The Four Guardrails That Enable Agility

2. Democratize data. Lack of access to information and data often holds cross-functional teams back from making operational decisions in large companies. Data ownership has traditionally been so compartmentalized that teams drive decisions up the organizational hierarchy because those at the top have better access to the data and are thus in a better position to make evidence-based decisions. To foster more efficient decision-making at the team level, organizations need to provide teams with regulated access to more and better data in a timely manner — and at its intended level of use. Doing so is both enabling and constraining: It helps teams analyze and experiment with relevant solutions more quickly while simultaneously keeping them from jeopardizing data integrity, endangering company compliance with legal and governmental regulations, and working on similar problems in isolation.

Mars Inc. has empowered employees by granting regulated access to data more broadly across the organization, with the goal of fueling employees’ use of data analytics to better understand customers. It has done this by deploying a data science group, Digital Demand and Analytics, to assist teams with data insights. Mars invested in this group by hiring over 100 data scientists and surfacing hundreds of existing employees who had sufficient knowledge of both Mars and data science to help teams solve customer problems.

For teams to solve problems even faster, however, every team member needs to be able to extract meaning and insights from data assets that were intentionally created in the context of specific customer problems. To achieve this, Mars’s Digital Technologies unit provided data platforms that enabled employees to transform and disseminate data assets securely and efficiently through advanced data visualization tools and self-serve diagnostics. But perhaps more important, its internal training resource, Mars University, delivered a multilevel data science curriculum that trained more than 30,000 employees in the basics of data science.

Organizational agility hinges on data being accessible, understandable, and actionable for all teams. Mars’s example shows that this requires companies to foster an environment in which data literacy is a shared value and data access is democratically distributed while, simultaneously, proper data management and utilization are ensured. Emphasizing user centricity and encouraging a collaborative environment for data analysis transforms data into a strategic asset that drives efficiency and innovation.

3. Establish minimum viable policies. If empowered teams are to make the most of their own operational decisions, then organizations should reasonably aim to simplify existing heuristics in the form of policies and standards. Setting the guardrail of minimum viable policy safeguards business continuity without overly restricting teams.

Policies and standards help to manage exceptions. Thus, one way to achieve minimum viable policy is to follow the “comply or explain” method: Rather than imposing rigid, one-size-fits-all solutions, provide teams with strong recommendations that are balanced with the flexibility to deviate when necessary. It’s about establishing foundational, high-level principles that can clearly guide decision-making, especially when teams are faced with trade-offs. Such high-level principles could be “data is an asset that must be shared” or “purchase rather than develop.” If teams were to choose to disregard those principles in a particular case, they’d be expected to explain their rationale.

Figuring out which particular policies, procedures, and standards to put in place at the enterprise level, which ones to suggest for potential adoption because they appear to be best practices, and which ones to simplify or remove safely can be a difficult exercise, however. Toyota Connected and Toyota Motor North America’s digital leadership team therefore let their various shared services groups determine for themselves how prescriptive they should be, weighing the need for customization by product teams with the need for companywide standardization. Through matrix-based organizational structures that embedded (horizontal) members of the shared services groups across (vertical) product teams, the organization instilled discipline and efficiency in its teams but also ensured that policies and standards reflected teams’ need for agility.

For instance, members of the UX design group created a design system — a mix of design and engineering processes and standards, partially instantiated in reusable code — that every product team was expected to adopt. The processes helped teams validate ideas and build solutions for testing with customers; the standards provided recommended use patterns for modular design elements; and the reusable code allowed engineers to quickly instantiate these elements in their applications. As a result, teams moved faster in software development while the UX design group maintained a coherent look and feel across the company’s wide spectrum of user interfaces, such as in-vehicle systems, mobile applications, and websites.

To further determine what might hamper their teams’ ability to deliver offerings that met customer needs or otherwise stand in the way of making progress, Toyota Connected’s leaders relied on Executive Action Team meetings. A group of executives met every day at 5 p.m. to review roadblocks that teams had brought to their attention. Each roadblock was self-assigned for resolution within a day. If an executive didn’t or couldn’t meet their deadline, the roadblock was automatically escalated to a more senior-level executive for removal, signifying the organization’s commitment to enabling team agility by reducing excessive complexity.

In addition to reducing or simplifying policies, minimum viable policy relies on reuse: Leaders set expectations for teams to componentize their solutions and rely on centralized platforms or repositories where those reusable components — whether they be data, processes, or digital assets — can be placed. At Toyota, this meant moving away from closed, monolithic platforms that became difficult to scale and expensive to maintain. Instead, it shifted to open-source code repositories and created microservices that it could distribute globally via platforms like its global Mobility Service Platform. This allowed teams across Toyota to avoid duplication of work, create customer value incrementally, and recombine services into locally customized solutions (such as car-sharing services in Hawaii, Japan, and Europe) that could get to market faster.

Like Toyota, Mars’s Digital Technologies group also encouraged the use of reusable components. This meant that teams could rapidly (re)configure user experiences on a weekly basis, which enabled them to exercise initiative and judgment to make decisions that delivered the most value to the company. Still, teams had to take a few high-level policies into account. For instance, each team initiative had to be run by a central architecture group, a cybersecurity group, and sometimes the procurement team. The involvement of these groups meant that Mars’s Digital Technologies group could readily identify solutions that had great promise within or across business segments and bring them to the fore while simultaneously safeguarding security and compliance of components. It shows how minimum viable policies ultimately need to take the overall interdependence of teams into account and that sometimes the agility of individual teams needs to be sacrificed to drive greater organizational agility.

4. Provide the required resources. A major constraining factor to a team’s agile operations involves organizational resources — physical, financial, and talent. Teams without the required resources are not empowered; they are abandoned. Yet traditional resource allocation processes fail in an empowered context because of their inefficiency and inability to accommodate rapid changes. Because these processes are project-based and fixed for a specific duration (typically a year, based on an annual budget cycle), it can be difficult for teams to pivot or change plans based on the results of their experiments.

To ensure that teams have adequate resources when pursuing uncertain outcomes, some organizations use venture capital-type funding approaches or provide explicit mechanisms for teams to unlock contingent budgets. At Toyota Connected, this approach keyed on three stages of maturity: proof of concept, development, and operation. When engineers had ideas for initiatives they were passionate about, they asked their respective chief product owners for approval to build out a prototype offering. If the prototype showed market potential to solve a unique problem, the developers brought it to members of the executive team (through a product review board and investment council) for further development funding. Once an initiative reached the stage of a (successful) minimum viable product, Toyota Connected pitched it to other Toyota entities for adoption in order to obtain funding for further development and operations. Teams would continue to receive funding for their initiatives as long as they showed meaningful progress in working toward the next stage of maturity.

The venture capital approach to funding initiatives meant that teams at Toyota Connected had to think in terms of business considerations, including price points, potential market share, and, most important, cost. Even when teams were looking to incorporate additional features into existing offerings, they considered the recurring cost of doing so: Would a new feature increase the hardware requirements for vehicles or drive up telematics costs? For instance, enabling customers to view their vehicle’s fuel level through the Toyota or Lexus app increased the functional value of the app but also added a data point that the company had to repeatedly capture, transmit, process, and store.

Like teams at Toyota Connected, teams in Allstate’s Claims division were expected to focus on outcomes. But because these outcomes were explicitly tied to shared strategic objectives, the teams’ funding wasn’t incremental. Instead, Claims funded functional areas and met regularly to ensure that teams had the right capacity to deliver on their intended outcomes. For instance, most initiatives involved one or more analysts, developers, or engineers from the Technology organization, so new initiatives were evaluated each week by the Pod, a committee run by Claims’ Innovation unit that included leaders from Claims, Data Science, and Technology. The Pod dynamically prioritized demand for the Technology organization’s resources based on an initiative’s ability to realize value or otherwise validate an initiative’s biggest unknowns or risks. This weekly process ensured that the talent allocation process was swift and conducted by those who had a thorough understanding of both customer and business needs.

Allstate’s example shows that the guardrail that provides teams with the resources to run is about more than just funding; it’s about creating a responsive, dynamic resource allocation framework that supports and adapts to the evolving needs of empowered teams. As a result, this approach not only streamlines resource management but also aligns it closely with the organization’s purpose, its strategic goals, and the changing landscape of business needs.

Charting the Path Forward

As you critically assess your current organizational practices through the lens of these guardrails, identify areas where you can increase empowerment while ensuring alignment with strategic goals. To do that, keep these four questions in mind:

• Are you and your teams considering purpose in every decision to ensure that it is aligned with shared strategic objectives?
• Are you enabling rapid access to the well-managed data that’s required to make informed and timely decisions?
• Are you streamlining policies and reusing standard components to speed decisions and development?
• Are you regularly adjusting resources based on evolving team needs?

Shifting a large organization and its culture toward agility is a continuous and ever-evolving process. It requires a commitment to ongoing assessment and adaptation of the four guardrails that empower agile thinking and action. The payoff? Greater innovation and responsiveness for organizations that recognize that empowered teams are the key to greater resilience and adaptability and a sustained competitive edge in a rapidly changing world.