To increase agility, companies can divide themselves into value centers in charge of a business strategic initiative, with end-to-end responsibility and with full access to the information regarding customer needs. Organisations need to create spaces where people can cross-collaborate and learn, using, for instance, self-organized improvement circles, Communities of Practice or an internal Open Source model.
Xavier Albaladejo, agile and lean coach at Mango, spoke about organizational refactoring at the Agile Summit Greece 2018. InfoQ is covering this event with summaries, articles, and Q&As.
The future of companies is to "unscale" themselves into smaller units ("value centers"), each one in charge of a business strategic initiative, with end-to-end responsibility and with full access to the information regarding customer needs, argued Albaladejo. A strategic focus means that this is dealing in the range of years rather than months, therefore creating the space to grow high-performance teams for specific business areas.
Albaladejo stated that when the company structure maps directly to the company strategy, it gives a clear purpose to the people working there and also autonomy; the goal is to shift from the concept of "empowerment" to "ownership" of their part of the company, so they can create the environment they need to succeed.
In a recent Q&A on the book Unscaled, Hemant Taneja explained how companies can unscale:
Taneja: There are really two parts to the unscaling phenomena. The first being an entrepreneur’s ability to rent instead of building the services - everything from office space to payment platforms. The second, which we’re just seeing emerge now, is the impact that the access to data and increasingly sophisticated AI is having on the pace and specificity of innovation. Early stage companies can learn more and iterate faster to create better products and solutions for smaller, more qualified markets.
Albaladejo mentioned one drawback of creating smaller units: you are breaking functional silos, but by design creating new ones (these "value centers"). What is worse, he said, is that they will know more than ever what their business goals are, so by default there will be no incentive to cross-collaborate unless you devote quality time, and find very good natural leaders to create spaces where people can share things and take advantage of being under the umbrella of a common company.
People don’t feel part of a bigger system until they start working together on something, argued Albaladejo. At Mango, they invest time and motivate people to join strategy and improvement circles (Business, Technology, Organization), Communities of Practice to share experiences and learn, to move to an internal Open Source model, etc.
InfoQ interviewed Albaladejo about refactoring the organization at Mango.
InfoQ: Why was there a need for refactoring at Mango?
Xavier Albaladejo: Usually organizations that were created more than 20-30 years ago (or even new ones) have an internal structure which is based on specialisation: marketing, sales, technology, customer care, HR, etc. So you cannot know what their business is about by examining their organization chart. By design, these kinds of structures create department silos, each one with its own priority and budget, de-incentivizing cross-collaboration. There is no joint responsibility of outcomes or common view of customer related information (demands, paint points, …).
Internal queues of work among departments pile up, breaking value chains and leading to very slow response to market needs, which is now unsustainable due to the change of behavior of customers (there is a natural digital transformation and they are getting used to solving their problems almost immediately). They will have to struggle a lot to be competitive against new SMALLER and more "AGILE" companies which provide simpler solutions without legacy structure, processes, technology and culture. If you consider also that nowadays in big companies profits are below 10% (see the performance of shares in the stock market during recent years), starting to lose clients implies putting the whole company in danger.
As any company of this size and internal structure, you can find some of the expected "system behaviors" as mentioned above at Mango. Therefore, there is a need to create internal "spin-offs". The creation of our online department more than ten years ago was aligned with this concept of being as autonomous as possible to the rest of the organization, but the internal structure was still based on specialization. Now this department is being transformed in diverse "value centers", and is gaining traction in the rest of the organization in order to expand the end-to-end view of the value chain. It’s a natural transformation, as the market is demanding more and more online sales and omnichannel services.
InfoQ: How did you establish a networked organization at Mango?
Albaladejo: One key thing is making any improvement initiative very inclusive, inviting people to join and fit in the place they think they can bring more value to the rest of the organization. As explained above, we have regular open workshops where we deal with each specialty strategy and improvements, spaces in which to share what we have learned or what each unit is doing. You have to experiment a lot with this in order to find the best way to make this valuable and enjoyable for your people. Making it social, funny and even "surprising" is also very important; they should come back home laughing and telling to their families or friends, "you have to hear what we did today at work!".
InfoQ: How has this impacted leadership?
Albaladejo: First of all, there needs to be a mindset change in order to transfer more responsibility and autonomy to these "value centers", and a lot of work is needed to make the surrounding environment as much seamless as possible for them. You have to coach management so they can learn and practice many new mental models.
As a consequence of this, and this is the second impact, you need real leaders who are able to develop a strategy, (and make it work), integrating and involving their people. In this way we will reach one of our main goals: to leverage the combined mental capability of all people in the company.
The third point is that in this new structure, the organization gets flatter and you need to reconvert some layers of management, moving them to work inside the teams with new roles or "half-aside" them as competence/specialty facilitators, who work shoulder-to-shoulder with specific teams for several weeks.
InfoQ: What have you learned during your agile transformation?
Albaladejo: The importance of explaining that you’re not introducing agile in the company, but solving the problems they face to reach their vision (Agile-Lean-Scrum-Kanban are means, but not purposes by themselves). In order to succeed, your communication style should really fit with your senior management style, and there is also a lot of power in running global bottom-up surveys on senior management values and skills, in order to create awareness on what they should improve on.
Another key point is that your senior management should be humble and have no fear to change things in the organization, while your middle management should be really open-minded and eager to learn (otherwise they could stop the transformation). In the end, what makes the real difference is if your management is able to make things happen, in a collaborative way, with their people, listening them, inspiring them and taking care of them. Desire is not enough; leadership is all.