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Agile transformations began to be considered successful when IT development teams applied Scrum (which we refer to as team-level agility). After a few years of applying New Ways of Working [1], there was some discouragement, as many transformations failed to successfully bear their promised benefits.
Only 45% of organizations indicated that they were satisfied with their agile transformation experience
While surveys show that a large majority (75%) of respondents are satisfied or very satisfied with new agile ways of working, only 45% of executives and professionals share the opinion that their agile transformation was successful [2]. Another study highlights that 64% of companies believe the transformation does not move fast enough [3].
89% of respondents believe New Ways of Working will be relevant or very relevant in the future to remain competitive
This finding is striking. 89% of respondents consider agility to be relevant or very relevant in the future to remain competitive [4]. The vast majority of organizations realize that new ways of working are essential, but opinions differ widely when it comes to defining and implementing the right approach.
Organizations that noted positive experiences with agile transformations stated these achieved benefits: [5]
Those companies reporting significant challenges in their agile transformations cited these reasons [6]:
Established hierarchy and culture
Missing mindset
Lack of coordinated, overarching processes
Business goals not aligned with transformation intent
Insufficient alignment between Agile and traditional approaches
Have you also experienced these or similar setbacks in your transformation? We will now look at ideas you can apply to ensure successful returns from agile ways of working.
1 - Scale agility beyond development teams
It’s important to recognize that agility has various dimensions. Team agility, where a team works with agile methods, differs completely from developing an organization that applies business agility to meet ever-changing market demands. While the benefits of applying Scrum (or other agile methods) on a team level have tremendous benefits when paired with a self-organizing company mindset, this represents merely one step towards achieving your expected transformations. If the company's solution to achieving business agility is to simply make a department, or even a single team, agile, it has failed to understand the challenge at hand [7]. If you intend to scale agile, you need to change the way people think and act throughout the organization [8]. Gaining the benefits from running an agile organization only becomes possible upon unification. A company whose operations are divided into groups, in which one is responsible for giving orders and the rest for implementing them, will not suffice. Instead, organizations should strive toward removing the boundary between "us" and "them" [9]. A structured scaling of agile teams, with multiple Scrum teams, organized based on roles that separate content, design, and governance matters, offers a better chance for success. This creates not only alignment but also lets you manage its dependencies. Key Takeaways:
The agile team is the heart of the agile approach.
Start with changing the way people think and act throughout the organization.
Scale agile teams in a structured way, so multiple Scrum teams are overseen by content, design, and governance authority and follow an aligned approach across all authorities.
2 - Anchor agile know-how up to C-level management
Real business agility integrates the upstream and the downstream into a single value, creating a fast and steady workflow [10]. To put it simply, strategy, operations, development, and delivery must work closely together and, most importantly, towards the same goal. For this to function properly, executive management must be on board [11]. Before leaders can strongly support and promote agile ways of working, there must be a deep understanding of how agile principles work.
If you don’t understand agile teams, you can’t understand agile as an operating philosophy.
As famously quoted in the book Doing Agile Right by D.K. Rigby “If you don’t understand agile teams, you can’t understand agile as an operating philosophy” [12]. If your organization wants to reflect on whether agile principles and its philosophy is merely a buzz-word mission, accept the challenge to ask yourself these questions [13]:
Are senior leaders using agile practices in their work?
Are they trusting and empowering people (including decentralized decision-making)?
Are they creating a culture that focuses obsessively on customers and adapts quickly to customers’ changing needs?
Are senior leaders planning product goals instead of team efforts?
Are planning, budgeting, and resource allocation processes frequent and flexible enough to quickly shift resources to the company’s highest priorities?
Key Takeaways:
If you do not understand agile teams, you cannot understand agile as an operating philosophy.
Involve senior management in agile teams to let them gain a deep understanding of agile principles.
Honestly reflect on whether agile principles are applied by senior executives.
3 – Bridge Strategy with Strategic Portfolio Management
Much has been said already about how important it is that agile is not only applied on team levels but connected strategically with operating layers. To adjust to changes in the market and demand flow, the business strategy needs to be quick to adapt to novel changes and simultaneously capable of developing features as requested by consumers. Now, many organizations have started their transformation on the team and cross-team level. However, only 29% of companies have transitioned to the portfolio level [14]. This inevitably leads to a situation where traditional managers allocate annual budgets to projects, creating inflexibility in resource shifting, resulting in an inability to match changing market demands throughout the year. This creates an ultimate gap to achieve a holistic agile running operation top-down and bottom-up. A major step towards a lean and agile organization is achieved when value streams [15] have approved budgets and adjust as necessary based on changing market demand. This requires a major change in how to manage budgets, as it requires managers and executives to think not in terms of projects but in terms of value streams (series of steps that an organization uses to implement solutions that provide a continuous flow of value to a customer). Business success requires testing strategies by comparing actual results to expected ones and then updating strategies. In a famous case study Dell® demonstrates this in real life: Dell creates, refines, and evaluates its strategic initiatives throughout the year, reprioritizing and resetting them[16]. Amazon Prime and Amazon Web Service are other great examples of successful features funded outside of annual strategy and budget allocation processes. To do this, it is vital to link agile portfolio planning with business strategy. This means [17]:
Introducing strategic portfolio management and abandon annual project funding cycles.
Decentralize decision-making and measure outcomes.
Key Takeaways:
Only 29% of organizations have introduced agile portfolio management, while it is a core puzzle piece to connect strategy with portfolio management and execution.
Strategic portfolio management creates flexibility for greater business opportunities.
Introducing strategic portfolio management is a great step to reach portfolio-level agility.
4 – Agility is not a magic bullet
Those who have only a hammer as a tool see a nail in every problem. With the omnipresence of agile, every business thinks the magic bullet is to execute every project in an agile way. The right question to ask, however, is how agile do you want to Be? More agile is not always better agile. There is an optimal range of agility for every business [18] and you need to discover what the best level for your organization is. Agile transformations are associated with significant investments. There are several good reasons why agile is not appropriate for every situation [19]:
When there are strict deadlines to meet with approval stages.
When there is little responsiveness to needs required (for instance in a regulatory-driven project).
When work packages cannot be sliced into reasonable work packages to allocate to single sprints.
When incremental results have no value and only the end product creates value to its clients.
Agile methods have great value in helping organizations achieve a higher potential. However, some situations need to be carefully considered.
Key Takeaways:
Not every project is suited for an agile approach.
Agile transformations are a journey, during which any initiative needs to be evaluated against its potential to execute in an agile way.
4 – Conclusion
There has been a major wave of agile transformations over the last few years. Although the importance of shifting the ways of working to remain competitive is recognized by most organizations, there is discouragement as not all promised benefits have been met. Agile transformations often face challenges such as breaking up existing hierarchies and cultures, shifting mindsets, and insufficient alignment of overarching business processes, and aligning agile transformations with business goals. In this article we highlighted a few aspects to consider improving your agile transformation: Scaling agile beyond development teams, anchor agile know-how up to C-level management, and bridging strategy with strategic portfolio management. Finally, we also highlighted that agile is not an approach that can be applied in every situation and every project. To sum up, it is our opinion that agile experts and consultants have promised a lot with New Ways of Working and many organizations still are on their way (with some major setbacks) to successfully apply them. An agile transformation should not be regarded as another change initiative or a reorganization, but a journey of an evolving organization continuously learning and ready to adapt whenever necessary. What results have you already achieved and what potential would you like to exploit with new ways of working? Interested in identifying quick wins in your organization? Discover our Spark Mind Business Accelerator.
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References
[1] Sniukas, M. (2020). The why, what and how of reinventing our ways of working. https://www2.deloitte.com/lu/en/pages/innovation/articles/why-do-we-need-new-ways-of-working.html (accessed 5 July 2021)
[2] Prohammer, D., Trends & Benchmarks 2020 – Was uns zu Business Agilität noch fehlt!, https://swissq.it/news/trends-benchmarks-2020-was-uns-zu-business-agilitaet-noch-fehlt/ (accessed 28 June 2021)
[3] Capgemini Research Institute, Agility at Scale: Four ways to gain enterprise-wide agility, https://www.capgemini.com/de-de/wp-content/uploads/sites/5/2019/11/Infographic_Agile-at-scale-2.pdf (accessed 29 June 2021)
[4] BearingPoint, Wie agil ist Ihre Organisation? https://www.bearingpoint.com/files/BearingPoint_Studie_Agile_Pulse_2020.pdf?download=0&itemId=754381 (accessed 25 June 2021)
[5] BearingPoint, Wie agil ist Ihre Organisation? https://www.bearingpoint.com/files/BearingPoint_Studie_Agile_Pulse_2020.pdf?download=0&itemId=754381 (accessed 25 June 2021)
[6] Capgemini Research Institute (2019), Agility at Scale: Four ways to gain enterprise-wide agility, https://www.capgemini.com/de-de/wp-content/uploads/sites/5/2019/11/Infographic_Agile-at-scale-2.pdf (accessed 29 June 2021).
[7] Leopold, K. (2019). Rethinking Agile - Why Agile Teams Have Nothing To Do With Business Agility. Vienna: LEANability GmbH.
[8] Rigby, D., Elk, S., Berez, S. (2020). Doing Agile Right: Transformation Without Chaos. Boston: Harvard Business Review Press.
[9] Leopold, K. (2019). Rethinking Agile - Why Agile Teams Have Nothing To Do With Business Agility. Vienna: LEANability GmbH.
[10] Capgemini Research Institute (2019), Agility at Scale: Four ways to gain enterprise-wide agility, https://www.capgemini.com/de-de/wp-content/uploads/sites/5/2019/11/Infographic_Agile-at-scale-2.pdf (accessed 29 June 2021).
[11] Leopold, K. (2019). Rethinking Agile - Why Agile Teams Have Nothing To Do With Business Agility. Vienna: LEANability GmbH.
[12] Rigby, D., Elk, S., Berez, S. (2020). Doing Agile Right: Transformation Without Chaos. Boston: Harvard Business Review Press.
[13] Adapted from the W. K. Kellogg Foundation Logic Model Development Guide, https://safesupportivelearning.ed.gov/resources/wk-kellogg-foundation-logic-model-development-guide (accessed 30 June 2021).
[14] Capgemini Research Institute (2019), Agility at Scale: Four ways to gain enterprise-wide agility, https://www.capgemini.com/de-de/wp-content/uploads/sites/5/2019/11/Infographic_Agile-at-scale-2.pdf (accessed 29 June 2021) [15] Scaled Agile Inc. (2021). Value Streams. Value Streams represent the series of steps that an organization uses to implement Solutions that provide a continuous flow of value to a customer. https://www.scaledagileframework.com/value-streams/ (accessed 5 July 2021)
[16] Rigby, D., Elk, S., Berez, S. (2020). Doing Agile Right: Transformation Without Chaos. Boston: Harvard Business Review Press.
[17] Capgemini Research Institute, Agility at Scale: Four ways to gain enterprise-wide agility, https://www.capgemini.com/de-de/wp-content/uploads/sites/5/2019/11/Infographic_Agile-at-scale-2.pdf (accessed 29 June 2021)
[18] Rigby, D., Elk, S., Berez, S. (2020). Doing Agile Right: Transformation Without Chaos. Boston: Harvard Business Review Press.
[19] Robbins-Gioia LLC (2020). When You Should – and Shouldn’t – Use Agile. https://www.teamrg.com/blog/when-you-should-and-shouldnt-use-agile (accessed 1 July 2021).
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