What a CEO needs to know to make “Agile” work for your agenda
What CEO doesn’t want an agile organization? Sharper execution. Faster, better decisions. More customer focus. Higher performing teams. Sign me up!
But hasn’t this been promised before? Think back to previous trends – quality, lean management, re-engineering. They all had similar promises.
So here’s why agile is so prominent today, and what you need to know to make sure you are working the fundamentals and not the fads.
Since the late 1980’s the “Command and Control” organizational model has been breaking down. Technology, markets, and demographic are radically different from when the C&C model emerged in Henry Ford’s day -- when the predominant strategy was “high volume, standardized production.” Now, 100 years later, competition is based much more on “speed, specificity, service” (think Amazon, Netflix, Teladoc) and a very different organizational model is required to succeed.
A new organizational model has been emerging with very “agile” characteristics. Let’s call this model “Engaged and Empowered” (E&E). It is less hierarchical and bureaucratic, more team-based and customer-focused and strives to deliver fast/incremental improvements. (For more, see McKinsey Quarterly: “Organization of the 90’s”, March 1992)
Leaders need a way of thinking about orchestrating the shift from the C&C to E&E model. Label it “transformation” or not, multiple dimensions of the organization need to change – structure, roles, culture, management and IT systems, skills, metrics, etc.
Agile appears to offer a ready-made approach to help drive the transition. The agile principles fully align with the E&E model. And the supporting methodologies born in the IT world (agile teams, user stories, backlogs, sprints, retrospectives, etc.) offer a proven set of practices. So, no wonder, that agile has “jumped species” from IT development to broader enterprise-wide change.
Agile works better at the team and project level. Agile works great in any area where the problem is complex and the solutions are unknown – and when you can identify a concrete objective (penetrate new market segment, develop a new product), assemble a cross-functional team, and define clear and measurable outcome with a deadline. And most companies have dozens of these types of initiatives on their agenda..
Agile “jump starts” the typical project start-up phase. We are all familiar with the “forming, storming, norming, performing” team development curve. Agile with its clearly defined roles, norms, and practices enable enables teams to get to “performing” with a lot less debate and trial and error.
Agile approach struggles when “scaled to the enterprise level.” It’s a lot easier to launch and manage a handful of teams than to systematically engage thousands of people across multiple business units, functions, and geographies – and redesign the defining strategies, structures and systems. For this type of enterprise level change, a very different set of perspectives and approaches are required to “architect” an enterprise-wide transformation.
Agile can fit well within an overall transformation effort. The simplest way to think about orchestrating change is to organize efforts around “transformational triangle” – where leaders are driving “top-down” direction-setting, “bottom-up” performance improvement and problem-solving; and “cross-functional” process redesign. Agile teams will naturally fit into the “bottom-up,” team-based dimension of these efforts.
Most organizations will end up operating in a “hybrid” model. Few strategies and business models will require (or even benefit from) everyone operating in full agile. Predictable, stable areas (e.g., large parts of manufacturing, customer service, finance & accounting) may benefit from some team-based structures, but probably will not be working in sprints, with product backlogs, etc. While other areas (e.g., product development, IT) will operate with formal agile practices. What will unify the culture are the underlying agile values – deliver value to the customer, work in non-hierarchical teams, embrace and respond to change, learn and iterate.
No “magic pills.” Management literature over the last 30 years is littered with overly-hyped promises for the “keys to transforming your organization.” (“Quality is Free.” “Zap: The Lightning of Empowerment.” “Reengineer Your Corporation.”) Transformation is devilishly hard and rarely linear – and those companies that make the most progress will develop a tailored and home grown effort. They can certainly incorporate specific methodologies (agile teams, design thinking, balanced scorecards, process re-engineering, etc.) but at the heart they will need a leadership and governance process that thinks deeply, acts as team, communicates clearly and learns over time.
Agile principles and methods are here to stay. The terminology and lingo may evolve – but the fundamentals are powerful and will endure.