The Agile Executive

Making Agile Work

Why Agile Matters

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Agile matters because it is a critical factor in the techno-economic process. In fact, it fits nicely in both the classical theory of techno-economic cycles, and the latest revisions to the theory. Whichever school of thought you might follow with respect to what the nature of the current macro-economic crisis is and what the implications for your company might be, Agile will serve you well.

Technological revolutions

In Technological Revolutions and Financial Capital, author Carlota Perez views technological revolutions as part of techno-economic cycles. According to Perez, techno-economic cycles are composed of a sequence of events that proceeds in the following way:

  1. A major technological innovation introduces a new infrastructure
  2. The new infrastructure disrupts both industry and commerce (and very possibly society)
  3. Overtime, the new technology gets to be understood; it then gets harnessed
  4. As the new technology gets harnessed, confidence in it grows and it gets used broadly. Consequently, in good time, the new infrastructure itself becomes a stabilizing force
  5. A new technological innovation disrupts the prevailing order and gives rise to start a new techno-economic cycle

Perez identifies five successive technological revolutions between the 1770s and the 2000s:

slide1

To summarize, Perez perceives that technological revolutions are subject to laws of cyclicality. The cardinal law in the cyclicality is that intertia eventually becomes the legacy of successfule innovation.

Has the techno-economic paradigm been disrupted?

In a recent Harvard Business Review article, authors Hagel, Brown and Davison suggest that we are witnessing a profound shift:

The historical pattern – disruption followed by stabilization – has itself been disrupted.

Hagel, Brown and Davison perceive an exponential pace in information and telecommunication. The exponential pace creates a new reality and a new order:

Because the underlying technologies are developing continuously and rapidly, there is no prospect for stabilization. Businesses and social institutions constantly find themselves racing to catch up with and learn the steadily improving foundational technologies…  The core technology infrastructures that once formed the bedrock have turned into plasma.

Choosing between the two theories

The debate about which techno-economic paradigm – the Carlota Perez paradigm or the Hagel, Brown and Davison paradigm – is better suited for the current circumstances is beyond the scope of this blog. Be it as it might, Agile fits well with either paradigm, though in a different manner.

Agile as a low cost input

If you believe the classical techno-economic paradigm a la Perez continues to prevail, you need to think of software produced by hyperproductive Agile team as a low-cost input in the techno-economic system.  If Agile is massively adopted, it will satisfy the four conditions stipulated by Perez for an input to be a key factor in the technological revolution:

  1. Clearly perceived low – and descending – relative cost
  2. Unlimited supply for all practical purposes
  3. Potential all-pervasiveness
  4. Capacity to reduce the cost of capital, labour and products as well as to change them

The potential  implications of Agile software getting to satisfy these four conditions are far reaching. According to Perez, the current technological cycle started in 1971 with the introduction of the microprocessor by Intel. Hence, one might think of Agile software as a “mid-life kicker” to the current techno-economic cycle.

At the micro-economic level, the implications of Agile as a low-cost input for traditional enterprise software vendors are dire. As pointed out in the post Enterprise Software Innovator’s Dilemma, some low-cost input effects are already manifesting themselves through Open Source Software.

 Agile as agile

If you subscribe to the “bedrock into plasma” paradigm advocated by Hagel, Brown and Davison, you need to view Agile from the point of view of, well, agility. Irrespective of whether your business strategy calls for adapting to the market or shaping it, speeding up the business, not “just” R&D, is absolutely of the essence. You need to apply the Agile principles to the way you develop your business and your customers.

The point in nicely illustrated in The Lean Startup presentation by Steve Blank and Eric Ries. The authors are emphatic in their recipe for success:

Winners are those that can move faster than their competition.

To move faster than the competition, Blank and Ries recommend applying Agile principles to customer development. In so doing, they extend Agile beyond the traditional starting point when the (customer) problem is supposed to be known but the (software) solution is unknown. They elevate the paying fields to the level in which customer development is done in  parallel to product development. This kind of uninterrupted flow in the feedback loop between developer and end-user makes Agile extraordinarily powerful. 

For further research

I encouraged you to consider the ramifications of the ideas presented above and to comment on them in this blog and elsewhere. Of the numerous avenues that we can explore in pursuing the boundaries of Agile, the following topics are particularly intriguing:

  • Alan Fusfeld introduced the Technological Progress Function as a tool to quantify technological progress as function of time and scale. The opportunity exists to combine software metrices, the technological progress function, and the techno-economic paradigm in a unified model.
  • As pointed out above, inertia eventually becomes the legacy of successful innovation. Conversely, one needs to overcome inertia in order to introduce successful innovation. Jim Highsmith‘s recommendation to innovate through experimentation a la Agile is very powerful at the project level. It is not fully clear how a similar approach could be facilitated at the policy level.
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9 Responses

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  1. Wow! There’s a solid week’s worth of additional research in this post Israel– nice work. The concept of applying Agile in a lean startup environment is very useful. Many startups actually are more iterative ‘labors of learning’ versus ‘endeavors of execution.’ It feels right now like a mid-life kicker followed by life (or death) inducing bedrock into plasma!

    David Vellante

    March 3, 2009 at 10:35 pm

  2. To quote Frost: “unless you are at home with the metaphor, you are not safe anywhere.”

    [Robert Frost; Education by Poetry, in Collected Poems, Prose and Plays]

    Israel Gat

    March 4, 2009 at 10:18 am

  3. […] IMVU is reported to do so every nine minutes. The report has created a fair amount of controversy. Whether you are or are not in favor of such continuous deployment, one point is worthy of mention. IMVU is the very same company featured in The Lean Startup presentation. The way they do customer development has been discussed in our recent post Why Agile Matters. […]

  4. […] Agile metrics: Reporting meaningfully on Agile projects is problematic due to lack of common language/terminology  between folks in the Agile trenches and executives. While the issue is probably true for reporting on software in general, Agile poses harder challenge for executives who have not had the opportunity to assimilate the Agile mindset. The problem seems to be exacerbated due to the “Bobby Fischer syndrome”: […]

  5. […] Revolutions and Financial Capital: The Dynamics of Bubbles and olden Ages.  In my recent post Why Agile Matters,  I […]

  6. […] Agile and the real customer: Much of the emphasis is still on Agile in R&D. The real customer is not iteratively integrated  in the development process. In spite of a ton of data to the contrary, we often drive the iterative development process under the fallacy that the customer problem is well understood. […]

  7. […] here and here for related discussions of Agile in the context of the current macro-economic […]

  8. […] Eric Ries advocates for the Agile start-up has been covered in previous posts (click here and here). Basically, Ries sees the need to iterate on the customer problem alongside iterating on the […]

  9. […] Perez, who has been often cited in this blog (click here, here and here), is a disciple of Schumpeter. I really like the way the “dots” are […]


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