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ITIL 4 continual improvement model in a VUCA environment White Paper

White Paper

ITIL 4 continual improvement model in a VUCA environment White Paper

White Paper

  • White Paper
  • Business solutions
  • Digital transformation
  • IT Services
  • ITIL

Author  Tatiana Peftieva

IT Governance, with a background in quality management, process improvement and software development.

November 20, 2020 |

 14 min read

  • White Paper
  • Business solutions
  • Digital transformation
  • IT Services
  • ITIL

VUCA, which stands for volatility, uncertainty, complexity, and ambiguity, is a set of features that the modern business environment bears. ITIL 4 is designed to help with VUCA challenges. It offers several useful concepts.  This White explores how. 

The ITIL continual improvement model

Continual improvement has been a key component of ITIL® for years, and it has evolved in ITIL 4. The ITIL continual improvement model, shown in Figure 1.1, is universal and can be applied to anything, including practices, products, services, relationships, resources, and so on. It provides a structured approach to continual improvement and works well at all levels of an organization, including governance, strategic and tactical management, and ongoing operations.


Image of Figure 1.1 illustrates ITIL Continual Improvement Model

Figure 1.1 ITIL continual improvement model

The ITIL 4 update brought another change to the model: the ‘take action’ step was introduced. This step is much more important than the model’s linguistic consistency. Without this step, the model was focused on improvement planning and control, and missed the actual realization of the plans. The updated model now looks more holistic and meaningful. However, there is a popular question about the improvement model because of its simplicity; it looks linear and has not changed much since 2002. So, the question is whether it will work in the modern VUCA world.

VUCA environment

VUCA, which stands for volatility, uncertainty, complexity, and ambiguity, is a set of features that the modern business environment bears1. Things are changing rapidly, the number of components in the systems around us is growing, and the cause-effect logic is decreasingly linear. All of these features are stimulated by digital technology, service economy, and other internal and external trends reshaping today’s organizations and their relationships.

2.1 Digital transformation

The digitization of businesses and the related changes to the role of technology in organizations’ business and operating models both introduce new factors to consider. These include the:

  • changing role of technology competency in business management
  • increasing pace of competition
  • disruptive digitally-native competitors
  • changing role of IT management and IT teams in business
  • increasing significance of data quality and effective data management
  • new legislation and requirements in areas such as privacy and information security
  • expansion of IT management practices to various business areas
  • return to or introduction of in-house software development
  • new dependencies on third parties, such as providers of cloud and communication services.

These factors may have different significance for different organizations, but generally they are on the agenda of governing bodies and executive leaders in nearly every industry. Organizations are delving into the area of digital transformation and in some cases have to learn how to manage expectancies after the fact.

2.2 Service economy

All organizations today are service organizations because they act as service consumers and service providers. There are no self-sufficient organizations with no external dependencies. Business ecosystems are becoming more complex, with more and more people involved, such as suppliers, partners, consumers, intermediaries, regulators, and so on. There are various ways of sourcing; some organizations take on more themselves, while others delegate and outsource as much as possible. Some organizations rely on service integration and management services provided by a trusted partner, whereas others prefer the diversity and flexibility of disintermediation and gig economy. Other trends, such as peer-to-peer services and platforms, or subscription-based services, impact organizations everywhere. Either way, the resulting ecosystem cannot be called simple or easy to manage.

Service economy raises several challenges:

  • multiple dependencies
  • lack of control over dependencies
  • complex sourcing models
  • lack of holistic end-to-end understanding of value streams
  • strong and volatile external factors (PESTLE)
  • expansion of service-based business models in traditionally goods-focused industries.

Just like digital transformation, challenges on the service economy affect organizations in different ways, but most organizations are affected. Additionally, many organizations are not ready for digital transformation or today’s service economy. Table 2.1 shows how these factors contribute to and are affected by the VUCA environment.

Digital transformationService economy
VolatilityTechnologies are constantly changing,
introducing new risks and opportunities.
Failure to keep the pace with opportunities
may results in loss of leadership; failure to
recognize risks may result in loss of business
Business models and relationship
models are constantly changing; these
changes lead to the re-positioning
of organizations in markets and industries
UncertaintyNeither the current nor future state of
technology and its role in business are clear
enough. Technology portfolio decisions are
difficult to make and new technologies emerge
before older ones can prove or disprove
their effectiveness
Every member of the service relationship
ecosystem has limited exposure to others
and the assessment of other organizations’
capabilities and associated risks is difficult and
never complete. The growing number of external
dependencies increases the overall uncertainty
of every organization’s current status and forecasts
ComplexityThe number of moving parts in the technology
landscape is growing, the cause-effect relationship
is unclear, and technology is increasingly
self-organizing. Procedure-based approaches
to IT management are no longer effective
The number of stakeholders in service relationships
is growing, and their interdependencies are changing
and never fully understood. Relationships based
solely on formal agreements are not effective in the
mid- or long-term
AmbiguityIt is hard to assess the impact of a technology
event or proposal; even known effects can be
contradictory and ambiguous. Only few
consequences can be forecasted with an acceptable
level of assurance
Due to the complexity of stakeholders’ interest and
the variability of social norms, it is hard to assess the
impact of a portfolio, relationship, or marketing decision.
Only few consequences can be forecasted with an
acceptable level of assurance

Evidently, digital transformation and service economy are not the only contributors to increasing levels of VUCA around us. However, they are both most relevant to the context of this paper; organizations using ITIL and the ITIL continual improvement model are likely to find these factors important.

ITIL recommendations for success in a VUCA environment

General recommendations regarding doing business in a VUCA environment are available from various publications. In the shortest form, they can be reduced to those shown in Table 3.1.
Table 3.1 Recommendations on addressing VUCA3

CharacteristicsRecommendation
VolatilityPrepare for variations by investing in extra resources
UncertaintyImprove knowledge management and quality of information
ComplexityRestructure for self-organization and agility
AmbiguityExperiment to explore available options

ITIL 4 is designed to help with VUCA challenges. It offers several useful concepts, for example, the seven guiding principles:

  • focus on value
  • start where you are
  • progress iteratively with feedback
  • collaborate and promote visibility
  • think and work holistically
  • keep it simple and practical
  • optimize and automate.

These principles are universal and help organizations in all circumstances, including when the environment becomes increasingly VUCA. Following the principles can become an approach to apply the recommendations listed above, as is shown in Table 3.2.

Image of Figure 3.2 shows table of the ITIL Guiding Principles to address VUCA


Table 3.2 ITIL guiding principles to address VUCA

The principles marked are specifically important when dealing with VUCA challenges; however, as in any other situation, it is recommended to consider all seven guiding principles and their possible application to current tasks and questions.

ITIL® 4: High-velocity IT describes five behaviour patterns that organizations should adopt in order to succeed in digital transformation. This is shown in Figure 3.1.

Image of Figure 3.1 illustrates Key behaviour patterns of a digital organization

While the first pattern, ‘accept ambiguity and uncertainty’, is directly linked to the VUCA model and does not require additional explanations; the other four address the VUCA challenges in an obscure way:

  • Trust and be trusted This implies trust-based relationships within organizations, as well as between the organization and its external stakeholders. Trust-based relationships mean a higher level of autonomy and responsibility, as well as aligned objectives and principles. All of these help to react to changes and new inputs faster and more effectively than by following a set of formal rigid agreements.
  • Continually raise the bar Readiness to face new objectives and the ability to work proactively are very helpful in an ever-changing environment where new risks and opportunities are identified all the time.
  • Help get customer’s jobs done Resonating with the principle focus on value, this pattern puts value for customers on the top of the organization’s, teams’, and individuals’ priorities in a work environment. Combined with other patterns, it helps to find and implement solutions that meet customers’ needs and expectations, even if they keep changing.
  • Commit to continual learning This behaviour pattern underpins the others. Ignorance is the root cause of many organizational problems, typically when somebody does not have the right information when they have to take action. The challenges of uncertainty and ambiguity can be specifically addressed by effective knowledge management, which is impossible without commitment to continual learning and information sharing.

Continual improvement model in a VUCA environment

ITIL® 4: High-velocity IT specifically addresses continual improvement in a VUCA environment: ‘HVIT environments apply the continual improvement model with a focus on iteration, experimentation, and data-driven scientific thinking’.5

Firstly, it is important to remember that the model is scalable. The cycle from ‘what is the vision’ to ‘how do we keep the momentum going’ can be very short. The higher the level of uncertainty, the shorter it should be. The principle progress iteratively with feedback, should be followed to avoid huge improvement programmes with long cycles and complicated tasks to implement. This will also reinforce the principle keep it simple and practical.

4.1 Toyota kata

Another key challenge for the continual improvement model is that, in a VUCA environment, ‘how do we get there’ is often unclear, as is ‘where do we want to be’. Understanding a vision and even a current situation can be fairly easy, but there can be too many options for measurable targets and too many ideas on how to achieve those, with no option that organizations can be sufficiently sure about. To address these obstacles, organizations can apply experimentation models, such as Toyota Kata (a mental model and behaviour pattern for scientific thinking and routines for practice and coaching6).

The steps of the improvement kata include the following:

  1. Understand the direction Improvement should be aimed at specific goals, not random.
  2. Grasp the current condition A direction is useless unless we know where we are right now.
  3. Establish the next target condition and identify obstacles Describe both the outcome we desire next and the expected condition of the process to generate that outcome.
  4. Experiment towards the next target condition Generate ideas to overcome an obstacle and run experiments with those ideas. If possible, test only one hypothesis at a time.

The improvement kata is shown in Figure 4.1.

Image of Figure 4.1 illustrates the four steps of the Toyota Improvement Kata

Figure 4.1 The four steps of the improvement kata

The first two steps of the improvement kata are aligned with the first two steps of the ITIL continual improvement model. The third and fourth steps are similar, but Toyota Kata works effectively where there are many options available to answer the question of ‘how do we get there’ or even ‘where do we want to be’, and experimentation is the best way to answer these.

4.2 OODA loop

Another model useful in a VUCA environment is OODA loop7. Just like the VUCA concept itself, the OODA model has military origins and was initially developed to explain how to direct energies to defeat a combatant in a military campaign. Now, it is used in many civilian areas and in different types of organizations.

OODA stands for ‘observe, orient, decide, act’, a routine for decision-making in a VUCA situation. The OODA routine is shown in Figure 4.2.

Image of Figure 4.2 illustrates the expanded OODA loop model

Figure 4.2 Expanded OODA loop8 

ITIL® 4: High-velocity IT describes the OODA loop as “a set of interacting loops that are in continual operation during combat. All decisions are based on observations of the evolving situation in combination with filtering of the issue at hand. Decisions and actions are based on observations, which are processed to orient them for decision-making. Orientation is the most important part of the loop because it informs how to observe, decide, and act. Orientation is influenced by genetic heritage, cultural tradition, and previous experience."9 In terms of the ITIL continual improvement model, the OODA loop helps to understand ‘where we are’, ‘where do we want to be’, ‘how do we get there’, and ‘how do we keep the momentum going’. Applied in conjunction with these (and other relevant) techniques, the ITIL continual improvement model can be as effective in a VUCA environment as in other relatively stable and certain environments.

Key message
ITIL® 4: High-velocity IT describes the OODA loop as “a set of interacting loops that are in continual operation during combat. All decisions are based on observations of the evolving situation in combination with filtering of the issue at hand. Decisions and actions are based on observations, which are processed to orient them for decision-making. Orientation is the most important part of the loop because it informs how to observe, decide, and act. Orientation is influenced by genetic heritage, cultural tradition, and previous experience.”10

4.3 Adjusting the ITIL continual improvement model

Each step of the continual improvement model can be adjusted to ensure that an organization is on the right track, regardless of the changing landscape. This is shown in Table 4.1.

Table 4.1 Adjusting the continual improvement model to address VUCA challenges

Improvement stepRecommendations to addressRecommendations to addressRecommendations to addressRecommendations to address
VolatilityUncertaintyComplexityAmbiguity
What is the visionReview the vision often; shorten the improvement cyclesTest hypothesis; define direction, not destinationThink holistically, stay open to new inputsTake responsibility; experiment; listen to feedback
Where are we nowShorten the improvement cycles; improve knowledge management; collect feedbackThink holistically; Take alternative viewpoints; improve knowledge management; keep monitoring the situationUse sense-making techniques9.
Where do we want to beShorten the improvement cycles; improve knowledge management; test hypothesis; listen to feedback 
How do we get therePlan for changes; shorten review cycles; use outcome-based planning; trust and Increase autonomyExperiment, test hypothesis, increase autonomy and stimulate discussion; utilize implicit knowledgePlan implementation according to the complexity level; test hypothesis; treat failures as learningListen to feedback; shorten implementation cycles; communicate and promote visibility
Take actionCommunicate and promote visibility; progress iteratively with feedbackInvolve stakeholders, communicate and promote visibilityFollow appropriate heuristics; experiment; maintain the feedback loopAnalyse feedback, be prepared to apply corrective actions
Did we get thereUse outcome-based measurement and reporting; allow for deviations as long as value is created

How do we keep the momentum goingAdopt OODA routine, continuously observe and orientImprove knowledge management; utilize implicit informationApply sense-making frameworksContinually listen to feedback; be ready to correct the course

Conclusion

The ITIL continual improvement model can be effectively applied to enable continual improvement at all levels of organization. It is a tested and proven approach to structure improvement efforts. The recently updated model is a key component of ITIL 4.

It is applicable in VUCA situations and environments as well as relatively stable and predictable ones. To support continual improvement in a VUCA environment, other models and approaches can be used at every step of the continual improvement model. These include:

  • Toyota Kata
  • OODA loop.

ITIL offers other methods and concepts to enable continual improvement in VUCA environment. These include:

  • ITIL guiding principles
  • key behaviour patterns for digital transformation
  • management practices (knowledge management, continual improvement, risk management, and others).

About the author

Tatiana works in IT Governance, with a background in quality management, process improvement and software development.

She is passionate about continual improvement and contributes to ITIL 4 supplementary publications on the topic.

Head and shoulder photo of Author Tatiana Peftieva

Further reading

AXELOS (2020) ITIL 4®: High-Velocity IT. TSO, London

AXELOS (2018) A guide to AgileSHIFT. TSO, London

Bennett Nathan, Lemoine G. James, 2014. What VUCA really means for you. Harvard Business Review

Osinga Frans, Science Strategy and War, http://www.projectwhitehorse.com/pdfs/ScienceStrategyWar_Osinga.pdf [Accessed 10 November 2020]

Rother Mike, 2009. Toyota Kata: Managing people for improvement, adaptiveness and superior results. McGraw-Hill Education

End notes

  1. U.S Army Heritage & Education Center. https://usawc.libanswers.com/faq/84869. Accessed November 10, 2020
  2. Pestle Analysis. https://pestleanalysis.com/what-is-pestle-analysis/. Accessed November 10, 2020
  3. Wikipedia. https://en.wikipedia.org/wiki/...,_uncertainty,_complexity_and_ambiguity. Accessed November 10, 2020
  4. AXELOS (2020) ITIL 4®: High-velocity IT. Section 3.1, TSO, London
  5. AXELOS (2020) ITIL 4®: High-velocity IT. Section 3.2.3.3, TSO, London
  6. AXELOS (2020) ITIL 4®: High-velocity IT. Section 3.2.3.3, TSO, London
  7. AXELOS (2020) ITIL 4®: High-velocity IT. Section 3.2.3.3, TSO, London
  8. Dr David G. Ullman. https://docs.wixstatic.com/ugd/20f020_65b20dec99cb45d0bd1456ed526c09b8.pdf. Accessed November 10, 2020
  9. AXELOS (2020) ITIL 4®: High Velocity IT. Section 3.2.3.3, TSO, London AXELOS (2020) ITIL 4: High Velocity IT. Section 3.2.3.3, TSO, LondonAXELOS (2020) ITIL 4: High-velocity IT. Section 3.2.3.1, TSO, London

ITIL 4 continual improvement model in a VUCA environment