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The productivity of software delivery at enterprise organizations falls woefully behind that of the tech giants, and the digital transformations that should be turning the tide are failing to deliver business results.

—Mik Kersten, Project to Product [1]

Business Agility

Business Agility is the ability to compete and thrive in the digital age by quickly responding to market changes and emerging opportunities with innovative, digitally-enabled business solutions.

Everything moves fast in the digital age. Customer desires, competitive threats, technology choices, business expectations, revenue opportunities, and workforce demands now happen at blistering speeds.

Today, achieving customer delight at the speed of the market requires validating innovations with customers and then ‘pivoting without mercy or guilt’ when the hypothesis needs to change. Moreover, significant technological advances are unlocking new ways to create this value. For example, AI, Big Data, Cloud, and DevOps enable enterprises to expand their product lines, modernize their existing offerings, scale to mass markets, make better fact and insight-based decisions, and streamline solution development.

Competing in the Age of Software

In her book Technological Revolutions and Financial Capital, Carlota Perez [2] explains the evolution of business, society, and financial cycles based on her analysis of five significant technological revolutions over the past three centuries. Her research begins with the Industrial Revolution, leading to the Age of Steam and Railways, the Age of Steel and Heavy Engineering, and the present Age of Software and Digital, as illustrated in Figure 1.

Perez concludes that these revolutions lead to massive social change, market disruption, and an all-new economic order. Indeed, these are world-shaking disruptions that typically occur once in a generation.

Figure 1. Technological revolutions change society
Figure 1. Technological revolutions change society

We are in the midst of one of those ages now, the deployment period of the age of software and digital. This period is when every business is a software business. Put simply, competing in this age requires large-scale software and system development capability that enables true business agility.

Why Organizations Struggle to Achieve Business Agility

The organizations we created in the 20th century were designed much more for reliability and efficiency than for agility and speed.

— John P. Kotter, Accelerate [3]

Most leaders in traditional organizations are aware of the digital disruption threat, yet many fail to transition to take their place in the next economy [4]. The question is, why?

Organizations Start as a Fast Adaptive Network

As an organizational researcher and author, John Kotter illustrates in his book, Accelerate: Building Strategic Agility for a Faster-Moving World, successful enterprises don’t start as large and cumbersome. Instead, they typically began as a fast-moving, adaptive network of motivated individuals focused on responding to the customer and the new business opportunity. Roles and reporting relationships are fluid, and people collaborate organically to identify customer needs, explore potential solutions, and deliver value in any way they can. In other words, it’s an adaptive ‘entrepreneurial network’ of people working to leverage an opportunity (Figure 2).

Figure 2. New enterprises operate as networks focused on the customer and new business opportunities
Figure 2. New enterprises operate as networks focused on the customer and new business opportunities

Hierarchy Forms, then Grows and Grows

As the enterprise succeeds, it naturally wants to expand on its success and grow. This growth means that individual responsibilities must become clearer. As a result, the enterprise hires specialists to add expertise, creating new functional areas. Policies and procedures ensure legal adherence and compliance, driving repeatable, cost-efficient operations. The business starts to organize functionally to scale, causing silos to form. Meanwhile, operating in parallel, the network continues to seek new opportunities to deliver value (Figure 3).

Achieving larger economies of scale requires the hierarchy to grow. And it grows until it conflicts with the entrepreneurial network.

Figure 3. Growing hierarchy running in parallel with an entrepreneurial network
Figure 3. Growing hierarchy running in parallel with an entrepreneurial network

The Hierarchy and Adaptive Network Collide

Eventually, the hierarchy collides with the faster-moving, more adaptive network. The result? The adaptive network gets crushed. The focus on the customer is often one of the main casualties (Figure 4.)

Figure 4. Entrepreneurial network collides with a growing hierarchy
Figure 4. Entrepreneurial network collides with a growing hierarchy

Without the entrepreneurial network, the organization lacks the agility to respond when the customer needs shift dramatically or when a disruptive technology or competitor emerges. An urgent crisis erupts, and the company’s survival is now at stake.

However, the organizational hierarchies built over the last fifty years have provided time-tested structures, practices, and policies. They support the recruiting, retention, and growth of thousands of employees across the globe. Simply put, they are still needed.

In addressing this dilemma, Kotter points out, “The solution is not to trash what we know and start over but instead to reintroduce a more agile, network-like structure” that operates in concert with the hierarchy to create what he calls a ‘dual operating system.’ This system, illustrated in Figure 5 and described in the following section, allows companies to capitalize on rapid-fire strategic challenges and retain their stability [3].

The Solution: SAFe is the Second Operating System

The existing hierarchy, people, and management still have a purpose and largely remain in place. However, SAFe creates a second virtual operating system organized around Development Value Streams instead of functional silos (or departments) to form the entrepreneurial network.

Each development value stream creates one or more Agile Release Trains (ARTs) with a shared business and technology mission. Each ART plans, commits, develops, and deploys together. They are an integral part of the entrepreneurial network that develops innovative products (Solutions and services).

Although the management reporting structure in the hierarchy may remain largely the same, the teams in an ART are self-organizing and self-managing, and they no longer need daily task direction. ARTs are virtual organizations with the people needed to define, deliver, and operate the solution. This new virtual organization breaks down the traditional functional silos that inhibit flow and innovation.

By organizing the second operating system around value streams instead of departments, SAFe offers a way for organizations to focus on customers, products, innovation, and growth in harmony with their existing hierarchical structure.

Moreover, this operating system is flexible. It is built on time-tested Lean-Agile SAFe practices. It can organize and quickly reorganize without completely disrupting the existing hierarchy, as illustrated in Figure 5. That’s what business agility demands.

Figure 5. SAFe as the second organizational operating system
Figure 5. SAFe as the second organizational operating system

Responding to market changes and emerging opportunities is vital to surviving in the digital age, where disruption is the norm rather than the exception. Technological advances have drastically shifted the dynamics of the competitive game by opening up various ways to win in the market. The ability to respond quickly with innovative business solutions—what we call Business Agility—is the deciding factor between success and failure. Therefore, enabling business agility is a mission-critical goal for every organizational leader.

An organization must first understand and then apply the SAFe Business Agility Value Stream (BAVS) to deliver value faster to keep today’s customers and win new ones. The BAVS helps organizations visualize the steps and implement the SAFe core competencies needed to move from identifying an opportunity to delivering customer value in the shortest possible time. The following sections describe the BAVS in greater detail.

Core Competencies of Business Agility

Achieving business agility requires this dual operating system and a significant degree of expertise across SAFe’s seven core competencies, as illustrated in Figure 6. Fortunately, they are part of SAFe, and as organizations adopt the Framework, they acquire the competencies incrementally over time. While each competency can deliver value by itself, true business agility is only present when the enterprise achieves significant mastery of all. It’s a tall order, but the path is clear.

Figure 6. SAFe Core Competencies
Figure 6. SAFe Core Competencies

Each competency is described in an article of that same name. You can easily navigate each competency from the SAFe Overview tab or the SAFe home page.

Why the Business Agility Value Stream (BAVS)?

Digital transformation is advancing in almost all business processes. Technologies such as AI, big data, and cloud computing are unlocking possibilities for creating new customer value. New business opportunities emerge more frequently, and many have the potential to disrupt market incumbents. Companies that continuously leverage these technologies will acquire more customers and improve value to existing customers. Ultimately, they will dominate their markets. For example:

  • Customers who can seamlessly fulfill their primary banking needs with an easy-to-use mobile app will remain loyal to that bank.
  • Health organizations that pioneer virtual urgent care at home will earn the gratitude and loyalty of all those who need their help.
  • A driver whose vehicle gets smarter and safer every day is more likely to remain loyal to that automotive manufacturer.

Traditional Development Won’t Get You There

In this new reality, competitiveness equates to rapidly delivering digitally enabled solutions. As Figure 7 illustrates, responding to a traditional, phase-gate development process may mean missing the opportunity.

Figure 7. The traditional approach to leveraging a business opportunity is just too slow
Figure 7. The traditional approach to leveraging a business opportunity is just too slow

Waiting for a funding cycle, big-design-upfront, and a long development cycle results in delayed technical and customer feedback. And more than likely, the learning at the end of this cycle isn’t positive. Simply put, it is difficult, if not impossible, to understand and adapt to customer needs and quickly deliver a solution with a traditional development approach.

Introducing the Business Agility Value Stream

Instead, what is needed is a rapid cycle of sensing and responding that helps the Enterprise navigate the unknowns and arrive at a desirable solution before the window of opportunity closes. This is the Business Agility Value Stream (BAVS), illustrated in Figure 8. And it is explicitly designed to foster rapid learning and enable more favorable business outcomes. By implementing SAFe, enterprises inherently develop the Lean, Agile, and DevOps capabilities that will allow incremental delivery at scale. Although these capabilities are essential, establishing true business agility requires flow to be cultivated and accelerated through the entire BAVS, from sensing an emerging opportunity to delivering the right solution (Figure 8).

Figure 8. A faster way to leverage a new business opportunity
Figure 8. A faster way to leverage a new business opportunity

Steps in the Business Agility Value Stream

While the specific implementation of the BAVS depends on the business context (organizational, market, customer, technology, and solution), the steps and basic structure are essentially the same. In addition, the knowledge, skills, and behaviors required to succeed with each step of the BAVS are described in the related SAFe Core Competency, as we will see below.

This agility requires all functions, processes, activities, teams, and events from end to end to be aligned and optimized for maximum speed and quality. The following steps form this value stream:


Sense Opportunity

The first step, of course, is to be able to sense the opportunity!

This step requires the SAFe Organizational Agility core competency, which fosters activities such as:

  • Market research
  • Analysis of quantitative and qualitative data
  • Direct and indirect customer feedback
  • Direct observation of the customers in the marketplace

Most directly savvy, Lean-thinking leaders ‘go see’ and spend significant time where customers perform work. They return with current, relevant, direct, and specific information about the realities of their products and services and identify opportunities for innovative new solutions.


Fund MVP

An enterprise must be able to respond quickly to these opportunities with nimble funding. Lean Portfolio Management (LPM) is the core competency needed to support this step.

With LPM, Lean Budgeting provides the ability to quickly allocate sufficient funds to build a Minimum Viable Product (MVP) —an early version of the solution used to evaluate the primary business hypothesis. The ‘Minimum’ in MVP refers to the low cost of the experiment needed to test the hypothesis and establish solution viability.

These funding decisions become visible and are addressed as the new initiative flows through the SAFe Portfolio Kanban system.


Organize Around Value

The next step is to organize—or reorganize as necessary—to address the new opportunity. An MVP can often be built by existing Agile Teams or Agile Release Trains (ARTs) as the new work finds its way into their respective backlogs. However, creating an MVP may also involve modifying existing teams and ARTs. An entirely new development value stream may need to be formed in a more extreme case.

Two core competencies—Team and Technical Agility and Organizational Agility—enable this flexibility.


Connect to Customer

Agile development is inherently focused on assuring a direct connection to the customer, and Customer Centricity is the mindset that underpins it. This way of doing business focuses on creating positive experiences for the customer across the enterprise’s complete set of products and services and throughout the entire customer journey.

Design Thinking provides the tools that help teams and ARTs achieve these ideals by empathizing with the user to design the right solution. Agile Product Delivery is the core competency that enables this connection.


Deliver MVP

The proof is in the doing. Agile teams and ARTs deliver the MVP iteratively and incrementally, following Lean-Agile practices.

However, there are differences in how teams and trains work on an MVP compared to evolving functionality in a mature solution. There is more risk and uncertainty for a start. Unknowns may manifest in critical areas, including technology choices, implementation strategy, organizational expertise, deployment, operations, customer acceptance, and business benefits. More experimentation and even faster feedback are required. But that is exactly what SAFe is optimized for.

Depending on the scope of the solution, Agile Product Delivery and Enterprise Solution Delivery are the two core competencies that enable this step.


Pivot or Persevere

The result of the MVP is a set of facts that support a decision regarding whether to proceed with further solution development. If the hypothesis is disproven, the organization accepts the sunk cost and moves on to other business opportunities. If the hypothesis proves beneficial, additional funding follows to enable further development. However, the MVP outcome is not always a simple yes or no. The experiment may yield vital insights that reveal new alternative solutions.

This decision point is a crucial investment milestone and is a critical stage in the portfolio Kanban system. Again, Lean Portfolio Management is the core competency that enables this step.


Deliver Value Continuously

A successful MVP that confirms the hypothesis opens the gates to deliver value continuously with additional solution features. This process relies on Agile Product Delivery that fosters iterative and incremental development powered directly by the ART.

Building on DevOps, these practices include optimizing a Continuous Delivery Pipeline that ensures a steady flow of value and the ability to release on-demand to meet the needs of customers and businesses.

For some organizations, these solutions represent large, significant, and complex applications and cyber-physical systems that require thousands of developers and many capable suppliers to coordinate their efforts within a Solution Train. Enterprise Solution Delivery is the core competency enabling this step in this case.


Learn and Adapt

Learn and Adapt is not the final step. A single initiative rarely determines business outcomes. Instead, the enterprise learns from the BAVS and the process and adapts based on these learnings.

Measurement is an integral part of improvement. As Figure 9 illustrates below, three measurement domains—Competency, Flow, and Outcomes—provide critical perspectives and measures of organizational performance that help identify impediments and opportunities for improvement.

The Continuous Learning Culture core competency is the primary driving force behind positive change. A learning organization has a sense of urgency, constantly looking for new business opportunities and improvements in existing processes and solutions. Indeed, the BAVS is an example of continuous learning, enabling continuous innovation. In addition, other forms of learning and adaptation happen through regular Inspect & Adapt events at every level of the SAFe operating system.


Lean-Agile Leadership Enables the BAVS

None of this happens without Lean-Agile Leadership, the foundation of SAFe and the BAVS. The BAVS represents a new way of working for most enterprises, which is substantially different from the status quo and affects most aspects of a modern enterprise.

Lean-Agile leaders view the organization as a dynamic set of business agility value streams that pursue and leverage critical business opportunities. And importantly, they lead the change to arrive at this new state. After that, they focus the organization on successful BAVS execution and improving BAVS performance over time. Only then can business agility be achieved.


Measuring the Business Agility Value Stream

As Figure 9 illustrates, SAFe provides three measurement domains—flowoutcomes, and competency— suitable for measuring and improving any value stream, including the all-important BAVS.

Figure 8. Three SAFe measurement domains support the goal of business agility
Figure 9. Three SAFe measurement domains support the goal of business agility
  • Flow metrics help determine how fast the value stream creates and delivers value, represented by flow distribution, velocity, time, load, efficiency, and predictability.
  • Outcomes metrics help ensure the solution delivered benefits the customer and the business. Value Stream KPIs are primarily used to measure these outcomes.
  • Competency measures evaluate organizational proficiency on two levels:
    1. The SAFe Business Agility Assessment offers business and portfolio stakeholders a way to assess their overall progress.
    2. The individual SAFe Core Competency Assessments help teams and ARTs improve their technical and business practices to achieve the portfolio’s goal.

See the Measure and Grow article for more details.

The road to business agility is long and never-ending. Measuring it helps enterprises understand where they are on their journey and reminds them to celebrate small successes.

Summary

Welcome to the age of software and digital, where business agility will be the most significant factor in deciding the winners and losers in the new economy:

  • Lean-Agile commercial businesses will create higher profits, increase employee engagement, and more thoroughly satisfy customer needs
  • Lean-Agile nonprofits will build resilience, sustainability, and the alignment needed to fulfill their mission
  • Lean-Agile governments will deliver systems that better ensure the public’s safety, economy, and general welfare

These three market segments depend on delivering innovative business solutions faster and more efficiently than ever. Each will need a dual operating system: a hierarchy for efficiency and scale and a second, customer-centric network operating system that delivers innovative solutions. SAFe’s seven core competencies will enable this all-important dual operating system. Those who master these competencies will survive and thrive in the digital age.


Learn More

[1] Kersten, Mik. Project to Product: How to Survive and Thrive in the Age of Digital Disruption with the Flow Framework. IT Revolution Press, 2018.

[2] Perez, Carlota. Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages. Edward Elgar Publishing, 2003.

[3] Kotter, John P. Accelerate: Building Strategic Agility for a Faster-Moving World. Harvard Business Review Press, 2014.

[4] Thangavelu, Poonkulali. Companies That Failed to Innovate and Went Bankrupt. Investopedia, 2022. https://www.investopedia.com/articles/investing/072115/companies-went-bankrupt-innovation lag.

Last update: 13 July 2023