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InfoQ Homepage Articles Increasing Enterprise Agility and Agile Innovation

Increasing Enterprise Agility and Agile Innovation


In his blog post about the need for agile enterprises Brad Murphy described seeing organizations that, after having implemented agile in their IT department, are trying to implement it using a similar approach in other parts of the organization and maybe also with their business partners. Brad questions if this approach will work, since according to him “You don’t need Agile teams. You need Enterprise Agility.”

Brad mentioned two problems he sees when organization try to scale agile by applying a similar approach to all departments and teams:

  • Thinking of Agile as TOOL.  Unfortunately in today’s digital age, we often think that if you have a problem, you can buy this NEW SHINY TOOL, install it everywhere and it will solve everything! The new tool ends up being bolted on top of your existing organizational processes, or your product development processes.
  • Forgetting that the company is an ecosystem. Your company is an ecosystem that is dynamic, composed of teams, departments, and businesses, each with a set of unique cultures and informational networks. Ecosystems are not designed; they evolve.  Most importantly, the health of the organizational ecosystem affects your company’s success.

According to Brad organizations first need to get insight in their current ways of working and their mindset and culture before starting to scale agile:

If you don’t understand your ecosystem and its dynamics, and try to merely scale Agile teams, the results at best will be ineffective. You might end up amplifying existing structural and procedural illnesses. At worst, an Agile implementation can be not only disruptive but catastrophic. Your organization may revolt.

InfoQ interviewed Brad about how traditional management can lead to disengaged employees, why scaling is more than scaling teams, diagnosing the health of organizations and approaches for enterprises that want to adopt agile and become more innovative.

InfoQ: You stated that when organizations are managed in a traditional way it can lead to disengaged employees. Can you explain why this happens?

Brad: Traditional management practices within fast growing and larger firms today are shaped by a strong belief and professional /cultural bias that executive leaders define strategy, managers direct the work of teams, and teams execute the directives of managers. This century old management paradigm worked during the industrial age, but it's an epic fail in today’s fast moving, experience economy. Within the context of digital innovation and product development, this linear flow of work from the top of the organization to the "bottom" fosters several dysfunctions that promote employee disengagement.

Let’s remember that some of the most significant advancements in software and knowledge creation grew out of a community of people that were passionate about the work they were doing. Linux, Apache, Wikipedia, and many of the top software-based companies and social media sites began this way. Even more than the Knowledge Worker of the 1990s, today’s Digital Worker seeks communities that provide support, feedback, challenge, and cutting edge technological advancement. OpenStack is a great example of a community that is advancing cloud computing technology and making it available to some of the world’s largest companies.

When employees like this come to work and executives are the only group tasked with interpreting conditions within the marketplace, making key technological decisions, prioritizing work, and determining methodology and processes disengagement occurs. This leads to a generalized lack of curiosity about what the company is trying to achieve, apathy instead of autonomy, and withdrawal of discretionary effort. In other words, creativity and passion are saved for their night-job not their day-job.

With the mainstreaming of Lean and Agile work practices, teams and employees are now increasingly "at war" with middle managers who have not been given a new role and continue to believe their value comes from directing and managing work and teams. Their mistrust of the self-direction and self-management that these practices promote cause them to increase their command and control management style, build silos of power and information, and worse, block access and direct engagement with executives (which keeps them in the dark and unaware of the problem).

This pattern fosters apathy, disengaged employees and competition between teams. The organization and culture are negatively impacted by higher churn rates, low employee loyalty, and poor decision making by those at the top of the organization, who are essentially "cut off" from those most skilled and knowledgeable about how to best design and execute new client experiences and technology. Ultimately, what is essential to long-term corporate health and brand relevance is withheld, whether intentional or unintentional, because intrinsic motivators are squashed. As young, eager new graduates enter the workforce this pattern will only be amplified unless a new management paradigm is adopted.

InfoQ: What are the possible effects for the organization and its customers when employees are disengaged?

Brad: When employees are disengaged it means quite simply that companies are receiving only a fraction of the creativity and productivity of their workforce. The tell-tale signs of this dysfunction include difficulty in responding to rapid change, poor product quality, lack of commitment, and low levels of collaboration. When employees are disengaged organizational boundaries create silos and a pervasive Us-Them attitude. Internal competition produces information hoarding and a lack of resource sharing and cooperation, which destroys productivity and performance. The outcome of employee disengagement for the organization is a Status Quo culture.

Employee engagement also has an impact on business value and customer satisfaction. Engagement is not simply how well you do your daily work, although disengagement decreases an employee’s desire to perform well, it also enables truthfulness, encouraging others and helping them perform, and focusing on innovative ideas and their benefits rather than personalities and power. Ultimately, engagement is an emotional state that taps into the individual’s intrinsic motivation, our innate desire to take on challenges (tasks), to be positive and have pride in our work, and be creative. Intrinsic motivation, coupled with discretionary effort, combine to create value for companies and customers.

InfoQ: You stated that if organizations “try to merely scale Agile teams, the results at best will be ineffective”. Can you elaborate why this is the case?

Brad: It is our view that the current Agile scaling trend is largely the result of well intended, but flawed, logic about what makes organizations tick. We now have decades of social science research and organizational performance data pointing us to more evolved scaling patterns, yet this research is largely unused by those seeking to scale agility. What companies need desperately are NOT more complicated ways of reorganizing the structures they already have, attempting to combine the capacity of large numbers of agile teams into their existing linear workflow model, but more sustainable ways to promote flexibility, resiliency, responsiveness to change, and product innovation. Our clients confirm that the business impact and relevance of Agile scaling, as it is currently implemented, has done little to position the company for long term sustainability and product innovation success.

So how do we get there? I have been at the helm of both startups and enterprises and, in both cases, the key lies in the ability of executives and managers to see their organizations as complex adaptive systems, NOT well run machines. In our collaboration with some of the worlds leading social scientists and business management researchers, we've come to appreciate how important it is to first visualize and support the naturally occurring informal human networks in your organization – we call this Start Where You Are. Once you have done that, you can use the key influencers in these networks to scale and transform the organization. This enables leaders to find successful but hidden ideas and experiments, called positive deviants (novel ways of doing things), and amplify them across the organization.

This is important because there are no silver bullets for scaling agility, no right way or single framework. What works for Google, Amazon, Apple, Facebook, you name it, won’t necessarily work for you – scaling agility is not a copy-paste operation. Organizations are complex adaptive systems with strong cultural values and this approach won’t work for two reasons: first, companies are composed of human networks of highly creative individuals, and second, they are highly diverse, not homogeneous. Context, location, and relationships critically define what is needed where. The best tool on the planet for tracking software development may fail miserably when used by operations, and be hated by business partners. This is how organizations come into conflict with themselves when they try to scale Agile teams by imposing the same methods and practices everywhere.

When you begin seeing your company as an ecosystem, you begin to appreciate the diversity, contextual differences, and personalities of the parts and how they contribute to the whole dynamic human system. Then you can take advantage of the complexity and provide the different tools and techniques needed for the each part of the system to evolve.

This doesn’t have to produce chaos or clashing methodologies and tools that don’t talk to each other. I mentioned above the natural scaling patterns of ecosystems, and this is where they come into play. Let me introduce this idea here, and continue with it in the next question.

When we stop seeing the company as a machine, designed to contain and control the informal networks within it, we begin to see nested communities that form layers of order. Lean and Agile practices support the most granular (notice I don’t call it the lowest) layer – individuals who come together and form small, tightly connected communities we call teams or tribes. From this multiple larger and more diverse communities arise based on functions, products, org chart hierarchies. These networks, like teams, can be self-directed and self-managing. When these networks are all focused on achieving a business goal or product we call them Portfolio and Program teams, but they are really networks that include multiple functions and cross organizational boundaries. When a Line of Business looks at its structure, executives see a network of networks, an ecosystem. And when the CEO, COO, CFO, CTO, etc looks at the organization they see multiple ecosystems that are a reflection of the market landscape in which they compete and add value.

InfoQ: Your suggestion is that to transform an organization into an agile enterprise you need to understand the organizational ecosystem and diagnose its health. Can you give some examples how organizations can do this?

Brad: Let me start with transformation. No good business person would apply the same tactics to all segments of their markets. So too, executives seeking to establish enterprise agility need to see the different parts (segments) of their organization as needing different organizational structures and dynamics. What is healthy for a software development ecosystem may not be healthy for a hardware development ecosystem. What works for deploying software that drives phone apps may not be appropriate for deploying software driving medical devices.

The tricky part about the transformation to agility is that it makes your company more diverse. What does that mean? By viewing the company as composed of multiple, stable structures that are able to compete effectively in different market landscapes, executives can transform each part of the organization into an appropriately agile enterprise. Having studied this extensively, we believe there are five stable structures that companies can use and that are effective for competing in and adding value to market ecosystems.

This is a challenge to leaders who see only hierarchy and a mechanized way of serving stakeholders and customers. For leaders who learn to see beyond hierarchy, seeing human networks for example, the ability to say, “This part of my organization has agility when it is reliable and resilient in the face of market turbulence, and, this other part of my organization has agility when it can spin-up new businesses off existing platforms” is immensely freeing. In fact, I believe this is the most fundamental value that executives can provide for their companies - the ability to see the variety of structures, instead of one homogenous structure, that collectively can provide the highest value to their stakeholders and markets.

This perspective is fractal, meaning it can be repeated at all levels of the organization. Let’s say I am a project manager using Adaptive PM (rather than Traditional PM), part of my role is to see the whole program as a mosaic of methodologies and technologies. I can then apply various workflow practices and processes where they are appropriate, rather than expect the teams to conform to a single process. This pattern is a way of scaling agility so that structure is based on function that adds value.

Implementing this becomes easier when you don’t have to invent everything from scratch, but instead, use a pattern from a validated template library and calibrate it to your needs, context, and culture. Now you can have diversity and stability at the same time. In other words, where higher stability is needed you have it, and where innovation is necessary you have it, and even where rapid change is required you have that too. The degree of flexibility this achieves is used to adapt to changes from business partners and market dynamics. This translates into operational excellence AND innovation. Enabling agility at scale by this means, challenges the current fad of "installing" single, over-arching methods and in it's place, provides for the needed flexibility, and on-going recalibration of appropriate work methods and tools.

That brings me to the question of diagnostics. Organizations able to successfully compete in the Digital Age are dynamic, complex systems, and any diagnostics you use have to capture that. Certainly any diagnostic is a snapshot in time, but the output has to reveal more than a static snapshot. For example, we use a tool to capture the dynamics of corporate culture that enables us to talk to leaders, managers, and teams about the polarities they are experiencing. Culture Scan generates rich data/output that provides the ability to see culture as something you influence and shape rather than a static straight-jacket you are constrained by. The benefit of shaping culture is to choose, active rather than passive, to drive the dynamic toward Collaboration, or Flexibility, or Control, or Innovation, or Market Competition.

Another diagnostic tool we use to understand the dynamics and complexity of companies analyzes their human networks. Do we have the right teams in place? How certain are we that the workflow we are using is responsive enough given the market’s rate of change? Are your Portfolio and Program teams connected to the people in the organization who can help them solve really tough problems and make excellent decisions? Is the structure of your organization able to absorb the complexity and disruption generated by the markets you serve? These are questions that all leaders struggle to answer.

We also believe strongly in linking diagnostics to learning, not judging. We use an indexing tool that allows teams to track their progress on the journey from novice to mastery of the practices and behaviors that produce agility (including those of Lean and Agile). Self-management and autonomy can’t exist without accurate and timely feedback. Using this enables organizational learning and the sharing of practices that emerge from performing the work of product delivery. Most critically, as managers move away from providing this and begin performing other important work, teams need a means of consistently and objectively measuring their learning and progress, including when they slide back toward old habits.

InfoQ: In your view what can be suitable approaches for enterprises that want to adopt agile?

Brad: The answer to this question partly depends on why the company is pursuing the transformation to an agile enterprise. It also depends on the extent of participation across the enterprise, is this an IT transformation or a Line of Business Transformation? You need to be very clear-headed about what the organization’s response to agile adoption has been so far. In our experience, if the tools and techniques have been forced on the organization in a one-size fits all manner, you probably have some repair work to do. People grow weary of constant change (as opposed to continuous improvement which they initiate), and adoption of agile can become a turf battle over methodologies led by self-proclaimed experts. We now know that agile has the same high failure rate as all the past IT fads.

That said, if companies want to promote real business agility, and not just adoption of new mechanics, they can do so by approaching both the transformation and the company as a living system, or ecosystem. By this I mean two things:

First, transformation is not going to be something purchased off-the-shelf (as a tool, training, or methodology) nor is it something that requires a cadre of consultants that roll-out their version of lean agile methods. Transformation is messy, it is an evolutionary process and does not happen at the same pace or in the same way everywhere. This is one of the hardest parts for leaders – they would love to impose a timeline, a list of all the quantitative metrics that will be quickly delivered, and a firm definition of success. While these are all within reach, achieving them comes NOT from arbitrary imposition of goals and deadlines. The companies we work with have all the ingredients necessary for transformation, but they want to follow a recipe and not do the hard work of combining the ingredients they have into a secret sauce of their own.

Secondly, approaching the company as an ecosystem means that it has its own vitality. I choose this word with care, vitality implies the ability to develop, endure, and be vigorous and full of life. This means your organization will constantly surprise you, act predictably irrational (knowing what to do only when it is seen in context), and respond to challenges and change in ways you couldn’t imagine. This is why you have a company, to take advantage of the diversity of ideas, experience, knowledge, and personality it contains.

With this in mind, there are a few things we encourage our clients to consider as they begin their journey to enterprise agility.

  1. Stand back and take a minute to see your company as the rich, vibrant ecosystem that it is. Understand the culture and how it needs to evolve to enroll and engage everyone. See the organization as interdependent yet contextually independent, and work with this to define the early roadmap for transformation, they will evolve it as they learn and change.
  2. See the human networks, identify and recruit the key influencers within them. Link up any fragmented programs and portfolios, making sure that the business is part of the transformation and not an observer or critic. Teach everyone to contribute to the networks they are part of, encourage the networks to collaboratively make decisions and solve tough technical problems.
  3. Enroll the middle. Middle managers have taken a bad rap and we propose a horizontal organization rather than a flat one. This means that middle managers have a new role, acting at the intersection of vertical and horizontal information flows, and a very different way of working, spending most of their time working on the organization not in it. In enterprise companies middle managers are the key to continuous innovation, but you have to re-role and re-educate them to do this. When you do, they become the means of connecting executives to the working surface and resolving conflict and contradiction that occur at organizational boundaries. Within the Agile community this is heresy, but it is integral to a Lean management style.
  4. Move toward Adaptive Project Management and away from Traditional Project Management. If you are going to eliminate Waterfall, then you have to find a new way to manage projects. This is an area that is largely ignored, except by a few out-of-the-box thinkers, and will be hotly contested by your E/PMOs. So be ready.
  5. Use both leading and lagging indicators as metrics to track your progress. Lagging indicators are easy to measure but hard to improve or influence – they are after the fact outputs of performance. Leading indicators are performance metrics that can influenced or change the output (lagging indicators) but are hard to measure. Leading indicators can be turned into KPIs that drive improvement and even innovation, for example, the famous 20% Rule for time spent on personal exploration of new ideas.

InfoQ: Next to increasing their agility organization often also want to become more innovative to be able to deliver new products faster to their customer. Can you share some of your ideas how they can do that?

Brad: Let’s first be clear on one thing, to innovate technology and products you have to innovate the organization and its processes. Essentially, product innovation is the outcome of the corporation’s ability to continuously re-invent itself from the inside-out. In this sense, innovation has multiple faces, which we lump into five lenses for viewing and influencing the organization: Teaming and Workflow, Leadership and Culture, Management and Structure, Value Creation, and Human Networks. By approaching innovation in this way we can help our clients deliver new products faster regardless of the localized constraints they face during product development and commercialization.

This points out what makes innovation so difficult, that is, the movement away from the Status Quo, or creative destruction, that must precede it. We use a very different model of change that is built to accommodate continuous innovation. This helps our clients manage the dilemma between needing to control operations and, at the same time, create an environment that permits new ideas and concepts to be pursued, and take root.

Balancing operational excellence and innovation is where the two very different curves of technological breakthroughs (a power curve) and organizational learning (an S-Curve) must be integrated to create value. This challenges the invisible architecture of the corporation – how decisions are made, control is divided between the core and the periphery, and the culture is evolved to enable new mental models. This is not insignificant and takes real courage at the executive level. Much of the work we do involves helping executives see that innovation and agility require a light leadership touch, asking the hard questions, shaping expectations, and confronting reality. Ultimately, a culture of innovation is a leading indicator for delivering high quality products to customers faster (the lagging indicator).

About the Interviewee

Brad Murphy, Founder/CEO Gear Stream, Inc., is a serial entrepreneur with over 30 years pioneering new Enterprise innovations in product, service, and software development. Since 2000, Brad has focused on helping companies implement and scale flexible, Agile and Lean based collaboration models that radically improve business and innovation agility, time-to-market, and top line revenue growth.

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