“The pace and ability at which an organization is able to effectively innovate will be the determining factor of competitiveness in the future. The future is now.”
― Kaihan Krippendorff

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Agile principles for business or enterprise agility

Business agility or enterprise agility is a longer term change for any organization. While agile is a very vague term, we have tried to distill 5 principles for ‘agile outside IT’. IT agile has the agile manifesto with its 12 agile principles. The below 5 principles are based on the body of knowledge of agile, translated to more simple language for enterprise agile.

1. From long term planning to iterative work

Traditional ways of organizing are all based on long term planning. In the past, markets and industries were more predictable. This meant that if we had a vision to build a product or to launch some new service, we could take the end in mind and translate this into a step by step plan. Today, things move much faster and by the time the long term plan is finished, you might be too late. That’s why in an agile organization, we need to work in shorter iterations.

Iterations or sprints in agile means that we work in timeboxes of 1 to several weeks (for most non IT work, agile teams use a 1 week timebox). Frameworks like scrum and lean startup are also based on timeboxes. Within those timeboxes we execute work (produce parts of our product or service). We then ‘ship’ those work items to the market and generate feedback. Through this feedback, we learn what the market or customer really needs. This leads to an updated and prioritized backlog of work items. The work items that bring the most value to customers are always on top. Now we may still have a clear direction that we are heading towards. But nothing is set in stone, because we iteratively find out what is the next step. After every sprint, we reflect and decide what we are going to execute in the next sprint.

2. From silos or departments to cross functional teams

In traditional organizations, we naturally create ‘pyramids of hierarchy’. As a company grows, we add layers of management. All decision making trickles up into the pyramid. Direction is set by people on the top of the pyramid. Lower down, we have people executing the orders of superiors. Managers control the work done by people ‘below’ them. There is a lot of power and status at play as people typically want to move up the pyramid.

This organization chart has worked for decades. Initially devised when humans were working in factories, the system of manager checking subordinate seems the modus operandi for almost all companies worldwide.

In an agile organization, we abandon (as much as possible) the pyramid. Instead, we organize in cross-functional teams. People traditionally work in a department (for example in marketing, in sales, in operations). In cross functional agile teams, we place people from those different functions or departments in an agile team or squad. The squad sits together and works on a specific product, service or value stream. People collaborate not because they are restricted to their specific discipline, but because they have a shared goal to build something of value for their customers. We organize around value creation.

3. From command & control to self organization

As we abandon the typical pyramid, we must re-think the way we create accountability. In a traditional organization, accountability is created through management layers: the manager ‘controls’ the subordinate. A project manager assigns work to people executing the work and tracks the progress. People have kpi’s to keep them accountable and report progress to their managers.

In an agile organization, the guiding principle is ‘self organization’. The leaders give direction (what needs to be accomplished); the teams decide how they will accomplish it. The leader coaches the team to accomplish things. This requires a team to be fully accountable to outcomes. To reach this level of accountability, we need a big mindset shift. Bosses need to let go of their inclination to give commands to people and control the outcomes. Teams need to see the work they do as ‘their baby’. Traditional kpi’s can be replaced by okr’s. Individual accountability can be replaced by team accountability.

4. From inside out to the customer drives innovation

Traditional organizations are producing ‘stuff’. This stuff is usually dictated by management. The stuff has been produced in the past and we keep producing this because it’s our core business. In the current era, things change fast and people have clear wishes for products and services. Organizations need to listen to the customer, collaborate with teh customer to develop the right  ‘stuff’.

The above graph shows an example of how the different agile methods can be combined to drive innovation with the customer in the drivers seat. In the initial phase, we use design thinking to identify customer problems worth solving. Once we have an idea of a solution, we use lean startup to build, measure and learn what the user really needs. We validate the solution by generating data from the market. Once we have product market fit and we start scaling the product and the organization, we use agile to create the right way of working.

5. From output or doing my job to end-to-end accountability

To stimulate accountability, we need to make people feel responsible from beginning to end. In many traditional kpi-systems, people think in terms of ‘output’. They see their work as ‘doing my job’. They are measured on how many candidates they interviewed; or how many invoices they produced; or how many times they shared an article in social media. In the agile world, we speak about ‘outcomes’. Outcomes are the ‘end results’ of any activity. As teams collaborate to deliver certain products or services, the teams need to be measured and held accountable for these outcomes. Instead of the number of candidates interviewed, we only look at how many ‘right fit hires’ the team has (And how many interview they must do to get those is irrelevant). We look at how many customers bought our service instead of how many times an article has been shared. This makes people ‘own’ the product or service they deliver; it creates an entrepreneurial mindset, makes people feel as if they are the owner of the product or service.