of occurring… The agility mindset does not view risk as either inherently positive or negative.”

“Risk = Vulnerability x Likelihood x Consequences… We propose our risk equation as a heuristic, designed simply to illustrate the main drivers of risk, highlight their interdependence and establish a common language—rather than a literal equation to be used.” To explain the concept using a familiar example, “credit risk is often quantitatively measured as the product of the total loan amount (vulnerability), the likelihood of default and the percentage of the loan amount we won’t be able to recoup (consequence)… The authors note that the risk equation “should be seen as providing a continuum of possibilities to consider rather than a single scenario… The entire set of possible outcomes and the likelihoods form a probability distribution.”

“The future will undoubtedly end up being different from our scenarios, and the actions we’ll end up taking will undoubtedly be different from pre-existing contingency plans. But the act of planning will foster agility—by improving our understanding of the environment and positioning us to recognize change… and decisively execute when the time is right.”

The Strategic Calculus heuristic is about balancing goals against risk and capacity: “Goals ←→ Risk x Capacity.” Capacity includes things like organizational bandwidth and the financial resources to absorb losses.

“When we view organizations as dynamic portfolios of risks, we realize that a system for identifying, monitoring and actively managing this portfolio can become a powerful way to synthesize and intuitively present relevant information and establish a common language and knowledge base.” The authors introduce their concept of organizational risk radar in Chapter 6.

“By recognizing that our organization’s portfolios of risks can be explicitly constructed and proactively rebalanced… this paves the way to execution dexterity: the ability to holistically and dynamically deploy all risk, business, and organizational levers, individually and in combinations, as environments change.”

“All risks can be divided into two fundamentally different categories: idiosyncratic and systematic. Idiosyncratic risks apply to individual organizations, assets or initiatives and, therefore, can be managed through diversification. In contrast, systematic risks represent changes in financial markets, economies and political environments… Static business models leave organizations at the mercy of external forces, making them the proverbial sitting ducks… In business and finance, static business models almost always involve systematic risks.”

What business are we in? “Companies that strive for enduring relevance and superior performance devote a concerted effort to comprehensively articulating their philosophy of value creation. They explain how they strike the right balance between internally driven purpose and strategy and externally driven customer needs and competitive factors. They instruct employees to use economic reality as a basis for decision-making, and they work hard to instill a mindset that focuses on capturing opportunities, not just mitigating threats.”

“To best exploit real time opportunities and manage risk through empowered decentralized execution, the concept of directive command (or, in modern terms, leading by mission) was created… As increasingly granular statements of Commander’s Intent cascade down the command chain, they help continually explain to the entire organization what must be achieved and why. In the military, the attendant operational guidance—how to achieve the mission—is usually kept to a minimum… Effective empowerment to the very edges of the organization requires all team members to clearly understand the boundaries within which they are expected to exercise bold initiative.”

“Mission Command is based on three key tenets: shared understanding, intent and trust.”

“The fog of informational ambiguity… can lead to other destructive organizational behaviors incompatible with agility. Chief among them is micromanagement. Delegating authority requires confidence in people and tolerance for honest mistakes and failures. When leaders become overly risk-averse in the face of uncertainty, they often excessively centralize decision-making and execution authority, which deprives organizations of agility and decimates engagement and trust.”

The authors stress the importance of the organization’s “True North—its purpose, vision, values and norms of behavior… Few things are more detrimental to the morale and culture than the leaders’ failure to live up to the organization’s True North they proclaim to embrace… If the leader’s behaviors or communications are viewed as inauthentic, this will breed cynicism and decimate trust, motivation and performance.”

“Successfully operating in environments that are filled with uncertainty and ambiguity requires an organizational setting that supports and rewards the principled pursuit of truth. Said differently, achieving agility is not possible when vigorous evidence-based debate is not consistently practiced… The unfettered exchange of ideas must become the pervasive social norm at all times, at all organizational levels and out to the very edges… They examine evidence from multiple perspectives, detect invalid assumptions and potential landmines, and challenge themselves about what they know and don’t know. This enables them to gain situational awareness, effectively assess environmental changes and risk equations, and shape productive responses.”

“One last point we’ll make here is that with the deterioration of standards of truth in the culture at large in recent years, the need for organizations to consistently operate as a Forum of Truth is all the more urgent. What may seem to be just basic common sense regarding the ethics of truthfulness in a society has been under assault.”

“Trust is essential for nearly every aspect of agility. When troubling environmental signals are detected, trust will give our team members the confidence to bear bad news. When the meaning of these often ambiguous signals is debated—or when we are shaping our responses to change and evaluating alternatives—our colleagues will be willing to question assumptions and express dissenting views. In decentralized execution, it is trust that drives smart risk-taking and improvisation as part of bold and purposeful disciplined initiative. That is why, as a central tenet of Mission Command, trust is key to creating a bias for action.”

“Of course, the Agility Process is an ongoing and iterative endeavor.”

Tilman, Leo M., and Charles H. Jacoby. Agility: How to Navigate the Unknown and Seize Opportunity in a World of Disruption. United States: Missionday, 2019. Buy from Amazon.com

Disclosure: As an Amazon Associate I earn from qualifying purchases. I received a review copy of this book.

Other books referred to in the text:

Published by andreweverett360