ORGANIZATION
Build the structures needed for agility
The basic building blocks of agile organizations are small, fit-for-purpose performance cells. Compared with traditional models, teams have greater autonomy and accountability, are more multidisciplinary, are more quickly assembled, and are more clearly focused on specific value-creating activities and performance outcomes.
Responsiveness
Customer-centricity
Innovation
ORGANIZING FOR AGILITY
Traditional firms tend to group organizational scope by specialization, such as sales, marketing, operations, and information technology. Within these areas, we often see further levels of granularity; marketing, for example, could be organized by product, content, demand generation, and brand.
This model is a legacy of management innovations dating back to the late 1800s. The focus was on building scale economies and expertise. Throughout the twentieth century, enormous effort from academics, consultancies, and big business radically sharpened the capability of each independent element of the organization.
But as the pace of change and degree of global competitiveness increased, these siloed models showed signs of stress. Consequently, there were various attempts, such as the matrix model, to resolve its rigidities and deficiencies.
We are now in the midst of a paradigm shift, whereby these old structures are being shed in favor of much more fluid and dynamic models. So what has caused this shift, and what does it mean for leaders of today?
The last few decades have seen incredible changes in business and operating arising from the application of new technologies. Countless billions have been spent on large-scale transformations, and more still by innovative firms disrupting entire industries.
The pervasiveness of digital has repositioned software development—from back office to a prime driver of customer and shareholder value. New business and operating models abound at a pace unfathomable just a few short decades ago.
As a result, there is an imperative to implement new, agile ways of doing business. To build agile organizations, leaders need to understand human networks (business and social): how to design and build them, how to collaborate across them, and how to nurture and sustain them.
HOW WE HELP
Agile organizations maintain a stable top-level structure, but replace much of the remaining traditional hierarchy with a flexible, scalable network of teams. The teams operate with high standards of alignment, accountability, expertise, transparency, and collaboration.
Lean governance is a lightweight approach designed to motivate and enable professionals to do what is best for the organization. It effectively creates visibility and control, without unnecessary waste and lengthy decision cycles.
Networks of empowered teams form the backbone of the agile enterprise. But the composition, distribution, and collaboration approach of each team will depend on the purpose it is meant to serve.
In order for Enterprise Agility to thrive, senior executives and managers must make substantive changes to their roles and behaviors to enable independent teams to perform. Without these changes, corporate inertia will crush teams’ ability to create value.
Build agility into your organizational structure
Agile organizations maintain a stable top-level structure, but replace much of the remaining traditional hierarchy with a flexible, scalable network of teams. The teams operate with high standards of alignment, accountability, expertise, transparency, and collaboration.
The organizational ecosystem is designed to ensure that these teams are highly effective. The framework is a clear, flat structure with teams clustered into performance groups (sometimes called tribes) that are focused on customer value streams. Teams typically range from 5-9 members, and tribes have up to 150 people. This number reflects research on human limitations to maintain personal relationships and effectively collaborate. The size and number of teams ebb and flow, by design, based on the changing needs of the firm.
The agile model provides clear, accountable roles that are well understood. Team roles include business owners, product managers, product owners, scrum masters, and product development resources. These roles can be modified to suit an organization’s purposes.
The governance approach pushes decision authority down to the relevant performance group and team. Planning and integration processes happen frequently within and across teams. The emphasis is on empowerment and coordination.
Communities of practice are established to develop and hone expertise. Agile team members find a home with colleagues who share a specialty. These communities form a basis for talent attraction, knowledge development, and resource planning.
Agile enterprises place great value on strategic partnerships. They understand that mutually sharing insights and talent with partners enables the co-creation and delivery of great new products, services, and solutions. Agile teams routinely work with customers, vendors, academics, and other partners to extend their capabilities.
In addition to structure, governance, roles, and talent management, agile organizations emphasize the importance of collaborative work environments. They create open physical and virtual environments that empower people and foster transparency, collaboration, and impromptu encounters between teams and across the organization.
There are many elements that come together to inspire, motivate, and reinforce enterprise agility. We work closely with clients to ensure each piece of the puzzle is appropriately developed and configured to meet their unique needs and circumstances.
Apply lean-agile governance to foster innovation and ownership
Lean governance is a lightweight approach designed to motivate and enable professionals to do what is best for the organization. It effectively creates visibility and control, without unnecessary waste and lengthy decision cycles.
Traditional governance models are command-and-control, with a focus on documentation. Teams are expected to adopt corporate standards and guidelines, and produce a trail of documentation for review and acceptance.
These approaches are generally onerous and ineffective in practice. Managers produce reports reflecting what the team believes the governing body wants to see, primarily to pass through quality gates. The result is a governance façade that often injects risk, cost, and time—the exact opposite of what good governance is meant to achieve.
Lean-agile governance is less about top-down approvals and reviews, and more about guidance on strategic priorities, built-in transparency, effective team-based planning and coordination, and fast innovation and decision cycles informed by customers and market results.
In contrast to traditional annual planning, budgeting, and review cycles, agile organizations move to quarterly cycles, dynamic management systems, and rolling 12-month budgets. Overall budgeting is still done yearly, but roadmaps and plans are revisited quarterly or monthly, and projects are reprioritized continuously.
Lean-agile governance processes are designed to create value by encouraging innovation, ownership, accountability, and results. To illustrate, we can look at three fundamental elements: investment committees, chief product owners, and agile teams.
An investment committee, consisting of business and technology representatives, meets monthly to make go/no-go decisions on initiatives. An agile organization may take a VC-style approach whereby initial funding is provided for product teams to produce a minimum viable product (MVP). The MVP will be released quickly, refined according to customer feedback, and relaunched in the marketplace. Subsequent funding is then based on how the MVP performs.
Under this model, the cost of failure is reduced because MVPs are continually monitored and development tasks reprioritized. In addition, information on results flows more readily, so it becomes easier to scrap low-potential projects early.
Chief product owners are charged with the tactical allocation of funds—continually rebalancing allocations and making quick decisions to capture business opportunities. Rather than making a few big bets, a continuous series of small decisions are made in rapid succession, supported by immediate market tests. Feedback is quickly absorbed and adjustments made for the next iteration. Agile organizations emphasize fast, efficient, and continuous decision-making, preferring 70% accuracy now versus 90% certainty much later.
Product owners sit on each agile team and are responsible for ensuring execution on a weekly
basis. They do not seek consensus decisions amongst their team, but all team members provide input, and the perspectives of team members with the deepest topical expertise are given greater weight. Other team members, including leaders, learn to “disagree and commit” to enable the team to move forward.
Standardized, integrated planning, combined with operational and reporting software tools and processes, provide unprecedented level of transparency across the system. Examples include agile boards, sprint planning, information radiators, product demos, and retrospectives.
The tools and processes are used simultaneously at all levels, incorporating data from daily work activities by each team member and linking this output directly to customer value and strategic priorities. The leaders and members of a team can access unfiltered data on its products, customers, and finances. This enables holistic and inclusive governance based on business impact rather than activity.
We help clients implement robust governance and investment models to support their Enterprise Agility transformation. We ensure practices, processes, and tools are combined with a psychologically safe environment, where all issues can be raised and discussed and where everyone has a voice.
Implement the right mix of team models to propel agility
Networks of empowered teams form the backbone of the agile enterprise. The prototypical agile team is “small enough to feed with two pizzas,” consists of colocated individuals with varied expertise, and remains relatively stable over time, so that team members can learn and improve how they work together.
However, within an agile enterprise, teams may take a variety of forms. The composition, distribution, and collaboration approach of each team will depend on the purpose it is meant to serve.
Composition includes the skills, knowledge, experience, and capabilities of team members. In agile, teams are typically cross-functional and have a product or project focus. Other teams may be domain-specific, which is suitable when the focus is within a particular field or function. Many agile enterprises also have point-of-need resource pools, which consist of individual experts who are deployed to help teams build capabilities and complete specialized tasks.
Distribution refers to the physical location and integration of roles. Location is influenced by many factors, including the demand for offshore capabilities and cost structures; the need to operate on a 24-hour clock (e.g., to develop and test in different timezones); and access to and retention of top talent.
Collaboration approach is how people work together within and across teams to deliver work products. Agile teams typically employ a variety of standard practices, such as work backlogs, sprint planning, daily standups, and retrospectives—but networks and teams must tailor their approach to meet their needs.
We work closely with the leaders of agile transformations to help devise the most appropriate networks and team models to deliver on organizational goals.
Ensure senior leaders and managers are ready to lead the change
In order for Enterprise Agility to thrive, senior executives and managers must make substantive changes to their roles and behaviors to enable independent teams to perform. Without these changes, corporate inertia will crush teams’ ability to create value.
For independent, agile teams to flourish, senior executives must consistently convey business priorities, direct teams to the best opportunities, and make sure teams have a clear, unobstructed view of customers.
When this context is provided, the agile team’s objective is clear: to generate continuous improvements in the value delivered to customers and the quality of the customer’s experience. To realize this outcome, teams must truly have the ability to act quickly and execute effectively.
So in addition to strategic direction and customer access, executives must empower teams with the resources and authority they need. This includes assigning people needed for end-to-end delivery, procuring external resources without hindrance or delay, and reducing dependence on support functions such as finance, planning, and human resources.
The less dependent on other stakeholders small teams are, the more quickly they can get things done. This is not the same as carte blanche; executives still must ensure that teams operate with proper governance, and that company resources are aligned in pursuit of strategic priorities.
The manager’s role must also undergo a revamp for agile teams to perform. They must first become well-versed and comfortable with agility. This can be challenging for managers accustomed to the more predictable set of tasks they performed in a command-and-control hierarchy.
An effective manager in this context will determine what the business outcomes should be, based on the company’s overall priorities, and will spell it out for the team using real-world measures of business performance. Then, rather than dictating the steps a team should take toward those outcomes, the manager must allow the team to chart its own path, intervening only when the team discovers a problem or a need that it can’t address on its own.
This manner of working can require major adjustments from managers. They may find that their skills in areas like planning and decision making are less needed, while other capabilities, such as communication and problem solving, must be exercised more frequently.
In sum, senior executives must create an environment in which teams can thrive and managers must emphasize delegation over decision making. We help with this transition through our agile leadership programs and live team coaching.