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Agile Strategy Execution = Better ROI

Paul Ritchie is Practice Director and leads the PM College program. Mr. Ritchie has presented on initiative leadership to multiple global audiences, including the PMI Global Congress, the PMI Europe and Asia Regional Congresses, as well as SAP’s SAPPHIRE and ASUG conferences. He also has published a number of articles and is the main author for the award-winning Crossderry Blog. He is on Twitter @crossderry. 

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The case for agile too often becomes an efficiency game: how many more features can we get out of the same resources in shorter cycles? That’s fine as far as it goes: who doesn’t want a more efficient engine? However, this approach implies that your innovation machine is something to be tuned and tweaked, rather than a competitive advantage to be unleashed upon the market.

The agile story is much more strategic than a mere productivity project. Let’s take a step back and look at some key barriers to strategy execution. It is well known that most organizations shift money and resources among priorities too slowly, and they stick with losers too long. According to “Why Strategy Execution Unravels” (Harvard Business Review, March 2015), barely one-quarter of organizations change and adapt effectively.

As you might expect, agile strategy execution drives greater returns. The same HBR article notes that firms that redeploy capital quickly deliver 30 percent better returns to their shareholders than those who don’t. Taking an average return on invested capital of just under 15 percent, we could expect an improvement that pushes the return to nearly 20 percent.

I believe that the key to these kinds of returns is the combination of enlightened and efficient strategy execution. First, socialize the benefits of agile strategy execution you’ve seen here. There is a real ROI to agile, and your executives need to see it. Also, like any organizational change, you must get your leaders on board, up front. Our Agile Overview for Executives is a great foundation for this: it focuses on what they need to do to make the leap to an agile organization. Once you’ve laid that ground work, then your agile machine can run…and even fly.

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