Preface

Digital transformation. Transforming to a digital enterprise appeals to senior executives in wide range of industries. They are attempting to stave off the next wave of disruptions that will put their organizations in jeopardy—becoming the latest Blockbuster or Kodak. Research indicates that a significant majority of CEOs aspire to be digital, but a very low percentage think they have been successful. A vast gap lies between strategy and execution—that middle ground that seems so difficult to traverse.

EDGE is not an acronym, but rather an expression that reminds us of the challenges, messiness, and excitement of transforming into a digital enterprise. The title “EDGE” comes from the concept of the “edge of chaos” in complex adaptive systems theory and provides the missing link between digital strategy and value delivery. Transformations require continuous innovation, which in turn requires an edgy culture that challenges the status quo.

EDGE is an operating model that addresses the following issues:

• How people work together when major, fast-paced responses are necessary

• How organizations allocate and monitor investment funds for initiatives based on an organization’s vision and goals

• How organizations learn to adapt fast enough to thrive in highly competitive markets

You have seen jokes that begin with an older adult trying to learn some aspect of technology and being referred to a 12-year-old for help. In today’s world, you can’t afford to be that adult. Executing a digital transformation requires that you view technology from a perspective that we call Tech@Core, in which everyone, not just the technologists, understands how technology offers both new opportunities that demand new capabilities.

Unfortunately, you can’t escape from the status quo using the same measures of success that were used to achieve that status quo. Transformation demands that you change those measures as well. Indeed, one of the most uncomfortable changes for leaders is this change in performance measures. The most profound of these is the change in focus from internal return on investment (ROI) to external customer value, which is fundamentally a change in perspective and your gut-level basis of decision making. Concurrently, the technology measures of success change from cost and efficiency to speed and adaptability.

One of the questions you might ask is “Who is the target audience for EDGE?” The traditional answer might be a CEO, or CIO, or chief digital officer, or CMO, or chief strategy officer. We have a different answer.

Since 1993, ThoughtWorks has partnered with enterprise organizations and leaders around the world to transform their businesses through technology. With thousands of executive relationships and hundreds of transformational journeys, we’ve identified a unique segment of leaders we call Courageous Executives. Some are breathing new vitality into legacy enterprises, while others are shaking up stale industries with new platforms and business models. They are boundless in their thinking, bold in their actions, and passionate about technology. This is why we believe Courageous Executives are the next major disruptive force in business, creating a powerful competitive advantage through their leadership style.¹

1. Guo, Xiao. “The Next Big Disruption: Courageous Executives.” ThoughtWorks, July 20, 2017. https://www.thoughtworks.com/insights/blog/next-big-disruption-courageous-executives.

Whether your job title is CEO, CIO, program manager, or individual contributor, we think the key personal trait for transforming to a digital enterprise is the courage to move forward in the face of uncertainty. Courageous Executives challenge the status quo again and again. Transformation isn’t for the faint of heart, and neither is EDGE.

As companies across all industries embrace the changes of our increasingly digital world, we’re seeing leaders at the helm of these companies dive deeper into how technology is implemented and how it works. Executives around the globe are learning that a strong grasp of technology matters, and they’re finding ways to adapt. A tenacious commitment to embrace technology is what sets apart truly Courageous Executives.²

2. Guo, Xiao. “The Next Big Disruption: Courageous Executives.” ThoughtWorks, July 20, 2017. https://www.thoughtworks.com/insights/blog/next-big-disruption-courageous-executives.

Each EDGE chapter focuses, primarily, on either determining which opportunities to invest in or building the capabilities to execute on those investments. Chapters 4–7 address opportunities, whereas Chapters 2 and 8–10 address capabilities.

Moving from a pre-digital technology fitness function of cost/efficiency to a digital one of speed/adaptability requires that enterprises embrace technology in much different ways than in the past. We call this perspective Tech@Core as technology moves from a support capability to a core capability that everyone—from CEO to clerk—embraces. Chapter 2, Tech@Core, outlines the components you need to think about as part of your digital transformation—from utilizing a technology radar to creating a technology platform.

One of the reasons the agile movement has been vibrant for nearly 20 years has been the influence of the values and principles contained in the Agile Manifesto, which was published in 2001. While there have been efforts to revise these principles, they have remained core to agile’s expansion. New agile practices and processes have blossomed over the years, but the core values have endured.

3. “Manifesto for Agile Software Development.” The Agile Manifesto,
2001. http://agilemanifesto.org/.

The EDGE principles are extensions of the core agile ones, oriented to the digital transformation of enterprises. They encompass individuals and teams, collaboration, adapting over time, customer value, and concrete results. Chapter 3, EDGE Principles, describes how these principles impact work and working together.

Chapter 4, Building a Value-Driven Portfolio, answers the fundamental question “How should we invest?” We start this process by articulating a clearly understood business vision and then express the strategy to achieve that vision as a Lean Value Tree (LVT) populated with goals, bets, and initiatives. We then describe the necessary processes for attaining this value-oriented expression of business strategy and how it fundamentally changes the allocation of investments based on customer value rather than internal business benefits.

Although your LVT describes strategy in outcome-oriented terms, you have to determine how to measure those outcomes. That is the subject of Chapter 5, Measuring and Prioritizing Value. Without definitive Measures of Success (MoS), you’re left with un-actionable statements for which success or failure is arbitrary. Measures that are defined and articulated correctly become a powerful way to shape work to achieve the desired outcome.

Chapter 6, Building a Product Mindset, covers an important aspect of aligning the whole organization to the delivery of value. The product mindset connects the organizational strategy (LVT) to the teams responsible for delivering the value for the customer. An important part of building this product mindset is applying an experimental approach to the discovery of value and the product skills needed in the organization to connect and align the portfolio teams to delivery teams.

Optimizing for maximum value necessitates combining several different types of work into an integrated backlog for delivery teams so that they can manage the work effectively. Chapter 7, Integrating Strategic and Business as Usual Portfolios, describes how to build that integrated backlog and prioritize different work items using a common measurement—value. One type of work is Business as Usual (BAU), which is often left out when discussing business agility, as the focus of agile development is strategic initiatives and innovation. Based on our experience with clients, typically 80 percent of large enterprises’ budgets are spent on BAU, so we see this as an opportunity to maximize value. We describe how to apply EDGE principles to this portion of your portfolio.

Both agile and lean principles guide us to think about value and removing built-up organizational overhead. Techniques like value stream mapping are used to optimize processes and documentation that have ossified and slowed progress. Governance is absolutely necessary—executives and leaders have fiduciary responsibilities—but senseless overhead is unnecessary, as it reduces both speed and adaptability. Chapter 8, Lightweight Governance, describes ways to balance the competing needs of governance and value delivery.

Chapter 9, Autonomous Teams and Collaborative Decision Making, tackles a core EDGE question: “How should we work together?” Working together in a fast-paced, innovative manner requires a special approach to organizing teams and making effective, quick decisions. This chapter delves into the concepts of autonomous teams, collaborative decision making, and aligning organizations to deliver outcome-oriented results. Traditional functional teams suffer in a transformational environment, and even newer “empowered” teams don’t go far enough (although “empowered” has been so overused that it’s nearly lost its meaning).

Chapter 10, Adaptive Leadership, helps answer two of EDGE’s key questions: “How should we work together?” and “How should we adapt fast enough?” Autonomous teams have a great deal of decision-making power, but they still need direction and leadership. But what type of leadership? While traditional management has carried the label “command and control,” more recent models have a variety of names—we use “adaptive leadership” to describe this concept. This chapter delves into the leadership behaviors that are necessary for today’s Courageous Executives.

Chapter 11, Exploring Your Transformative Future, is the final chapter in this book. It summarizes the key points of the book and looks ahead to what the future may hold.

These principles, practices, and tools have been curated from our work with many global clients, tried and tested, and evolved into a body of knowledge we are excited to share.

Jim Highsmith, Lafayette, Colorado

Linda Luu, San Francisco, California

David Robinson, Evergreen, Colorado

August 2019