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Agility maximization

Date: 2024-04-25 10:30

Back in the day, when everything was simple

My economics teacher told us that companies strive to maximize profit. This made sense at the time. We then learned how to use fairly simple mathematical equations and graphs to calculate how these companies would behave. This is all based on that one principle: companies look for that point where profit is maximum.

Now

This week I read that Spotify has made a profit for the first time this year. Quite special when we consider that in 2022 the market value of this market leader in music streaming services was approximately fifty billion.

The New York Times and X both employ a few thousand people. They both provide millions of people with a way to read the news. When Twitter, the predecessor of X, went public, the company was more than twelve times the stock market value of one of the largest newspaper producers. And you guessed it, Twitter then made a loss. So this week I asked myself, 'Did I waste my time in economics class?'.

What do we maximize then?

Stock market values are the sum of future cash flows^. You pay a lot for a Spotify share. This is because it is expected that in 2029, 2030, 2031, ... the euros and dollars for this supplier of music streaming services will flow in their direction. But who knows what the world will look like in five, ten years? I don't suspect anyone. But we do know, or can estimate fairly well, how well an organization can respond to the changes that will come until then. Those news services, insurers, banks, etc. that can do this best will then make the most profit.

What the Agile Manifesto and Service Orientation have in common

The Agile Manifesto, now more than two decades old, says the following: Agility is the ability to adapt and respond to change … agile organizations view change as an opportunity, not a threat.

The SOA framework has three strategic benefits. The most important of these: increased organizational agility.

Make your decisions with agility in mind

IT is an important area of attention, if not the most important, when it comes to realizing an agile organization. When a stakeholder asks why you as an IT architect have taken a certain decision, it is great if you can answer: 'this increases the agility of our organization'. When he or she asks, 'what does this mean for us?', the answer will be clear...

^ purely seen because of the discounted cash flows

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