The pace of change is increasing. Organisations that adapt fast are poised to leapfrog the competition. As ways of working evolve, the method by which outcomes and work are funded must also evolve. However, there is no perfect one-size-fits-all solution, so taking an incremental approach to this change, learning and improving as you go, is the way forward.
Organisations are expected to do more with less, unable to commit to projects that may take years to prove value. On the other hand, most people can recall a project that continued to be funded long after it had gone over time, budget and scope, otherwise known as the "
escalation of commitment."
Organisations with a more modern approach adopt long-lived cross-functional teams as part of teams-of-teams (aka value streams) and orient around the flow of value. When capacity is funded rather than the project, there is far less focus on whether the pot of money has been used in full and more on whether the money that has been spent is yielding the outcomes sought.
If we look at the
Tuckman stages of team development: Forming, Storming, Norming and Performing, we understand that teams perform better when they stay together. Teams are the unit of delivery and should be stable, not static.
Teams become high performing over time. Project-based funding eventually breaks teams apart and prevents them from reaching their full potential.
This team-focused approach to funding is usually referred to as an investment hypothesis or bet, to signify that the organisation is investing in solving a problem, rather than in developing a specific solution or set of deliverables. Consumers will tell you (directly or indirectly) if what you have delivered is valuable - your metrics will give you the insights you need.
If an organisation can pivot on its investment hypothesis, it should increase business agility, but this is only the case if teams plan work in thin slices (that can be independently delivered over time - a quarter or less), rather than a deliverable that may span multiple quarters and cannot be stopped halfway. If teams plan and deliver work incrementally, they can rapidly find out if it is generating value, and if not, pivot with little waste. At worst, the next quarter will need adjusting.
For further reading check out
How should I fund agility by our partners at
Sooner Safer Happier.