Agility for the rest of us

Agility is a wonderful thing, so much so in fact, that most corporation around the world are trying to replicate the benefits achieved in software delivery at every level of their organization. Here is a short review of the most popular option you could consider and a few insights on how to choose the one that is best for you

Agile Corporate Management

1- What does it mean to be agile at the corporate level ?

My personal definition of corporate agility is:

Leveraging the power of small, self managed team to achieve optimum adaptability in providing value to your environment.

There are 2 school of thought on how a corporation is to achieve optimum adaptability in a fast-moving world.

· The traditional hierarchical (control and command) management structure is obsolete. It can no longer provide the desired outcomes at any level of the firm. Consequently, it must be replaced wholesale, and everyone in the firm must transition to a new management structure. We will refer to these as lean/agile structure.

· The traditional hierarchical (control and command) management structure still provide superior outcomes in some areas of the firm. To achieve optimum adaptability 2 things must happen. First create and support a robust lean/agile structure where needed. Second create an efficient interaction mechanism between the 2 management structures (easier said than done !!!). We will refer to these as hybrid structure.

IT focused group as well as management focused group have presented solution for both school of thought.

2- Lean/agile management structure

All the teams in your corporation are self managed and using one form or another of lean/agile management. Frederic Laloux1 did an extensive analysis of enterprise using that corporate structure and concluded that they were more resilient, profitable, that they had high quality product and more satisfied employees/customer. This remained true even as some of the firm’s size increased to more that 10,000 employees. Many of the management approaches in his study were unique to a specific corporation and loosely structured. It is possible to do like these pioneers and create your own unique management approach. However, for the less adventurous of us, there are also 3 structured models available.

· Holocraty2 : Originally developed by Ternary Software, it operates as a structure of nested teams. Teams (called circles) decompose into sub-team until a manageable size of problem is defined. The inner circle is perfectly autonomous but maintain 2 ways communication with the outer circle that deal with the larger question. It can be efficient with long value chain.

· Evidence Based Management (EBM)3 : This relatively new approach (2019) focuses on 4 parameters known as Key Value Areas (KVA) to ensure corporate agility. These factors are Current value, Unrealized value, Ability to innovate and time to market. The intended product to deliver is software. Time will tell if it is adaptable to other product or longer value chain

· Safe 5.04 : Another new approach that focus on software delivery. The central concept is to scale lean/agile process around customer needs. (Various method exists already to scaling agile. For instance, Scrum.org created” NEXUS”) There are 7 core competencies each having 3 dimensions. These competencies are Lean-agile leadership, lean portfolio management, organizational agility, continuous learning culture, team and technical agility, agile product delivery, and enterprise solution delivery. As for EBM time will tell if it is adaptable to other product or longer value chain

3- Hybrid Management Structure

In this model some people work in a hierarchical structure while other work in a Lean/Agile Model. This is a valuable construct even if your final goal is to have all the team in a self management model. You are most likely going to transition from hierarchical to self managed for a number of year (because adoption rate will vary by corporate segment). You will be de facto in a hybrid model until you reach your goal. The 4 propositions for this approach are :

· Kotter’s Accelerate5: Propose to achieve corporate agility by having the creative effort done in a satellite entity (a spin-off) but to keep a maximum of communication with the hierarchy as a way to stay aligned on corporate goals.

· Scrum Studio6: Use an approach similar to Accelerate but does not put the same emphasis on communication with the hierarchical entity in order to minimize it’s influence on the satellite entity (the spin-off).

· Team of teams7: One of the most hierarchical structure known, the military adapted agile concept to their reality. Threat are now to complex to be quickly understood by a single individual, teams are required. Team need to be small, they need to understand their ecosystem and have the ability to make decision by themselves. Trust must exist in a team as well as between them. Information must flow to all quickly and connect to the big picture. Leader concentrate on culture not day to day operation. In other word the mindset must change from efficiency (being ready for known threats) to adaptability (being able to react quickly to unknown threats).

· Derivative of the Toyota way8: Kanban, Kaizen and lean six sigma never became a management philosophy in the occident. They are mostly used as tool to increase quality and efficiency. They all can adapt to longer value chain. Only Kanban was able to adapt to software delivery. The importance of these methods lies in the fact that the concept that they put forth became the foundation of the lean/Agile movement

4- What an agile transformation should not be

· It should not be about accelerated delivery, cost reduction or sale increases. These things are consequences of your adaptability to provide value. They are not goal in themselves.

· It should not be about telling the environment (through your innovation) what it is that has value for them. You should listen and adapt to what the environment tells you, not the other way around.

· It should not be about limiting the definition of your environment as your costumers and industry regulators. Your corporate environment is much larger than that.

5- Which structure to choose

Innovation is a hot topic right now but let’s not loose focus of the other component of the value you deliver to your environment. Quality, speed (time to market and production efficiency) and cost are also part of the overall value you deliver. Since agility is all about delivering value these are your agility parameters.

In a traditional structure the motivations are;

· To maximize production efficiency (Cost and speed parameter)

· To achieve consistent quality level (Quality parameter)

· To protect the firm

In an agile/lean framework the motivations are;

· To reduce waste (Cost and speed parameter)

· To foster creativity/innovation (innovation)

· To maximize market adaptability (agility goal)

If we compare the motivations for both structures, we see that choosing a fully agile structure could be detrimental if some of the parameter could be better served by a traditional structure. In these cases, a hybrid structure make sense.

Another precept of agility is to move from a “project” mindset to a “product” one. If indeed you are dealing with a product then use existing product metrics to better understand your needs. One such tool is the product value chain9. It can help you choose the type of structure you need (Lean/Agile or Hybrid). It can also help optimize a Lean/Agile structure.

For instance, if your contribution is software and this software is delivered directly to the customer then your value chain is short and corporate agility is achieved if you correctly follow Scrum practices.

However, if your contribution is software that help fly a new type of airplane, the value chain (for the product = airplane) is much longer.

There can be more than one agile approach along the value chain of your product, each with their unique way to achieve agility. SAFe for instance frequently use Scrum, Kanban, XP, DevOps concurrently in delivering value to their environment. Other contributors (such as manufacturing) could also have Lean/agile process (Lean 6 Sigma, Kanban, Kaisen, etc.) in place. How do you integrate them all cohesively ?

6- The CEO dilemma

As an example, let’s say that your agile team has developed the next generation of smartphone (Coolphone V.12). You then send the prototype to China to have it mass produced, you notify marketing and logistic about what is coming and your product owner notify the agile team of what he/she envision for version 13. The manufacturer, marketing and distribution people might not have to use agile because most of the time the problems they face are in the obvious or complicated quadrant of cynefin10.

Hence a dilemma for our fictional CEO. Agility give you the tool to deal with Complex adaptive problem. CEO have to deal with problem that ranges from the obvious to the chaotic. For this reason, more than one corporate structure might need to coexist in order to achieve corporate agility. The length and depth of your value chain will also be a factor in selecting which of the 2 model (Agile or Hybrid) is best for you.

7- Conclusion

Transitioning team to agile processes and mindset is neither easy or quick. A lot of information about the various agile options needs to be circulated. The benefits and drawbacks of each should be explained. When a specific agile approach is selected, training and coaching is required. Support from management is essential as well. In the end, each team has to figure out what work for them, that is why it is called self management! Without team taking ownership of how they will deliver value, agility will not happen. Traditional management dogma instructs you to find the best recipe for the problem at hand. With Agility it is not about the recipe it is all about the cook and his/her ability to create a unique recipe.

There are many more option out there. I don’t pretend to know them all or to even know which one would work better in a given situation. What I do know is that we must do better in helping firms transition to a more agile status.

And remember “focus on the cooks not the recipes !!!”

8- References:

1. Frederic Laloux, Reinventing organizations, Nelson-Parker, 2014

2. Holacracyone LLC, Holacracy Constitution V4.1, Holacracyone LLC, 2015

3. Scrum.org, Evidence-Based Management Guide, Scrum.org, 2019

4. Scaled agile Inc., Achieving business agility with SAFe 5.0, Scaled Agile Inc, 2019

5. John P. Kotter, Accelerate, Harvard Business Review Press, 2014

6. Kurt Bittner, Scrum studio a model for innovation, Scrum.org, 2017

7. Stanley McChrystal, Team of teams, Penguin Publishing Group, 2015

8. Jeffrey Liker, The Toyota way, McGraw-Hill, 2003

9. Michael Porter, Value chain, 50 minutes, 2015

Dave Snowden, Cynefin Introduction, Cognitive edge pte ltd.