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InfoQ Homepage Podcasts Evan Leybourn on Responding to Uncertainty Using Business Agility

Evan Leybourn on Responding to Uncertainty Using Business Agility

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In this podcast recorded at the Agile Christchurch conference, Shane Hastie, Lead Editor for Culture & Methods, spoke to Evan Leybourn about the characteristics of agile organisations and how they respond to disruption.

Key Takeaways

  • Business agility is a way of taking the principles of agile development and applying them to areas of the organisation outside of software engineering 
  • Unpredictability is the new norm, and organisations need to build it into their corporate strategies
  • As an influencer in an organisation your job is to infuse cultural change rather than drive it 
  • Really successful companies in this age have cultures based on trust and empowerment rather than mistrust and many layers of approvals 
  • The future is unclear and will always remain so – adaptability and responsive are keys to success in the age of disruption 

Transcript

00:21 Introductions

00:21 Shane Hastie: Good day, folks. This is Shane Hastie for the InfoQ Engineering Culture podcast. I'm at Agile Christchurch in lovely Christchurch, New Zealand and I'm sitting down with Evan Leybourn. Evan is the CEO and founder of the Business Agility Institute and coincidentally, my co-author on the #noprojects book. Evan, great to see you again, it's been awhile. How are you doing?

00:44 Evan Leybourn: It's been really good and as always enjoy talking with you and I'm looking forward to where the next 30 minutes goes.

01:01 Shane Hastie: Obviously you and I know each other pretty well, having pair written large quantities of text, which hopefully many of our listeners have downloaded and read. But the Business Agility Institute, maybe let's just start with the why. Why is business agility such a buzzword today?

01:07 Agile development has become a victim of its own success

01:07 Evan Leybourn: I think what many companies are starting to find is diminishing returns in their Agile transformation. So many of your listeners will be familiar with the transformations that Agile and Scrum and Kanban and these systems and practices and processes that have been around now for 20 years. And I don't think it would be wrong to say that Agile has become a victim of its own success. So I don't think there's a company out there that isn't doing Agile, or at least has tried Agile. Even if they decided it's not for them, it's no longer the underdog.

01:44 Evan Leybourn: Agile is no longer that thing that the strange hippie developers do, but it's something that the banking developers do. It's something that everyone does. Because it's become successful, because everyone is doing it, it means that there is a very large discrepancy in quality. Some are doing it well, some are not. It also means that there's a lot of companies who have now been doing it for quite a while and they're no longer getting the benefits that once they did.

02:13 The ideas of business agility

02:13 Evan Leybourn: So business agility has emerged and to be fair, this isn't a new thing. Many of these concepts, we can date back to the 1940s. But business agility has emerged as a way of taking the principles, not necessarily the practices, though in some cases, yes, but the principles of agility, not Agile, but being customer centric, employee engagement, making sure products are fit for purpose and make the work right and do the right work and do the work right and all that kind of stuff.

02:48 Evan Leybourn: And as a way of addressing all of these challenges as making something happen, more and more companies are then looking at well, what's next? Agility has got us so far but with diminishing returns, what are we going to do? How do we keep being Agile? And the answer is, it's no longer technology. It's no longer your software teams that need to be... Sorry, that's not fair. The software teams still need to be Agile, but that's not where the investments in change needs to be. So more companies now are looking at HR, they're looking at finance.

03:21 Evan Leybourn: So everything from recruitment policies to performance management, to funding models, marketing and sales. How do you structure work in a sales team? How do you get away from individual bonuses? How do you get away from that lone wolf seller in marketing? How do you create cross-functional marketing teams? How do you get marketing functions that can actually take a campaign to market in days not months. Many of the same challenges that Agile software teams faced 10, 15 years ago.

04:01 Evan Leybourn: I think we sometimes forget how good we have it now. So yeah, that's a very long-winded way of answering the question, but the truth is business agility is companies out there right now, trying to thrive, trying to be relevant and trying to delight their customers in a marketplace that is saturated, that is full and that is completely unpredictable.

04:15 Shane Hastie: Talking about unpredictable, this is the late February, 2020. We are at the bottom of the world and there's a virus spreading all around. What would having an Agile business approach help in addressing some of the challenges that organizations are facing right now?

04:34 Unpredictability is the new normal, and organisations need to build it into their corporate strategies 

04:34 Evan Leybourn: Unpredictability is the new normal, and whether you're talking biological, whether you're talking climate change, whether you're talking just social and social challenges, that unpredictability has to be baked into your corporate strategy. So if you're an airline and every newspaper at the moment is talking about the impact on airlines because of Coronavirus, the impact on tourism and so forth, and how do you as an organization, I don't want to say take advantage because you're not taking advantage of a bad situation, but how do you recognize that you're now entered into a bad situation and you have the resilience and the capability, the competence inside your organization to adapt and almost come out stronger than your competitors.

05:19 Evan Leybourn: So there's a couple of key elements. The first is many companies are running too thin. They've spent years reducing costs to points where profit margins are, they're still big, but they're big because it's at scale, but they're still 1% or 2%. And airlines are a good example, as is for that matter retail, so groceries, for example. In both these sectors, because margins are so, so thin, it doesn't take much in the marketplace to completely disrupt and in some cases, cause market failure.

05:52 Evan Leybourn: I obviously don't advocate for market failure, I don't think that's a good thing, but companies need to have a level of resilience built in and ability to shift focus, shift people, shift strategy, shift products, shift services in such a way that meets that new normal, or at least allows them to weather that disruption.

06:14 Evan Leybourn: The other thing that's in play here is culturally, when times are bad, when things are happening, companies tend to go inwards, and they look at their own practices and processes. They want to be more efficient and what we know from our research is that companies that actually invest in growth in times of hardship actually come out in a much, much stronger position than companies that focus on efficiency in times of hardship.

06:45 Evan Leybourn: So what we want to see is more companies, especially when things are down, how do they use that to become a better organization?

06:56 Shane Hastie: Perhaps the question is how do they? Our audience are going to be technical influencers, technical team leaders. What do I do?

07:04 Advice for technical influencers

07:04 Evan Leybourn: First of all, you influence. Change doesn't happen because the CEO says, "Hey, let's run a transformation." Change in an organization happens because people say, "There's a better way of doing this and I'm going to give it a crack." I'll use a non-Agile example. A lot of companies are really starting to amplify their corporate social responsibility initiatives, whether it's around climate, whether it's around diversity, whether it's around inclusion, it doesn't really matter. But those transformations, there's no market... Well, there is a market reason, but it's not a strong market reason to do it.

07:42 Evan Leybourn: Companies are doing it in large part because of their employees wanting them to do it and with enough movement saying, "I want to work for a company that acts in this way, that has this culture, this give back, this..." well, it doesn't really matter what it is. So influencing a company to be a little bit better than it was yesterday is one of the biggest ways that you can actually make a company start to change.

08:12 Organisational change is like infusing a cup of tea

08:12 Evan Leybourn: I use a metaphor of tea. So organizational change isn't top-down, it isn't bottom up. That's a false dichotomy, it's neither of them. What it is, is it's like making a cup of tea. You put a tea bag, you put some tea leaves in the tea and three minutes later, you have a nice cup of tea, five minutes if it's strong, right? But there's no point it becomes tea. There's a point when it's definitely water and there's a point when it is definitely tea, but there's no point when it suddenly flips over.

08:45 Evan Leybourn: So tea leaves, if you're an influencer, if you're in that organization, your job is to infuse. Your job is to infuse a culture of collaboration, a culture of customer, I was going to say customer centricity, but let's go further. Let's say a culture of customer obsession, a culture of taking risks, a culture of trying. You don't need management approval for any of that. You just need the willingness to actually try and to make a difference. And there are some organizations where it won't work, but there's an old saying, it's like, "Change your organization or change your organization."

09:27 Shane Hastie: What does good look like in this space?

09:30 Trust and empowerment as a key foundation 

09:30 Evan Leybourn: That's a very hard question to answer because companies are so unique. There are the famous examples. Companies like Netflix give... They have incredibly trusting policies. Actually, I think that's the key. Companies that look good companies are companies that have trust and that trust their staff and that goes everywhere from governance. So many organizations have what we call approval-based governance, "Stop until I tell you to continue."

09:57 Evan Leybourn: Whereas more agile companies will have what we call audit based governance, "Continue until we tell you to stop." And we want more companies with that, "We're going to trust you. Not blindly. We're going to check. We're going to make sure that what we're doing is right."

09:14 Evan Leybourn: But once we get to that point, once we get to the point of telling someone to stop, we've both made more money. We've been more effective. And even if we've discovered in the worst case, fraud and in the best case, just a mistake. If it's fraud, we correct, we recover. People go to jail, there is recourse for that. If it's a mistake, then the cost of that mistake is so much smaller than the cost of the bureaucracy to make sure that mistake never happens in the first place. So sometimes we just need to trust people.

10:47 Evan Leybourn: So good looks like trust.

10:50 Shane Hastie: So what are some examples? You've mentioned Netflix, what are some of the others? Maybe not so high profile, but what are some organizations that are out there that's just doing well at this stuff?

11:01 Examples of organisations doing this well

11:01 Evan Leybourn: So there's quite a few organizations and one of the things that we do with the Business Agility Institute is we have a library of case studies and references. This is all freely available. What we're trying to do with our library is we want people to be inspired and some people are inspired by stories and some people are inspired by data. And so the case studies are the stories and the research is the data.

11:24 Evan Leybourn: But with the stories, there are companies doing some amazing things, big companies. DBS bank in Singapore, they've been running their transformation for, I would guess, I think it's about seven years now, maybe eight years, and they've been slowly, incrementally, with successes and failures all the way down, making changes and just touching every piece of the business from HR, obviously to technology, to operations, to marketing, there's been some amazing stuff.

11:52 Evan Leybourn: And companies like AirAsia, I've been running a fairly decent transformation. In fact, they've split into, they've got a digital airline and really trying to shift their business models. You've got companies that people have never heard of like DTCC, Depository Trust Clearing Center. Don't quote me on the exact title, but they handle all stock trades. So quadrillions of dollars go through their systems every year. Now they can't go down. If they're down for a second, the stock market loses millions of dollars. So for them an Agile transformation means something very different to another organization.

12:35 Evan Leybourn: Roche is doing transformations in biotech, in medical devices. Mars corporation, M&Ms, using real true design thinking in the creation of their stores, not a digital product, but literally a brick and mortar shop front. So there are hundreds of case studies of companies, big and small, companies that are trying a little small thing. Maybe they're just changing how budgeting works or they're changing how they recruit. They're just doing small things, to companies that are fundamentally shifting the very DNA of their organization and changing everything.

13:19 Evan Leybourn: And neither way is good, neither way is bad. It's just the way the companies work. But if all the listeners want to know more, check out the library, but beyond that, just know that if anyone ever says, "Oh, that won't work here because... " that's a completely fallacious statement because in every industry, in every sector, in every business function, I can show you how it works. I can show you the kind of changes that are happening in companies from India, to America, to Turkey, to the Philippines, to Australia, to here in New Zealand. In every industry that you can imagine from mining and banking and manufacturing, healthcare, it's all changing and it just requires a little bit of creativity.

14:13 Shane Hastie: One of the things that we did a news item on a while ago was the employee engagement white paper that you launched. Tell us a little bit about that. The headline was, Agile Organizations Have Better Employee Engagement.

14:26 Research showing that agile organisations have better employee engagement

14:26 Evan Leybourn: As an organization, we have nine research teams around the world. They're exploring different topics on inclusion, on the transformation at different company sizes. We have one piece of research on unions, which is surprisingly prescient, given that Kickstarter just unionized, which is quite interesting. But the employee engagement research started with the hypothesis. Do Agile organizations have greater employee engagement scores than non-Agile organizations?

14:52 Evan Leybourn: It was a very hard question to answer because first of all, define employee engagement. It's very hard to. We found at least 11 different definitions. There is also very little in the way of global public data on engagement scores. So engagement scores tend to be held very internal to an organization and if they release anything, they release a number, like an NPS score. But that number, especially in a large organization, it always trends to the middle. It always trends to the average, you've got good, you've got bad, so it doesn't give you much.

15:26 Evan Leybourn: So we had to go deep into a number of different data sources. We had to explore both what engagement meant and what companies are doing to increase engagement and how that related to agility and business agility. But in the end, after I think about seven, maybe eight months of research, one of the conclusions that we came to, and there are multiple conclusions in the paper. There's a few caveats to this sentence, so I'll give you the sentence, then I'll give you the caveats.

15:54 Evan Leybourn: So mature, Agile organizations have a 20% to 25% higher engagement scores than the general business population. I think it was 24%, but statistical error-bars say 20% to 25%, kind of thing. Now the caveats. So first of all, what's a mature, Agile organization, right? That in itself is an incredibly complicated question to answer. So what we have developed as part of other research, is a set of characteristics of what an Agile organization looks like. Things like growth mindset, strategic agility. For your listeners, if you're interested, you actually find all this, it's called, The Domains of Business Agility.

16:33 Evan Leybourn: And what we've done is we've created a set of measures against each of the domains that we use to articulate. What does good look like? It doesn't tell you how to do it. It doesn't tell you what practices to do. So we're not saying, "A company is good if they're using scrum," but rather specific characteristics. And if those characteristics are true, no matter how you achieve those characteristics, then you have a level of maturity. So that's how we did that.

17:00 Evan Leybourn: The second caveat to that statement was around how do you get employee engagement scores? So we have another research project, which is the business agility report, which looks at how effective are companies with their transformations? We then looked at Glassdoor data. So Glassdoor is not a measure of engagement, but it does correlate to engagement and that's the key point here. So we know that of those companies that we interviewed, that scored high in Agile maturity. They had on average 25% higher Glassdoor ratings than the general average Glassdoor rating. I can't remember the averages off the top of my head, but it's all in the report.

17:41 Shane Hastie: Where's it going next? What's the future for business agility.  There's buzz words out there. There's anti-fragile, there's teal. What do these things mean to us and where are we actually headed?

17:54 Pondering future trends – things with names are not the future

17:54 Evan Leybourn: My crystal ball is fuzzy at the best of times, but a couple of thoughts. So first of all, I don't think it's going to go where we think it is. Everyone's trying to create a framework. Everyone's trying to create a system and they'd like it to be the one. But go back to the eighties and what was that business model called? It didn't have a name. It was just how they worked. I think that's the point. I think all these things with names aren't the future, Agile, Scrum, Teal. These are characteristics, and when the dust settles, companies that are effective will work in a particular way, but it won't have a name in the same way that in the eighties, that was just how you worked.

18:39 Evan Leybourn: I think there will just be, this is how we work. It doesn't have a name it's just good business. So I think it will have characteristics of everything that you described. There'll be more network, it will be more collaborative, cross-functional teams. There'll be more empowerment, engagements with employees. They'll be a lot more customer centric, customer obsessed. And all of these characteristics from all of these places will form this is how it works, this is how it should work.

19:07 Evan Leybourn: I'm not sure that's quite the answer you're looking for, but to be honest, it's probably the best answer I can give.

19:13 Shane Hastie: Evan, thanks for taking the time to talk to us. It's been really good to catch up. If our audience want to continue the conversation, where do they find you and where do they find the institute?

19:21 Evan Leybourn: I'm on LinkedIn, it's probably the easiest way. A small request, if you're going to send a connection request on LinkedIn, please do so but tell me you heard me on this podcast. I do get a lot of connection requests and I like to connect with real people. So prove you're a real person by telling me you heard me on the podcast.

19:36 Evan Leybourn: The Institute is businessagility.institute. I was as surprised as everyone else to discover that dot institute is a top level domain these days. So yeah, businessagility.institute and in there you will find the library, you'll find all of our research, not just the employee engagement, but the others as well, as well as links and references to pretty much everything I've spoken about today. All the companies that I've mentioned have case studies in there.

20:01 Shane Hastie: Thank you so much.

20:02 Evan Leybourn: Thank you, Shane.

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