The Agile Mindset: Releasing Frederick Winslow Taylor's Stranglehold On Your Company

Disruption always looms just over the horizon.

During his tenure as Goldman Sachs CEO, Lloyd Blankfein, was frequently heard saying that Goldman Sachs is a tech company now. Indeed, in 2015, Goldman already employed more software engineers than Facebook, 9,000 of their 30,000 employees globally. That was 6 years ago!

Every industry has been facing disruption from the digital revolution for nearly 30 years, and that disruptive trend has continued unbroken, launching companies that embrace it into the future, and decimating those who fail to heed Marc Andreessen's warning that "software is eating the world."

Then came the COVID-19 pandemic.

Last year, every company on the planet found itself scrambling to reorganize itself to accommodate a now 100% remote workforce. Meetings needed to be 100% virtual. Data centers had to be retooled to allow secure access from home computers. It suddenly became incredibly clear to all CEOs that now was the time to innovate or be crushed by the weight of history.

As a result of all of this rush to digitize everything, an already large interest in Agile methods increased dramatically. I myself, along with all of the technology, product, and leadership coaches and consultants I know, suddenly found ourselves inundated with requests to help companies implement Agile strategies as quickly as possible.

But what is Agile? Where did it come from? And how can it help companies that do not yet see themselves as tech companies?

Taylor's Big Idea

Frederick Winslow Taylor is largely responsible for the way you and almost everyone you know in a corporate management role see work, teams, and leadership. His impact on the global corporate culture is immeasurably large and largely invisible. And it is Taylor who is standing in the way of your innovation efforts today.

In the beginning of the 19th century, the US was largely still an agricultural economy. From the end of the Civil War, which raged from 1861 – 1865, the share of urban population more than doubled, from under 20% to over 40% by the beginning of the 20th century.

This was the world that Frederic Winslow Taylor grew up in. Born in Philadelphia, PA in 1854, his father a successful lawyer who made a fortune in real estate, Taylor passed the Harvard Law School entrance exams with honors. Yet, surprising everyone, he opted instead to become an apprentice machinist at Midvale Steel in 1878, a company owned and operated by friends of his parents. Fascinated by the world of industry and mechanisms, he quickly climbed the ranks through journeyman, and foreman, to eventually become chief engineer.

During this period, the US was steadily growing as an industrial power competing with the former colonial powers on the world market. There were frequent calls from Washington to improve production capacity. Historically, all of the knowledge for manufacturing was held by the artisan guild systems, and each master craftsman did things their own way. Taylor became obsessed with the idea that these work methods could and should become standardized, and he pursued this goal with ruthless determination.

In 1898, with 20 years of experience under his belt, Taylor joined Bethlehem Steel to solve an expensive machine shop capacity problem. And it was here that he developed his now famous "Principles of Scientific Management." Scientific Management is popularly associated with Taylor's famous time and motion studies, which broke down each step in a process so that it could be measured and optimized in isolation in order to increase overall output. But the more far reaching impact of Taylor's work is less appreciated and understood: the separation of thinking from doing, and the creation of a class of clerks who performed all the planning and left the doing to the laborers. Those clerks eventually evolved into today's managers.

In fact, Principles of Scientific Management was so successful in increasing output that Taylor's methods deeply influenced McKinsey, the first consulting company, the curriculum at Harvard Business School, and even government policy. Taylor's organization principles became the de facto standard for the organization of industrial companies worldwide.

And it worked! Mass production enabled the US to compete with increasing effectiveness. Taylor had collaborated with Henry Ford and influenced the adoption of the assembly line. Using his methods, managers devised ever more sophisticated ways of monitoring and measuring the performance of employees. Even the unions, fiercely opposed to Scientific Management initially, gradually found it enabled them to more easily define rank, seniority, and job descriptions to solidify collective bargaining agreements with employers. So, now everyone was on board.

While he died in 1915, his methods were instrumental in helping US manufacturers meet the production challenges of the first World War.

There was only one problem. Quality was not accounted for until the inspection phase at the end of production. Errors in the process upstream could produce massive amounts of waste. This was not a big deal in the first half of the 20th century as the US became the factory to the world market. But in the postwar period, competition with Japan and Germany started to make quality a critical problem to be solved.

W E Deming Turns Taylor On His Head

Meanwhile, a little known statistician in the US Dept of Agriculture would be asked to help with the 1940 US Census. William Edwards Deming was born in Sioux City, Iowa and was 15 years old when Taylor died. His parents were well educated, and instilled the value of an education in him.

When he was 27, the director at the Ag Dept introduced Deming to Dr. Walter Shewhart of Bell Labs, where he then worked under Dr. Shewhart for a decade. Together they developed statistical sampling methods that are now common in manufacturing, in particular Lean and Six Sigma. Shewhart tended to be lost in his own thoughts, and made things more complicated than necessary. So Deming soon learned how to simplify and popularize their ideas.

He spent the rest of his career developing those ideas and teaching them to any executive who would listen. Among those ideas was the first approach to an iterative quality control process, called PDCA (Plan, Do, Check, Act), which ultimately found its way first into the Toyota Production System and what we now think of as Lean, and later into the heart of Agile.

Deming's participation in the 1940 census, applying the statistical sampling methods he and Shewhart had pioneered, was so successful that he was asked to be part of a 5-man team during WWII, tasked with improving quality in the production for the war effort.

Thinking and Doing, Together Again

His approach to improving quality was radical, and turned Taylor's ideas upside down. Deming insisted on bringing thinking and doing back together into the worker. He was a champion for moving the authority and responsibility for process improvement right down to the workers on the assembly line. And it was wildly successful.

Unfortunately, Deming's methods fell out of favor after the war, as US industrial giants returned to their Taylorist approach to wasteful mass production now that the war effort was over.

But catapulting from his success in the war planning team, Deming was asked to help Japan's Union of Scientists and Engineers rebuild Japanese industry from scratch. And it was here that Deming really put his ideas to the test. In 1951, Japan honored him by creating the Deming prize, which is still awarded annually to this day. Deming is said to be the most influential non-Japanese person in the creation of modern Japanese industry.

One member of the Union of Scientists and Engineers who toke an interest in Deming's work was Taiichi Ohno, Chief Engineer at Toyota Motor Company. Ohno later went on to develop the now famous Toyota Production System. Although, Ohno and other executives visited the US in the 1950s and toured the Ford manufacturing plants, they were not able to produce cars like the Americans. Storage space was at a premium in Japan, and so they concentrated instead on reducing waste through continuous improvement. Symbolized by the PDCA cycle that Deming taught, continuous improvement was adopted as one of the two pillars of the Toyota Way.

Another principle that Deming championed passionately, respecting people by honoring the workers' own ingenuity in solving production problems, became the second pillar of the Toyota Way. This commitment to moving respect, authority, and empowerment to the workers on the line was in direct opposition to Taylor's cynical and suspicious views of workers. And it is this commitment that allowed Japanese manufacturing to threaten the once mighty US auto industry.

Back home, in the US, despite his preeminence in Japan, executives continued to ignore Deming right up until the late 1980s when the threat of Japanese imports reached its zenith. Only then, did American industrialists begin to take notice of Deming's work.

Getting Lean

Lean manufacturing was coined by John Krafcik in a 1988 paper for Sloan Management Review as a way to describe the Toyota Production System and other Japanese methods. Many executives associate Lean with Six Sigma, but the two are not the same. Six Sigma was developed at Motorola and was inspired by Japanese manufacturing as well. But Six Sigma lacks the critical human element of Lean, the pillar of respecting people, and instead focuses on driving quality from the reduction of variation from the system. For this reason, Six Sigma was never able to produce the outcomes achieved by Toyota. Spurred by fiercely competitive CEO Jack Welch, General Electric ruthlessly pursued a Six Sigma approach to reorganization and improvement in the late 1990s. To this day, GE still struggles to innovate in a digital world, and may finally get there now that their latest CEO is a Toyota trained executive.

One reason for the enthusiasm of American executives for Six Sigma, and a reluctance to truly embrace the more heart-centered methods of Lean and Toyota, is that Taylor's grip on the philosophy of management methods is still incredibly strong in corporate culture.

The tragedy of the Second World War paradoxically created the opportunity for the Toyota Way of respecting people and continuous improvement. It also created the information technology revolution. The craft of software development originates from military infrastructure projects needed to break codes during World War II. But it came into its own in the 60s and 70s in corporate finance and accounting departments.

By the 1980s and 1990s, when US manufacturers finally were desperate enough to begin implementing Lean manufacturing, something of the opposite was occurring in corporate IT. Big complicated IT projects were being subjected to ever more strenuous efforts to exert control over software development, using a phased gate fixed-cost, scope, and budget approach software developers now derisively refer to as Waterfall. Waterfall was for software development what six Sigma was for production. All of the process and none of the heart.

Enter Agile

But in 1995, the Standish group, a prominent consulting agency, released its now famous CHAOS Report, which found that the vast majority of software projects across all industries, if they were delivered at all, were delivered way over budget and well past their deadline. This was a clarion call to the software world, and in response to this damning evidence about corporate IT projects being mishandled, a small group of software innovators were quietly developing a new method inspired by the very Lean manufacturing efforts that were underway in the factory.

Kent Beck, Ken Schuaber, and Jeff Sutherland, to name a few, had been inspired by what was going on in Japanese manufacturing. Beck is now known for being the creator of the Agile method eXtreme Programming, while the other two developed the method now known as Scrum. All three were to become signatories on the Agile Manifesto in 2001.

The idea is deceptively simple: the two pillars of respecting people and continuous improvement can be applied to software development, not just manufacturing. The first of the four principles of the Agile Manifesto deals with respecting people. The other three clearly embrace continuous improvement.

Where Agile has failed to take hold, there is usually a pattern of companies embracing all of the prescriptive aspects of Agile, the daily Scrum, sprints, and so forth, with none of the more human aspects. The senior leadership demands that everyone embraces Agile, but they themselves aren't ready to change. Again Taylor steps forward to haunt us with his separation of thinking from doing.

Among the main limitations of Taylor's thinking, and where Deming, Ohno, and all those who've followed in their footsteps differ, is in trying to control things in an uncertain environment. The power of the PDCA cycle, or any continuous improvement feedback loop for that matter, is that it doesn't try to predict the future. Agile, like Lean, is about embracing change. And Agile requires a type of mindset that also embraces change. It requires a Mindful Agile Leadership.

It's All In Your Mind

Three books published in the last two decades have provided the final pieces of the Agile mindset puzzle.

In 2005, Stanford professor of Psychology, Carol Dweck, published Mindset: The New Psychology of Success. In it, Dweck explains that there are two main types of mindsets, Fixed Mindsets and Growth Mindsets. A person with a fixed mindset believes that everyone has relatively fixed qualities that will change very little throughout their lives. Fixed mindset people tend to struggle with failure because they see it as a reflection of their relatively permanent attributes. A person with a growth mindset, on the other hand, believes that people are capable of learning and growing from their mistakes. They embrace experimentation and failure as a learning opportunity.

We can see Dweck's research reinforcing the core idea in Agile of continuous improvement. If we embrace a growth mindset, it means that we can embrace our mistakes as opportunities to learn. This is in direct alignment with the principles of the Toyota Way, and the teachings of W Edwards Deming.

A few years later, Dan Pink published his book Drive: The Surprising Truth About What Motivates Us, in which he explained that in today's knowledge economy, teams and individuals must be motivated by the three central concepts of autonomy, mastery, and purpose. Like Deming, Pink illustrates why teams must be given control over their time, tools, tasks, and techniques if we want them to produce positive outcomes for the business. They must have the ability to learn and grow and become masters of their craft. And most importantly they must be guided by a clear sense of purpose. Pink's work supports the idea of a mindful Agile leader by encouraging us to delegate and let go of control, and allow the teams to guide process of continuous improvement.

Finally, in 2011, Thinking, Fast & Slow was published by Nobel Prize winning economist, Daniel Kahneman. His work showed how extensively cognitive biases affect human behavior. He identified two different systems in the mind. The first, System One, a fast, automatic pattern matching machine that we use to make snap judgements under pressure, and that we likely inherited from our prehistoric ancestors. System One works by leveraging biases that we've developed from experience so that we don't have to decide a shadow in the grass is a snake every time we see one. There is a shadow, and so we just jump out of the way.

The second, System Two, a slower and more methodical system, we use to deliberate, calculate, and make more rational decisions. The trouble with this is that most humans operate from System One most of the time. System Two takes effort, focus, concentration, as well as calories, sleep, and relatively low levels of stress in order to function properly. Under pressure, overworked, and malnourished, we are more likely to resort to the snap judgements of System One, even though they can be frequently wrong. Those judgements are clouded by a range of cognitive biases, and those biases while appropriate for immediate physical danger, are not appropriate for making rational decisions in the workplace.

The Mindful Agile Leader

The mindful Agile leader is aware of the two systems operating in their mind, and they take responsibility for making sure that they are thinking carefully when the situation calls for it. Further, they encourage a growth mindset and autonomy, mastery, and purpose in their organizations.

Agile teams can be incredibly effective and efficient. But only if we follow the core precepts of Deming and Ohno of respecting people and continuous improvement. Respecting people means giving them as much autonomy over their work environment as possible, and trusting them to do what is right. Continuous improvement means making sure that our organizations embrace an experimental growth mindset, that learning is encouraged and mistakes are not only tolerated, but actually embraced as learning opportunities.

The 21st century has already presented us with some very formidable challenges to our thinking and our ways of doing business. Relying on the antiquated methods of F W Taylor and Henry Ford, both dead now for nearly a century, is as inappropriate as insisting we all travel by steam ship or rail, and only send messages by telegram. The world has moved on, and so too should your management and leadership culture. Agile is here, and it's time we embrace it. We can all be mindful Agile leaders.

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