It is not software that is eating the world. But software is teaching us an important lesson. It thought us that is is about the journey after all. Organisations are slowly waking up to the fact that, in order to be successful, a different set of skills is needed. The unit focused corporations of the 20th Century are finding themselves being overtaken by organisations that are smaller, faster and thus better able to adjust to the shifts in customer drives and needs.
It is agile that is eating the world. Organisations that run in a way that allows for maximum flexibility, adaptability and nimbleness. Whatever wording we give to it, a focus on delivering value for customers, working in small teams in short cycles, and organisations that work like spiderwebs are the key tools that set these organisations apart.
The result is a world where people, insight and monetary value change quickly, lowering transactions costs and marginal cost per product.
So what does it mean that agile is eating the world?
The customer defines the value
By now it is clear that the primary function of a business is to create a customer. Since this paradigm is radically different from creating shareholder value or other short-term strategies let me make a few notes.
Creating a customer means that a firm should be able to get an customer’s job done better, cheaper or faster than other organisations could previously offer. Organisations will need to shift to an outcome driven business model focusing on delivering end-results, not products/tools.
The customer sets the service level
By focusing on the job at hand companies get a better understanding of what outcome a customer is looking for and are better able to brand, price and position their products.
Customer will be able to set the level of service they require and get a price/proposition accordingly. These service level agreements will be linked to subscriptions.
The infinite game
Whether you think of it as a subscription, or a membership, or just a service level agreement, the essence is a recurring cycle of interactions, the result is that the flow of business changes from linear to circular. Agile does not scale, it repeats.
This has deep implications, both as to operations, and as to the nature of the relationship. Game theory tells us that one-shot games create very different player behaviors from repeated games. All recurring business has elements of a repeated game, but effective game design can make the game more productive, cooperatively win-win, and long-lived.
Your new job
The material gains generated by the industrial revolution are largely the result of the fact that a large number of people agreed to sell themselves into wage slavery. In exchange for a fair amount of money (first daily, weekly now monthly) people agreed to be treated like slaves at work, following orders, obeying their masters, falling in line.
Only during the last few decennia it became clear that this model was not able to deliver the creativity and drive that was needed to have an adequate answer on globalisations and the explosion of new technologies. Organisations were craving for people that were intuitive, creative, innovation, passionate and bold.
As a result, a new kind of management was needed to enable this new kind of worker. There have been all sorts of name for the new way of running organisations, “Rijnlands”, “Holocracy” and “Agile”. The results were clear; people became immensely more productive. Human beings being able to use their full potential to create value for other human beings.
To survive, let alone thrive, firms today must learn to embrace the new business reality: they are entering the age of Agile and agile is eating the world.
Customers are central to the value question, they will define the level of service and the price they are willing to pay and organisations will need to think about their business as a recurring cycle of interactions (circular economy) instead of a one-off opportunity for margins.
This changes everything.