Everyone is talking about the benefits of agility in business. But with so many faltering agile transformations what is it that makes an agile enterprise?
Enterprise agility is more than just product or software delivery, it is about how your overall business is structured, how it operates and how it behaves. The current pace of digital change requires businesses to be set up and led in a fundamentally different way to the last century. As a result, businesses are more closely attuned to external change and able to adapt quickly and effectively – this is critical to remain competitive.
Figure 1: The components of a digital transformation
As part of the Digital Transformation Done Right series, we are providing advice on the various components that make up a Digital Transformation. This article dives into the topic of agile transformation. Sure, everyone is talking about it – but are they really doing it, and are they doing it properly?
The authors André Azadehdel and Sohrab Hosseini have consulting experience at Big 4’s and have designed and rolled out multiple digital and agile transformations in Fortune 500 companies. Written by experts who have really done the work, we hope this summary of their insights and successes will provide you with the right practical knowledge to transform your business.
Your business is a living organism that wants to survive and grow
Why the “business as machine” analogy is doomed to fail
Truly understanding an agile enterprise and driving an agile transformation requires a paradigm shift, drastically moving away from the age-old analogy of businesses running like well-oiled machines.
Classical management theories had their roots in the industrial revolution and were focused on mechanical industries of the late 19th century. They adhered to a mechanistic and systematic approach to management, with its ethos based on rationality, predictability, command and control. These theories assume that an individual or a few individuals in a business can be all-knowing, all-controlling and all-predicting. In today’s complex and volatile world, this is simply not the case.
Looking to nature and society, one can see many examples of how systems can survive and thrive at scale in a complex and volatile world. A species is able to survive and grow through constant adaptation. In the same way, economies are able to flourish even in a hugely uncertain and unpredictable world.
Business as a complex adaptive system
The pattern that has been most successful from an evolutionary perspective is that of a Complex Adaptive System (CAS). Examples of these include the brain, a flock of birds, the free market economy, democracy or the internet. What each of these systems have in common is:
- They are made up of individual agents (E.g. neurons in a brain, birds in a flock)
- Although these agents are individual they are interrelated, interdependent and in some way networked (E.g. interconnected neurons in a brain, nodes on the internet)
- Overall they create system wide patterns or behaviours (E.g. a stock market crash, an elected leader)
It is easy to see how a business can be viewed in a similar way. Independent employees or groups of employees, all connected and dependent on each other, delivering outcomes such as products and services, and ultimately revenue and profit.
An agile enterprise should move on from classical management thinking and take inspiration from what makes a Complex Adaptive System (CAS) so successful. The key characteristics of such a system are also the key characteristics of a successful agile enterprise:
- Clear purpose. For a CAS to function, each individual agent should work towards the same outcome. For example, a flock of birds flies to the same destination. An agile enterprise, therefore, needs a clear articulation of the purpose and vision of the business that every employee (and broader stakeholder) understands and is emotionally bought into. There may be lots of adaptation, experimentation, and change within the business, but ultimately everyone knows what they are collectively trying to achieve.
A great example of this is Amazon, which puts the customer at the centre of the business. This permeates through everything they do: “Our vision is to be Earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.”
- Autonomous and self-organising. The very nature of a complex system means there can be no omnipotent agent who knows, predicts and controls everything. For example, the neurons in the brain are independent and autonomous. They act independently to ultimately create an outcome, such as typing this very content piece. There is no master neuron that controls the others. They are all equal.
An agile enterprise works in a similar way by providing teams and individuals a level of autonomy, as well as the remit to organise themselves. This is the opposite of the traditional command and control approach. It pushes authority, decision making and accountability to those who are closest to the information, and ultimately empowers employees.
- Continuously evolving. The most successful CAS’s operate at the “edge of chaos”. This is the space between order and disorder. They are constantly adapting and innovating – and often failing, too. For example, the free market economy is in a constant state of flux with cyclical patterns and businesses failing all of the time – yet over time it is ultimately growing.
An agile enterprise should also operate in this state. The iterative and cyclical nature of agile software delivery should be considered across the business. This enables the business to constantly try new things – new ways of improving or innovating, whilst having quick feedback cycles to validate whether they are succeeding or not. This way of working in iterations — assessing whether the small incremental actions being taken are succeeding or failing — should be applied across the entire business.
- Distributed and loosely coupled. The reason the internet is so resilient and works so effectively is that it is massively distributed and loosely coupled. Taking out nodes or large parts will not bring down the system. A successful agile enterprise should work in a similar way, whereby individuals and teams are ultimately able to succeed or fail without impacting others. Overall this will enable greater flexibility and resilience across the overall business.
- Diverse. In the context of evolution, it is often an obscure mutation in a species that may ensure its survival in the face of environmental changes. Similarly, diversity should be a key characteristic of your agile enterprise. Innovation, creativity, and the ability to solve business problems in unique ways requires different perspectives and ways of thinking.
Not only is diversity a significant topic from an ethical perspective, but it is also a great enabler of growth from a purely commercial perspective.
As you are looking to rewire your business to become agile, you should continuously consider how you are modelling it to exhibit these characteristics.
What is an agile enterprise?
To transform from a traditional to an agile enterprise, with the characteristics of a successful CAS, business leaders should focus on a few core elements. These can be broadly grouped into the following areas as detailed in Figure 2:
- Building deep connections with its environment
- Putting in place adaptive direction
- Creating an organisation with operational flexibility
Figure 2: The agile enterprise
Understanding these elements should enable you to structure your agile transformation, focus your efforts and plan your agile roadmap. It can also act as a framework to troubleshoot, as you are able to dive into each area and validate if it is working as it should be.
1. Deep connections
Any successful system needs to be able to take information from external stimuli, process that information, and act upon it. This information flow creates a continuous loop, whereby positive outcomes are amplified and negative outcomes are dampened. The quicker this feedback loop, the quicker the system is able to correct or improve.
For an agile enterprise this involves:
- Building closer relationships with external actors and the external business ecosystem
- Improving and tightening external and internal communication mechanisms
- Capturing and analysing data on external actors and the external business ecosystem
- Disseminating this information quickly and widely across the business
- Removing internal impediments and quickly acting on this information
- Creating effective feedback loops
Advancements in digital technology make this significantly easier with improved communication tools (e.g. Slack, Skype), open and closed social networks (E.g. LinkedIn, Facebook, Yammer, Chatter), simpler technology integration approaches (E.g. RESTful, JSON) and next generation data and analytics platforms (E.g. big data, AI, cloud based visualisation). As is always the case, the technology is only an enabler, not a panacea!
Customers
One of the most important characteristics of an agile enterprise is that it has an intimate relationship with, and deep knowledge of its customers. If being agile is about being adaptive to survive and grow, then this customer insight and data is the lifeblood of the business. It directly feeds into decisions on what products and services they take to market, how they are designed, how they are priced, how they are supported as well as cross-sell or up-sell opportunities.
What to focus on to get customer relationships right
- Involve customers in product and business model development
By involving customers early on and regularly in the design and development process, you are able to validate the viability of what you are creating. Do this by creating cheap prototypes or proof of concepts as early as possible, then adopt an iterative approach. The sooner you get customer feedback, the cheaper it is to change direction or even decide that what you are building won’t be successful. Receiving feedback also allows you to optimise it for real customers needs by prioritising features or functionalities they will actually use, or by making it easier to use. There are a number of approaches you can use to do this, like The Lean Startup by Eric Ries, or the Google Ventures Design Sprint.
- Invest in customer data
Build the capabilities to capture, organise and analyse data on your customers throughout the lifecycle of their relationship with you. This data feeds the agile enterprise by providing information to make decisions on where and how to adapt and evolve, and provides the feedback loop on what is working well and what isn’t. For some of the most successful digital businesses, this customer data is their core product. For example, look at the consumer data that fuels the advertising campaigns that Google and Facebook sell to brands. Building these capabilities requires investment in:
– Enabling technology. Easily accessible to most businesses now with cloud services providing big data, AI and visualisation tools to all.
– People skills. Many traditional businesses do not have the requisite skills or capacity in areas such as data analysis, data engineering or data science.
– Data design and governance. Making the most of your data involves some upfront thinking on how it is structured and related across the business. It also calls for strong governance on how it is processed, so it is of the right level of quality to be useful. The types of customer data that can be captured are broad, hence where to prioritise largely depends on the type and maturity of the business. In general, this may include upfront marketing or sales data, analytics on how customers are interacting with your website or using your SaaS product or IoT device, as well as customer service interactions. Capturing customer data online is a relatively mature practice that is used by agile businesses to continuously optimise their online presence. Recently, we have been working with a number of global clients on how to capture better customer data in an “offline” retail environment. In one example, we partnered with Samsung to install cameras with computer vision that captured customer demographics (E.g. age, gender), footfall and linger time at various locations in-store. This data was used to reconfigure the store and change staff rotas to drive better outcomes.
- Share interactions and insights
A key enabler of an agile enterprise is transparency, sharing information so each of the individual units (i.e. employees or teams) is able to act and adapt accordingly. Traditional businesses are often built in silos, with individual teams or functions “owning” parts of the business, elements of the customer relationship or specific data sets. This approach stifles agility. To create an effective agile enterprise, as much of the business as possible should have access to the information and data insights on its customers. A natural place to start is ensuring that teams responsible for sales, marketing and customer service all have access to the same information on the customer interactions.
Talent
An agile enterprise needs a flexible workforce with skills and capabilities that are adaptive to ever changing customer needs. Sourcing the right people as and when needed is fundamental. As such, your business should ensure a strong connection with talent in the marketplace, where the competition is strong, and demand for skills like software engineering or data science is by far outstripping supply. If a business cannot quickly access the required talent its ability to adapt, evolve and grow will inevitably slow down. Addressing this involves a transition from a transactional approach to a more permanent sustained and continuous effort for acquiring talent, feeding the state of flux that an agile enterprise should always be in.
What to focus on to get talent sourcing right
- Build a continuous talent acquisition process
The talent acquisition team has many competing priorities and conflicting stakeholders across the business. Organise talent acquisition in a similar way to how you would organise software delivery, with a continuous backlog of demand (i.e. positions to be filled) that is regularly prioritised then processed incrementally and iteratively. This will ultimately focus the business on the highest priority talent first, all the while increasing speed and improving candidate quality as regular ongoing feedback can be used to optimise the process. An example framework for such an approach is IBM’s agileTA.To truly reap the benefits of this continuous process, you should capture data on candidates throughout, and don’t stop once the right people have been hired. Data on how they perform in the business once recruited is the ultimate measure of successful talent acquisition. It should be fed back to the team so that they can adapt and evolve and improve based on that information.
- Create a brand for talent
In this highly competitive talent market only focusing your brand on your customers and not on your employees is a big mistake. To attract high performing talent, you need to ensure they know about your business and perceive it as an attractive place to work. This is about selling the purpose and culture of the business, showing how working with you will benefit their career, as well as positioning other benefits or perks.
One of the most effective ways of creating this brand is by being open and transparent about the work you are doing and how you are doing it. Demonstrating what an innovative place you are to work at and what exciting products or projects you are working on provides real examples of what it would be like to work with you. A great example of this are the Spotify Engineering Culture videos which provide an insightful overview of how Spotify addresses the challenge of scaling agile. Next to that, they demonstrate what an innovative and forward thinking company Spotify is.
- Utilise the open talent economy where appropriate
Sourcing specialist capabilities and capacity is becoming easier with the proliferation of professionals working on an independent basis. This gives businesses access to extremely experienced and capable talent on a near on-demand basis. This talent can be used to flex existing teams when particular skills are in short supply or additional capacity is required. Businesses should be careful of getting too dependent on such a workforce, and not investing in their own internal capabilities. Aim to use independents to augment internal capabilities, not as a substitute. If you are building new capabilities, then independents can be used to do this quickly – but proactive and explicit knowledge transfer plans need to be in place to ensure a transition to internal teams.
Suppliers
For an agile enterprise to build flexibility into how they operate, the same flexibility in the way they work with their suppliers is needed. Forget about an arm’s length “customer – supplier” relationships with long term plans and commitments that are backed by rigid contracts. A more appropriate approach is to transition to a partnership with tighter co-operation and information sharing and ensure the relationship and commercials are set up in a way that enables flexibility.
This approach has been around for decades in manufacturing, with Just In Time supply chain processes that ensure products are produced when demand is there. It was these lean approaches to manufacturing at Toyota with their Toyota Production System (TPS) that were the inspiration for agile in software delivery.
What to focus on when working with suppliers
- Automate the process with integration
Significant speed (and efficiency) advantages can be gained by automating end-to-end processes between a customer and a supplier. This will often involve integrating the customer’s system with the supplier’s system where their respective parts of the process are executed. High volume processes such as order management or support can deliver sizeable benefit through this end to end automation.
Advances in technology mean that integrating technology systems is significantly easier. Technology protocols and formats such as RESTful and JSON enable integration and cloud services like Authentication Services. At the same time, API Gateways enable integrations to be secured and controlled to manage risk.
We have worked with a number of clients to design and deliver efficient end-to-end processes between customers and suppliers. This includes connecting advertising agencies with a large media owner so they can plan and buy advertising campaigns in their own proprietary systems, reducing lead time from days to minutes. We also see the lines between customers and suppliers being blurred in this space. For example, we have advised a leading global fashion brand on how to integrate processes and systems to source stock for online customer orders from a pool of their own, their supplier and their channel partner’s inventory. This reduces inventory levels and working capital as well as increases the ability to fulfill a customer order.
- Change contracts for flexibility
If the ethos of agile is to be ready and adaptive for change, then a contract that rigidly defines the work and relationship will often put unnecessary shackles on the business. A prime example of this is the fixed price and scope contract that was traditionally used for software delivery. The assumptions embodied within the contract were only true at a particular point in time and left the project little room to adapt or change without being financially penalised with “Change Requests”. This incentivised many wrong behaviours such as prioritising and managing the contract rather than managing the delivery. Unfortunately, these projects often have a rigid focus to deliver what was agreed in the contract rather than what the project team learns is right for the business.
- Share data
As already mentioned the proliferation of data, and easily accessible technology tools to make use of this data is driving improved business decision making. The benefits can be realised outside of enterprise by sharing of this data between suppliers and customers. Combining data-sets from different domains can provide across partners who specialise in their area can provide great insights. An example of this is in the advertising industry, where big brands who spend in this space like Unilever have amazing insights on their customers. This data is combined with that of media owners who have deep insights on their advertising assets (I.e. web-pages, search results, TV slots or outdoor advertising locations). This results in much more targeted and effective advertising campaigns for the brand, with improved ROI. It can also generate improved yields for the media owner as often the data will indicate that the “best” assets for brand A are different than for brand B allowing them to utilise more of their inventory.
Competitors, industry bodies, regulators, etc.
In its journey, an agile enterprise will need to build deeper connections with many other actors making up its external environment. Obviously having strong insight and understanding of how competitors are acting is important. Depending on the type of business there may be other important actors who can dramatically change the landscape the business is operating within such as regulators or industry bodies.
2. Adaptive direction
A well-functioning CAS has a clear purpose. An agile enterprise has a solid and consistent purpose and vision; but a more fluid and flexible strategy for how to go about achieving this. The destination they are trying to get to should be clear, while individuals and teams should have autonomy and the ability to self-organise to work out how to get there. After all, they are best qualified to make decisions for their area of responsibility and are closer to the information that will enable them to plot the most effective course.
The direction provided in an agile enterprise should:
- Be at the right level. Avoid going too granular as this is the role of the teams who are closer to the information and accountability
- Be iterative and flexible. Ensure you there is the ability to change based on new information and learning
- Have clarity and strength. The message and story that is communicated across the business should be simple enough for everyone to understand, and compelling enough for everyone to work towards
- Be consistent. agile is all about change and adaptability but if there isn’t a clear and consistent north star this can result in chaos.
- Be focused on value. Ultimately everyone in the business needs to understand what will generate value for the business. Often in an agile enterprise the balance for achieving this is more towards effectiveness and efficiency. There is no point in having a really efficient production line producing a widget that no one wants to buy.
Leadership
It is the leaders in a business who set the direction and communicate it with their employees. It is, therefore, their responsibility to do this clearly, at the right level, all the while enabling flexibility. Their actions and behaviours will create the conditions in the business for agility to either thrive or fail, particularly by fostering the right culture.
The challenge for leaders is that an agile enterprise requires a fundamentally different style of leadership. To be successful, they will need to relearn a lot of what made them successful in the first place.
What agile leadership should focus on
- Craft and communicate a purpose
It is the leaders of the business who need to create this north star, by being close to and listening to individuals and teams – this is where the real expertise and knowledge sits. It is also fundamental to utilise the deep connections built with the broader ecosystem to plot a course within this wider environment. This involves crafting a sharp and compelling story and communicating it in a way that various audiences with different styles of consuming information will buy into. It also involves being consistent and repetitive, so the purpose sinks into the DNA of the business. An agile enterprise should be able to adapt and change, but its leaders need to be consistent in messaging its purpose otherwise it is easy to lose direction.
- Become a servant-leader
This is a fundamentally different approach that a lot of leaders find difficult to adapt to. This is about setting the direction and inspiring the team, as well as being a facilitator for self-organisation and autonomy, so the teams can get on with what they know best. Often the reason why this can’t happen is that there are organisational, structural, political or cultural reasons. There can also be competing priorities or conflicts between teams. The role of the servant leader is to help remove these blockers or impediments, so the system works more effectively for the individuals operating within it.
- Develop an agile mindset
Leaders need to change their way of thinking to develop a more open, creative and adaptive mindset. This involves continuously assessing data, constantly re-evaluating situations, and being willing and open to change their thinking. They should foster creativity in a world where innovating and doing things differently is the driver of competitive advantage and growth. An IBM survey of over 1,500 CEOs from over a decade ago now cited creativity as the most important leadership quality in a complex business world. Business leaders like Elon Musk, Steve Jobs or Jeff Bezos are great examples of the power of creative leadership. A significant element of creative leadership is not being afraid of failure, but rather using those moments to learn and innovate.
Strategy
The strategy of a business is traditionally slow to develop and slow to change. Strategy development goes in cycles of years, involves large numbers of stakeholders and lots of data analysis. In a fast moving and complex world, however, the assumptions and conclusions may no longer be relevant, making the strategy out-of-date and redundant. An agile business therefore needs to take a more agile approach to its business strategy. Strategy in an agile business needs to be at the right level. Going too deep or granular, or assuming you can predict more than you can which risks paralysing the business.
What to focus on to develop an agile strategy
- Develop incrementally and iteratively
Rather than following a “waterfall” approach to developing strategy which could take months, work in sprints. Start with the most important questions or the items that will create value. And start at the top making sure the purpose and vision are clear. The strategy that then unfolds to achieve this purpose and vision can then be more adaptive. Put in place continuous feedback loops to test, validate and improve the process of strategy development.
- Make strategy development inclusive
A key tenet of agile software development is involving the user or the customer early on and throughout the process, and the same should be the case for agile strategy development. Make sure individuals and teams who are close to the customer and close to the day to day business are heavily involved in authoring the strategy. This taps into those deep connections they have with the external ecosystem; it sense checks the strategy in terms of real world feasibility and helps gain buy-in from the broader business.
- Use modern methods
Beyond authoring strategy just with employees, modern methods can be used for several purposes. Methods like Lean Startup can be used to ideate and test whole new business models with real customers, rather than this being a paper-based theoretical exercise. There are a number of other approaches such as innovation labs, design thinking, design sprints or story-telling that can be used to enable a business to develop its strategy in a much more effective way. These generally involve using creative techniques to help teams craft new ideas, timeboxing to focus minds on value and the use of multidisciplinary teams to ensure diverse perspectives input into the processes.
Planning
A common misconception is that a plan is not needed when following an agile approach. This is incorrect. Planning is as important for agile as with any other approach, but it should be done at the right level, and for the right time horizon. An agile enterprise recognises that the future cannot be predicted, that planning anything of complexity will include incorrect assumptions. And that as soon as a plan is issued it will be out of date as things change. Agile therefore calls for realism in planning – only plan what you can realistically predict. With a truly agile approach, the team is always planning but just in the right small increments.
What to focus on to plan an agile enterprise
- Multi-tiered planning
Plan in multiple-tiers and update these plans with a relevant frequency. Make it clear to everyone in the business what level each of the plans is at and what its purpose is so everyone is thinking and operating at the right level.An example might be:
- Plan enough to get started
A plan shouldn’t get in the way of starting something that you just know needs to happen. There are often some key upfront questions that need to be tackled before starting to do or deliver something. The key balance with planning is knowing what these are and focusing on only addressing these. Often this is as simple as clarifying what you are trying to achieve, how you are going to go about doing it, who or what resources are required and what dependencies there are.
- Don’t impose plans top-down
A common theme throughout this article is the need for a bottom-up rather than a top-down approach in an agile enterprise. Planning is probably one of the sharpest and often emotive examples of this. Teams in more traditional businesses are used to being imposed timelines from management who don’t know what it will take to deliver and don’t have a realistic view on feasibility. It is incredibly demotivating for teams to be put in these situations, knowing no matter how hard they work, they will be unable to hit these timelines. As well as creating resentment it makes being late the norm. In an agile enterprise the people delivering the plan need to feed into it, so it is based on more realistic assumptions and so they are committed to delivering it.
3. Operational flexibility
Ultimately an agile enterprise requires the core business operation itself to be flexible. This is where the analogy of an agile enterprise being more like an organism than a machine really comes to life. The operation is made of individuals, teams, functions, capabilities, products, services and projects. All operating autonomously, self-organising whilst being connected and co-dependent, all ultimately working towards the vision and purpose defined for the organisation. Each of these elements of the business is competing for scarce resources, and many will fail – but through continuous trial and error, the business will evolve and most importantly grow. Creating a business that operates in this way requires a balanced focus across the core dimensions of the operating model.
Organisational structure
Depending on the philosophy being followed most agile Transformations will either focus solely on:
- People and Culture – the agile purist “Don’t do agile, Be agile” approach that is based on agile’s developer led roots; or
- Process – putting in place ways of working, ceremonies and agile methods like SAFe which are often done to businesses by consultancies.
Apart from mistakenly only focusing on one dimension of the business these approaches generally miss the fact that organisational structures also need to change. Old school, hierarchical pyramid-like structures do not enable the autonomy and self-organisation required for an agile enterprise. Instead, a flat structure built up of individual units or cells should be defined to improve communication and reduce bottlenecks in decision making and information flow.
What to focus on to make your organisational structure truly adaptive
- Structure, based on value
The structure of the organisation needs to ultimately be focused on what delivers value for the business. Traditional organisational structures are built around internal functions such as marketing, sales, service, finance, supply chain, etc. Delivering value such as an outcome to a customer will generally involve many of these teams working together. But the way they are organised creates silos, inefficiencies, conflicts, lack of knowledge sharing and poor communication. This ultimately results in a sub-optimal outcome. How many times have you complained about poor service only to be told it was another department who dropped the ball? Structuring based on value involves; 1) defining the key drivers of value in the business 2) mapping the end-to-end value streams (or high level steps) that deliver this value and 3) grouping teams or squads so they are aligned to these value streams. For example, if a key driver of value in a business is customer placing an order (which is often the case!) then structure teams around this outcome. If an engine of growth for an online business is viral with users referring other users to the product, then structure a team or group of teams around driving referrals. As well as having a clear company-wide purpose to work towards, each team also has a clear lower level purpose that is directly linked to business value – i.e. “I am coming into work every day to increase the number of user referrals”.
- Autonomy and empowerment
The organisational structure, roles and responsibilities in an agile enterprise ultimately need to be defined in a way that enables autonomy and empowerment for each individual and each team. This will create an operation that is able to self organise, communicate effectively, act quickly and be accountable. This involves delayering hierarchical structures to put as much focus as possible within the teams carrying out the work. Provide teams with the mandate and autonomy to work out themselves how to approach their work, how to organise themselves on a day to day basis and how to solve problems. Empower teams to make decisions themselves. One of the biggest drags on speed and efficiency in most organisations is the process of decision making. Decisions often need to be reviewed by multiple people, agreed by the committee and/or made by someone of the right level of seniority. This creates significant time lags and slows down the change. In an agile enterprise, decision making authority should be pushed as low in the organisation as possible. This way it can happen quickly, close to the information, by the specialists who know the subject and who will ultimately take accountability for it.
- Cross-functional and dedicated
For agile teams to be effective they need to have all of the capabilities required to achieve their purpose within the team. Creating these cross-functional teams means that they are self-sufficient, hence it reduces external resource dependencies on them. For example, in a team driving user referrals they may require a cross-section of capabilities such as marketing, user experience design, data analysis, software development, quality assurance, and potentially finance. These cross-functional teams need to be dedicated and ringfenced to that purpose for a period of time. This creates a better understanding and emotional commitment to the purpose, builds a deeper knowledge of the domain and creates a stronger team dynamic. As importantly dedicating the team reduces the amount of context-shifting or multi-tasking. Going back to agile’s lean roots – when machines, systems or people switch between contexts it creates a large amount of waste. For this reason, focusing the team will dramatically increase their efficiency and effectiveness.
Structuring teams in this way might lead to a lot of tension and uncertainty in a traditional business, as it is a very different approach from how things were done in the past. For instance, businesses are used to scheduling individuals on multiple projects and tasks to squeeze the most utilisation out of them. Counter-intuitively, it will often be more effective to have someone under-utilised but dedicated to one team as at a macro level it makes the team (and the overall system) more effective.
Another important consideration for an agile enterprise is what to do with functional leadership or management when dedicating teams cross-functionally on value. This will often involve a matrix structure where team members will report into a functional or capability lead, as well as a product lead to focus on value. From a people perspective, the functional or capability lead will provide a long term home within the business, will be responsible for recruitment, performance management, career development, pay, etc. They will also be responsible for building good practices and standards in their function or capability area. The product lead will be own the resource for the period of time that they are assigned to their product to deliver the agreed purpose and value. They will, therefore, be responsible for the day-to-day direction, objective setting and prioritisation. Getting a matrix such as this to work is often a significant challenge in an agile transformation and one that needs focused change management and coaching effort.
People and culture
Truly being agile involves adopting a new philosophy, crafting a new culture and exhibiting a new way of behaving. To ultimately work in an adaptive, flexible and fast way, each person in the business needs to behave that way. The value of people is at the core of the agile philosophy. Removing layers of management, providing autonomy and empowerment to individuals and teams, enabling self-organisation and putting the power with the people who are specialists and closest to the action. Underpinning all of this is a key assumption – that these people are good enough and can be trusted with this responsibility.
What to focus on to foster an agile culture
- Skills and capabilities
Investing in people is an important part of any agile transformation. Giving people the opportunity to be masters of their own destiny and have authority over what they do often unleashes both energy and latent potential. But mapping individuals into agile teams often highlights the skill and capability gaps that should be proactively addressed through recruitment, external support or people development. This is often missed during agile transformations so people feel that although their reporting lines may have changed or they are being directed to work in different ways they aren’t being equipped with the skills needed to do this. This could be on an individual or a team level. Without investment in these areas, teams will quickly lose motivation.
- Culture
Much of the thinking and theory about agile is focused on how to create an agile culture. But what does this mean? It often translates into behaviours such as being collaborative, being accountable, being willing to take risks, having an inquisitive learning mindset, being flexible and being outcome and value focused. It is true that without developing these characteristics it is hard for a business to become agile. But culture and behaviour are some of the hardest elements of the business to change hence they are probably not the best place to start. If the key driver of your agile transformation is cultural change without considering other dimensions of the operating model, then it will be like pushing water uphill. Poorly designed organizational structure can manifest itself in poor culture and behaviour. An example is trying to move towards an agile enterprise without explicitly changing responsibility for the day to day direction and priority setting of resources to the product leads that focus on value. In this scenario, resources will ambiguously sit between their old functional leads and new product leads. People find it hard to be accountable, collaborative and outcome-focused without clear accountability, or a defined leadership figure setting priorities for the team.
Culture is important, so focus on it. But often, to get this right requires focusing on the enablers of a better culture and the root causes of poor cultures and behaviours.
- Coaching
In an agile enterprise, everyone needs to get used to either being a great coach or being great at being coached. For leaders to enable people to self-manage and act autonomously, they need to adopt this different focus and style. The role of the agile coach is also invaluable in an agile enterprise, as they are able to look at the system from the outside in and more easily spot what isn’t working, advising on how to improve.
Process
To many people agile is about the implementation of a new methodology or process. By putting in place weekly sprints, managing a product backlog, holding sprint planning meetings and daily standups, “we are now agile”. This has been taken even further with the implementation of heavyweight frameworks such as SAFe. This is at odds with the first statement of the agile manifesto: “Individuals and interactions over process and tools”.
With that being said, any true transformation should involve required changes and impacts to the business process. An agile transformation needs to focus on new processes and ways of working that will facilitate people working in an agile way. It should also consider what existing business processes are inhibitors of agile.
What to focus on to enable agile processes
- Implement processes to facilitate agile but keep it lightweight
For people to work in an agile way there are some basic principles and good agile practices that should be adhered to. Process is often a good way to ensure that this happens. Let’s look at the example of agile software delivery. Some of the elements you need are:
– A healthy and prioritised backlog, so you are doing the work that will deliver the highest value
– User stories that are ready to be developed, so you can build them immediately in an iteration
– User stories to be Done at the end of an iteration, so they can be released immediately to deliver value early
– User feedback, to ensure the product is meeting the needs of the customer hence will deliver value
– Continuous improvement, so the team can get quicker, produce higher quality and more value each iteration
– Putting processes and ceremonies in place helps facilitate this happening
Retrospective meetings enable:
– Backlog refinement (aka “grooming”) meetings focus on a healthy and prioritised backlog
– Sprint planning meetings check that all user stories are ready to be developed
– Sprint demo meetings are a final check that all user stories are Done at the end of an iteration
– Sprint demo meetings enable the capture of user feedback
- Putting in place a regular cadence, with light-weight processes and regular ceremonies help create a heartbeat for the teams and facilitate communication and collaboration. But this should be done with the teams through advice and coaching. Ultimately it is up to the teams to work out the most effective way to deliver their work. There may also need to be some standard ways of managing interdependencies between teams. But again, keep them lightweight!
- Fix broader operational processes
Other operational processes that can often inhibit agile need to be revisited. Some areas that are often guilty are finance, legal and risk. Traditionally, financial processes look far into the future, are slow and assume a level of foresight that simply isn’t feasible. An agile enterprise requires agile financial processes. If agile teams need funding to ramp up or change quickly based on new learnings but it takes months for finance to be approved, then this will be the throttle on speed. A progressive approach for agile enterprises is to treat agile teams like start-ups, and for Finance to act like a Venture Capitalist who is able to fund new ideas or hypotheses coming from the business. If they are proving successful, then ramp up the funding to help them scale. Legal and risk processes can also be a constraint on the flexibility of a business. The appetite for risk in an agile enterprise often has to change and increase. Legal also needs to be much closer to (and often within) the agile teams so they can collaborate early on to think of creative ways of avoiding or managing constraints.
- An agile methodology can be used across the business
Consider how agile processes can be put in place across other areas of the business to help focus on the most valuable work, to increase effectiveness and efficiency, to improve speed to market, to increase predictability and put in place continuous improvement. Marketing, for example, is an area that is greatly benefiting from “going agile”, as it is able to quickly test messages and campaign effectiveness with customers very early on before scaling them. Agile is making an impact across businesses in areas such as Sales, Customer Service and Creative Production to name a few.
Closing thoughts
Agility is a fundamental requirement for businesses to maintain their competitive advantage in an increasingly complex and fast-moving environment. For traditional businesses, becoming agile will require a fundamental rethinking of their management philosophy, as well as the key characteristics of the business should be. Transforming into an agile enterprise involves rethinking many of the elements of the operating model. It’s a challenge – but one well worth the effort! The result will be a business that is always transforming and continuously improving. This could be the last big wholesale transformation you ever need to do.
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