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“
Those who master large-scale software delivery will
define the economic landscape of the 21st century.

—Mik Kersten, Project to Product

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 business solutions.

Business Agility requires that everyone involved in delivering solutions—business and technology leaders,
development, IT operations, legal, marketing, finance, support, compliance, security, and others—use Lean
and Agile practices to continually deliver innovative, high-quality products and services faster than the
competition.

Competing in the Age of Software

In Technological Revolutions and Financial Capital , [1] Carlota Perez plots the evolution of society, business,
and financial capital based on technological revolutions that have occurred over the last few hundred years.
She opines that these disruptive trends happen every generation or so. These include technology trends
such as the ‘age of steel and heavy engineering,’ ‘age of oil and mass production,’ and others, as illustrated in
Figure 1.

She concludes that these technology revolutions radically alter society, first via a mass movement in financial
(investment) capital, which then results in new production capital (goods and services). Massive societal
change, disruption, and a new economic order sets in. These are truly ‘world-shaking’ disruptions that occur
with three distinct phases:

• Installation Period – New technology and financial capital combine to create a ‘Cambrian explosion’ (a
geological term for a relatively short time over which a large diversity of life forms appeared) of new
entrants.
• Turning Point – Existing business either master the new technology or decline and become relics of the last
age
• Deployment Period – Production capital of the new technological giants starts to take over
 Figure 1. Technological revolutions over the past few centuries. [1, 2]

As Figure 1 indicates, are we at the turning point or in the deployment period?

• If we are looking for the explosion of new entrants, we would need to look no further than the dotcom boom
and bust at the start of this century.
• If we were looking for the turning point, where existing business either master the new technology or
decline, Blockbuster, Nokia phones, AOL, and many others come to mind
• If we were looking for the deployment period, one might look at the market capitalizations of Google, Apple,
Amazon, Baidu, Salesforce, or Tesla—all companies that didn’t exist just 20-30 years ago

In his analysis of this work and in his book, Project to Product , Kersten [2] notes that with respect to
production capital “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.”

This means that many large and successful enterprises today face an existential crisis, the distinctive
competencies and massive tangible assets that got them there—distribution, real estate, manufacturing,
retail, local banking centers, insurance agents—will not be adequate to assure survival in the digital age.

How We Got Here

“The problem is not with our organizations realizing that they need to transform; the problem is that
organizations are using managerial frameworks and infrastructure models from past revolutions to manage
their businesses in this one.” — Mik Kersten

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

As an organizational researcher and author John Kotter illustrates in his recent book,  Accelerate: Building
Strategic Agility for a Faster-Moving World [1], successful enterprises don’t start as large and cumbersome.
Rather, they typically began as a fast-moving, adaptive network of motivated individuals aligned to a
common vision and focused on the needs of their customers. 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 towards a
shared, customer-centric purpose (Figure 2).
 Figure 2. New enterprises start as a customer-focused network

As the enterprise succeeds, it naturally wants to expand on its success and grow. This means that individual
responsibilities must become clearer to ensure that critical details are carried out. To add expertise,
specialists are hired. Departments are created. Policies and procedures are established to ensure legality
and compliance and to drive repeatable, cost-efficient operations. The business starts to organize by
function. Silos begin to form. Meanwhile, operating in parallel, the network continues to seek new
opportunities to deliver value (Figure 3).

Figure 3. Growing hierarchical structure running in parallel with an entrepreneurial network

To achieve increasing economies of scale, the hierarchy continues to grow. And grow. However, by assuming
the practices and responsibilities incumbent on large business, it begins to conflict with the entrepreneurial
network. With the authority of current revenue and profitability needs behind it, the hierarchical
organization collides with the faster-moving, more adaptive network. The result? The network gets crushed
in the process. Customer centricity is one of the casualties. (Figure 4.)
 Figure 4. Entrepreneurial network collides with a growing hierarchy

Still, as long as the market remains relatively stable, the economies of scale provide a barrier against
competitors, and the enterprise can enjoy continued success and growth. However, when customer needs
shift dramatically, or when a disruptive technology or competitor emerges, the organization lacks the agility
to respond. Years of market domination and profitability can vanish, seemingly overnight. The result is an
existential crisis; the company’s very survival is at stake.

The organizational hierarchies that we’ve built over the last fifty years have done a great job of providing
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. But the question becomes, how
to organize and reintroduce the entrepreneurial network? In addressing the dilemma, Kotter points out, “The
solution is not to trash what we know and start over but instead to reintroduce a second system.” This
model, which Kotter calls a ‘dual operating system’ (Figure 5), restores the speed and innovation of the
entrepreneurial network while leveraging the benefits and stability of the hierarchical system.

Figure 5. A ‘dual operating system’ offers efficiency and stability with the speed of innovation

So how do we create such a dual operating system?

SAFe 5.0 – Your Operating System for Business

Agility
By organizing the second operating system around value streams instead of departments, SAFe offers a way
for enterprises to focus on customers, products, innovation, and growth (Figure 6).
 Figure 6. SAFe as a second organizational operating system

Moreover, this operating system is flexible . It is built on time tested Lean, Agile, and SAFe practices, and it
can organize and quickly reorganize without completely disrupting the existing hierarchy. That’s what
Business Agility demands.

But to achieve this, the organization requires a significant degree of expertise across seven core
competencies, as illustrated in Figure 7.

Figure 7. The Customer is at the center of the Seven Core Competencies of Business Agility

While each competency can deliver value independently, they are also interdependent in that true Business
Agility can be present only when the enterprise achieves a meaningful state of mastery of all. It’s a tall order,
but the path is clear.

The remainder of this article summarizes each of the seven core competencies

Team and Technical Agility

It all starts with Agile development, the cornerstone of Business Agility. The Team and Technical Agility
competency describe the critical skills and Lean-Agile principles and practices that high-performing Agile
teams and Teams of Agile teams use to create high-quality solutions for their customers. It consists of three
dimensions, as illustrated in Figure 8:
 Figure 8. The three dimensions of Team and Technical Agility

• Agile Teams – High-performing, cross-functional teams anchor the competency by applying effective Agile
principles and practices.
• Team of Agile Teams – Agile teams operate within the context of a SAFe Agile Release Train (ART), a long-
lived, team of Agile teams that provides a shared vision and direction and is ultimately responsible for
delivering solution outcomes.
• Built-in Quality – All Agile teams apply defined Agile practices to create high-quality, well-designed
solutions that support current and future business needs.

Agile Product Delivery

Business Agility demands that enterprises rapidly increase their ability to deliver innovative products and
services. To be sure, the enterprise is creating the  right solutions  for the  right customers  at the  right time;
they must balance their execution focus with a customer focus. These capabilities are mutually supportive
and create opportunities for sustained market and service leadership. Agile Product Delivery is a customer-
centric approach to defining, building, and releasing a continuous flow of valuable products and services to
customers and users.

There are three dimensions to Agile Product Delivery, as illustrated in Figure 9.

 Figure 9: Three Dimensions of Agile Product Delivery

Customer Centricity and Design Thinking – Customer centricity puts the customer at the center of every
decision and uses design thinking to ensure the solution is desirable, feasible, viable, and sustainable.

Develop on Cadence; Release on Demand – Developing on cadence helps manage the variability inherent
in product development. Decoupling the release of value from that cadence ensures customers can get what
they need when they need it.

DevOps and the Continuous Delivery Pipeline – DevOps and the Continuous Delivery Pipeline creates the
foundation that enables enterprises to release value, in whole or in part, at any time it’s needed.

Enterprise Solution Delivery

Building and evolving large, enterprise solutions is a monumental effort. Many such systems require
hundreds or thousands of engineers. They demand sophisticated, rigorous practices for engineering,
operations, and support. Moreover, over the decades that these systems are operational, their purpose and
mission evolve. That calls for new capabilities, technology upgrades, security patches, and other
enhancements. As true ‘living systems,’ the activities above are never really ‘done.’ Instead, they are released
earlier and further developed over time.

The Enterprise Solution Delivery competency describes how to apply Lean-Agile principles and practices to
the specification, development, deployment, operation, and evolution of the world’s largest and most
sophisticated software applications, networks, and cyber-physical systems. It consists of three dimensions.
(Figure 10).
 Figure 10. Three dimensions of Enterprise Solution Delivery

Lean System and Solution Engineering applies Lean-Agile practices to align and coordinate all the activities
necessary to specify, architect, design, implement, test, deploy, evolve, and ultimately decommission these
systems.

Coordinating Trains and Suppliers coordinates and aligns the extended set of value streams to a shared
business and technology mission. It uses the coordinated Vision, Backlogs, and Roadmaps with common
Program Increments (PI) and synchronization points.

Continually Evolve Live Systems ensures both the development pipeline and the large systems themselves
support continuous delivery of value, both during and after, release into the field.

Lean Portfolio Management

The three competencies above provide the technical practices needed to build and deploy meaningful
business solutions. But none of them directly address the more significant issue of why those solutions are
required, how they are funded and governed, and what other solutions are necessary to deliver complete
enterprise value. For that, we need to address portfolio concerns. However, traditional approaches to
portfolio management were not designed for the impact of digital disruption. These factors put pressure on
enterprises to work under a higher degree of uncertainty, and yet deliver innovative solutions much faster.
Portfolio Management approaches must be modernized to support the new Lean-Agile way of working. The
Lean Portfolio Management competency aligns strategy and execution by applying Lean and systems
thinking. As Figure 11 illustrates, it accomplishes this through three collaborations for strategy and
investment funding, Agile portfolio operations, and Lean governance.
 Figure 11. Lean Portfolio Management responsibilities

Strategy and Investment Funding ensures that the entire portfolio is aligned and funded to create and
maintain the solutions needed to meet business targets. It requires the cooperation of Business Owners,
portfolio stakeholders, technologists, and Enterprise Architects.

Agile Portfolio Operations coordinates and supports decentralized program execution, enabling
operational excellence. It requires the cooperation of the Agile Product Management Office/Lean-Agile
Center of Excellence (APMO/LACE) and Communities of Practice (CoPs) for Release Train Engineers (RTEs) and
Scrum Masters.

Lean Governance manages spending, audit and compliance, forecasting expenses, and measurement. It
requires the engagement of the Agile PMO/LACE, Business Owners, and Enterprise Architects.

Organizational Agility
Even with the competencies above, the enterprises must be able to change quickly to respond to the
challenges and opportunities that today’s rapidly evolving markets present. This requires more flexibility and
adaptability than the hierarchical operating system is likely to be able to muster. Again, we turn to the
second operating system for help. SAFe helps businesses address these challenges with Organizational
Agility, which is expressed in three dimensions (Figure 12):
 Figure 12. Three dimensions of Organizational Agility

Lean-Thinking People and Agile Teams – This state occurs when everyone involved in solution delivery is
trained in Lean and Agile methods and embraces and embodies the values, principles, and practices.

Lean Business Operations – Teams apply Lean principles to understand, map, and continuously improve
the business processes that support the business’s products and services.

Strategy Agility – This state occurs when the enterprise shows the ability and adaptability needed to sense
the market and quickly change strategy when necessary continuously.

Continuous Learning Culture

And even with mastery of the above, there can be no steady-state. Startup companies will continue to
challenge the status quo. Juggernaut companies like Amazon and Google are entering entirely new markets
such as banking and healthcare. Expectations from new generations of workers, customers, and society as a
whole challenges companies to think and act beyond balance sheets and quarterly earnings reports.

To address the demand for continuous learning, growth of its people, and improvement in processes, the
Continuous Learning Culture competency describes a set of values and practices that encourage
individuals—and the enterprise as a whole—to continually increase knowledge, competence, performance,
and innovation. It is expressed in three dimensions, as shown in Figure 13.
 Figure 13. The three dimensions of a continuous learning culture

The three dimensions are:

Learning Organization – Employees at every level are learning and growing so that the organization can
transform and adapt to an ever-changing world.

Innovation Culture – Employees are encouraged and empowered to explore and implement creative ideas
that enable future value delivery.

Relentless Improvement – Every part of the enterprise focuses on continuously improving its solutions,
products, and processes.

Lean-Agile Leadership
Finally, we recognize that an organization’s managers, executives, and other leaders provide the foundation
ultimately responsible for the adoption and success of Lean-Agile development and mastery of the
competencies that lead to Business Agility. Only they have the authority to change and continuously improve
the systems that govern how work is performed. Only they can create an environment that encourages high-
performing Agile teams to flourish and produce value. Leaders, therefore, must internalize and model leaner
ways of thinking and operating so that team members will learn from their example, coaching, and
encouragement.

By helping leaders develop along three dimensions, as illustrated in Figure 14, organizations can establish
the core competency of Lean-Agile Leadership .
 Figure 14. Three dimensions of Lean-Agile Leadership

Leading by Example – Leaders gain  earned authority  by modeling the desired behaviors for others to follow,
inspiring them to incorporate the leader’s example into their development journey.

Mindset and Principles – By embedding the Lean-Agile way of working in their beliefs, decisions, responses,
and actions, leaders model the expected norm throughout the organization.

Leading Change – Leaders  lead (rather than support) the transformation by creating the environment,
preparing the people, and providing the necessary resources to realize the desired outcomes.

Measure and Grow

The road to real business agility is long and never-ending. The SAFe Business Agility Assessment helps
enterprises understand where they are on their journey and reminds them to celebrate the small successes
along the way. It is built directly around the seven core competencies; each competency is further split into
the three competency dimensions. Applying the assessment, reasoning about the results, and following the
recommendations will help assure the best possible outcomes for the enterprise. See the Measure and Grow
(/measure-and-grow/) article for more details.

Summary
Welcome to the age of software. An era where Business Agility will be the most significant single 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 its mission. Lean-Agile governments
will deliver systems that better assure the safety and economy of the general public.

All of these segments depend on the ability to deliver innovative business solutions faster and more
efficiently than ever before. Each will employ a dual operating system: a hierarchical model intended for
efficiency and scale and a second, customer-centric network operating system that delivers innovative
solutions. The seven core competencies of SAFe for Lean Enterprises instantiates this all-important second
operating system. Those who master these competencies will be those who survive and thrive in the new
digital age.

Learn More
[1] Perez, Carlota. Project to Product: Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden
Ages
 [2] Kersten, Mik. Project to Product. IT Revolution Press. Kindle Edition.

Last updated: 05 November 2019

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