Many organisations have updated their revenue-generating business units' operating models to a value-stream or product-based model, increasing the flow of customer value and creating better business outcomes. However, updating the operating model of supporting corporate functions can also unlock significant value. Designing a corporate function operating model requires careful consideration and the work often differs significantly from designing the operating model of revenue-generating business units. 

This article shares how we have approached this. We will refer to two different types of business units: 

  1. Revenue-generating Business Units - a business unit that creates products or services that generate revenue.
  2. Corporate functions - business units that support revenue-generating business units, such as People and Culture, Marketing, Procurement, Corporate Affairs and External Communication, Finance and Commercial, Risk, Assurance, Legal and Compliance, and Sustainability.

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Why are organisations focusing on corporate functions?

CEOs are looking to obtain better value from their corporate functions. According to Gartner, more value from corporate functions is one of the top three concerns of CEOs, jumping 63% among survey respondents.

There are three key reasons for this:

  1. There has been less investment in corporate functions. Many revenue-generating parts of organisations have invested to move to more end-to-end, value-stream-type operating models. The benefits they are enjoying are faster delivery, increased customer value flow, and better business outcomes.
  2. Corporate functions are not keeping up. Now that they are fast and lean, the revenue-generating business units have the same high service expectations for the corporate functions that support them. Yet, these corporate functions are working with operating models that have become outdated. The result is the creation of “shadow functions” within the revenue-generating business units as they seek greater control and faster results that are better aligned with their needs. While this short-term fix might solve their immediate issue, it does so at considerable cost to the organisation, creating inconsistency and waste. Ultimately, this can lead to confusion, politics, and organisational fragmentation.
  3. Pressure to improve organisational cost and efficiency. With less stable environments and more intense competition in many markets, there’s a mounting emphasis on performance results. At the time of writing, 75% of our customers have a cost reduction agenda. In addition, corporate profit margins are at their highest since the 1950’s, meaning there is little “headroom” for increasing revenue. One of the only places left to find profit is cost. These pressures are forcing corporate functions to:
    1. Boost operational excellence further, usually while reducing costs
    2. Consolidate and centralise duplicate roles and design engagement approaches that allow for speed and independence.
    3. Improve Governance, Planning & Prioritisation to continually ensure the most valuable work for the business is the focus and being delivered continuously.

In their attempt to achieve this, many corporate functions have flipped back and forth between centralised and decentralised models, often the result of incoming new leadership or on the advice of a consulting firm. Over time, they’ve become bloated, expensive, slow, and confused. In reaction to this, revenue-generating business units are left with little other option than to “opt-out” by creating shadow functions. 

Finally, patchwork fixes are frequently applied to solve specific problems without the proper buy-in and change management or a greater understanding of the organisational context. As a result, over time there is diminished clarity and coherence of how everything works together, low ownership to maintain and champion the change, and often an unintended increase in complexity. 

Through our work with executives and business leaders, we see recognition of the above, with increased focus on ensuring that corporate functions are set up to support organisational growth better. As a result, leaders are investing in increasing delivery speed within corporate functions.

 

Challenges

Corporate functions are often in a constant battle to balance their strategic priorities while also meeting the needs of the revenue-generating business units they serve. Tensions arise when these become imbalanced.

  • If it is more weighted towards the enterprise's strategic priorities, the BUs feel that the corporate functions are adding more work and slowing them down, and in some cases, they prefer to work in isolation.
  • If it is more weighted towards the needs of the business units, there is a lack of strategic coordination.

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Knowing how to enable the right balance is essential but hard. The struggle to find this balance lies in three key pain points:

  1. Authority and decision rights - Is the ownership and decision-making authority with the revenue-generating business unit or the corporate function? 
  2. Value definition and prioritisation—In a world where there’s always more work to be done than time or resources, it’s easy to misalign what work is valuable (and what isn’t) and whether/when/how the work is resourced. What is our definition of value?
  3. Expectations on services - Without intentional conversations and alignment, there is often a mismatch of what is expected from the revenue-generating business units (demand) and what is provided by the corporate function (supply) in terms of speed of delivery, level of expertise or contextual understanding, quality of work, level of ownership, type of engagement, etc.

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A reconfigured corporate function operating model is a holistic and systemic way to solve these challenges.
 

What is an Operating Model?

operating-model-diagram

Simply put, an operating model helps teams and individuals turn strategy into results.

It is a framework that operationalises strategic plans by translating and managing the big-picture thinking into coordinated day-to-day actions needed to achieve tangible outcomes. An organisation’s operating model defines how their capabilities are managed to achieve their strategic goals, and the success of an organisation depends on the interconnectedness of five core elements.

  1. Governance:  the framework used to plan and prioritise the work. It’s a critical process to align day-to-day work priorities with the organisational strategy so people can deliver results. It’s composed of a regular cadence of activities and events that breaks down the organisational strategy into long term objectives, then shorter term goals with tangible outcomes, then incremental plans on how to deliver. 
  2. Ways of Working: the practices, processes, methodologies, and behaviours that guide how work is planned, executed, and managed. It provides clarity and consistency to how people collaborate, communicate, and execute their tasks to achieve organisational goals. 
  3. Future Capabilities: these are the skills, processes, technologies, and structures that an organisation needs to develop or enhance in order to achieve its strategic goals and remain competitive in a changing environment. In an operating model, future capabilities act as enablers that allow an organisation to meet future challenges, seize new opportunities, and adapt to evolving market demands. 
  4. Leadership & Culture: the behaviours, values, and practices set and demonstrated by leaders and embraced by the organisation. Together, they define the tone, environment, and mindset that drive how work gets done and how employees experience the organisation.
  5. Structure: in the context of an operating model, organisational structure refers to the framework that defines how tasks are divided, coordinated, and supervised within an organisation. It outlines how people and responsibilities are organised to achieve the organisation's strategic objectives and deliver its value proposition. 

Structure brings all the elements together, and because it is also the most visible and tangible part of the operating model, it’s often easier to start with that, then integrate the other elements. However, Ways of Working are highly interconnected with Structure, so these must be front of mind during the design process.
 

Start with Strategy & Principles

An operating model starts with the strategy so this needs to be right before moving into design, and Radically often helps clients relook at their strategy as a first step. With a corporate function, because its core purpose is to enable the Business Units to achieve the organisational strategy, a highly differentiated or clearly expressed strategy doesn’t need to be a prerequisite. Instead, it can be helpful to articulate clear shifts they want to target. Below is an example.

corporate-service-operating-model-logic

 

The Radically Teaming Model

Conventional hierarchical structures make it challenging to visualise how teams and their roles align with how they engage with their internal consumers. Often, our roles are made more complex and slow due to a lack of clarity on decision rights.
The Radically Teaming Model ensures consistency in how we discuss team structures and whether they enable or hinder our ability to get work done. By introducing distinct team and interaction types, we create clarity and focus on the organisational structures.

 

What is a Teaming Model?

Teaming models refer to organisations' frameworks or structures to form, manage, and optimise teams to achieve specific goals. ​These models provide guidelines on:​

  • How teams should be composed
  • How they should operate​
  • How they should be supported to maximise their effectiveness.

Different teaming models are suited to different types of work and organisational needs. Teaming models help organisations maximise efficiency through:

  • Improved resource utilisation​
    • Optimisation of skills allocation by aligning the right skills and expertise with the right tasks​
    • Flexibility to respond quickly to changes in workload or priorities
  • Removing duplication​
    • Elimination of duplicate roles and tasks​
    • Standardised processes with clear ownership of implementation and maintenance ​
  • Faster decision-making​
    • Clear roles and responsibilities, both within the function and between the function and its consumers​
    • Decision-making authority where the work happens​
  • Increased ownership and accountability​
    • Clear ownership of tasks based on how functions engage with and support their customers​
    • Ability to build feedback loops and monitor performance

 

Why use the Radically Teaming Model?

There are three key reasons why you should use a teaming model:

  1. It provides a common language and toolkit across the organisation, which builds clarity at scale and allows leads to refine and improve the model over time.
  2. It streamlines the design process from something that would take 3-6 months to 2-4 weeks. This means significantly reducing the cost and distraction of a longer design process and the ability to benefit from the new operating model sooner.
  3. Returns 20-30% efficiency gains by improving clarity on the teams, roles, and how the service is consumed.

corporate-service-operating-model

Radically Teaming Model Components?

There are two components to the Radically Teaming Model:

  1. Team Types: A category of teams for individuals who are homed together based on what work they do, where they sit and who directs their work.
  2. Interaction Types: A category of interactions based on level of control by the corporate function.

 

Team Types

For Corporate Functions, the Radically Teaming Model has four different team types.

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corporate-service-operating-model

Interaction Types

The Radically Teaming Model has four interaction types, which define how the four teams above interact.

corporate-service-operating-model-interaction-types

Designing the Operating Model

We take a co-creation approach to design, leveraging the Radically Teaming Model. We believe you know your business better than anyone, and by collaborating with our highly experienced team of experts, we can co-create a model that works for your specific situation. 

Clarity on the strategy is always the starting point as an operating model brings strategy to life. Given the enabling nature of corporate functions, this can be as simple as defining how it will support the organisational strategy to achieve its goals.

While structure is often the most visible part of the operating model, its harmonisation with governance, ways of working, future capabilities, and leadership and culture determines how well the organisation’s strategy is translated into results. 

Embedding the new operating model requires focus, tenacity, and patience. With guidance, teams will mature as they build a rhythm in the new processes, gain confidence in decision-making, and feel ownership of their work. This will ultimately increase the speed of delivery and build an adaptive culture.

corporate-service-operating-model-3-step-process

If you are considering an operating model change, discuss partnering with us on your journey.

Contact edwin@radically.co.nz

 

The roles of Product Owner and Product Manager often intersect, leading to confusion and potential conflicts. These roles play a crucial part in product delivery, yet their distinctions are not always clear-cut. Understanding the nuances between a Product Owner vs Product Manager is essential for organisations to reduce friction, optimise their product development processes, and ultimately deliver high quality outcomes for the customer, faster and more reliably.

This blog aims to shed light on the key differences and similarities between these roles, exploring the challenges they face and the misunderstandings that can arise. We'll delve into the scope of their responsibilities, decision-making processes, and approaches to stakeholder management. By examining these aspects, professionals and executives will gain valuable insights to help them navigate the complexities of product development and foster more effective collaboration within their teams.


Defining the roles: Product Owner vs Product Manager

Product Owner responsibilities

Ideally, the Product Owner role is a sponsor or entrepreneur for the product, who are in charge of the business case and budget, and have the authority to make decisions. They should be invested in the product's success and have overall strategic and management responsibility.

However, in some organisations, the Product Owner's role has been reduced to that of a scribe or proxy. There's a tendency for Product Owners to take on the role of "story writer" and "project manager," adopting a project mindset of requirement order-taking and managing scope, budget, and timeline.

Product Manager responsibilities

Product Managers have their eyes set on the horizon, focusing on vision, strategy, and communication. They gather insights, understand customer needs and plans for the future of the product, whilst also maintaining the product roadmap. Their core responsibilities are to drive innovation, meet long term business objectives, and keep the organisation’s products relevant in competitive market contexts.

It's worth noting that in some organisations, especially smaller startups, one person may perform both roles simultaneously. This approach can work, but it's important to understand the core responsibilities required to ensure effective product development.

As Dan Teo, CEO & Partner of Radically puts it, “Someone needs to manage the strategy, value, and backlog of work; everything else is open for tailoring. I would start with a blank sheet and list the core things that need to be done. Then within the context see what roles are required. In a cost-constrained environment, the concept of “hats” instead of roles is a good solution.”

 

Key Differences and Challenges

While there's significant overlap between these roles, there are key differences which are sources of common tensions.

product-owner-vs-product-manager

Scope and Time horizon: Long-term vs Short-term Goals

Product Managers are responsible for setting the overall direction of the product, which involves making strategic decisions that align with the company's long-term objectives. Product Owners, on the other hand, are more concerned with short-term goals, such as delivering specific features or improvements within a sprint.

This difference in time horizons can lead to disagreements about priorities and resource allocation. Product Managers might push for initiatives that have long-term benefits but require significant investment, while Product Owners might advocate for more immediate, tangible results that satisfy current customer needs.

Decision-making: Strategies vs Tactical Focus

Product Managers typically focus on the broader product vision and strategy, while Product Owners tend to concentrate on tactical, sprint-level decisions. This difference in focus can lead to tensions, especially when responsibilities overlap. Product Managers need to maintain a long-term perspective, overseeing the entire product lifecycle and developing the product roadmap. In contrast, Product Owners often find themselves more involved in the day-to-day aspects of product development, managing the product backlog and working closely with development teams.

Stakeholder Interactions

Product Owners work closely with development teams, and act as a bridge to other stakeholders to maximise the value of the product. A key group is the customer, as they often represent their needs and translate them into product requirements. 

Product Managers have a broad scope of stakeholder interactions. They focus on the product vision and strategy, communicating with stakeholders to ensure alignment and gather insights. They oversee the entire product lifecycle, from conception to launch and beyond. Product Managers also develop and maintain the product roadmap, outlining the future direction and planned features.

Product Managers need to balance the needs of various stakeholders, including executives, customers, and development teams. They are responsible for making higher-level strategic decisions that align with the company's long-term objectives.

 

Overcoming Tensions

Establishing clear distinctions between a Product Owner and a Product Manager’s role can help with overcoming decision-making conflicts. Some useful strategies include:

  1. Role clarity: Because these roles work together closely and responsibilities can vary greatly from organisation to organisation, it’s important to clearly articulate the scope and responsibilities of each role to minimise confusion. 
  2. Regular communication: Encourage continuous open dialogue between Product Managers and Product Owners to ensure alignment on product goals and priorities.
  3. Collaborative planning: Involve both roles in strategic planning sessions to allow both the long-term vision and short-term execution needs to be surfaced and tradeoffs be worked through.
  4. Shared metrics: Establish common success metrics that both roles can work towards, balancing short-term wins with long-term objectives.

product-manager-vs-product-owner


Conclusion

The relationship between Product Owners and Product Managers has a significant impact on the success of product development initiatives. Their distinct yet overlapping roles require clear communication and collaboration to navigate the challenges of scope definition, decision-making, and stakeholder management. By understanding the value and  responsibilities of each role,  fostering an environment of mutual respect, and addressing these challenges head-on, organisations can create a more harmonious and effective product development process.

Want to learn more?

If you’d like to learn more, feel free to get in touch at tiffany@radically.co.nz

 

In today’s business world there is a tension between flexibility and certainty, and organisations find themselves torn between predictive and adaptive approaches. Combining Agile and Traditional Project Management has become a hot topic, as businesses try to use the best parts of both methods without compromising quality. This mix aims to blend the structured planning of the waterfall model with the adaptability and ongoing improvement of agile techniques creating a strong hybrid approach that can adjust to different project needs and hurdles.

This article explores how to blend predictive and adaptive approaches to create successful initiatives. We'll look at key considerations when putting this combined approach into action, including project type, communication strategies, and tools that support both approaches. The piece will also tackle common problems that arise when mixing these different project management philosophies and offer practical ways to solve them.

 

Integrating Predictive and Adaptive approaches for successful initiatives

The integration of traditional project management with agile methodologies has become more common in large-scale organisations. This blend brings together the organisation and planning of traditional methods with Agile's quick responses and adaptability. But setting up and operating a hybrid approach has its own challenges which require careful alignment between the project team, organisational objectives, and project implementation.

To better understand the challenges associated with implementing hybrid models, interview data was collected from eight experienced Agile coaches who have implemented Agile in non-software industries. The practical actions identified for managing these challenges can be categorised into three levels: aligning planning and delivery approaches, effective risk management, and stakeholder engagement.

agile-project-management

 

Planning and Delivery

A crucial part of combining predictive and adaptive methods involves striking the right balance between planning and delivery. Traditional project management puts emphasis on detailed planning up front, while Agile focuses on iterative delivery and adaptability. To integrate these, organisations should establish a plan that provides direction and clarity of intended outcomes, while allowing for some flexibility as more information arises with each iteration. It’s important to have a plan to forecast, predict and manage dependencies, and iterative delivery with frequent feedback loops to allow projects to navigate the uncertainty inherent in today’s projects.

At the beginning of the project it’s crucial to clarify the intended outcomes of the initiative and create at least a high level plan of how they will be achieved. The optimum level of upfront planning required will be determined by the type of work and level of certainty, but in most cases the work in the near future will be more certain than the work further in the future, and the level of granularity of planning should reflect this. There is often little value in planning every detail of a task that will happen 3 years from now because it is likely to change and can be solidified closer to the time!

Once a plan is established, the iterative delivery of adaptive methods allows for the project team to react to change by checking progress on a regular cadence and making more informed decisions as the work progresses and more information is available. Ensuring that the main project plan is continually kept updated, and transparent to team members and stakeholders is crucial to ensure alignment across the project.

Risk Management

Effective risk management is crucial when combining predictive and adaptive approaches. Traditional risk management techniques such as identification, mitigation and monitoring strategies are important, but can be complemented by the proactive risk mitigation approaches of Agile practices such as limiting work in progress and increasing transparency. Regular risk reviews and retrospectives also allow teams to identify and address potential issues promptly. By fostering open communication and encouraging proactive risk management, organisations can manage the risks they can predict and navigate the ones they can’t.

Stakeholder Engagement

Engaging stakeholders is essential for the success of hybrid projects. Traditional project management often involves formal communication channels and structured stakeholder management processes. Agile, on the other hand, emphasises frequent interaction and collaboration with stakeholders. To effectively integrate these approaches, organisations should follow the valuable traditional approach of stakeholder identification and engagement planning, but also establish clear communication protocols that facilitate regular feedback loops and stakeholder involvement. This includes conducting regular demos, showcases, and review meetings to keep stakeholders informed and aligned with project progress.

By defining and aligning planning and delivery approaches, creating effective risk management practices, and meaningfully engaging stakeholders, organisations can successfully navigate the challenges associated with implementing hybrid models. The insights gained from experienced Agile coaches provide valuable guidance for practitioners seeking to effectively combine predictive and adaptive approaches in their project management practices.

 

Key Considerations

When integrating Agile and traditional project management approaches, several key considerations need to be taken into account to ensure a successful implementation. The approach taken for any project should be based on the type of work and the problems to be solved. Generally, if work is more predictable, a traditional approach may be more suitable, while if work is more uncertain and requires more flexibility, an Agile approach may be more appropriate.

Assessing Project and Programme Type

The project and programme type and requirements play a crucial role in determining the most suitable approach. It is essential to assess the nature of the project, its complexity, and the level of uncertainty involved. This assessment helps in deciding whether a predictive, adaptive, or hybrid approach would be most effective in delivering the desired outcomes.

Evaluating Team and Organisational Culture

Another critical consideration is the team and organisational culture, as well as stakeholder expectations. Agile methodologies heavily rely on collaboration, transparency, and a willingness to embrace change. The organisation's culture should support these values to facilitate a smooth transition towards Agile practices. It is important to align stakeholder expectations with the chosen approach and ensure their buy-in and support throughout the project lifecycle.

Adapting Stakeholder Engagement

Effective stakeholder engagement is often the key success factor for initiatives and can make or break a project. To ensure stakeholders are kept informed and engaged, one must consider the current expectations and mindsets of key stakeholders and tailor the stakeholder engagement and communication approaches accordingly. For example, a key stakeholder who is accustomed to traditional reporting and governance styles will expect to be engaged in this way and these practices may be required to win their trust, but involving them in regular iteration reviews and showcases can introduce them to a different way to engage.

Tailoring the Approach

When integrating Agile and traditional project management, it is essential to consider the project and programme type, team and organisational culture, and stakeholder expectations. By carefully assessing these factors and adopting a tailored approach, organisations can successfully blend the strengths of both methodologies to deliver successful initiatives.

 

Tackling Obstacles

Integrating agile and traditional project management approaches can present several challenges that organisations must navigate to ensure successful implementation. These challenges often stem from resistance to change, misalignment of processes, and stakeholder management issues.

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Addressing Resistance to Change

One of the primary obstacles is the resistance to change within an organisation. Transitioning from a traditional, hierarchical structure to an agile, collaborative environment requires a significant shift in mindset and culture. Employees may be hesitant to embrace new ways of working, fearing the unknown or feeling uncomfortable with increased transparency and accountability.

To overcome this resistance, organisations must invest in the change journey for their people. Training and education programmes can help employees understand the benefits of agile methodologies, but experiencing a different way of working is often required to shift mindsets. Choosing a strategically important project to pilot Agile ways of working creates focus and dedication, but often requires external support to ensure a sound application of Agile approaches. Leadership leaning in and encouraging teams to embrace change and adapt to new ways of working is also an important success factor.

Aligning Agile and Traditional Processes

Another challenge lies in the misalignment of processes between agile and traditional approaches. Providing clarity on which approaches will be adopted, how the project will operate and how roles and teams will interact is crucial for success. Investing time at the beginning of the project to agree ways of working (project structure, roles and responsibilities, forums and cadences, etc.) will ensure that team members understand how work is done and how information flows through the project.

Managing Stakeholder Expectations

Managing stakeholder expectations can be difficult when they are accustomed to one approach over the other. To overcome this mismatch in expectations, organisations must educate stakeholders on the benefits and strengths of each approach in different contexts, and how each approach requires different stakeholder engagement and behaviour.

Ensuring that stakeholders feel engaged and updated is important to win and maintain their project support. Especially if agile methodologies are new to some stakeholders, ensure that they are involved in planning and review meetings and actively elicit their input. Creating and maintaining transparent reporting practices which clearly communicate status and progress can also be a great way to ensure stakeholders stay informed and engaged.

Managing stakeholder expectations can be difficult when they are accustomed to one approach over the other. To overcome this mismatch in expectations, organisations must educate stakeholders on the benefits and strengths of each approach in different contexts, and how each approach requires different stakeholder engagement and behaviour.

Ensuring that stakeholders feel engaged and updated is important to win and maintain their project support. Especially if agile methodologies are new to some stakeholders, ensure that they are involved in planning and review meetings and actively elicit their input. Creating and maintaining transparent reporting practices which clearly communicate status and progress can also be a great way to ensure stakeholders stay informed and engaged.

Embracing a Proactive Approach

By addressing resistance to change, aligning processes, and effectively managing stakeholders, organisations can successfully overcome the challenges associated with integrating agile and traditional project management. It requires a proactive approach, clear communication, and a willingness to adapt and continuously improve. With the right strategies and support, organisations can harness the strengths of both methodologies to deliver successful projects and drive business value.

 

Quick Recap

The integration of Agile and traditional project management approaches provides a powerful toolset to tackle complex initiatives. By blending the structure of traditional methods with the flexibility of Agile, organisations can adapt to changing requirements while maintaining a clear direction. This hybrid approach has a significant impact on project outcomes, enhancing team collaboration and stakeholder engagement throughout the project lifecycle.

As the project management landscape continues to evolve, mastering this integrated approach becomes crucial for success. Teams that embrace this methodology are better equipped to navigate challenges and deliver value consistently. By adopting a balanced perspective and continuously refining their approach, organisations can unlock new levels of efficiency and innovation in their project delivery.

Want to learn more?

If you’d like to learn more, feel free to get in touch with me at ryan@radically.co.nz

 

Many organizations are striving to become more adaptive a means not just to survive, but to thrive.  The success of an adaptive organization hinges significantly on the capabilities of its people, which often raises the question of how to select people for agile teams.

Those who excel in an adaptive environment exhibit three key characteristics. To begin with, they welcome uncertainty while maintaining their focus. Secondly, they focus on outcomes over process. Thirdly, they prioritise the health of the team. By focusing on the traits that define successful teams, adaptive organizations can enhance how they select people for agile teams.

 

people for agile teams

 

The Characteristics of High-Performing Agile Teams

From decades of working with successful agile teams, we have learned that the highest-performing teams tend to have the following characteristics:

  1. They embrace uncertainty: They exhibit a high degree of flexibility. They focus on goals and are comfortable adapting the path to reach those goals, often starting with minimal information.

 

  1. Outcome orientation: They focus on delivering valuable business outcomes, as opposed to frameworks and processes. This often requires them to “loose the training wheels” of agile frameworks once they have built basic reflexes.

 

  1. Team Collaboration: They actively contribute as team members, fostering cooperation and cohesion within the team. As individuals, they exhibit skills in empathetic listening, collaboration, and valuing team input over individual ideas.

 

Embracing uncertainty

People who tend to thrive in agile teams avoid spending a lot of time comprehending every intricate detail and potential risk, nor do they meticulously plan. Instead, they are comfortable with enough planning to feel confident in their team's ability to start, accepting that more will emerge as they progress and this emergent work can be discussed and prioritised accordingly.  The secret here is choosing what "enough planning" is for the specific context.

Individuals who embrace uncertainty tend to display high levels of curiosity. They use curiosity to foster a mindset of continuous learning and flexible decision-making (a growth mindset). For example, when working with a team on a complex problem, when they speak they tend to ask questions in order to better understand both the problem along with how others are thinking about it. They avoid assumptions and jumping to conclusions.

They also tend to embrace challenges. They see challenges and obstacles as opportunities for learning and growth. They are more likely to take on new and difficult tasks with enthusiasm. they're open to learning from others and seek feedback that enables them to enhance their abilities.

Finally, they are resilient in the face of setbacks and failures. They understand failure is not a permanent state but a stepping stone toward improvement.

When considering how to select people for agile teams, focus on people's curiosity, approach to challenges and setbacks, their attitude to failure and their persistence to overcome challenges.

 

Outcome orientation

Clarity on the business outcomes and goals is critical for an organisation that decentralises decision-making. Yet this is often an area where many teams struggle.

We often see teams that take a narrow view of their work, believing their job is to select product backlog items and turn them into outcomes. This is commonly known as a "Feature Factory" mindset, and only differs from a production line by the fact that it is a team doing the work rather than an individual.

Successful agile teams start with a clear business goal and break that down into smaller iteration-level goals together. They focus on the iteration goal, not the tasks. They

 

  1. Are clear on “the why” (goal) of the iteration. Why are we doing this work and what is the intended outcome we are seeking to achieve? Test whether everyone can clearly articulate the goal and what success looks like.

 

  1. Co-create “the what” with their stakeholders or product owners. They determine what work needs to be done to achieve the why. If they are working with a product backlog, this means selecting (or creating) work items that align with the goal. Remember the purpose of an iteration is to deliver the goal, not the work items.

 

  1. Take ownership of “the how” by creating and owning their plan to get that iteration of work completed. It is vital that this is their plan. Leaders must give the team the space to create their plan. People take their own commitments more seriously than commitments made for them by others.

 

This helps solve one of the most common failures in knowledge work: the people doing the work dont understand the work.

how-to-select-teams

When seeking people for agile teams, check for outcome orientation. How do they remain focused on goals? How do they achieve this when they are head down in the details?  What are their personal habits and traits they use to remain goal-focused?

Team Collaboration

Successful agile teams understand the nature of the problems they are solving are beyond the ability of individuals and require multiple perspectives to find the best results. They actively contribute as team members, fostering cooperation and cohesion within the team.

This often requires significant shifts in behaviour from individuals. Traditional organisations tend to encourage and reward individual expertise. Agile organisations tend to value skills like curiosity, empathetic listening, mentoring, knowledge sharing and giving others an opportunity to contribute. This requires a significant shift in leadership.

When seeking people for agile teams, look for how they work with others. Do they look around the room to check the levels of participation of others?   Are they comfortable accepting a direction a team wants to go in when they personally disagree with it? How do they approach such situations? Ask for examples!

 

Process for Selecting Team Members

Choosing the right team members can be approached in various ways, each with its own advantages and drawbacks.

Teams choose

Our preferred approach is for teams to choose their team members. They identify the gaps they are looking to fill and the behaviours & values they are seeking. They interview potential new members and have the autonomy to decide.

The risk of this approach is affinity bias and groupthink, where the team tend to look for people like them, whereas diversity tends to result in better teams. A good way to mitigate this in an enterprise setting is to engage with a People and Culture (HR) business partner/advisor. They’re experts in people and can help avoid blind spots.

 

Self-selection

Sandy Mamoli has had success with self-selection and has written a book about it. We’ve used varying levels of self-selection, depending on the context. We’ve learned that culture plays a key role in self-selection.  A colleague of mine who works in the field of team dynamics and human psychology shared an interesting piece of science on the topic recently. He said, “when a new group forms, they always seek a leader to provide the structure necessary to move towards an emergent order.”  This is an important point – psychology suggests the role of the leader in self-selection is enough structure for emergent order to occur.

 

Manager led

In our experience, this is the worst way to form a team. It assumes one person is better placed to make the decision, despite the fact that they won't themselves be involved in executing the work. It can work and we have consistently helped organisations to get this approach to work, but in our experience, the other options are more effective.

No matter the approach, selecting team members based on values, behaviours and diversity is key.

 

Conclusion

Successful agile teams are not solely composed of the most technically skilled individuals but those with the right personality traits and values. The important traits to look for are the ability to handle uncertainty, an outcomes-oriented mindset, and people who focus on team collaboration. These factors are instrumental in building strong and adaptable teams ready to thrive in today's dynamic business environment.

 

I recently spoke with a diverse group of small-medium business owners about how to apply agile in business.  The audience was both big and small firms from almost every business sector conceivable, from manufacturing to construction, media, health care, real estate right through to a large freight and logistics firm.

They had all heard about agile but thought it was just for technology companies. To help them understand how to apply agile in business in very practical day-to-day terms, I had to strip out the jargon and show them how they could apply agile at their workplace right away.

We all found the conversation extremely valuable. They were grateful for someone who could make it real for them. I was grateful for the challenge of explaining agile to an everyday business owner, short of time but wanting to understand how they could get started without all the jargon and terminology.  This article attempts to capture that conversation for others to understand how to apply agile in business.

How to apply Agile in business

Agile’s principles, concepts and tools are applicable to a wide variety of settings, but to bring out its true potential it requires pragmatism and continual refinement, based on what is and isn't working. If you are working in a sector where agile might not feel like a clear-cut fit, here is how I suggest you can apply some basic concepts of agile to see how well it might improve how you work.

Start with Visual Management

Visual Management helps you understand how your work works. It is a simple but important core principle of agile. By visualising the work, we can better understand it and therefore improve it.

In layman’s terms, this means mapping out the steps to take a piece of work from idea to completion.  The easiest way to do this is with a whiteboard or wall space and a set of sticky notes. One useful way to getting underway is to simply start with three columns: To Do, Doing and Done. This allows you to get underway easily and get your work on a visual board. You can then break the work down into smaller steps, continually revising your board until it reflects how your work works.

Visual board to apply agile in business

Remember to avoid perfection. The point isn’t to map out exactly what happens each step of the way! That will result in a visual board for every variation of the workflow which defeats the purpose.  We are only after “good enough to get started” at this point. You will almost certainly evolve your board as you go!

Now it is time to populate your board with work. Again – don’t worry about being perfect. The objective here is to create a visualisation of how work works so you can detect patterns and trends. Let the work help learn what a suitable visual board is for your situation.

Visual board to apply agile in business

Now add a Doing and Done column to each workflow stage. The Done column of one stage becomes the To Do column of the next.

Visual board to apply agile in business

Once you have run some work through your board, start considering what sort of data might help you better understand the flow of work.  Some common things organisations track are:

  • How long a work item spends in a particular column (workflow stage). You can measure this by capturing when a piece of work enters a workflow stage and when it exits.
  • How long a piece of work waits in a workflow stage before it is worked on. This is often referred to as “wait time” and when added up across stages can be quite revealing. In many organisations, around 80% of the time taken for a piece of work to go from start to finish is wait time.
  • How many pieces of work are in each workflow stage? This is referred to as work-in-progress, or WIP. Lots of WIP can be an indicator of trying to get too much work done at once, resulting in less being achieved. A common strategy for dealing with this is WIP limits on each workflow stage.
  • Bottlenecks – the Theory of Constraints taught us that the throughput of a system is limited by the throughput of the narrowest bottleneck. WIP is often a lead indicator of bottlenecks and gives us a good indicator of where we might want to investigate further. Addressing bottlenecks improves the flow of work!

For example, in the above graphic, there appears to be a bottleneck in Editorial, given that all the Draft work is complete and waiting. This would be a great place to explore. Queues tend to indicate downstream bottlenecks!

If you are interested in further reading on visual management, I found this article on Value Stream Mapping useful.

The principles of Scrum for Agile business

Scrum is the most popular agile framework in use today and for good reason – it is an extremely powerful yet simple framework. Now that you have a visual management board underway and can visualise how your work works, try these Scrum patterns.

  • Introduce iterations – an iteration is simply a fixed, time-bound length of work, also known as Sprints in Scrum. Your Sprint length is largely determined by how frequently you want to inspect and adapt the work. The most common Sprint cadence is two weeks.
  • Set a goal for the Sprint – in business terms, what will be different at the end of each Sprint? This forms the “north star” for each Sprint. Why is this goal important? Who will benefit and how? Make this clear to the people who will be doing the work.
  • Plan a Sprint of work – get the people involved in doing the work together to break down how they can achieve the Sprint Goal. The outcome is a plan for the Sprint. It doesn’t have to perfect and don’t go to the level of who will do what, but break the work down into chunks of value and only take on what is achievable in the Sprint. Your objective is to have something 100% done that can be used by others. Rather than take on lots of work, take on less and get it 100% completed. You might have to re-negotiate the Sprint Goal in order to achieve this. In Scrum, this is called Sprint Planning.
  • Every day, everyone involved in delivering the work gets together in front of the visual board for 15 minutes to understand the current state of the work and what the most valuable thing is they can collectively do next 24 hours to progress towards the Sprint Goal. This isn’t a problem-solving meeting. It is a meeting to re-align around the plan and adjust the plan as required. In Scrum, this is called a Daily Scrum or stand-up.
  • At the end of the Sprint, hold a meeting to review what was achieved and consider what might be the best thing to do next Sprint. This should typically involve others in the business who need to understand progress or contribute.
  • Hold a continuous improvement meeting for the team who did the work in the last Sprint. Collaborate to understand what went well that we could do more of, and what areas we could improve. This should be an open meeting that discusses everything, including interpersonal relationships and teamwork.
  • Start another Sprint.

Scrum framework for agile in business The iterative, incremental nature of Scrum can help to bring focus, commitment, alignment and collaboration to the forefront of your business.

If you are finding iterations don’t add value to your work, (for example, your work is highly repetitive and pausing to regularly inspect & adapt doesn't make sense) then drop them. There is no recipe!

Remember, Scrum is based on three important inter-connected pillars – transparency, inspection and adaptation. Our ability to inspect and adapt is largely determined by the transparency of the information. If we don’t increase transparency, then our ability to make meaningful decisions and trade-offs are decreased. A great way to increase transparency is keeping your visual board up to date and having open and honest conversations.

As a Professional Scrum Trainer, I know Scrum extremely well and would caution readers about some of the material on the internet from “Scrum experts”. Credible sources of further reading include Scrum.org and Scrum Inc. In addition, the single source of truth on Scrum is the Scrum Guide, written by the creators of Scrum, Dr Jeff Sutherland and Ken Schwaber.

Minimal viable product thinking

One of the most common mistakes businesses make when learning how to apply agile in business is assuming they need to have the product or service they are developing perfect before engaging customers. Usually, the opposite is true – they introduce significant risk by not getting sufficient customer feedback early enough. A minimum viable product (MVP) is a product or service with enough functionality to obtain feedback and validate the idea as early as possible. This can significantly reduce risk and increase customer value.

To achieve this, you need to re-think the purpose behind each iteration. Is it to deliver work or is it to learn about what the customer really wants and de-risk work?

Minimal Viable Product thinking

In the above example, you can see two different approaches. In the first approach, the requestor has specified the solution - give me a painting that looks like this. The people doing the work have delivered that, one high-fidelity piece at a time. The problem with this is what happens if they are wrong? Even if they are using agile techniques, they must still deliver the wrong thing. In the second example the requestor has outlined the problem they are trying to solve and the MVP approach has been applied to reduce risk and integrate customer feedback.  Coiuld you apply a similar mindset to your work?

If you are interested in diving deeper into the MVP-type space, the books Running Lean and The Lean Start-up are both useful reading.

In summary

In this article, I have tried to share how you can apply agile in business. In my twenty years working in this space, I have learned that the best get familiar with agile is to do it. It is tempting to stand on the sidelines, watching the game play out in order to learn the rules before playing, but I can assure you that in the case of agile, more is learned by playing than watching. Just get in there and do it.

The journey to mastery is however long and difficult. The focus on transparency, visualising work and seeking continuous improvement invites you to be always asking questions of your business, evolving and improving it to be the best it can be. This can be tiring, however, don't we all strive to be the best we can be?

Transparency is critical for agility, but often the power of transparency is challenged by long-hold cultural norms. This article shares examples of the power of transparency and how it can be used to create breakthroughs in performance.

Situation

I was helping an organisation adopt agile ways of working across six teams. We had started well. We had a shared vision for the change and everyone felt excited. We held a series of workshops to upskill everyone and had kicked off strongly.

The teams were full of highly skilled people who knew each other well and had worked together for years. They had been granted plenty of autonomy, were all highly committed and knew the area they were working in very well.

As we progressed, I kept getting a feeling that something wasn’t right. I drive home each day feeling something was wrong, but I couldn’t put my finger on what. I didn’t know the area of the business nearly as well as they did, but my gut feeling was that they should be getting through much more work than they were.

While reflecting on this I suddenly realised what I needed – transparency. Without transparency, I didn’t really know what is going on.

Creating Transparency

I decided to set up a small experiment. The CEO had made it clear that this project was the number one priority of the entire company, therefore all people working on this were dedicated to it full-time. I decided to test this.

Rather than dig into the details of what everyone was working on (micro-management), I asked them to help me create transparency about where their time was being spent. To do this, I set up a simple board where each day (at our Daily Scrum) each person recorded a green tick if they were doing the 7 hours they were supposed to, or a red cross if it was less than this.

What I saw shocked me. Everyone was red crosses!

As we worked through this, we found something significant - most people were only spending one hour a day on the project.

Despite this being the most important project of the organisation, structured to deliver the most important work first in iterations, the teams were actually working on all sorts of other things!

I remained curious and asked lots of questions. One team member shared an email that read something like this:

No transparencyIt turned out this was happening everywhere. There were literally thousands of invisible undercurrents running all the way through the organisation based on whatever work well-meaning managers were trying to get done. They had no transparency of what was actually going on.

Using The Power of Transparency

This organisation had a hierarchical culture, where success was measured by people doing what managers asked them to do. Well-meaning managers were trying to get their accountabilities delivered, but were creating a nightmare of bottlenecks, delays and dependencies across teams.

I bought the discovery to the Product Owner, who was also a senior manager with a lot of influence in the organisation. He too was shocked yet also thrilled with what we had discovered.

We designed an all-hands meeting where we shared the problem. He then empowered all the teams by asking them to say no to any work that wasn’t part of their current Sprint or was a genuine emergency that had been agreed by the Product Owner. All other incoming work to go to the relevant Product Owners to be ordered on their respective Product Backlogs.

The next Sprint productivity went through the roof. Teams were much more focused and happier. They started delivering significantly better-quality outcomes more frequently.

Winning with transparency

Breaking difficult habits

Six weeks later we hit another brick wall.

The Teams were struggling to manage the volume of support work coming through. It was impacting their ability to focus on project work. They raised it as something they needed our help with to resolve.

We asked them to estimate how much of their time was being spent on support work. They calculated 25%. When then asked them to calculate their per-Sprint capacity. As an example, one team had 8 people, each dedicated 7 hours a day over the 10-day Sprint. Therefore, their capacity was 8 x 7 x 10 = 560 hours. If 25% of their time was being spent on support work, then this was approximately 140 hours. Each team then set aside this amount of time for unpredictable incoming support work.

But to ensure we maintained transparency, we tracked how we were using this time. We created a large public whiteboard where we tracked how much of this time was being used, day by day.

What we discovered shocked us again.

After one week (half the Sprint), they had used all of their support allocation! The amount of support work was significantly more than what they had estimated.

Together, we analysed the incoming support work. It turned out that only a fraction of it was genuine support work. The rest was coming from the same managers as before, who were now gaming the system by putting through their work requests as “support work”. We still had the same problem – just in a different format.

Brick wall

Solution: Increasing the Power of Transparency

To resolve this once and for all, we made a decision to make all incoming support work transparent by putting it on the wall. Each day at our Daily Scrum, the teams and Product Owners agreed how much support work versus how much project work they would do each day.

Productivity shot up again.

We then kicked off a broader piece of work to address the root cause of the problem – the portfolio of work the company was trying to get done. We created an organised, structured and transparent portfolio system where all project were prioritised based on the capacity of the available teams. With all the managers involved aligned, everyone could to get their work done and be successful.

Conclusion

Transparency is your friend. It is easy to blame people when we are getting results we don’t expect, but it is usually the system of work that is the root cause. People don’t want to fail.

Leadership is about creating clarity and an environment where people can be successful and high-performing teams can emerge. As leaders, transparency is an important way of achieving this. Without it, it is difficult to know what is truly going on.

I encourage you to consider how your organisation uses the power of transparency. What could you do to improve it?

We have all been in meetings that don’t seem to have any purpose. You attend because you were invited and felt you should go but find the purpose of the meeting isn’t clear and the meeting itself doesn’t create any meaningful outcomes. Sound familiar? The POWER start technique results in better meetings and better outcomes.

Meetings are an essential part of work, but poor meetings are a chronic waste and can drastically hamper organisational performance and agility. This post shows you how to use the POWER start technique to keep your meetings focused, meaningful and valuable.

In our Facilitation class, we teach a technique called the POWER start. It is a simple framework, originally created by the Agile Coaching Institute to help keep meetings focused, well planned and delivering quality outcomes.

The POWER acronym stands for :

  • Purpose – what is the overall purpose of the meeting? Why is it necessary?
  • Outcomes - what outcomes do you aim to achieve in this meeting?
  • WIIFM – What is in it for the attendee? Make it clear why they should attend. One useful approach is to make it clear what they will miss out on if they don’t attend.
  • Engagement – what techniques will you use as a facilitator to keep the participants engaged?
  • Roles and responsibilities – who is going to do what in the meeting? Are you facilitating? Do you need a scribe?

How to use the POWER start technique

The POWER start helps you plan, structure and run your meeting effectively. Here is how it works. In this example, we use our simple template (download here).

Purpose

Write out the purpose of the meeting in one simple paragraph. Try to use no more than three sentences and use plain language.  The point here is to make it crystal clear on why the meeting is needed and the general topic of what will be discussed. Make it clear if you intend on making a decision at the meeting.

Outcomes

What are the key things you want to achieve in the meeting? What will be the result that occurs from people attending this meeting?

It is critical to get this part right. People typically avoid meetings because they don’t see value in them. You need to address this by painting a very clear picture of the intended outcomes and the benefit of them attending. Otherwise, why should they care?

WIIFM

People will not attend meetings if they can’t relate the meeting to something that is important to them. Obviously, this is not what you want.

Start by thinking about what your attendees are trying to achieve and how this meeting relates to that. What’s important to them? What might they want to get from the meeting? By taking a few moments to map this out, you can achieve a significantly better outcome.

Engagement

Engaging meetings don’t feel like meetings. They draw you into the topic and encourage healthy participation. To achieve engagement, you need to prepare well.

We work off a simple rule of thumb – for every hour of meeting you need one hour of preparation.

Sounds like a lot of effort, right?  Yes, it is more effort, but what we are after here is quality over quantity. Think about it his way.

If you have 7 people at a meeting, and their average hourly cost is $100 per hour, that is $900 (including you). If that meeting fails to reach a quality outcome, there will likely be a lot of extra emails, phone calls and discussions required. You might even need another meeting.  The cost of that can be significant. If you spend one hour preparing for the meeting, the maximum cost of that is one hour of your time - $100.

To create engagement, design activities to help achieve outcomes. For example

  • to rapidly engage everyone to create ideas: 25/10 crowdsourcing is a great technique
  • if you would like to vote on a series of options, dot voting is a powerful technique.
  • to generate quality ideas, faster than before and include everyone, 1-2-4-ALL is a great technique.

One critical consideration when planning the meeting is whether there is any information you would like attendee to read in advance.  This might be a report or similar background information.

Finally, make sure you have the agenda displayed, with timings, in an easy to read, graphical format. This will help you keep everyone focused and on schedule. A flip chart is ideal.  You may also choose to share the agenda in advance.

Roles & Responsibilities

Finally, consider the roles and responsibilities of the attendees. Are you facilitating the meeting? If you need to participate in the content of the meeting then it might be better to engage a facilitator. Who will be capturing actions and outcomes? Are there any subject matter experts required? Who will contribute? And who will schedule any follow-up meetings required? These all are important before, during and after the meeting.

Conclusion

The POWER start is an excellent way of making meetings powerful, engaging and fun. Over time you will find people want to attend your meetings as they deliver results in a collaborative, engaging way.  And by achieving clear outcomes you may even be able to reduce the number of meetings your organisation needs.

POWER starts are one of the techniques we teach during our amazing Agile Team Facilitation course. We also help attendees learn how to work with difficult behaviour, how to facilitate for full participation and how to work as a servant leader to help guide your team to quality outcomes. We would love to see you on the next one.

Many organisations have adopted agile but how many ask the obvious question: What is the ROI on our investment in Agile and how will we measure it?

There are two ways I’d like to explore this topic: from the perspective of delivering an initiative (a product or project) with agile, and from the perspective of scaling this to an entire organisational (Enterprise Agility).

The ROI of Agile Delivery

fast agile

On a project or product level, the ROI on agile is without doubt orders of magnitude greater than traditional methods. There have been a number of studies, the most notable by the University of Maryland, all of which provide extremely compelling evidence.

The University of Maryland study found that agile projects were 20 times more productive, had five times better cost and quality and had a 7 times earlier breakeven point. Furthermore, agile projects had an 11 times greater ROI, 11 times higher NPV, and a 13 times higher ROA when expressed as a percentage.

This research has been backed up by several private studies.  Without doubt, the ROI on agile projects is compelling and an order of magnitude improvement over traditional methods.

The ROI of Enterprise Agility

Naturally, this has led companies to want to scale these benefits beyond single initiatives and reap the organisation-wide benefits. Who wouldn’t want significantly improved breakeven, ROI, time to market, quality and NPV – and the ability to change course as required!

At an organisational level, the ROI becomes harder to measure. This is because Enterprise Agility is about improving the entire system for all future outcomes, not just one specific project. In other words, this is a core infrastructure investment, and these types of investments take many years to pay off.

An investment in Enterprise Agility tends to yield the following benefits:

  • Customer engagement – putting the customer front and centre of our efforts and testing the validity of our assumptions by regularly releasing work and obtaining their feedback.
  • Better solutions - when complex problems are solved by interactive, cross-functional teams, the solutions tend to be more robust and of higher quality. This is because we have taken in many different perspectives on the problem – technical, sales, marketing, quality, commercial, operational, plus we have baked quality in from the outset and tested it every iteration.
  • Culture and engagement - the research on intrinsic motivation is compelling – when teams can shape the work and work in a self-directed way, engagement, creativity and productivity go through the roof.
  • Adaptability – the ability to continually adapt our strategic direction, based on evidence of what we see in front of us. Agile brings transparency and empirical data. We can use this focus on only what is important and limit having too much work in progress, thus creating the ability to pivot.
  • Value - When the above four benefits are combined, we can focus on only delivering what is of value to both the customer and our business. While this seems obvious, what is often overlooked is our ability to cull a significant number of features we assumed customers wanted. Research into feature usage shows customers often only use 25-50% of the features delivered. Imagine if you could cut your investment in features by 50%!
  • Reduced Total Cost of Ownership – TCO accounts for the lifetime cost of the product, including maintenance, enhancement, and support. In many cases, this accounts for 60-90% of TCO, making the development cost looking minimal. By only developing features customers care about, we can repurpose investment into more product places.
  • Market share – combining all the above effectively tends to result in increased market share and eventually market dominance if done well.

Clearly, these are all long-term investments in the infrastructure of our businesses, based on designing it for agility.

ROI on this sort of investment take years to measure, not months. But this doesn’t mean we shouldn’t measure it. On the contrary.

One useful approach for measuring the ROI of Agile is Evidence Based Management (EBM). Many organisations lose sight of the real goal of agile ways of working as they get stuck focusing on improving activities and outputs instead of business outcomes.  Agile is a means to an end, not the end itself! EBM helps prevent this by focusing on the value delivered to the organisation from an investment in agile. This enables organizations to make rational, fact-based decisions, elevating conversations from preferences and opinions to empirical evidence,  logic, and insight.

If you are interested in EBM, please contact me.

Otherwise, you may find the approach and the metrics as a useful way of considering how you are going to measure your Return on Investment in agile.

Good luck!

Nobody really saw COVID-19 coming. Most people thought it would be similar to previous virus outbreaks and peter out without any meaningful impact on our daily lives. As the situation unfolded, we struggled to fully grasp the exponential nature of it.

In the business world, we continually face sudden disruption shocks in a similar way. Our senses tell us things are changing incredibly quickly, but like the COVID-19 situation, we fail to grasp the exponential nature of the change, leaving us ill-prepared to cope when it inevitably arrives.

More and more organisations are realising they need to be designed to cope with constant change. This article aims to outline 6 key principles necessary to build such a business.

  1. Structure
  2. Decentralised Decision Making
  3. Goals and Objectives
  4. Execution
  5. Alignment
  6. Leadership

Structure  

Most businesses are designed for efficiency, not adaptability. The underlying philosophy is to obtain the maximum yield for an acceptable effort and to scale this as effectively as possible. Last century’s Scientific Management is the key influence.  Such businesses, by design, are not built to suddenly change course. They are designed to do key activities efficiently.

A Traditional firm is like a freight ship - efficient but difficult to change course

In contrast, a start-up is designed to be incredibly adaptable. It’s structure is fluid as it continually pivots to find the right product-market fit in order to survive. It is fast and nimble and can easy out-manoeuvre larger organisations, but it isn’t efficient and it can’t scale.

A start-up is like a fighter jet, fast, nimble but not efficient

Companies that push through the start-up phase and scale bemoan the resulting bureaucracy and structure. The original ethos and culture of the start-up is lost as it grows.

Our clients want the benefits of both. They want the innovation, speed and agility of a start-up combined with the size and scale of a larger firm. Often they are facing some sort of disruption, hence they must be able to change direction quickly.

A business that has embraced Organisational Agility can achieve this, however it requires a profoundly different structure and operating model. It is typically structured as a collection of autonomous, adaptive units working together in unison towards a common objective. They have the scale to compete, yet the agility to suddenly change course to navigate around an obstacle without the cumbersome sluggishness of centralised control. They resemble a fleet of boats, each with a crew, a mission and autonomy to sail towards an agreed objective.

Organisational Agility looks like a fleet of yachts

If new conditions emerge, they can change course accordingly, based on the conditions each of them currently face. For instance, say a pod of whales suddenly surfaces for air. Each boat can change course to sail around the whales based on the conditions they observe. Those close to the pod might rapidly tack starboard. Those further back might take a different course of action to avoid the traffic heading starboard.

Contrast that to how a large freight ship would cope. It would struggle to change course fast enough, and likely plough straight into the whales.

A firm is similar. If we are structured as a “fleet” of smaller, independent units (teams), and something suddenly appears out of nowhere, say a new competitor, a change in regulations or a global pandemic, we can change course quickly by distributing control to the independent teams.

Structure enables agility.

Decentralised Decision Making 

If we are to structure ourselves this way, we clearly need to change how decisions are made.

In a traditional firm (the freighter), intelligence and decision making is centralised. Decisions are made at the “top” of the firm and supporting directives cascade to the people doing the tasks. When decisions need to be made, they must flow back up to the centralised control and then back down again. The delay directly prevents agility.

In an adaptive firm, authority is pushed to the people with the information. In other words, the people at the coalface are empowered to make appropriate decisions as required. If the decision requires others, they find the people required and attempt to make the decision as quickly as possible.

But if we empower teams to make their own decisions, isn’t it possible they head off in random directions? Absolutely, which is why the other principles are equally as important. Read on.

Goals and Objectives

To make sensible decisions, teams must understand the broader outcomes the organisation is aiming to achieve.  To support this, teams undertake planning collectively to break down larger objectives into ones their team can effetely own.

"Stay home to save lives" is a clear goal (although lacks measures). Set by the NZ Government for the COVID-19 crisis, it is obvious what is being asked, but more importantly, why. It turns out "why" is deeply important to humans.

The goal doesn’t have to be perfect with answers for all contingencies, but it does need to be clear, explain why, and needs to be supported by the ability for people to clarify the goal. To turn the goal into an objective, it needs to include tangible measures.

OKR's have recently become a useful way of expressing objectives.

Objectives are memorable qualitative descriptions of what you want to achieve. Objectives should be short, inspirational and engaging. An Objective should motivate and challenge the team.

Key Results are a set of metrics that measure your progress towards the Objective. For each Objective, you should have a set of 2 to 5 Key Results. More than that and no one will remember them.

The reason objectives are important is that they enable better execution.

Execution

Traditional management is based on humans being analogous to machines, whereas Organisational Agility is designed to bring out the chaotic, messy, creative brilliance of humans.

To demonstrate, let’s contrast two different organisations - Traditional Company and Modern Company.

Traditional Company

Traditional Company uses traditional management techniques. The Executive Leadership Team (ELT) develop long-range strategies and the Senior Management Team (SMT) turn those into annual plans and budgets and manage execution.

Decision-making is centralised in two different forums – the ELT for things that impact strategy and the SMT for execution-level decision making. Each forum meets fortnightly.

The culture tends to value conformance, adherence to plan and outputs. People tend to be rewarded for either tenure or delivering work on time and under budget. People have managers who allocate tasks and give appraisals of performance.

Work is usually delivered via projects. Projects break work down into smaller chunks and assign tasks resources who are managed to execute. Sometimes, resources comment that they are unsure of why they are doing the work, by just get on with the job.

If a project needs to change direction, it has to submit a change request for either the SMT or ELT fortnightly meeting. This is quite an intimidating process to go through so is generally discouraged. Sometimes the ELT discover “watermelon projects” – projects that have status reports that indicate green (everything is fine) but the project is actually red on the inside (in trouble). These projects are terminated.  Traditional Company estimates that on an average year it wastes $72M on either watermelon projects or projects that require additional funding.

Overall, people at Traditional Company reasonably happy, although staff mention they are worried about the new competitors springing up and how quickly customers jump ship given the chance. Customers also seem to be more informed than they used to, often demanding new products and services.

Modern Company

Modern Company has embraced organisational agility. The Executive Leadership Team develop long-range strategies and communicate these via outcomes they would like to see the firm achieve, expressed as OKRs.

Decision-making is pushed to as close to the people with the appropriate information as possible. Sometimes this means decision making at “tribe” level (a tribe being a collection of teams). Other times it means decisions are made by the teams themselves.

Modern Company has invested in developing its culture. It values delivering amazing customer experiences ahead of following the plan. This often requires staff to be creative. People work in teams, each with its own style of sub-culture. Across all teams though, there is a culture of constant feedback and growth. Everyone is aware of the growth areas and openly pursue opportunities to address them.

Teams obtain work as part of Modern Company’s quarterly planning sessions. They use a technique called Big Room Planning out of which comes their Team OKR for the quarter. They then break this down into a number of “Sprints” (two-week chunks) that deliver a piece of the OKR. They regularly review progress and discuss whether they need to change direction.

They’re less concerned about following plans. At first, managers were anxious about this, but when they saw the results of focusing on customer outcomes they relaxed.

They don’t have people managing them to execute, but they do have people who are dedicated to helping them learn and grow. Their key role is to help develop their competence.

Work is delivered by teams. Some teams are part of a larger group called a Tribe. Work exists in a backlog – a prioritised list of things required to achieve their OKR. Each Sprint, Teams select work from their backlog.

If Teams need to change course, they have the freedom to do so, as long as they remain committed to their OKR. If throughout the courses of their work they find the OKR needs to change, they immediately engage whoever they require to discuss and re-plan. They success based on customer value and business value delivered, not time and budget.

Overall, staff at Modern Company say they feel highly engaged. The company has a really eclectic mix of people, from analytical to creative. Staff often say they are excited about what opportunities future technologies will enable and what this might mean for their customers. Customers rate Modern Company highly, even participating in the development of new products and services.

As you can tell, these two companies execute very differently because they are designed and structured differently.

Alignment 

When work is being done by many small, autonomous teams, it is easy for them to drift off in random directions.  There are a number of techniques to keep teams aligned without reverting back to centralised control.

  • Daily alignment - a 15-minute daily meeting to inspect progress towards our goal(s) and adapt accordingly. This is an opportunity to get our heads out of the weeds to ensure we heading in the right direction.
  • Scrum of Scrums - a simple way for teams to keep across progress of other teams and order to avoid overlaps and dependencies. After each daily alignment meeting, 1-2 representatives of each team go to a Scrum of Scrums meeting and share progress, obstacles and challenges.
  • Sprint Reviews are open meetings anyone in the company can attend. Teams demonstrate tangible progress and obtain feedback. Sprint Reviews occur at the end of every single Sprint and are a powerful way for a team to ensure what it is delivering is both of value and aligned to the organisational objectives.
  • Big Room Planning is a way of all teams planning the next stage of the journey together. We take the outcomes of last period as input and together plan out what we, as a company, aim to achieve for the next quarter, including which teams will be working on what and whether they think it is achievable. It is a combination of top-down and bottom-up planning that includes teams involved. It typically results in significantly increased buy-in and engagement.

Leadership

Clearly, this type of firm requires different leadership. Thankfully, one of the most successful nuclear submarine commanders in history who ran his vessel this way wrote an outstanding book on how he achieved this and it’s enduring impacts, tried and tested in numerous mission-critical situations.

Control, clarity and competence

He shares three critical principles leaders must embrace to be successful with Organisational Agility:

  1. Clarity on the objective and why it is important
  2. Control - delegating control & decision making as much as is practical
  3. Competence - if we are going to decentralise decision making then we need to ensure the people doing the work are technically competent to make the decisions they need to make.

We’ve covered Clarity in “Goals and Objectives” above and we’ve covered Control in “Decentralised Decision Making”, “Execution” and to some extend “Alignment”. If you are interested in diving deeper on these topics, I recommend David Marquet’s website and book.

Competency

Over the years I’ve worked with many firms who have attempted to apply the principles I have outlined in this article. In my experience, one of the key reasons they fail is that they give too much control without developing competency. You cant simply transition from one culture to another overnight and expect to succeed. Building competency in people is utterly vital.

Many of us have been raised based on traditional thinking. It was the underlying principle in our schooling and careers. To work in this way we have a significant amount of re-wiring to do, which takes time. Learning new ways of working is one thing. Applying them is another. It requires patience and support from people who know what they are doing and can guide you.

Our approach is to first give a small amount of control to uncover the gaps in competence and clarity. The step is small and calculated to uncover gaps. Competence is developed through training, mentoring and coaching. If the step is too big, chaos will ensue. Equally, developing a highly trained team without giving them control will result in frustrations and departures.

Balancing Control with Competence and Clarity

The idea is to instil a culture of leadership that gives others the opportunity to grow by inviting them to the next level. For example, if someone wants to be told what to do, the best response is to ask them what they think or see, and so on.

Leadership Ladder

If you are interested in understanding this better, please contact us.

Conclusion

COVID-19 will change the world. All of us will learn from this situation and make our businesses more adaptable and responsive. This can be significantly accelerated through a fundamentally different system of work based on distributed intelligence.

Once you have stabilised, please don’t forget to invest in your organisation to help avoid learning lessons the hard and expensive way. Together, let’s build better businesses that progressively shape the world for good.

Mistakes

Forward thinking firms are realising that in order to thrive in a world of uncertainty they need to fundamentally rethink themselves beyond the tactical “doing” mindset (processes, frameworks and methodologies), to an adaptive mindset, based on a culture of collaboration and a team-centered approach to problem solving.

Culture, HR, intrinsic motivation & emotional EQ are converging with agile, servant leadership, the growth mindset & customer empathy to fundamentally reshape what it means to be a modern organisation.

The winners in the current climate are not just embracing modern technology; they are fundamentally redeveloping their core DNA in order to detect new opportunities. And this change is increasingly being led as a culture-first initiative.

Much of the work we are currently doing is less about responding to a particular crisis, rather it is more focused on creating new capabilities to enable our clients to continually adapt and respond to almost any situation. We call this agility. In practical terms, what does this involve?

From years of working at the coal face of adopting agile ways of working, we have learned that a holistic approach radically increases your chances of success. We therefore approach it as two interrelated pieces – Business Design and Transformation, with the overlap, validation, playing a vital role in road-testing the change.

Business Design

Business Design is about designing the business to help it best achieve its strategy. It is vital, yet in our experience many organisations skip this and leap straight into “implementing agile”. The result is a transformation with no real substance, no compelling call to action, no North Star. And firms wonder why so many transformations fail!

At Radically we take a very pragmatic view:

  • First, understand the core strategy. What space does the firm play in? What unique combination of drivers enable it to win in this space?
  • Design an Operating Model that will enable this strategy, empowering and aligning all the key business functions towards the same outcome.
  • Get explicitly clear on the target culture required to achieve this. What does it look and feel like? What will leaders do to role model this? How do we reward and recognise people demonstrating the desired behaviours?
  • Review and align the Organisational Structure to support the above. If our Operating Model is strongly agile based, then a different org structure is often required. What does this look like and what changes are required to get there?
  • Ways of Working – clearly design how we will approach our work. What work should be approached with an agile model? What work should be delivered by a traditional model? How will these interact? Who will do what? How will we measure success of this?
  • Funding & Governance – an agile enterprise tends to adopt an experimental mindset, delivering quick iterations of value that can be quickly tested with customers, resulting in continual course correction. Traditional funding and governance models tends to focus on adherence to a fixed plan. So how should a more modern funding and governance model work?
  • Leadership – given the above, what should our approach to leadership look like? How will we live the values as behaviours each and every day?

Sadly, most agile transformations we have seen in New Zealand completely fail to consider these fundamental building blocks. Instead, they tend to take an “agile practitioner” approach, focusing on frameworks, methodologies and processes. In our experience, these firms are unlikely to achieve their desired business outcomes.

Transformation

Transformation is the art of moving the business to the new model.

This is when the ‘people aspect’ of change truly kicks in. If you think about what we are actually transforming, it is people and people are the trickiest part to change; processes and models are relatively easy. The human shift must be designed with a human-centred approach. We find that by taking a leadership and mentoring approach, our job is to guide all levels through the change and build the capability and mindset within the staff to be self-sustaining into the future.

Validation

In our experience, no design is perfect. There is low value in trying to design a perfect design as no such thing exists, and secondly it will change as you implement it through transformation. Transformation validates design, yet transformation without design is folly.

 

Conclusion

In summary, we urge you to take a strategic focus when embracing agility. Are all the pieces of the firm aligned to the same vision, model and approach? Are we all completely clear why we are doing this and what outcomes we want to achieve? If you can’t answer yes to these foundational questions then it is time to re-think what you are doing.

Don’t “go agile”. Instead, design your business for agility, break the cycle of failed transformation and realise the true benefits from your investment.