7 Habits of Successful Organizations - An Interview with Erwin van der Koogh
Erwin van der Koogh gave a talk at the Agile New Zealand conference in which he discussed the Seven Habits of Successful Organizations and how they enable business agility. Afterwards he spoke to InfoQ about the key themes from his talk.
InfoQ: Good day this is Shane Hastie with InfoQ we are here at Agile New Zealand conference with Erwin van der Koogh. Erwin you are with Elabor8 based in Melbourne, Australia. Elabor8 also have offices in Sydney. Please can you briefly introducing yourself for the audience?
Erwin van der Koogh: I started out as a software developer in the late nineties. My quest has always been how to have a bigger impact, so I started out as a crappy dev, got to be a better dev, until I realized that as a team lead I could have a even more impact. And that’s when I noticed that the big upfront decisions were an even bigger problem so I got to be a software architect for a while. Doing that I realized that organizations are fundamentally broken. So I set about fixing organizations. That has been my passion over the last five or six years.. how do we grow better organizations.
InfoQ: You gave a talk about the seven habits of highly effective organizations, and you opened with an interesting challenge, you asked us what have we achieved with Agile? From your point of view what have we achieved with Agile?
Erwin: Not yet anything really. And that’s the interesting thing I’ve realized. Once you start asking that question it’s a tough question to ask, because it seems like we’ve won, Agile is everywhere.
InfoQ: Everyone is doing Agile.
Erwin: Everyone is doing Agile, or everyone is talking about it. There is no job description in software development without Agile in it, yet if you look at organizations as a whole, we haven’t really improved much. We haven’t reaped the benefits yet. So we have created this amazing potential, in the IT department, but we are struggling very much to take advantage of it. And if you look at the companies that have taken the biggest advantage of it, they are the ones where a lot of what they do is software development. For example Spotify those types of companies have been doing really well with Agile, because a large part of what they do is deliver software. But the further delivering software comes from the organization’s goal and their products, the harder it gets. So it’s time we started thinking how do we design our whole enterprise to be Agile or whatever you want to call it. But those same principles can work anywhere else.
InfoQ: Taking the ideas behind the Agile manifesto and Agile thinking into the broader organization.
Erwin: Yes, very much so and there is so much other stuff out there, as Lyssa Adkins and Michael Spayd pointed out there are things like Beyond Budgeting, which are quite frankly a couple of really genius bean counters, coming to pretty much the same conclusions in accounting. And there is a lot of other thinking that we need to integrate to be able to do this.
I find it very interesting that we are talking about scaling Agile and the only thing we think about scaling is the process in IT, which I find slightly ironic.
InfoQ: Switching to your talk on highly effective organizations, what makes highly effective organizations effective? How would you summarize the seven habits.
Erwin: As I mentioned in the talk the only competitive advantage left in the twenty first century is adaptability. How do we scale learning instead of efficiency? The twenty century was all about scaling efficiency, and while it’s still important to be efficient it’s not nearly as important as learning, creating feedback loop and acting on that feedback. Organizations are very ill-equipped to deal with learning because we are so focused on efficiency.
Erwin: That’s pretty much what it is, yes. It’s how do you as an organization learn most effectively. None of these techniques are brand new or not invented yet. In my talk I talk about Helmuth Moltke who basically laid out everything we need to do right now in 1862. Senge has been talking about it for decades, Demming and Drucker have been preaching the gospel for decades so yes, none of it is very new, but it hasn’t made it to the mainstream of management thinking.
InfoQ: Let’s explore what the seven habits are?
Erwin: I put them in three categories: the first one on the people side is trusting people. A lot of what I see is trust until someone screws up, which is what I would call not trust. And we talk about it a lot but we don’t get to decide who we are working with for example. We might get to decide how we work or when we work, but it’s rare that we get to decide who’s going to be on our team and who isn’t. And it’s unheard of that people figure out what they are going to work on or that they can spend whatever money they need to spend to do their job. That’s the level of trust I am talking about.
InfoQ: But isn’t that a recipe to chaos?
Erwin: It is, it potentially is, and that’s why you have some of the other habits, especially habit number four, where I talk about autonomy, and the need to alignment right. But trusting people is one of the most basic habits. Without trusting people none of the other habits actually work.
InfoQ: And number two?
Erwin: Number two is embracing failure; not just tolerating it. Learning is something unexpected happening, and you learning from that. Because that’s basically what it is. I thought something was going to happen and something else happened, so I can learn something. The trick is how do we fail more, more smartly and embrace that. Our current organizations are very risk and failure adverse.
InfoQ: Failure is negative.
Erwin: It’s not an option, you hear that a lot, but it should be!. We have to be smart about it though; we shouldn’t kill the company over it. But how do we get these experiments going? How do we try new things? And if it doesn’t work you go “That didn’t work”, what have we learnt and move on.
InfoQ: Number three?
Erwin: Number three I like a lot, being brutally honest with yourself. The example I use often is Kodak who actually invented the digital camera twenty to thirty years before it actually killed them, all but killed them. They never could get themselves to bet on it commercially. They were content to spend R&D money on it, but they never were able to bet the farm on it. The other example I use is Netflix versus Blockbuster. That’s not the interesting battle. I find Netflix versus Netflix the interesting one, we forget that Netflix was the company that mailed out DVDs. Their main source of income was as reliant on DVDs as Blockbusters’ was but they were able to make that change. Whereas most organizations they just can’t be honest with themselves.
InfoQ: Holding up that mirror is hard.
Erwin: Very, very hard and it will make you very, very unpopular.
InfoQ: The emperor has no clothes. The forth one?
Erwin: Autonomy at all levels and this is basically how do you bring decision-making power down. Right now we have a lot of: information travels up, decisions travel down. That sort of thinking doesn’t work anymore. We need to make decisions much quicker, and much more personalized. So we need to get authority down the organizational chart. And that’s what autonomy at all levels is about. It’s about getting rid of our silos, because you can’t be autonomous if you have to rely for everything on a whole bunch of different departments. So I often talk about getting rid of IT departments. if you start a company right now, you wouldn’t have an IT department. Why do we still have IT departments in existing organisations?
It is also the secret ingredient for scaling Agile. The only way to scale Agile is to scale autonomy
InfoQ: And number five?
Erwin: Number five is think big stay small, you don’t need to be that big.
InfoQ: But organizations want to grow.
Erwin: Organizations want to grow, it’s fine to grow organizations and the impact you have in the monetary sense, but rapidly growing the amount of people that you have, is hard to do and it’s often counter productive. You don’t need to have many people to have a big impact. Look at the new crop start ups, Instagram selling for a billion with eleven employees, Whatsapp selling for nineteen billion with fifty five are extremes, but if you look at the Airbnb’s and the Uber’s you are talking tens of billions of dollars valuation with a couple thousand people. So the days where you needed to have fifty, hundred, two hundred thousand people to make an impact are over. And if you do grow, make sure you grow in such a way that it scales, so keep small autonomous units, as a vehicle for growth.
InfoQ: What is number six?
Erwin: Number six is simplify. Simplifying is one of the hardest thing to do it well. It’s about make it simple, not simplistic. But if you look at some of the research in complex adaptive systems , it’s a couple of very simple rules that result in really complex behavior. So it’s about simple rules, it’s about simple processes, but also it’s very much about simple products and laser-sharp focus. The biggest come back story in corporate history is from Apple at the verge of bankruptcy. When Steve Jobs got back he killed every product line they had, but four. So he draws this diagram where we got consumers and we’ve got professionals and we have desktop and we have laptops. They had one product offering in each category and that’s it. Twenty, thirty years later they’re the most valuable company on the planet.
InfoQ: They’ve done something right.
Erwin: They’ve done something right. It’s about simplifying everything in organizations.
InfoQ: And the last one, the seventh?
Erwin: The last one is one that my co-conspirator Steve Denning always talks about, is relentless customer focus. In the end that’s what we are doing it for. It’s about finding and satisfying customers. Customers are never in your organization. I often hear clients say “we talk to customers daily”, but when I start probing, the customer this guy two floors up, that’s in “the business”. “The business” isn’t your customer, bank tellers aren’t customers, contact center people aren’t customers. Customers are people paying good money for products and services you provide. It’s all about relentless customer focus and customer delight.
InfoQ: What are some organizations that do that one well, because I think there are a lot that do it badly.
Erwin: There are tons that do it badly, I tried to get internet in my new place for about four weeks before the provider even accepted my application. Zappos is one organization that is doing it really well. Another company I talk about a lot in simplifying is Buurtzorg. They are about healthcare, they are a amazing nursing organization. Here in Australia, in Melbourne even, we have 2 really interesting organizations, Envato & RedBubble that are marketplaces between independent artists and the world. They have a relentless focus on both the community of artists and their own customers. Unfortunately most organizations around the world care more about KPIs than their customers.
InfoQ: Erwin thank you very much for taking the time to talk to us.
Erwin: You are welcome.
About the Interviewee
Erwin van der Koogh is a Principal Consultant at Elabor8 and head of the Elabor8 Academy. When he isn’t training or traveling to speak at conferences he is working with clients in Melbourne and Sydney to scale autonomy & common sense across their organisations.