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Agile: Should we adopt it now?

What is Agile?

The word “agile” is an adjective and according to Oxford Learner’s Dictionaries (Oxford Learner’s Dictionaries, 2020) the meaning is: “1) able to move quickly and easily; 2) able to think quickly and in an intelligent way”. This adjective can be used to address the capability of just one person, or for a group of people, like for example in an organisation or a team.

In the business context the dictionary thus has two more meanings for the word “agile”:

  • used to describe a way of managing projects in which work is divided into a series of short tasks, with regular breaks to review the work and adapt the plans;
  • used to describe a way of working in which the time and place of work, and the roles that people carry out, can all be changed according to need, and the focus is on the goals to be achieved, rather than the exact methods used

Note that in this ESCIMCO Insight we will focus on the last definition: organisation that are, or want to become Agile.

Organisations that are successfully deploying Agile show five trademarks (Aghina, et al., 2017):

  1. They have a clear and shared business purpose, and a vision of what they are trying to achieve for all of their stakeholders. The stakeholders are defined very broadly and go beyond customers and shareholders, to also include employees, suppliers, communities and many more.
  2. They work with a flexible and scalable network of empowered teams. The organisation is flat with just a few hierarchical layers. The team members have clear accountabilities and governance is done hands-on. The focus of the team is on cross-functional sharing and combining of information, which the team members acquire from interacting with and within their stakeholder community.
    Teams are formed and disassembled based on the priorities for the organisation that deliver value for the stakeholders
  3. Decision within these organisation are taken rapidly, and reviewed frequently to determine the value they bring. Solutions are developed in an experimental way, working closely with the stakeholders. Information flows openly within and between the teams to allow the decision taking to happen.
  4. The organisation model and culture is focused on fully supporting the empowered teams. Leaders are servant or shared leaders that provide the teams what they require to deliver on their accountabilities. The teams in themselves are high-trust environments that allow for positive peer feedback and behaviour influencing. Given the entrepreneurial drive these teams embody there is an intrinsic passion for their work and the teams will always aim for excellence.
  5. They use the latest available technology to enable their Agile way of working and unlock the potential to deliver value to their stakeholders. Hackatons and virtual collaborations spaces are used to understand the needs and requirements of their stakeholders, and to develop solutions quickly.

Why become Agile?

In the previous section five trademarks have been described that agile organisations possess, but why would you want to become agile?

Most of our businesses are still modeled according to the traditional Taylorism-ideas (Aghina, et al., 2017). These traditional organisations are designed for stability: they are static with a structural hierarchy; decision making is done at the top, while execution happens at the bottom of the organisation; decisions take relatively long to travel from the top to the bottom of the organistion, if at all they arrive there; the organisation is siloed into functional departments who are effective and efficient within their functional areas.
These traditional organisations can be seen as machines that can be optimised and naturally they are focused on effectiveness, efficiency, quality and traditional project management.

During the last couple of decennia life cycles of products and developments have become shorter. Access to new technologies and information has become easy and widespread through the use of the internet. More and more disrupting technologies have developed and businesses are confronted with disrupting global developments like trade wars, and more recently the Covid-19 pandemic.

This has led, and leads, businesses to reconsider their organisational model and adopt the Agile methodology. The methodology allows organisation to act more like a living organism having a stable backbone (business purpose, vision, governance structure) while being dynamic in other areas as described in the five trademarks (network of adaptable and empowered teams, fast decision making, rapid learning, people centered business culture and technology enabled).

Adopting Agile has shown to generate benefits in various areas including, but not limited to, team productivity, employee satisfaction, meeting redundancy, quality defects, customer engagement, customer satisfaction, time-to-market, risk reduction and management focus on strategic activities (Rigby, Sutherland, & Takeuchi, 2016)

The sign of the time is there for business to become more agile and move away from the traditional organisation model, if they want to survive under the current volatile, uncertain, complex and ambiguous (VUCA) conditions.
Organisations and teams that have adopted Agile have demonstrated to outperform their non-Agile counterparts both financially and non-financially with a factor 1.5 – 1.7 (Aghina, et al., 2017), which should be reason enough to adopt the Agile methodology.

Is Agile for everyone?

The Agile methodology initially was developed in and for the tech businesses to allow IT-solutions to be delivered more quickly and deliver better solutions to customers. This methodology however can also be used in many other businesses to deliver quicker and better solutions. Especially business that traditionally are confronted with VUCA-conditions benefit from this methodology. These are businesses in industries like: high tech, telecommunications, financial services, pharmaceuticals, retail, media & entertainment, healthcare systems and services, and even oil & gas industry (Ahlbäck, Fahrbach, Murarka, & Salo, 2017).

Given however the current business environment volatility other businesses are also adapting the Agile methodology. Specifically they are adapting Agile in the parts of their business that experience more VUCA-conditions than other parts. You can think of activities that are closest to customers, like: Research & Development, Customer Service, Sales & Services, Product Management.

There are other activities that are less likely to benefit from Agile, these are for example: Finance & Control, Purchasing and Manufacturing. These activities have a more stable character by nature, however elements of Agile can still be beneficial in these activities.

Although Agile can not be used by everyone, it can be used in many industries and in parts of industries that are confronted with more or less VUCA-conditions.

How to implement Agile?

Before implementing Agile in any organisation it is important to understand how Agile really works, and what the methodology actually entails. In addition it is important to understand under which conditions Agile does and doesn’t work (Rigby, Sutherland, & Takeuchi, 2016).
Concurrently be clear on your Agile vision and understand the magnitude of the change, because it is a cultural change that requires thorough change management (Ahlbäck, Fahrbach, Murarka, & Salo, 2017).

Once you have a clear picture of these points you can select a small business area in which the Agile methodology can have a big impact. The word of success in this business area will spread, and others will be enthusiasted by it, naturally adopting the methodology.
The methodology is not rigid and based on mastering certain proven disciplines teams are allowed to improvise with the methodology to further develop it.
Management should also start adopting Agile given that most of the activities have a VUCA-character. Management can further help by destroying barriers that limit Agile behaviour, and lead with questions instead of orders.

McKinsey (Ahlbäck, Fahrbach, Murarka, & Salo, 2017) identifies and distinguishes 18 Agile practices splitted in 9 stable and 9 dynamic practices (remember that Agile has a stable backbone while allows dynamics in other areas). Depending on the character a business (area) is deemed to be in before adopting Agile, different practices should preferably be implemented first.

When your business (area) is deemed to have a ‘bureacratic’ character it is important to modify that stable backbone and focusing on people, processes and structure. You can do this by focusing on testing new ideas in small fully accountable teams while providing feedback on business outcome and behaviours and combining with shared/servant leadership.

When your business (area) is deemed to have a ‘start-up’ character it is important to develop a more stable backbone. You can do this by involving the teams in strategic and organisational decisions, provide information transparency and give feedback on behaviours and business outcomes.

When your business (area) is deemed to have a ‘trapped’ character (politics, firefighting, protecting turf, lack of coordination, etc.) it is important to develop both a stable backbone and dynamic capabilities. You can do this by applying servant/shared leadership, provide information transparency to allow for continuous learning, and by focusing on testing new ideas.

Depending on the character of your business (area) you should adopt different Agile practices first to achieve quick results. The preparation and general approach to adopting Agile is the same for each business (area).

How does an Agile team work?

Once Agile is implemented you will see teams are working in a rather similar way, described in “10 ways our business can become more agile today” (Waldock, 2020). These teams will:

  1. balance running day-to-day business with changing business, and see change as an opportunity to learn and grow from
  2. build in slack time to foster growth and improvement
  3. create clarity and visibility by using info-board that foster collaboration, break down silos and encourage cross-team working
  4. apply the Pareto-principle, delivering the 20% of activities that give 80% of the value
  5. apply metrics that provide clear visibility whether they are moving to the goal
  6. think big and act small by testing solutions early, use feedback to continuously improve and respond to changes in the market
  7. run sprints and not marathons by running activities that take between 1 and 3 weeks, then review performance and adjust the direction if needed
  8. have daily meetings to communicate and build commitment, tackly daily issues, raise awareness and share knowledge
  9. have retro meeting to reflect on and review progress, as well as their impact
  10. be empowered, because they can organise and manage themselves

Summary

Now more than ever is the time to adopt Agile: the VUCA-conditions are larger than we have ever experienced before. Adopting Agile should start small and practices to apply first depend on the character of your business (area). Early successes in one part of your business will motivate the rest of your business (areas) to adopt the Agile methodology.

Teams that have adopted Agile considerably outperform other non-Agile teams in both financial and non-financial metrics. If you are looking for motivated self-organising teams that deliver high customer and stakeholder satisfaction under VUCA-conditions then it is time to start adopting Agile.

References

(2020). Retrieved from Oxford Learner’s Dictionaries: https://www.oxfordlearnersdictionaries.com/definition/american_english/agile

Aghina, W., Ahlbäck, K., De Smet, A., Fahrbach, C., Handscomb, C., Lackey, G., . . . Woxholth, J. (2017, December). McKinsey Insights: The five trademarks of agile organizations. Retrieved from McKinsey.com: https://www.mckinsey.com/business-functions/organization/our-insights/the-five-trademarks-of-agile-organizations

Ahlbäck, K., Fahrbach, C., Murarka, M., & Salo, O. (2017, October 2). McKinsey Global Survey Results: How to create an agile organization. Retrieved from McKinsey.com: https://www.mckinsey.com/business-functions/organization/our-insights/how-to-create-an-agile-organization

Rigby, D. K., Sutherland, J., & Takeuchi, H. (2016, May). Embracing Agile. Retrieved from Harvard Business Review: https://hbr.org/2016/05/embracing-agile

Waldock, B. (2020). 10 ways your business can become more agile today. Retrieved from Bytestart: https://www.boyden.com/media/10-ways-your-business-can-become-more-agile-today-590476/index.html

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