As part of my series about the “How Businesses Pivot and Stay Relevant In The Face of Disruptive Technologies,” I had the pleasure of interviewing Sarah Elk.
Sarah Elk is the global head of Bain & Company’s Operating Model practice and has deep transformation experience at the intersection of organization, agile, performance improvement and change management. She is the author of DOING AGILE RIGHT: Transformation Without Chaos and the Harvard Business Review articles The Agile C-Suite, Start Stopping Faster, and Develop Agility That Outlasts the Pandemic.
Thank you so much for joining us in this interview series. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I actually started my career as an engineer. I became passionate about environmental engineering in High School and wanted to innovate to make the Earth a cleaner, better place. However, after a few years as an environmental engineer at a large company, I realized I needed business skills to have an impact. It was too hard to get things done. Business school at Stanford broadened my perspective, and I began to focus on how to drive change and transform large companies. That is how I landed at Bain & Company, and I love it.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?
I once sent the wrong attachment to the CEO. It was a heavily marked up version of the presentation instead of the final presentation. I knew it immediately after I hit send. In that moment, it felt like a huge mistake since it was one of the first CEO emails I had sent. In reality, it wasn’t a big deal. It is a great example of how we need to keep things in perspective.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
My husband. He has consistently pushed me to be more ambitious than I would have been on my own. He suggested I apply to business school, and he pushed me to go full time. He recently jumped in to help in a major way when our nanny got COVID. He continues to challenge me to be my best self at home and at the office. Navigating career and family with five kids has not always been easy, and he has been my unwavering superfan.
Extensive research suggests that “purpose driven businesses” are more successful in many areas. When your company started, what was its vision, what was its purpose?
At Bain & Company, our mission has endured since our founding — to help our clients create such high levels of value that together we set new standards of excellence in our respective industries. I am grateful to be surrounded by colleagues who challenge themselves and others to be exceptional. Our purpose means that collectively we are supporting each other to push boundaries. For me that is a great source of motivation. Why we do things is part of who we are. The most rewarding work I have done was achieving something that others thought was not possible.
Thank you for all that. Let’s now turn to the main focus of our discussion. Can you tell our readers a bit about what your business does? How do you help people?
In the last couple of years my co-authors, Darrell Rigby, Steve Berez and I have been focused on helping companies to become Agile enterprises. The dynamic, changing world means businesses have to adapt at an ever-greater pace. They must learn how to better balance both running and changing their business. With COVID, many companies experienced the benefit of sporadic agile — they pulled resources out of their day jobs, put them on a multi-disciplinary teams, and dedicated them to solving a particular problem. Now companies must turn sporadic agile into systematic agile — building the ability to change the business into how the organization works every day.
Which technological innovation has encroached or disrupted your industry? Can you explain why this has been disruptive?
Technology is affecting how almost every capability is being built and delivered. There isn’t one disruptive technology, there are many. And it impacts every industry. We cannot predict the future, but we can plan to adapt. Many companies have not figured out how to tackle designing and scaling technology and process improvements as part of their everyday way of working. Agile is a great means to accelerate technology innovation in a way that is connected to the customer. We see Agile at work most frequently in technology departments, but to really accelerate results from technology innovation, we need Agile teams working in a connected way across technology, business process and customer solutions. This means using Agile to drive innovation inside and outside the technology function.
What did you do to pivot as a result of this disruption?
A first step in the pivot towards becoming a more Agile enterprise is to define how you want to change your business. What are the stretching outcomes that you want to achieve? Agile teams can then be formed to prototype solutions and test them with internal or external customers to achieve an outcome. These teams are working on the most valuable initiatives and testing the most value-driving assumptions in the heart of the business. A shift to fully dedicated resources means you cannot do everything, so you will need to create a backlog of priorities and revisit resource allocation frequently.
Was there a specific “Aha moment” that gave you the idea to start this new path? If yes, we’d love to hear the story.
We decided to write Doing Agile Right because we were worried that Agile was getting a bad name. We felt we needed to share our experience and dispel myths. The empirical evidence on the benefits of Agile is overwhelmingly positive. However, we continue to see significant misuse of Agile; for example, the idea that a company should become Agile all at once in a big bang, or the idea that Agile should be used in every function and for all types of work, or the idea that Agile is great way to cut headcount costs. We felt we needed to share how you should use Agile to become Agile. That while Agile is great for ambiguous problem solving, bureaucratic standard operating procedures and approval layers have value too. And, that Agile is not the best tool for cost-cutting. There are more fitting tools. Agile is about growth and innovation. We were worried that if we didn’t start the dialog about how to do Agile right, it would be a passing fad and a missed opportunity.
So, how are things going with this new direction?
Responding to COVID has certainly underscored the need to build in adaptability. We have met with hundreds of companies in the last six months since the book launched. With the need to reexamine talent and location strategy due to work from home changes, many companies are also looking more holistically at their operating models. There has not been a better time to be on the journey towards a more Agile enterprise. Given the strategy acceleration and associate engagement benefits at stake, those who are not doing so may be left behind.
Can you share the most interesting story that happened to you since you started this pivot?
We have had the opportunity to collaborate with a few of the world’s most innovative companies. These are companies with thousands of Agile teams. What has been interesting in those discussions is that they reinforce the need to focus on the holistic operating model. There are critical parts of the operating model design that must be in service of Agile teams. For example, the management system should be designed for more frequent decisions on strategic prioritization and resource allocation. Having Agile teams is important, but you need an agile operating model too.
What would you say is the most critical role of a leader during a disruptive period?
Leaders must do three things to embed adaptability: 1) Determine the stretching outcomes they want to achieve, 2) Resource dedicated teams against those outcomes, and 3) Guide the journey to a more agile operating model to help teams be more successful over time. Leaders should expect disruption. This is the new normal. We know that 80–90% of innovation fails, and for the innovation that succeeds, two-thirds of the time there was a significant adaption from the original solution design. Therefore, leaders can either plan to fail or plan to adapt.
When the future seems so uncertain, what is the best way to boost morale? What can a leader do to inspire, motivate and engage their team?
Leaders are inspirational in different ways based on their strengths. However, when trying to drive innovation and change, one common challenge is that leaders try to predict, command and control. Oftentimes leaders share experiences or expertise thinking they are being helpful, but these behaviors get in the way of customer centricity. Teams end up being boss-centric instead of customer-centric. To avoid this, when engaging with their teams, leaders might ask a few simple questions. What do you recommend? How can we test that? How can I help?
Is there a “number one principle” that can help guide a company through the ups and downs of turbulent times?
Turbulent times create opportunity — more share is usually up for grabs. Companies that make focused changes and investments can take share.
Can you share 3 or 4 of the most common mistakes you have seen other businesses make when faced with a disruptive technology? What should one keep in mind to avoid that?
- Not focusing on customer need. Companies should scan the market not for solutions that look like theirs, but solutions that meet the same customer need
- Scaling too quickly. Sometimes this is not involving the business enough. Sometimes this is not fixing process and believing that technology on its own will be silver bullet solution.
- Not testing the value in the heart of the business. Sometimes technology is tested on the periphery so that current P&L operations are not disturbed. As much as possible, test where it matters.
- Lack of transparency. Even with a disruptive technology, people expect change and can handle knowing that a disruptive technology exists. And, testing a lot of things doesn’t mean you will scale them all.
Ok. Thank you. Here is the primary question of our discussion. Based on your experience and success, what are the five most important things a business leader should do to pivot and stay relevant in the face of disruptive technologies? Please share a story or an example for each.
- Become an agile leadership team. This means spending more time on strategy, resource allocation and removing roadblocks. The leadership team must set clear missions for teams and then adapt resources accordingly. The most change-oriented and innovative companies in the world plan to adapt.
- Use agile teams to accelerate your strategy. It is impossible to predict the best scaled solutions. Instead, dedicate resources to persistent, multi-disciplinary teams that have a specific mission. The outcome should be stretching enough that the answer is not obvious. Let these teams learn what works in partnership with internal or external customers and scale those solutions.
- Build an agile operating model. We know that having agile teams is helpful, but not enough. Leadership teams need to adapt their operating models to support agile teams. This means adapting leadership and culture, planning, budgeting and reviewing processes, talent systems, and other business processes. The operating model should better enable the success of your run the business and change the business teams over time.
- Design disruptive innovation with teams located close to the operations that must adopt and scale them. Too often, we see leaders put innovation to the side of the core business so that it won’t disturb existing operations. But doing that means you lose out on resources and expertise that would help scale that solution. Instead, place these dedicated resources in the division or function that most needs to change. For example, if you are a grocery retailer designing an online grocery business and the hardest part of that change is picking items in the store, place the dedicated team designing and testing that solution underneath the head of store operations. Coming up with ideas is easy. Scaling them and realizing results is a lot harder.
- Celebrate both running and changing the business. New shiny ideas and technology are great, but those solutions are not meaningful if you can’t scale them into day-to-day operations and realize results. Avoid having a situation where the ‘cool kids’ are working on new technologies. When properly harmonized, teams that are running the business and teams that are changing the business are working in partnership and are equally important.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
I love the quote that to love is to will the good of the other. For me this is the kind of empathy that fuels true consumer centricity. And this other-oriented mindset is required for true servant leadership. I strive to help others succeed and reach their potential. When it is not about me, we achieve better results and succeed together.
How can our readers further follow your work?
You can find the book and learn more about Doing Agile Right at https://www.bain.com/insights/books/doing-agile-right/ and follow me on LinkedIn at www.linkedin.com/in/sarahelk.