Pragmatic approach to becoming an agile business
Businesses are under unprecedented pressure to innovate with speed that moves the needle to higher performance. For businesses to compete in “disrupt or be disrupted” world, under pressure from globalization, economic turbulence and technological changes, they must adopt new ways of bringing strategy and execution together with speed and innovation. Most enterprises are stuck in old ways of operating that can be detrimental to the company’s speed and adaptability to change.
As the name makes clear, agile emphasizes speed and flexibility, along with a strong customer focus. Getting it right reduces time to market, increases customer satisfaction, and delivers many efficiency improvements. Leaders among high-performing companies like Google, Netflix, Spotify, Facebook and Zappos have become customer-centric with a great collaborative culture that delivers results. They have adopted this new way of working together and servicing clients called Agile. It’s more collaborative, more open, more creative, and much more efficient than other business operating models. They work in small teams that are united on a common purpose, follow an agile “manifesto,” interact closely with customers, and are constantly able to reshape what they are working on.
What is Agile?
The fundamentals of Agile are simple. To tackle an opportunity, the organization forms and empowers a small, focused, cross-functional, self-managing team. The team’s initiative owner (also known as product/solution owner), who typically comes from a business function and divides his or her time between the Agile team and key stakeholders, uses techniques such as design thinking to build a catalog of promising ideas or features. The initiative owner continuously (and ruthlessly) ranks that list based on the latest estimates of value to customers, financial results and other innovation initiatives. A process facilitator (also called a coach or Scrum Master) protects the team from distractions and puts its collective intelligence to work.
Here is a model for agile implementation:
The team then breaks top-priority tasks into small modules, decides how much work to take on and how to get it done, and starts building working versions in short cycles known as sprints. The process is transparent to everyone. Team members hold brief daily stand-up meetings to review progress and identify impediments. They resolve disagreements with experimental feedback loops rather than through endless debates or appeals to authority. They test small working increments with groups of potential customers. If customers get excited, the increment may be released immediately, even if the boss isn’t a fan or others think it needs more bells and whistles. The team then brainstorms ways to improve future cycles and prepares to attack the new top priority.
Here is how a bank embraced agile:
When ING introduced an agile way of working in June 2015, there was no particular financial imperative, since the company was performing well, and interest rates were still at a decent level. Customer behavior, however, was rapidly changing in response to new digital distribution channels, and customer expectations were being shaped by digital leaders in other industries, not just banking. They needed to stop thinking traditionally about product marketing and start understanding customer journeys in this new omni-channel environment. It was imperative for them to provide a seamless and consistently high-quality service so that customers can start their journey through one channel and continue it through another—for example, going to a branch in person for investment advice and then calling or going online to make an actual investment. An agile way of working was the necessary means to deliver that strategy for ING.
As you see agility is a mindset with which a company adopts a set of principles. It is about becoming agile, rather than doing “Agile.” Here are some key agile principles that work well:
Focus on Customer Value
Align project, product and team visions to deliver better quality products / outcomes – innovate, build, assess, learn cycle; fail fast, fail cheap (sounds familiar? – Lean Startup mindset)
Create a flow of value to customers by “chunking” feature delivery into small increments to create a prioritized backlog
Projects comprise of multiple releases; each release comprises of multiple sprints; stories started and completed within each sprint; Stories are executed based on value and priority
Small, Integrated Teams
Intense collaboration, (via face-to-face communication, co-location, integrated, self-organizing, self-governing, etc.) of smaller cross-functional teams with individuals having mutually accountable diverse roles.
Small, Continuous Improvement
Teams reflect, learn, and adapt to change; their work and continuous feedback from the customer, influences and evolves the plans
“Designed to fit” product / outcome with flexibility to change
Iterative and incremental project, outcome, and/or product “chunks” with shorter time to value delivery
Lean, efficient processes that are diligently measured, with lower costs and higher productivity
But there’s a difference between principles and practices. Agile principles are enduring and widely applicable. Agile practices, in contrast, may evolve as teams gain experience and technologies advance. These practices are not the one-size fits all kind. Every business environment may have a different approach to agile practices.
When the agile approach got implemented at ING, this is how it looked and felt:
Another example of agile adoption is Spotify, the popular music-streaming company, geared its entire business model, including everything from product development to marketing and general management, to support agile innovation. But managers do not dictate specific practices; on the contrary, they encourage experimentation and flexibility so long as the changes are consistent with agile principles and can be shown to improve outcomes. As a result, practices vary considerably across the company’s 70-plus development squads and its functional chapters. For example, nearly every squad uses some form of visual progress tracking, small and cross-functional teams, time-boxed work iterations, ranked priorities, adaptive planning, continuous improvement retrospectives and a focus on creating value over keeping people busy. But many squads do not use the burn-down charts that show remaining work, a common feature of Agile teams. And few measure velocity, keep time reports or utilize the same work estimation techniques.
Beware of pitfalls when embracing agile
Many companies that struggle with agile development either fail to commit the right resources or focus solely on IT, and, ultimately, these missteps derail the agile process. Agile transformation can face many challenges, including:
Embracing the agile principles into the way people work means that they adopt new behaviors that result in cultural shift. Cultural shifts must be fully backed by the executive leadership of the company. Agile culture promotes risk-taking with fail fast / fail cheap, and experimentation, that should not backfire later on the participants of this approach.
The product owner is the central node where creative ideas come to thrive and get to market quickly—or to wither and die. The best product owners temper grand visions with practical decisions that create measurable value. Empowering product owners requires a governance model that allows for greater freedom and a cultural change that focuses on trusting lower-level employees. Product owners need to own the product. If they can’t change the scope or add team members, then they can’t make the decisions that need to be made. All too often, product owners are given defined parameters that they must work within, but limiting owners does not yield results. When product owners are held accountable for value creation and employees’ incentives are aligned around this point, then agile teams are well-positioned to produce tangible results—for customers and the business.
Although IT is a logical place to first embrace a new product development methodology, engaging the business leadership early on and collaborating across the organization to define such details as organization design and the governance model are absolutely crucial to success. Most agile programs are championed initially and solely by the CIO; but, agile transformation must be driven across all parts of an enterprise.
We’ve found that agile teams experience a dip about two to three months into a transformation, but they ultimately embrace agile change and continue to work at a high level. Targeted support and coaching during this phase is critical to ensure teams don’t fall back into old patterns. Agile teams get a lot of attention from management, trainers, and coaches early on, but once the initial excitement fades and the team faces a setback, people tend to fall back into their previous behaviors.
When large companies get agile right, the results can be stunning. Productivity can improve by a factor of three. Employee engagement, measured in quantitative surveys, increases dramatically too. New product features can be released within weeks or months rather than quarters or years. Rates of innovation rise, while the number of defects and do-overs decline. Some large companies, however, are figuring out how to make agile work for them too. Rather than impose its specific methodologies, they apply its general principles, paying special attention to the integration of agile teams into the rest of the organization.
As entire industries are disrupted by fast-moving tech startups and innovative business models, agile methodologies can help companies stay ahead of the competition. But agile methodology on its own is not enough. First of all, agile development needs to be driven by a passionate and entrepreneurial product/solution owner backed by a culture of transparency, empowerment, and trust. Secondly, be prepared to pick from other best practices that out there – like, design thinking, startup mindset and storytelling – to enhance your own practice to achieve the optimum level of innovation and speed for your business.
Read how we bring these different best-practices together with our offering called "Co-SPIN"