How would you define a truly agile organization?

The truly agile organization does two things.

First, agile is all about doing things right. In my experience, companies do a lot of things well, especially when it comes to product development. They're developing products all the time. Developers develop code very efficiently. Hardware producers develop hardware very efficiently.

That’s the first part of the equation.

But a truly agile organization also has to do the right things. For example, they don’t just create products—they create products that will win in the marketplace. And they know that they’re going to win before they even start developing them. The truly agile organization is not just failing fast and iterating because they got it wrong in the first place.

One of the biggest problems is that companies need to separate what I call the innovation process from the development process. The innovation process is all about coming up with the right product concept. This product concept should be finalized, with evidence it’s going to win in the marketplace (it will get the job done 15-20% better and/or cheaper than alternatives), before development begins. That’s a dominant strategy that always wins.

If you can bolt this innovation process onto the front end of your agile development, then you're a truly agile organization.

But many companies are intertwining innovation and development, not finalizing the product concept until development is well underway, then getting stuck in rounds of iteration.

If you want to unlock your business’ innovation potential and leapfrog the competition, you need to understand the full agile equation—not just the first part of it. If you can do the right things to begin with, you've just eliminated a ton of need for agile downstream.

One of my projects with Pratt & Whitney aircraft provides the perfect example.

We were looking at engine materials that could potentially be used to hide under radar. At first glance, these materials would require a significant amount of experimentation to see if they would achieve the goals. But once we figured out what outcomes the pilots were looking for and which ones were most important, we were able to reorganize the order in which the tests would occur. We executed the test to predict failure along the key outcomes first, which allowed us to cut testing down from a couple hundred tests to about 80. We also reduced test time from a couple of years to about six months.

Pratt & Whitney was conducting tests correctly—but they weren’t conducting the right tests in the right order. That’s the kind of inefficiency a truly agile organization roots out and corrects.