The Case for Agile: What, Why and How?

27 January 2015

Management versus Agile

• 88% of 400 people surveyed reported tension between Agile managed in their organisation & the way the rest of the organisation is managed

What is Management?

• Vertical mindset – strategy set at the top, power trickles down, high rise buildings

• Big leaders appoint little leaders • Individuals compete for promotion • Compensation = rank • Tasks assigned, managers assess performance • Rules circumscribe discretion • Purpose: make money for shareholders & top executives • Communication top-down • Values = efficiency + predictability + preserve gains of the past +

conservative • Tight control = CSF • Systematic disruption = large-scale fast-paced innovation that can

disrupt stable businesses very rapidly

What is Agile?

• Horizontal mindset – low flat buildings, established foothold in most vertical organisations,

• Purpose = delight customers + liberate full talents & capacities

• Making $$$ = result, not goal of activity

• Focus is on continuous innovation + enablement

• Communication = horizontal conversations

• Creation of the future Banking, not banks; transport, not cars.

• Creative economy

So what’s working?

Market capitalization • Apple – $660 billion

Horizontal • Google – $362 billion

Horizontal • Facebook – $222 billion

Horizontal • IBM – $155 billion Vertical • GM – $54 billion Vertical Vertical firms are struggling with declining revenues & cost cutting reorganizations. Horizontal firms like Google & Apple are busy growing & inventing the future

More on Agile

• Self organizing teams that work in iterative fashion & deliver continuous additional value directly to customers

• Practices include Scrum, XP, Kanban, DevOps and Continuous Development Source from lean manufacturing

• “This new emphasis on speed and flexibility calls for a different approach for managing new product development. The traditional sequential or “relay race” approach to product development… may conflict with the goals of maximum speed and flexibility. Instead, a holistic or “rugby” approach—where a team tries to go the distance as a unit, passing the ball back and forth—may better serve today’s competitive requirements.” ~ Hirotaka Takeuchi and Ikujiro Nonaka “The New New Product Development Game” in HBR in January 1986

Hierarchical Bureaucracy

• Current firms with hierarchical bureaucracy – Falling rates of returns on assets & invested capital – Dispirited workforce – Decline in competitiveness – Widespread disruption of existing business models – Basic idea = people report to boss who tell them what to

do, control their work & provide order

Hierarchical Bureaucracy

• Solves 2 problems – Get semiskilled employees to perform repetitive

activities competently & efficiently

– Coordinate efforts to produce large quantities of products

• Good for stable environments = Scalable + efficient + predictable + reliable average performance

• Weakness = Vertical + non-collaborative + linear plans + internal focus + dispirited workforce + inflexible + customer absence

Changes in economy

• In the past, – Change wasn’t important because of stable context where firms can

predict what customers would buy – Semi-skilled employees cared they had a job & paycheck

collaboration was secondary – Managers knew best

• Globalization, deregulation + new technology changed everything: – Power in the marketplace shifted from seller to buyer. Customer was

now central. – Now the new norm as “better, cheaper, faster, smaller, more

personalized and more convenient.” Average performance wasn’t good enough. Continuous innovation became a requirement.

– In a world that required continuous innovation, a dispirited workforce was a serious productivity problem.

– As the market shifted in ways that were difficult to predict, static plans became liabilities.

– The inability to adapt led to “big bang disruption.”

Changes in economy

• In this turbulent context, the strengths of hierarchical bureaucracy evaporated.

– Scalability turned into unmanageable complexity.

– The efficiency of economies of scale turned into diseconomies and inefficiency.

– Predictability turned into a crippling lack of agility.

– Reliable average performance wasn’t good enough for customers who wanted “faster, better, cheaper, smaller, more personalized and more convenient.”

Horizontal world of Agile

• Features of agile approaches

– Work is done by self-organizing teams that could mobilize the full talents of those doing the work.

– Work is focused directly on meeting customers’ needs.

– A “lens” focuses attention on the customers’ needs (when the lens is a person, as in Scrum, the person is known as a “product owner”; in large scale applications, the lens is “a platform.”)

– Work proceeds in an iterative fashion so that it can progressively satisfy customers’ needs better.

Horizontal world of Agile

• Features of agile approaches

– Workplace interesting, inspiring and autonomous

– Customer central & purpose is to delight the customer

– Basic dynamics of traditional economy reversed

Implementation of Agile