Agile is a suboptimization … the next frontier is Business Agility

From the early days until now, no matter which framework or approach you use, Agile has been focused on parts of the organization. Dealing with the organization as if it was a machine with interchangeable parts.

Even those frameworks, methods and methodologies that claim to be enabling Business Agility, like Enterprise Scrum or Kanban Enterprise Services Planning are still in the Product Development arena, trying to squeeze the last drops of juice from Agile, Scrum and Kanban. No single framework will provide that. Agile needs to grow-up and transcend the domains of technology and product development, because an organization is much more than that.

We have been trying to assemble the engine of a Ferrari into a tractor, causing a lot of tension, friction and ultimately succumbing to organization antibodies.

Operational Agility friction

This has provided many benefits, but not as much as if we had taken a systemic approach from the beginning. Many Agile Transformations based on LeSS, SAFe or Kanban publicly report improvements in Time to Market, Productivity and Quality, fair enough, but hey!, that’s only your production system, what about the rest of the organization? Are you creating loyal customers? Are you innovating? Are you expanding to new markets? Are you attracting talent? Are you organically evolving your structures? Is everyone aligned and moving towards the same direction?

While most large organizations are still learning how to master operational Agility, the main financial benefits will flow from the next Agile frontier: Business Agility.

Agile is a mindset, a way of being, you embrace wholly or you don’t embrace it. And this is what organizations need to be doing in order to survive in 21st century volatile and fast-paced environment.

I will explain what I mean with an example of something that happened to me recently.

How to screw up your relationship with a customer

On December 2016 I subscribed two credit cards from a well-known airline company in Spain. They provided great benefits at little cost.

I had been using them for 4 months already and I was very happy with the service.

All the sudden, on 22 March 2017, I got this SMS:

Iberia Cards
SMS CARDS. Cost 0,50. card/month from the next month. To cancel, send BAJA to +34 xxx xxx xxx (max. cost 0,15 Euro)

I thought, “what the hell!”. They change the conditions of the service, they make me pay every month, they make me pay to cancel and, they make me pay to call Customer Service. You know what? Two minutes later I had already cancelled my two cards. They lost a customer forever.

This could be the case of any other company undergoing an Agile or Digital Transformation. Most probably this airline is doing its own Digital Transformation, and they have plenty of Agile Coaches doing a lot of funny things. But, they treat their customers like crap, they are not aligned and they have clearly a resource efficiency culture.

I feel really sorry for the poor Marketing guy, who had done a really great job creating valuable customer like me. But, somewhere else, there is another department or business unit whose only purpose is to maximize shareholder value by reducing costs. I bet, the main purpose of this firm is still maximizing shareholder value.

Probably, when they analyze data (if they do at all) they won’t have a clue why several customers cancelled their cards. And, what is more, imagine there is an individual performance appraisal system in place and the poor Marketing guy who did a great job is punished for not achieving a randomly set yearly objective.

So, what is Business Agility about?

Business Agility is a mindset, it is about growing and developing an adaptable organism that is constantly evolving to survive and thrive. It is not only about technology, digitalization or processes. It is much more.

Steve Denning says that the central challenge in business today is to move from “deliver quality goods and services at a reasonable price” to “provide instant, frictionless, intimate value at scale”.

Achieving this goal lies beyond the performance capability of an internally-focused bureaucracy. And, firms that can’t deliver this won’t survive.

ROA US

Business Agility is an strategic decision

A different goal leads to a different structure of work, a different way of coordinating work, different values and different way of communicating.

Companies must break away from the assumption of sustainable competitive advantage and embrace adaptable differentiation.

While most large organizations are still learning how to master operational Agility, the main financial benefits will flow from the next Agile frontier: Business Agility.

Today, the agility (and “Lean”, “design thinking”, etc) still reflects a preoccupation with achieving operational agility. But in a marketplace where competitors are very quick and where power has decisively shifted to customers, it can be difficult for firms to monetize those gains and improvements.

You need to be constantly evolving your structures, governance and strategy to adapt to the rapidly changing environment. You need adaptability, flexibility and speed in how you hire, how you take decisions or how you manage your budget.

What you need is Business Agility.

romanesco_wallpaper_by_keldbach-d36xnw3

Ten Principles of Business Agility

These are not coming from a spiritual retreat in the mountains of Utah. These are based on my own knowledge, my experience in the field and, beliefs of how the future is going to be looking like. Still a draft, though.

  1. The only valid purpose of a firm is to create a customer – Peter Drucker, 1954
  2. Delivering monetizable value to customers is the only metric that matters – Ash Maurya, 2016
  3. The organization is a fluid and transparent network of players that are collaborating towards a common goal of delighting customers – Steve Denning, 2015
  4. Treat your future employees, your current employees and your ex-employees as if they were customers – Gerard Chiva, 2017
  5. The best organizational designs emerge from self-organizing structures that continuously evolve to express its purpose (i.e. Holacracy)
  6. Organize in market focused value streams
  7. Organize for antifragiliy even over productivity and short-term financial gains
  8. Develop a growth mindset
  9. Transparency and free flow of information over rules and policies
  10. Continuously improve all the processes, all the time, forever

How do we do that?

Pyramid

Imagine your company is a living organism. These are the key component parts of that organism.

Purpose

Backbone

Body

  • Network of self-organizing multidisciplinary teams operating with decentralized authority

Production

  • Product Development: Lean & Agile
  • Innovation: Lean Startup & Growth Hacking

Energy

Ecosystem

  • Customers
  • Community
  • Partners

What won’t you find here?

You won’t find here any reference to coaching, management or leadership. Think about it. How many decades have we been talking about leadership? How many different theories exist? What has been the real positive impact of all these in the world and business? We have to get away of this culture of heroism, of this individual who saves the team or the company: the leader, the coach or the manager. This paternalism that smells old and musty.

And what about management? What happens when people come back from a Management 3.0 training? They do some kudos and delegation boards and that’s it, back to normal. Because making better management doesn’t make a better business. Still a suboptimization based on the parent-children relationship.

Culture eats strategy for breakfast they say. Yes, and structure eats culture for dinner. Structures and processes have a great power and influence in human systems. So, my approach is focused on structures that enable business agility.

Structure influences behavior more than anything else. We need to stop focusing on the individual, and focus on the design of the system that enables agility. We know that from Richard Hackman’s work with teams in organizations, from Systems Theory or the Stanford Prison Experiment. But we still insist in leadership development, career development or coaching. Just put the goddamn structures in place and let humans thrive!

Stay tuned for the next posts describing how to cross the next frontier to Business Agility.

Thanks.


 

More on Business Agility series:

10 thoughts on “Agile is a suboptimization … the next frontier is Business Agility

  1. I like this way of thinking a lot and it resonates with what I’ve been experiencing and seeing in companies. I just think that servant leadership is part of this new structure, where serving each other is a role for everyone in the teams and not he role of the traditional “leader”. Thanks for sharing your thoughts!

    1. Thanks for your comment Sandra. This concept of servant leadership is a interesting one. I think it is better than more traditional styles of leadership but I also think it is still an evolution of the same paradigm. It is bureaucracy 3.0 if you want. A paradigm based on the assumption that a team needs someone to serve them and be the hero. And team members are some kind of children or victims of the system that need to be saved and protected. It is still a very paternalistic approach.

      There is something I learned in my recent Holacracy practitioner training, which says “Behavior that is healthy in pathological environments becomes pathological in a healthy environment”.

      So, in organizations with still a hierarchical power distribution Servant Leadership might be healthy, but in organizations with distributed power and network organization servant leadership is not needed and can be pathological.

      Thanks!

  2. great post! this was the exact the attempt of mine to achieve business agility in fast growing organization. I think main reasons falling back to cost efficiency were:
    1. not enough involvement of C level people
    2. not established “interfaces” for distributed teams to align and communicate
    3. not enough transparency (or sense of control) on dependencies among distributed teams

    i tried to summarize my experience in couple of blog posts in case you find it interesting to check it out:
    – network structure we implemented: http://agilemindstorm.com/2014/12/19/network-structure-why-part-0/
    – lessons learned from this experiment: http://agilemindstorm.com/2017/02/18/network-structure-11-lessons-learned/

  3. Very interesting article and fully agree that the focus must be business agility.
    It seems natural in a startup, but if it’s not our case, how can we move to business agility is a big challenge.

    1. Hi Nuria, yes, that’s a great point. I was actually discussing about who where the early adopters for real business agility with a colleague last day. We came to a similar conclusion. However, I still think there are some big companies that can achieve this. There is plenty of stories about big firms wanting to do “this agile thing that everyone else is doing” and they get it wrong. What fraction of the total Agile Transformations done around the world during last 10 years have succeeded? Companies invest huge amounts of money, time and generate disruption and frustration in their workforce, but what is the real benefit in the end? And how long does that take? So, probably it is time stop selling snake-oil and embrace real business agility. Some industries are more prepared than others. We will see. Thanks for your comment.

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