The Promise of Business Agility?

In my 20-year career in consulting, I realised that one of the things we get hooked on are fads, trends or buzz words. Thanks to Google that defines a buzz word as “a word or phrase, often an item of jargon that is fashionable at a particular time or in a particular context.”

It seems to me that Agile seems to be precisely that. You may ask why would someone that has built his career over the last nine years on Agile coaching and training, building arguably the leading Agile consulting team in South Africa, make such a controversial statement and potentially discredit all our achievements in the last nine years? The reality is that most large corporates have fallen in love with the promise of Agile and perhaps now may feel a little let down by not achieving the true value of what Agile can offer.

Let us provide some context. Agile software development practices have been around for several decades (the late 80s and 90s) and you can trace back the origin of these principles even further back to lean manufacturing made famous by the Toyota Production System (TPS). In 2001, 17 Software practitioners got together in a mountain resort in Snowbird, Utah, to define common values and principles to make software safe for software developers. I don’t believe that it was the intent to apply the values and principles outside of software development. More importantly, I don’t believe their goal was for this to scale in large, corporate organisations. It was intended for small software teams building cool software products.

But now in 2019, we have observed a massive movement in the global market where large organisations, built on legacy processes and technology, are adopting what they refer to as New Ways of Working underpinned by Agile practices, tools and techniques driven primarily by IT. So why is this happening now, even though this has been around for 18 years? In all my workshops and sessions with clients and validated by our research paper (State of Agile in South Africa 2019), the number one reason is to accelerate product delivery. To be faster than your competitors in introducing new products, features and services to market. Due to the massive rate of change, the VUCA economy, the 4th industrial revolution and the introduction of millennials in the workforce, the need to remain relevant and competitive there needs to be a different approach to the way we work. To be honest, the real urgency for change is to ensure these organisations still exist within the next few years.

But then reality sets in. Recently I have been asked by some of my clients, “Can you tell me where there is an organisation in South Africa that has truly transformed into an agile organisation?” And to be honest, I can’t really think of one that has delivered on the promise of agile. Don’t get me wrong; many organisations have achieved massive success in improving the way they work primarily in their IT organisation. They have improved visibility, improved collaboration and provided a better working environment, increasing team morale and motivation. However, many organisations are becoming cynical in believing they can transform into an agile organisation.

So, enters a new buzz word - Business Agility. In the last two/three years, I have seen an increase in the research, articles, conferences and movement for Business Agility. Perhaps, the starting point is to define what it is:

For me, the best definition that I can find is that provided by The Business Agility Institute on their website: “Change, both technological and cultural, is occurring faster than ever before. In this climate, modern enterprises will live or die on their ability to quickly adapt. As a result, companies are turning to agile for ideas to innovate, reduce costs, and remain relevant in a changing market. Business agility embraces change. Business agility changes how you think, how you work and the way you interact with people. This change is crucial at every level of the organisation, from the operations floor to the C-Suite.”

So how do we move away from Agile software development to Business Agility? Even more so, how do we move away from Operational Agility, where we are making the existing products better, faster, cheaper and so on for existing customers to Strategic Agility where we are creating new markets with new products that reach new customers, i.e. market-creating innovation (reference: Clayton Christensen, and to Professors Kim and Mauborgne in their books on Blue Ocean Strategy). And this is not only about applying Agile methods to other areas such as Human Resources, Finance, etc., but creating an agile organisation.

At IQbusiness, we believe that to achieve this; there is a fundamental shift in thinking required and an approach that must tackle the complete value chain:

Understand your purpose

As Simon Sinek says, “People don’t buy what you do, they buy why you do it”. There are many business authors such as Frederic Laloux (Reinventing Organization), Dan Pink (Drive: Surprising truth at what motivates us), Simon Sinek (Start with Why?) and Stephen Denning (Age of Agile) that all are driving the same message about the importance of creating purpose for both employees and customers, that is beyond increasing shareholder value. Don’t get me wrong, purpose without profit is not the goal, however, profit without a purpose is not sustainable and in today’s organisation it is critical to success.

Purpose provides clarity of direction and certainty that employees can truly buy into. The reality is that knowledge workers are motivated at work by ensuring what they do makes an impact, they can master their craft and have the autonomy to make decisions. Making money for the organisation isn’t what motivates people (unless you are a shareholder of course).

In an agile context, you need to provide clarity of direction as to why it is important for the organisation to adopt a new way of working, creating the urgency for change. Without this, people in your organisation will struggle to make the connection as to why this is important to them.

Business agility is not the goal, it is the enabler to achieve the goal and ultimately the overall purpose.

Align your business model

An organisation’s operating model provides the link between the operations and execution to the strategy of the organisation, which ultimately should be aligned to achieving the purpose (as above). It is the set of capabilities required in an organisation required to achieve the strategy and enable the execution.

To achieve business agility, organisations need to fundamentally change the way they operate across the value chain. Operational agility is achieved in IT and improved Agile software development practices. However, this operates in a system (Systems thinking is a holistic approach to analyse that focuses on the way that a system's constituent parts interrelate and how systems work over time and within the context of larger systems – Peter Senge). And the challenge that we face is if we only make IT agile, we land up with local optimisation and global sub-optimisation.

The reality is that we are only as fast as our slowest process or team(s). So, we need to consider the following:

Organisation and governance:

• Moving from traditional supply and demand models with separate business and IT to focus on value delivery to the customer by integrating business and IT in cross-functional teams across the value chain
• Moving from Project teams operating in large programs to small product-based teams operating in interconnected networks
• Moving from traditional project budgeting to Lean/Agile budgeting (value-stream funding, zero-based budgeting or venture-capital style)
• Moving from strict contracting models to partnering with your suppliers in an agile procurement model
• Moving from internal audit identifying lack of controls and processes reactively to working with the business in protecting the business against risk proactively

Human resources

• Moving from measuring input to measuring value delivery and outcomes
• Moving from individual Performance measurement to team-based performance measurements (e.g.) using Objectives and Key Results (OKR’s)
• Moving from traditional performance development based on KPI’s to regular check-ins with a focus on coaching and mentoring
• Moving from specialisations focused on optimising utilisation where the goal is to achieve 100% utilisation to specialist/generalist profiles with an agile mindset
• Moving from fixed job descriptions with little opportunity for growth to fluid job roles allowing experience and exposure across many competencies

There are other changes required in the operating model in technology and culture, but this will be defined later in the article.

Activate your leadership

As per any large-scale transformation or change initiative, leadership buy-in is required at all levels. There are many studies and research papers that indicate one of the main reasons for failure is the lack of leadership buy-in. From my experience, it is not different in any Agile transformation. And when I refer to buy-in, I am not referring to lip-service buy-in. Not just by delegating the change but by modelling the behaviour required to achieve business agility.

When executives are committed and actively supportive in the “Business agility” transition, they foster an environment in which employees are supported in this step–change, and it resonates throughout the organisation. When top management does not buy into the transformation journey, the employees find it too easy to revert to old ways of work. Leaders need to go first and guide them along the way.

We need to move from old, industrial style management to management is not only the manager’s responsibility but that it’s everyone’s job! Leadership pursues the goal of growing and transforming organisations, which are great places to work for. They care about having engaged employees because when this happens the work is improved, and clients are happy.

To activate leadership, the following recommendations are made by Scaled Agile Inc. to which I can relate:

• Learn about the new world – become Lean|Agile leaders and embrace the Lean|Agile mindset – attend Agile training, read up about Agile and Lean. Embrace the agile manifesto and principles and model the behaviour that you want. “Lean-Agile Leaders are lifelong learners who help teams build better systems through understanding and exhibiting the values, principles and practices of Lean, systems thinking and Agile development.” – Dean Leffingwell
• Lead the change – be active in the change without delegating this down to your teams. W. Edwards Demings stated “It is not enough that management commits themselves to quality and productivity, they must know what it is they must do. Such a responsibility cannot be delegated.”
• Unlock the intrinsic motivation of knowledge workers and enable decentralised decision-making. Leaders need to move away from acting as conductors, directing employees in their work to leaders as developers of people. I like to use the analogy that leaders need to be more like gardeners, ensuring that the ‘system’ has the right environmental conditions (soil, water, sun) for the plants to grow. They also need to enable self-organisation by allowing teams and individuals to make decisions that are local to them. However, this again requires leaders to provide clarity through setting clear objectives, ensuring individuals and teams understand the constraints or boundaries of their decision-making and the conditions to allow for autonomy.

Align your culture

Peter Drucker famously said, “Culture eats strategy for breakfast”, but what is culture?

One of my colleagues, Reneshan Moodley once said that “culture is how people behave on release night when under pressure, or at least how people behave when the boss is not looking.”

Culture isn’t what is written on the walls. These are espoused values. Enron’s first value statement was Integrity, and we all know how that turned out. This is one of the challenges of agile adoption in that organisations adopt only the practices (doing Agile) without embracing the behaviours that are aligned to the agile manifesto (being Agile). The behaviours that are required to achieve Business Agility can be summarised as follows:

• Ensure that all work is prioritised and delivered to delight the client
• Work is conducted in self-organising teams
• Teams operate in client-driven iterations and build incrementally
• Each iteration delivers value to the client through smaller batches of work enabling faster feedback
• Leaders foster radical transparency and an environment of collaboration enabling high-performance teams – leadership need to create an environment of psychological safety
• Leaders nurture continuous self-improvement through safe-to-fail environments and providing the necessary slack time for learning.  

Transform your world and that of your customers through digital transformation

Agile ways of working enable both digitisation (automating internal processes creating efficiencies) and digitalisation (using the digital technologies and channels to change a business model and provide new revenue and value-producing products and services). Product development requires investment in principles and practices of design thinking and lean start-up (made famous by Eric Ries) to allow the development of digital products in small, quick iterations. This provides the opportunity to enable immediate feedback to ensure that whatever, we are delivering adds value to the customer. These practices are complementary to Agile methods such as Scrum, XP and Kanban, and in my opinion, digital transformation cannot be successful without combining the two philosophies. Over and above, both digital and agile cultures require the same changes in behaviour across the organisation.

Measure the impact

A large investment in time and money is required to achieve the promise of Agile (Business Agility). Due to many variables that exist in the system, it is difficult to quantify the benefits of Agile transformations through cause and effect. We also know that measures drive behaviour and therefore, we need to determine a different mechanism to determine the value that Business Agility can provide an organisation. As indicated, we know that agile is not the end goal, but the enabler to achieve the end goal. A recommendation is to measure the following outcomes:

• Improved time to market
• Improved customer satisfaction
• Improved employee satisfaction
• Increased innovation
• Improved reliability
• Increased responsiveness
• Increased predictability

As an organisation, understand what you want to measure when you start this journey. Ensure that you continually assess against these outcomes, ensuring we are aligned in achieving a successful transformation to Business Agility

Business Agility is far more than agile processes outside of IT. It is a state wherein the Agile culture, values, and way of working is embedded in the way the organisation operates. It allows the organisation to adapt to changes in the market, providing a competitive advantage. It is about being customer-centric through the networked interaction of small, autonomous, multi-disciplinary teams.

Business Agility IS the promise of agile, so let us make sure that it isn’t just another buzz word.