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Why didn’t an established digital photography company create Instagram? Why didn’t an established taxi company create Uber? Why didn’t an established music company create iTunes? It’s not that the people in these organizations don’t have great ideas. They do.
It’s because these organizations are not designed to create new and exciting innovations, even when the ideas are there. Their finance departments are not set up to invest in initiatives with high uncertainty and a questionable return on investment. Their leadership and cultures are such that they are unlikely to view failure as a necessary stepping-stone to success. These organizations tend to be designed around functional silos set up for exploit-type activities. They are built to execute with efficiency, not to explore with agility, with all the messy collaboration and uncertainty the latter implies. As such, they find it extremely difficult to create new things, and no amount of tinkering around the edges will change that.
Achieving true business agility has an impact on almost all parts of an organization. Yet many who embark on an agile transformation have little appreciation for the sheer reach the effort must have in order to succeed. Confining the changes to one department, often IT, will certainly not yield much benefit at all. This book will help leaders to go into these endeavors with their eyes open, truly aware of all the changes that will be necessary.
The 6 Enablers of Business Agility
#1 Leadership and Management
You often hear it said that leaders should support or “buy into” the agile transformation initiative. The author disagrees, having been part of plenty of transformations where the most-senior leaders buy into the change— and that turns out to be the last involvement they have. Buying into a change is rarely enough. In my experience, a great deal more than words of support is needed. The change needs to be actively driven by leadership. The leaders themselves need to go through deep learning and growth in their roles. They need to transform the way in which they lead, and learn new cognitive and emotional capacities to foster a whole different set of behaviors across their organization (or department). It all starts with leadership.
There are many ways in which leadership and management of a truly agile organization are virtually unrecognizable when compared with the traditional versions of those roles. Vital shifts include those from directive to supportive leadership, from centralized to decentralized decision-making, and from focusing on the work to focusing on direction and creating an environment for success. This is done not just through words but also through new behaviors, structures, and policies that encourage the changes to happen. These kinds of changes just cannot be driven from the bottom up.
#2 Organizational Culture
Culture mismatches consistently appear as the number one inhibitor of increased agility. Many will talk of the importance of addressing an organization’s culture, but few will have a structured approach to assessing and shifting that culture. The first step is to understand the current and the desired culture of an organization. There are many frameworks for assessing this.
If it is decided that the culture does indeed need to be shifted, this must be carefully planned. One does not change a culture simply by trying to change it. Culture is a product of the behaviors, values, and beliefs of the people involved in an organization or department. Cultures can only be shifted by changing behaviors. These new behaviors must be supported by new policies, metrics, structures, and leadership styles. Only then will the culture shift. This is a key enabler of agility, and it must not be ignored.
The culture of an organization is akin to a shadow on a wall. It cannot be changed directly. To change a shadow, it is the item causing it, or the light source, that must be changed. Similarly, culture is itself a product of the other five enablers. The current and desired culture will, however, greatly influence the changes that are made in the other areas. For this reason, it must remain a key enabler of agility.
#3 Organizational Structure
Few things affect an entity’s agility like the organizational structure. Picture yourself on an oil tanker. You may be able to travel fast, but there is very little you can do to change direction quickly. Try as you might, the ship is designed, from the ground up, for something else. Now imagine yourself as part of a flotilla of speedboats. It’s now much easier to change direction-much easier to respond to changes, much easier to be agile. It’s less about what you are doing and more about the system in which you are operating.
Organizations are the same. The design of organizational systems tends to have a disproportionate effect on how those systems perform-far greater than do the people working within them. The types of organizational design changes that tend to increase agility are things like shifting from functional silos (such as finance, marketing, and engineering) to collaborative, cross-functional teams with vastly reduced handoffs. Others include a shift from traditional hierarchies, which are often slow to respond, to networks of interconnected teams responding to constantly changing events on the ground. Value creators must be brought closer to customers and business stakeholders to allow for greater collaboration.
Leaders must decide which characteristics they wish to see exhibited by the value-delivery system and (re)design it with those in mind. Organizational design and structural changes can be difficult, disruptive, and, for some, unnerving. On the other hand, they are often disproportionately significant in the pursuit of the desired outcome. Given that leadership can change organizational design directly in a way that it cannot do with organizational culture, and that organizational design changes are so important, this remains one of the most powerful instruments in the toolbox of greater agility.
#4 People and Engagement
In modern business, the rules of the game have changed. There is no longer any doubt about the link between employee engagement and business results. Whichever data you look at, the results are the same: companies with engaged employees significantly outperform their competition
Many organizations still use Industrial Revolution-era management approaches—approaches that manage for compliance and conformity. Instead of managing for these things, however, the most effective entities manage for initiative, passion, and creativity. This helps them attract and retain the most effective employees and will bestow a huge competitive advantage in today’s complex knowledge economy.
Is it any wonder that in the 2017 State of the Global Workplace Report by Gallup, only 15 percent of people polled indicated that they were “engaged” in their jobs? Organizations are wasting human potential and are not getting the best out of their people. This is bad for people—and bad for business.
To create high-performing, adaptive organizations, actively managing for engagement is a must. This involves reinventing many outdated HR policies for the twenty-first-century knowledge worker.
#5 Governance and Funding
How can we be agile when we need to sign off the scope, cost, and timelines up front, and those things cannot be changed without revisiting the business case? The answer, of course, is that you can’t. This is akin to asking how one can respond to change while simultaneously not responding to change. It makes no sense.
A waterfall-based governance model that insists on big up-front analysis and design, the creation of detailed business cases, strict change control, and the funding of large batches is not a model designed for agility. Quite the opposite, in fact—it is designed for rigidity and predictability. It makes a whole load of assumptions that do not tend to hold water in the face of complex developments—assumptions like, “We can know what to build in advance,” “Things won’t change much as we progress,” and “It’s safe to place big bets and validate our assumptions once the money is spent.” This is fundamentally incompatible with agility. It is also not how you build great products in such a complex, fast-changing space.
Changing how money is invested from predicting and planning to experimenting and adapting is a huge mindset shift. Placing many small bets and course-correcting based on feedback is the least risky way to proceed, but organizations need to be set up for that. Most are not. Transitioning from investing in large projects to investing in long-lived products and taking a venture capitalist approach to allocating funds will unlock true agility. Movements like Beyond Budgeting can also be a huge help. Bringing in finance, risk, compliance, project management, and other governance functions to shift to an approach that enables greater agility is a long and difficult process. Many have ignored it and have failed to become agile. Many have done it and are reaping the benefits. As ever, when it comes down to it, you just need to follow the money.
#6 Ways of Working
Ways of working is the enabler on which most organizations place the majority of their focus. Whether it is implementing formal agile frameworks or improving engineering practices, this tends to be the starting point for most seeking increased levels of agility. People spend a lot of time arguing over which frameworks or practices are “good” and which are “bad.” The fact is that focusing purely on ways of working without addressing the other five agility enablers will all but guarantee that “agility doesn’t work here.” In short, it doesn’t matter which approach you use; if you focus only on this element, you will fail. The reason you will fail is that the organizational and leadership changes needed to create an environment of success, the organizational operating system, will not have been made. This is akin to trying to grow a beautiful rose in a desert. It just will not, and cannot, thrive until the conditions are right.
The various frameworks available can be very valuable when applied in the right context. Your organization’s culture will lend itself to a certain approach. Any “coach” or consultant who advises that you start with a particular framework without understanding your workplace’s context, culture, desired outcome, and attitude to change is someone who probably doesn’t have the experience to advise you on your transformation.
Processes, practices, and frameworks are important, but they will not achieve results in isolation.
So there you have it. Are all six enablers contributing to your organization’s achieving greater agility? If not, which need more focus?