Agile tact on three levels

The three planning levels of an organization address different issues:

• The strategic level deals with issues such as budget and resource planning or entering new markets.
• The tactical level provides information on the extent to which the strategic objectives have been met; in addition, larger functional packages planned here provide a good basis for stakeholder feedback on an integrated overall product.
• At the operational level, the focus is on the next small step. The focus is on details and the precise design of a solution. Feedback is already possible and important here, but the development does not yet show any significant change in the big picture.

For high-performance teams, the principle is: "Work comes to the teams (and not the other way around)" - teams should therefore work together constantly over as long a period as possible, and the distribution of team members across several teams should be avoided.

In the classic paradigm, however, strategic planning in companies takes place in annual or even longer cycles. In contrast, agile teams, following the principle of early and regular delivery, think in much shorter cycles, but never longer than four weeks. So here we are dealing with two worlds that need to be brought together.

For this purpose, it has proven useful to think in a medium cycle of two to three months, even at a strategic level. This is long enough to avoid slipping into micromanagement, but it also allows managers to fulfill their essential task: To make decisions on the basis of an assessment.

The basis of this iterative approach at all levels is the PDCA cycle, often called the Deming cycle after its inventor. This management method describes a recurring process consisting of the following phases

• Plan - Planning
• Do - Implementation
• Check - performance review
• Act/Adjust - Derivation of necessary adjustments

In order to manage a portfolio in an agile way, agile values and principles and the iterative approach must be practiced at all three levels. Elements such as overarching meetings and artifacts, which we are familiar with from the team level, have also proven their worth in longer work cycles.

Agile organizations usually choose

• 1-4 weeks for the operational level
• 2-3 months at tactical level
• 1-2 years at the strategic level (see Foegen/Kaczmarek ²⁰¹⁸¹)

It is obvious to work in three temporal levels. However, this does not necessarily mean that three hierarchical levels are also necessary.

Organizational vs. operational structure

In this context, it is important not to see the different planning horizons as a hierarchical structure! Regardless of the question of how many hierarchical levels scaled product development needs (there are plenty of discussions on this in the agile community on various scaling frameworks), it can be said that a division into three time horizons makes sense in large companies.

A PDCA cycle at the tactical level approximates the quarterly planning of traditional management in terms of its lead time.

The lean startup concept is suitable for iterative work at the tactical level: after each tactical cycle, a product is created for which there must be a potential market. Customers can decide whether they would buy a result or not.

An MVP can be used to evaluate the basic readiness of the market and, building on this, can be pursued further with incrementally and iteratively developed add-ons. The question behind this is: What is the minimum viable product (i.e. the smallest functional unit) that could be delivered to a potential customer after around two months?

This post is part of the Agile Portfolio Management series. The first post in this series is here -> Agile portfolio management
Continue in the next post -> Decisions on several levels

Note: This text is an article by Sebastian Schneider and Lothar Fischmann that we published on our website in 2018. As this topic is still very popular, we republished this article on our blog when we restructured our website.

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¹ Foegen, Malte/Kaczmarek, Christian (2018): Organization in a digital age. 4th ed., wibas, Darmstadt