Continuous Strategy Engineering—Beyond Waterfall Planning With Tom Gilb and Simon Holzapfel

Summary

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Episode Summary: Continuous Strategy Engineering—Beyond Waterfall Planning

Podcast: Scrum Master Toolbox Podcast: Agile storytelling from the trenches
Host: Vasco Duarte
Guests: Tom Gilb & Simon Holzapfel
Release Date: December 9, 2025
Series: Engineering Organizations for Impact (Episode 2)

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Episode Overview

This episode dives deep into the limitations of traditional, waterfall-style strategic planning and explores the need for continuous strategy engineering in today's organizations. With expert guests Tom Gilb and Simon Holzapfel, host Vasco Duarte uncovers how organizations can shift from long, rigid strategies to adaptive, evidence-driven, and incrementally delivered strategy cycles. The discussion highlights practical approaches, including Tom Gilb’s "EVO" framework, the pitfalls of popular frameworks like OKRs at scale, and the critical role of organizational alignment using systems thinking.

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Key Discussion Points and Insights

1. The Waterfall Legacy in Strategic Planning

• [02:18-02:56]
  Tom Gilb critiques the academic and professional inertia in strategic planning, arguing that most organizations still plan strategy like outdated waterfall projects.
  • Quote (Tom, 02:18):

    “The professors of strategy have no clue as to what EVO is. They are locked in decades ago Waterfall mode... They haven't undergone the agile conversion.”

  • Many leaders and professors still teach and apply sequential, big-batch strategy processes, missing out on the adaptability and learning central to Agile.

2. The EVO Approach to Continuous Strategy

• [03:43-06:24]
  Tom Gilb outlines his "EVO" (Evolutionary Value Optimization) approach:
  • Strategy Discovery:
    • Design is about identifying quantified goals ("North Star") and exploring diverse ways to achieve them.
    • Failure to clarify requirements leads to poor strategy design, which results in managing unsuccessful strategies.
  • Strategy Execution:
    • Instead of 3- or 5-year strategies, decompose plans into frequent, small increments—ideally weekly value delivery cycles.
    • Quote (Tom, 05:05):

      “Agile says no, you have to decompose this large strategy into a stream of smaller cycles of strategy delivery... I’ve been using once a week as a very good starting point.”

    • Tom emphasizes leveraging AI tools to break down large strategies into actionable weekly steps, removing barriers to incremental value delivery.
    • Quote (Tom, 06:24):

      "You can give anything big to your favorite AI and say decompose this into 52 weekly value delivery steps... you can no longer be in denial."

3. Contrasting EVO with OKRs and Vision-Led Strategy

• [06:44-09:20]
  Vasco and Tom compare EVO’s lean, quantified approach to the widespread use of Vision statements and Objectives & Key Results (OKRs):
  • OKRs are suitable for small-scale or personal productivity, but fail for large, complex systems due to oversimplification.
  • Quote (Tom, 07:19):

    “If you’re designing the air traffic control system for Europe... OKRs were never designed and never changed, so they were appropriate for that class of problem. They're just too simple.”

  • Effective strategy requires deeply quantified objectives and rigorous design, which most OKR implementations lack.
  • Tom references his paper "What is Wrong with OKRs?" and offers to share extensive resources for better strategic design.

4. Systems Thinking and Organizational Alignment

• [09:20-10:36]
  Simon Holzapfel brings in systems thinking, noting that organizations lack visible, two-way mechanisms (“information radiators”) for communicating and aligning strategy at all levels.
  • Quote (Simon, 10:04):

    "It's some sort of visible information radiator or maybe sprinkler... the Hoshin Kanri sprinkler system whereby the CEOs on the top make good use of Tom and his methods, it hits the sprinkler system, then comes out like a fine mist over everyone's desk—alignment. We don't have anything like that."

  • Refers to Hoshin Kanri (and "catch ball") for enabling ongoing, multidirectional strategy deployment.
  • Most leaders lack effective mental models for real organizational alignment, leading to failed strategy execution.

5. Making Strategy Practical and Testable

• [10:36-11:43]
  The episode previews tomorrow’s follow-up on testing strategies, not just testing software functionality—how to empirically test and adapt strategies as part of continuous improvement.

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Notable Quotes & Memorable Moments

| Timestamp | Speaker | Quote | |-----------|---------|-------| | 02:18 | Tom Gilb | “Professors of strategy have no clue as to what EVO is. They are locked in decades ago Waterfall mode... They haven't undergone the agile conversion.” | | 05:05 | Tom Gilb | “Agile says no, you have to decompose this large strategy into a stream of smaller cycles of strategy delivery... I’ve been using once a week as a very good starting point.” | | 06:24 | Tom Gilb | "You can give anything big to your favorite AI and say decompose this into 52 weekly value delivery steps... you can no longer be in denial." | | 07:19 | Tom Gilb | “If you’re designing the air traffic control system for Europe... OKRs were never designed and never changed, so they were appropriate for that class of problem. They're just too simple.” | | 10:04 | Simon Holzapfel | "It's some sort of visible information radiator or maybe sprinkler... the Hoshin Kanri sprinkler system whereby the CEOs on the top make good use of Tom and his methods, it hits the sprinkler system, then comes out like a fine mist over everyone's desk—alignment. We don't have anything like that." |

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Timestamps for Key Segments

• [01:11] – Introduction to the miniseries and guests
• [02:18] – Why traditional strategy remains waterfall (Tom’s critique)
• [03:43] – Overview of Tom Gilb’s EVO approach to strategy
• [06:44] – Comparing EVO to Vision/OKRs; OKR limitations
• [09:20] – Organizational and behavioral gaps in strategy execution (Simon)
• [10:36] – Explanation of Hoshin Kanri and alignment tools
• [11:07] – Mention of US practitioners and “catch ball” analogy
• [11:27] – Preview of next episode: Testing Strategies

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Conclusion

This episode unpacks why organizations struggle with adaptive strategy, offering a compelling alternative in Tom Gilb’s EVO approach: break down strategy into clear, data-driven, rapidly iterated cycles. It critiques the misuse of OKRs at scale, underscores the lack of alignment mechanisms in organizations, and argues for systemic, two-way communication of strategy. The conversation primes listeners for a follow-up episode on empirically testing strategies—moving strategy from grand plans to tangible, measurable progress.

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Transcript

[A]

Hey there Agile adventurer, just a quick question. What if for the price of a fancy coffee or half a pizza, you could unlock over 700 hours of the best agile content on the planet? That's audio, video, E courses, books, presentations, all that you can think of. But you can also join live calls with world class practitioners and hang out in a flame war free and AI slop clean slack with the sharpest minds in the game. Oh, and yes, you get direct access to me, Vasko, your Scrum Master Toolbox podcast. No, this is not a drill. It's this Scrum Master Toolbox membership. And it's your unfair advantage in the agile world. So if you want to know more, go check out scrummastertoolbox.org membership. That's scrummastertoolbox.org Membership. And check out all the goodies we have for you. Do it now. But if you're not doing it now, let's listen to the podcast.

Hello everybody. Welcome to episode two of this Engineering Organizations for Impact, the miniseries with Tom Gilp and Simon Holzapfeld. Tom and Simon, welcome back.

[B]

Thank you so much.

[A]

So yesterday we explored what I'm sure Apple podcasts will not like me to say, fuzzy bs, let's say way and how that affects the decision making and how we structure organizations. We explored a little bit what is the actual value trigger in organizations to date and it is no longer efficiency. So let's now talk about continuous strategy engineering because that is where the critical decisions get made. So let's start with the problem. Tom. We go about strategy very much in most organizations. Like we used to go about waterfall projects in the past. Why is it that we're missing that adaptive and learning aspects of agile at the strategy layer?

[C]

Simple answer. The professors of strategy.

Have no clue as to what EVO is. They are locked in decades ago Waterfall mode. I've analyzed their works. I've written about this in my Strategy Ring book. So they haven't got a clue.

That's the reason. So the people learn about the strategies in waterfall mode and they haven't undergone.

The agile conversion. That's the simple answer.

[A]

So one of the things and we'll put the link to Tom's presentation about EVO for strategy. One of the things I really liked about your presentation of EVO for strategy was this concep of this. Not just the cycle. That's obvious, right? Like we're in an agile podcast. There's always cycles. It's no longer linear folks. I guess everybody heard and already knew about that. But you Talk about micro cycles. Like every cycle is super short and there are even short cycles within the major cycle. So walk us just high level through this, Tom Gilb's approach to strategy. I guess we could call it discovery and execution because it's not just execution or not just discovery planning.

[C]

Okay, so there are two aspects and one is the discovery of the strategies. Now this has many names. It is essentially a design process. You're trying to find a design called strategy by the management people to reach objectives, goals, requirements, your North Star. Okay, so, and I believe people don't seem to understand or teach the design process, which in very simple terms is you have some quantified values you want to reach and how, what kind of things you have to do to get there. That's the design process. Okay? Now if you're, if your objectives or requirements are unclear, you have an unclear design process and you'll throw in unclear designs which won't work. So your design process fails and then it doesn't matter how well you manage the rest of it, you're just managing bad designs at best. Okay, okay. So the second part is, given that you have a design which is more or less good, a hypothesis, a strategy or a set of strategies, how do you prove them? Now if you have a five year strategy and after five years you try it out and it doesn't work, you're screwed big time. Okay, so Agile says no, you have to decompose this large strategy into a stream of smaller cycles of strategy delivery. So the question becomes, is that stream once a year, once a quarter, once a month, once a week, once a day? Well, long story short, I've landed for decades, I've been using once a week is a very good starting point. Now this assumes you can do another type of design thing which is take a big strategy which everybody thinks will take a year, the least, and somehow divided into 52 parts weekly. And I call this decomposition. People don't know how to do it. They are mentally, culturally convinced it cannot be done. Okay, Now I do describe exactly how to do it, but by the way, there's a new shortcut. You can give anything big to your favorite AI and say decompose this into 52 weekly value delivery steps.

[A]

Incremental value delivery steps.

[C]

Yeah, exactly. And it will do it in one minute for free. So you can't, you take a look at them and they're perfectly reasonable. So you can no longer be in denial.

[A]

Okay, you can still be in denial. It's just harder.

[C]

Well put, well put.

[A]

And I wanted to specifically give us your thoughts on how this approach, this maybe having the design as you said, as for the whole thing, the whole strategy, but then incrementally deliver over in this case 52 weekly periods. But how does that compare with vision and okrs? Because okrs are, let's call it the ruling approach right now in many companies. And I think it's important to make a contrast here. So how do you see your approach being different from this vision and OKR approach to strategy?

[C]

Okay. I have a paper which you can share called what is wrong with okrs? And anybody can look it up on Google. So what's wrong now? I'll simplify and I'll be very nice. If you're doing small scale stuff that OKRs were designed for, like planning your personal work 14 days hence, OKRs are wonderful. They force you to think a little bit. That's great. If you're designing the air traffic control system for Europe or the health system for United Kingdom, it's a totally different scale. And okrs were never designed and never changed. So they were appropriate for that class of problem. They're just too simple. Okay, that's the problem we look at now. The idea of having quantified objectives is quite different from okrs. Okay. But I have, you know, long written about a, you know, a discipline for doing that and time doesn't permit me to give you the five day course on how to do it with the 500 pages. But we can share those 500 pages for free with people. Okay, but there's a lot more to it than just okrs is just too simple. But we do need to clarify our purpose. We part of clarifying, but not the only part of it is to quantify variables of values. Right. So, but, but if you mentally equate OKR with really good value requirements for large systems, there's a big gap of about 100 things that are different and wrong there, which I have written about. That's. Now that's the short answer. People will only be satisfied by reading that list and saying, gee, he's right, he's right. We don't do this, we don't do that. Okay. And I'll certainly supply that. So I'm going to stop there. Maybe you need to get back if I didn't complete the question.

[A]

I think it's important and we're going to explore this idea further tomorrow when we talk about testing, not testing functionality in software, but actually testing strategies. We'll talk about that tomorrow, so stay tuned. But I wanted to go Back to you, Simon, because you've been applying systems thinking and thinking about organizations and behaviors because there's a lot of behavioral aspects here as well. So what is missing in our organizations today to be able to do this kind of strategy design? Strategy slicing. I'm going to use slicing here for incremental delivery, of course, and then eventually the actual execution of that incremental process at strategy level.

[B]

Yeah. So it's some sort of visible information radiator or maybe sprinkler. Like an overhead sprinkler. Imagine you're sitting in an office and you've got an overhead sprinkler system. This is the Hoshin Kanri sprinkler system whereby the CEOs on the top make good use of Tom and his methods. It hits the sprinkler system, then comes out like a fine mist over everyone's desk alignment. We don't have anything like that. We have no, we have no mental model for most of leadership about how you actually align people.

[A]

And by the way, Hoshin Kandry is a, do they call it catch ball in the U.S. it's like a process of strategy deployment by which there's information flowing in both ways. So from leadership to the rest of the organization and vice versa or all the time. So it's not just leadership goes to a very expensive resort with a couple of expensive consultants, comes back and you know, like Moses delivers the tablets, but rather they are participating in this continuous iteration of.

[B]

I mean anyone in the US who wants to know more should just ping. Todd Covert, who's the head of school at the Montessori School of the Berkshire's. He is a wizard. He's really the top practitioner of strategy to tactics or he's in the top cohort in the US.

And so stay tuned everybody.

[A]

We're going to talk about how do we make this practical. Tomorrow we're going to mention testing and how it should happen even at strategy level. So stay tuned. Tom and Simon, thank you very much for being part of this special miniseries. I'll see you tomorrow. Take it easy.

[C]

Bye bye.

[A]

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