Authored by Evan Jago, Principal, ADAPTOVATE
COVID-19 has disrupted business to its core.
As the situation has rapidly evolved, it has created an unpredictable and volatile environment for business to operate in. Companies are facing unprecedented challenges having to adapt business models, product and service offerings, and, ways of working quickly in order to survive.
In a high-stakes, fluid and dynamic situation, how do you chart a course to turnaround a business or project? Traditional approaches of command and control, hierarchy and centralised decision making can be slow, inflexible and trapped in mindsets developed in times of stability.
Increasingly, teams are looking to approaches that allow for the ability to rapidly respond and adapt in order to survive and thrive.
The agile approach is specifically built for when the speed to turnaround is critical and value needs to be delivered immediately. Agile isn’t new and is grounded in common sense principles.
We used agile processes and principles to drive break even within two months
As an example, we applied agile principles to business turnaround:
It was 2002 and a colleague and I had been parachuted into a warehousing and transport business that was making a multi-million-dollar loss and we had been told to “turn the business around or shut it down”.
It had started with some fundamental operational issues that made its customers unhappy. Management teams had been brought in in using traditional techniques to attempt to reverse their fortunes. One of the first teams began cost-cutting, but inadvertently as a result the number of issues increased.
A subsequent team took another tack, throwing more and more people at every new operational problem that was uncovered. However, the issues remained and now the cost-base increased significantly and at the same time the business lost a major customer worth over 25% of revenue. We became the fifth management team to come into the business.
Senior management was now out of patience with the lack of progress and we had little time to prove that we could turn the business around. We had to not only show immediate progress but deliver tangible business outcomes as quickly as possible.
We used agile processes and principles to drive break even within two months of the start of the turn-around, earn profit within twelve months with the business continuing to operate and over one hundred people employed.
We took a four-step approach to deliver value, fast:
- Test and learn to rapidly iterate. On our first day, we spoke to staff, prior management and observed operations. This rapid analysis allowed us to identify nine potential initiatives that would contribute to the bottom line, determining that that they would move us in the right direction. The approach meant we didn’t get stuck in weeks of analysis. We tried out each initiative to test how well it worked and gained insight into what we needed to do to make them as successful as possible. We also used test and learn to determine optimal levels of shift staffing and resourcing.
- Build a backlog to start delivering. We used our list of nine initiatives that would move us in the right direction and prioritised them for highest dollar impact and speed of implementation. We broke the first initiative down into actions and immediately began rolling out those actions to deliver ongoing results across fortnightly cycles of work which we know as sprints. We didn’t write a project plan, communications plan, or any other heavyweight project documents. Our approach led to fast, impactful results as we reduced annualised costs by over $500K in the first and second fortnights, and by $300K in the third fortnight for a total $1.6m reduction in six weeks.
- Meaningful interactions to foster alignment. We held cross-functional daily meetings (stand-ups) with all the key site staff to ensure work was getting done and to synchronise on priorities. On Monday mornings we held a longer meeting to plan the week (sprint planning), to agree on weekly priorities and plan for emerging issues.
- Regular demonstration of progress to receive timely feedback. We arranged a fortnightly meeting with senior management to discuss results and ongoing plans. We used this meeting to highlight the progress and successes of the past fortnight, demonstrate the saving in the P&L and our next actions.
It served as our sprint review or showcase, acting as a forum to to ensure alignment with senior management and giving them confidence in our ability to deliver. It between, it gave us space to get work done without fielding endless queries on progress and plans. It also meant we didn’t require multiple signoffs on our plan or proposed actions, so we could be more nimble.
As a result of these techniques we had our first break-even week within two months of the start of the turn-around and consistently broke even after six months. After twelve months the business started to earn a profit, continued to operate and over one hundred people kept their jobs.
We used these practices not because they were part of a particular framework, but because they were the appropriate business practices designed to deliver measurable value as quickly as possible. These practices are as relevant as ever in the current climate as businesses adapt to the new normal.
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