Let's talk about change first. You've all seen this slide—this is the slide that talks about how the change curve is increasingly getting steeper with technology. It's coming at us at an accelerated rate across multiple industries and vectors, and this is really the issue we're dealing with in today's world.
Now, how does this manifest itself? It shows up in poor execution, which, in more detail, results in failed projects and failed transformation initiatives. It appears in budget and resource contention, priority-setting issues, loss of customer and employee loyalty, and overall low employee engagement. Across the board, we see poor communication and collaboration—just to name a few areas.
When Larry and I engage with an organization, we typically start by asking the leadership team: "What are the big challenges you're facing?" They have no problem listing them off. Then we ask, "What are the big projects and activities you're working on?" Again, they have no issue listing those. But then we ask, "Are any of these projects addressing the big challenge areas?" And very often, silence fills the room. If an organization is not actively addressing its major problems, it's essentially following a going-out-of-business strategy.
We've seen this reflected in the lifespan of companies on the S&P Index. It used to be over 60 years, then dropped to 20 years. But not all companies are struggling—some see change as an opportunity rather than a risk, and they thrive on it. So, what’s going on here?
When I was at Cisco in the late '90s, they were running 1,200 projects per quarter with only a 4% failure rate. They defined failure as being 10 days late on a 90-day cadence or 10% over budget. These projects were all synchronized on a 90-day cadence, purpose-defined, and outcomes-driven. Meanwhile, Larry was at Nortel, and one of the projects Cisco was working on was closing the books faster. The goal was to close the books as fast as possible to enable quicker decision-making.
Cisco assembled a cross-functional, outcomes-driven team, and through incremental projects over three years, they reduced their close time from four weeks to a single day. By the end of 1998-1999, they were closing the books across 130 countries in one day. Meanwhile, most companies, including Nortel, were still taking four weeks. This meant Cisco had near real-time data on their business, allowing them to react much faster when the downturn hit in 2000.
So why do some companies thrive while others struggle? There's a capability gap. The change curve is going through the roof, but the capability curve isn’t keeping pace. We believe this is due to management science. While there has been tremendous innovation in technology, management science has not kept up. Many organizations are still operating under principles that were introduced over a hundred years ago—what we call Management Science 1.0, which was designed for optimization. Today, we need Management Science 2.0, which is designed for continuous change and innovation.
All the speakers at Agile Days, the Agile Manifesto, Lean Startup, Jonathan’s book, and strategic doing advocates are all pushing for Management Science 2.0. We are at an inflection point in management innovation—moving from management science for optimization to management science for continuous change and innovation.
If you look at the red curve, it represents the change in technology. As the change curve steepened, we started seeing major issues in organizations still operating under Management Science 1.0. This was the push that led to the development of Management Science 2.0 principles. Gary Hamel’s video covers this in more detail.
Now, let’s examine the transition in more detail. Many organizations struggle to connect strategy to execution because they operate under Management Science 1.0, which assumes no change. This assumption leads to the problems we discussed earlier. Larry and I call this the "First Loop of Despair."
In the early 2000s, a group of software developers, frustrated by the failures of Management Science 1.0, created the Agile Manifesto. It worked well in some organizations—across entire enterprises—but in others, it was limited to IT. These organizations hit a "glass ceiling" because leadership was still operating under Management Science 1.0. We call this the "Second Loop of Despair."
At the organizational level, waterfall culture and mindset remained dominant—siloed organizations, command-and-control leadership, and a focus on assets rather than outcomes. They were output-focused rather than outcome-focused. To truly embrace agility, they needed to shift to Management Science 2.0, which emphasizes servant leadership, shared context, diverse teams, and outcome-driven value. Not making this shift results in the "Third Loop of Despair."
Breaking through this third loop allows organizations to turn their challenges into opportunities and benefits. Agile strategy encompasses these learning loops, embedding them into the organization's fabric on a regular 90-day cadence.
Traditional strategic planning assumes a static environment, is time-consuming, and is often conducted by outside firms, leaving the organization without the capability in-house. Agile strategy, on the other hand, aligns with the principles in Jonathan’s book—focusing on outcomes, starting with "why," and empowering the "how."
Organizations often operate in silos, with projects running independently. During discovery, we map outcomes and create a "True North" statement, identifying interrelated projects. Often, projects from different silos are working toward the same outcome without realizing it. Creating this shared context fosters coherence across the organization—an essential part of lean-agile strategy.
Our agile strategy implementation is built around four pillars: strategic intent (starting with why), strategic execution (leveraging strategic doing), strategic retrospectives (for feedback), and values/principles (to create an open, shared environment). This operates in a 90-day cadence, ensuring continuous adaptation.
We implement this in six plays:
- Play 1: Strategic intent—defining our True North.
- Play 2: Identifying possible outcomes—shifting problems into outcome statements.
- Play 3: Ecosystems—considering external factors beyond the organization.
- Play 4: Flow of value—ensuring the right sequencing of activities.
- Play 5: Execution—leveraging agile teams and strategic doing.
- Play 6: Retrospective—applying triple-loop learning.
All of this is tied together by shared values and principles. For more details, we co-created an eBook with BAI, available in English and Spanish at the site listed below.
Strategic doing is a great way to connect strategy to execution. It’s not just another framework—it’s about people, collaboration, and action. The book Strategic Doing by Morrison, Hutchinson, Nielsen, and Franklin outlines the process in detail and is available on Amazon.
When implementing agile strategy, we start with strategic intent and strategic doing to validate strategy with immediate evidence. As we scale, lean-agile strategy ensures coherence among outcomes, maintaining shared context across the organization.
The final topic is strategic diversity—ensuring the right skills and capabilities across the S-curve. Every organization and product follows an S-curve, from development to optimization. Strategic diversity ensures organizations can introduce, scale, and optimize products while making the jump to new S-curves. Without this capability, adaptability and resilience suffer.
If you want to learn more, there was an HBR article on this in March 2017.
To summarize, agile strategy is a key component of Management Science 2.0, driving organizational innovation and adaptation, and replacing traditional strategic planning.