Does this scenario sound familiar? Your company has embraced agile and teams now enjoy greater focus and clearer collaboration. Yet the anticipated business benefits have not materialized. Delivery is slow, expensive and a source of frustration.

Although agile has markedly improved organisations, the full benefits are unattainable unless the entire work system is aligned with agile principles.

With over 20 years of experience in helping organisations achieve high performance and adaptability, I've gained valuable insights into agile system design. In this article, I will share some of these insights and discuss one of the most effective frameworks for optimizing organizations for peak performance: value streams.

Organisational Design

For the past century, reductionism has been the prevailing method of organizational design. In this model, the work of the organization is progressively broken down and assigned to functional units. Centralized management then coordinates these functions, aiming to ensure that the right people perform the right work at the right time. This approach has historically been reasonably effective, contributing to the development of many goods and services we now consider essential.

However, over the past three decades, as the world has grown increasingly fast & complex, the limitations of the reductionist approach have become painfully apparent. It presents several challenges:

  1. Frequent hand-offs between teams or business units that hinder rapid end-to-end delivery.
  2. Ambiguities in team roles and interactions, leading to internal friction and confusion.
  3. An inability for the organization to swiftly adapt to external market changes as work is stuck in progress.

 

Slow delivery

 

Consider a traditional organisation design where individuals are grouped based on their skills into specific functions, such as Sales, Marketing, Product, and R&D. When a customer makes a purchase or request, the responsibility for fulfilling this request flows across these various functions. Each participant handles their segment of the request before handing it off to the next function, like a relay race. If errors occur, the work must be returned to a previous stage for corrections.

Coordination of these efforts typically falls to a manager, whose task is to orchestrate these activities efficiently—a nearly impossible job. Often, when work arrives at a function, that group is already engaged with other tasks, forcing the new work to wait. This leads to significant delays.

Furthermore, since each group focuses only on their specific part of the process, they may lose sight of the overall customer outcome. This can lead to misdirected efforts and costly mistakes.

While a functional structure makes sense from an internal efficiency standpoint (let's group everyone who does similar work together), it creates significant waste and fails to streamline the delivery of value to the customer. And in a hyper-competitive world that just doesn't cut it.

Agile Emerges as a Team-Level Solution

Agile provided major improvements at a team level via cross-functional teams. To eliminate hand-offs between functions, teams were cross-functional and worked collaboratively to deliver a shared customer outcome.

Jeff Sutherland, co-creator of Scrum, took inspiration from The New New Product Development Game.

"Under the rugby approach, the product development process emerges from the constant interaction of a hand-picked, multidisciplinary team whose members work together from start to finish. Rather than moving in defined, highly structured stages, the process is born out of the team members’ interplay (see Exhibit 1).

In the rugby approach to product development, a specially selected, multidisciplinary team collaborates continuously from the project's inception to its completion. The development process evolves through the dynamic interplay among team members, rather than progressing through rigid, predefined stages. This method emphasises the fluid and collaborative nature of the team's interactions (refer to Exhibit 1)."

The New New Product Development Game

Exhibit 1 - Sequential (A) vs. overlapping (B and C) phases of development

 

In a cross-functional scenario, a team would be made up of individuals from Sales, Marketing, Product, and R&D, all collaborating as a single unit with a clear focus on meeting the customer's needs. Progress!

 

Collaboration

 

 

However, complications arise when the work requires multiple teams. Handoffs lead to work accumulating in queues, awaiting the next person, team or business unit.

This delay is glaringly obvious in the production of physical goods, where work visibly stacks up. Consider a production line where goods must go through several stages to be completed. Queues immediately highlight where the bottlenecks are and we can identify areas to investigate.

Yet in knowledge work, the queues are largely invisible. Work sits in a queue, waiting for a team or business unit to pick up once they get what they are currently doing completed. Consider all the items sitting in your email inbox, pending your action to move forward!

In many organizations, only 5-10% of the total time required to deliver a piece of work is the time spent actively working on it (adding value). The rest, a staggering 90-95%, is spent waiting. This is known as process efficiency and understanding this can fundamentally change how you view organisation design.

 

Process efficiency

The traditional functional organisation design results in significant waste. The value-add work is only 5 days yet elapsed time is 23 days. This is surprisingly common.

 

Value Streams

Agile revolutionized more than just software development, quickly gaining traction with other business units such as legal, finance, and marketing.

Value Streams extend the agile philosophy into organizational design by organizing multiple teams around a clear, customer-oriented mission, aiming to minimize hand-offs and establish clear team scope and interactions. By aligning cross-functional teams towards a unified goal, value streams reduce unnecessary hand-offs and have become an essential element of contemporary organizational design.

Value Stream model

In a Value Stream-based model, the design is optimized to reduce hand-offs and wait times, with clearly defined team scopes and interactions.

 

When structuring teams, Team Topologies by Matthew Skelton and Manuel Pais offers valuable guidance. It outlines four distinct team topologies:

  1. Stream-aligned team: aligned to a flow of work from (usually) a segment of the business domain
  2. Enabling team: helps a Stream-aligned team to overcome obstacles. Also detects missing capabilities.
  3. Complicated Subsystem team: where significant mathematics/calculation/technical expertise is needed.
  4. Platform team: a grouping of other team types that provide a compelling internal product to accelerate delivery by Stream-aligned teams

 

Leveraging Value Streams

While value streams are a highly beneficial concept, adopting a value stream-based operating model represents a significant undertaking. It alters the fundamental ways in which people work, disrupting roles, accountabilities, reporting structures, and performance metrics. Managing this transition requires strong change management.

Such transformations are inherently risky. Each organization possesses a unique blend of people, processes, culture, mindset, governance, management, and leadership. Successfully implementing a value stream model involves thorough consideration, meticulous planning, and careful adaptation.

We have achieved considerable success using a strategy that involves co-creation with stakeholders and pilots.

Co-creating a Value Stream Operating Model

Co-creation involves collaborative workshops where we design the operating model together. Our approach is grounded in the belief that while Radically provides deep expertise, no one understands the intricacies of your business as well as you do.

Our clients consistently tell us that this collaborative approach is a breath of fresh air. Many have had negative experiences with traditional consulting firms that isolate themselves in a conference room for weeks before unveiling their model in a grand reveal. Experiencing change imposed upon you can be unpleasant. Participating in the process of change is far more empowering.

Naturally, no model is flawless. This type of work is fraught with complexities and many "unknown unknowns." This is where conducting pilot projects proves invaluable, allowing for iterative testing and refinement.

 

Pilots

The field of Complex Adaptive Systems has significantly influenced our understanding of organizational design. Such systems, characterized by "unknown unknowns," defy straightforward planning and implementation. Instead, effective solutions tend to emerge organically through active engagement and practical experimentation.

The purpose of a pilot is to implement a crucial piece of work using agile, uncovering likely "unknown unknowns" before scaling further. Typically, a pilot focuses on a specific segment of the business, such as a single value stream, a strategic initiative, or a major project. At Radically, we establish these pilots based on the principles, desired culture, leadership style, and operational methods we aim to promote.

We assemble a cross-functional team drawn from different business units. Their role is to

  1. Guide the change.
  2. Observe the emerging patterns and interactions.
  3. Use the insights gained from these observations to refine and enhance the operating model design.

In this approach, we work in short cycles, continuously reviewing and adjusting our progress. During these iterations, we identify any aspects that may need modification to successfully scale the model, such as reporting structures, incentive schemes, key performance indicators, mindsets, skills, and communication methods. Over several months, this iterative process yields critical insights—insights that only become apparent through actual implementation. We then determine solutions for these issues before scaling further.

By leveraging co-creation and pilot projects, we collaboratively design and test a model that truly works. When the people doing the work participate in the model design, it not only enables smoother change but also makes acceptance and adaptation of the model substantially easier.

Co-creation

Summary

Adopting a value stream-based operating model can significantly reduce waste and increase adaptability across many organizations. When combined with agile ways of working, human leadership, and a strong emphasis on value, companies can greatly enhance both performance and customer satisfaction, while also improving organizational culture and the workplace experience for their employees.

Designing such an operating model involves numerous collaborative design workshops, effective communication, active listening, and thoughtful discussions, all underpinned by careful change management. Strong executive sponsorship and support are crucial; without this model being a priority among the top executive concerns, successful implementation is unlikely. Transitioning to a new operating model is a substantial and disruptive endeavour, but the benefits make it a worthwhile investment.

 

Want to learn more?

If you’d like to learn more, we can run a one-day deep dive Designing Value Streams workshop for you. Just drop me a line and we can discuss.

 

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?

I recently attended a zoom meeting with my Toastmasters club — yup, online speeches and all — which was pretty fantastic. Some of us were sitting in their kitchen, some of us in their bedroom, someone outside with an amazing view in the background. While I was busy giving my first ever online speech, I had a realisation: all these backgrounds give a much more intimate view into a person’s life than I would have had a chance to get otherwise. Has this crisis made the workplace more human?

Has the crisis made the workplace more human?

Safe to say that we are all online meeting pros by now. We have trialled what feels like a hundred different tools, we’ve optimised our home office set up as much as possible and we have all had our funny and embarrassing moments. I’ve seen children needing attention and curiously eyeing the camera while the person was trying to talk about a roadmap, pets “helping” with the meeting or hidden significant others who bring their loved ones a cup of tea or coffee while they whisper “Thank you” to the left of the screen. I have even seen people’s partners or roommates in their undies, squeezing past them, believing that they are out of the angle of the camera. In a weird way, these glimpses into a person’s private life, their home or even just of their weird favourite coffee mug, have made me see them in a different light. Even if I only see them on a screen, I have learned a little more about who they are (or might be) outside of work.

In his book “Reinventing Organisations”, Frederic Laloux talks about the concept of wholeness — bringing your whole self to work. Traditionally, the idea of bringing your whole self to work was not embraced by organisations. In an attempt to show up professionally, people have created a version of themselves, or a mask for themselves, that they wear to work. All other parts, that don’t fit in this professional image, were left at home, especially the part that shows vulnerability.

Now, while Laloux takes this concept as far as a spiritual level, the very unspiritual COVID-19 global crisis has forced many of us to be vulnerable and open with their co-workers and managers about challenges they currently face. With lockdowns in place, children at home or helping out others or the community, many of us have to juggle a busy ‘bubble’ life with working from home and getting stuff done. Uncertainty about the world after, job security or worries about the health of loved ones and friends are piling on the pressure. We simply don’t have a choice to not bring our whole selves to work anymore, because work-life and life outside work have started to blend.

However dramatic this sounds, finally, I have experienced a workplace where it is ok to log off at five to cook dinner for hungry children, where it is supported to go grocery shopping for the elderly parent to help them out and check in on them. People are encouraged to share their feelings, be vulnerable and ask for help. In fact, many meetings I attended over the past three weeks have started off with a check-in round to give everyone a chance to share what’s going on for them. And while I wish it would not have taken a pandemic to get to this point, I hope that we can learn from this experience. That, in a post-COVID-19 world, however it may look, we can continue to strengthen the human connection we forged during this time of crisis — over VC no less! — and bring our whole selves to work.

(Photo by Andy Orin on Unsplash)

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

The NZ Productivity Paradox is one of the issues of our time. Our nation is poorer than it should be despite growth-friendly structural policy settings. We should generate GDP per capita 20% above the OECD average, but we actually generate more than 20% below average. Closing this gap would dramatically lift incomes and wellbeing for all New Zealanders. It would also mean we don’t have to trash our environment by trying to extract one-off value from the environment and could create a fairer society, based on social justice, liveable communities and high levels of education.

All very inspiring, lofty stuff, right? Yes – but it is also important stuff. In this post I aim to outline why Radically has chosen this problem as the thing to set our sights on.

Sir Paul Callaghan’s watershed presentation Sustainable economic growth for New Zealand brought an incredible amount of truth to table for many New Zealanders. “We are poor because we choose to be poor” remains etched in my mind for eternity.

Sir Paul brought up some painful myths we tout in NZ – “great place to live”, “relaxed lifestyle”, “clean and green”. The truth is actually quite the opposite.

NZ has some of the worst statistics in world relating to families. We are the bottom of the heap (or close to it) in child poverty, teen suicide, jobless households, environmental awareness, teenage birth rate, inequity in education, inclusive economy, and child murder. But does the lifestyle in New Zealand makes up for that? No, unfortunately it doesn’t. We are the second hardest working country in the OECD, yet the lowest in terms of productivity. The lifestyle isn’t so relaxed after all.

But we are so clean, green and 100% pure! We know this is not true to the point where it has become a bit of an embarrassment. With the 2017 OECD report finding NZ is reaching its ecological limits, we can no longer stake this claim. We simply can’t continue to haul money out of the ground (milk, meat and forestry). It is what Sir Paul labelled egregious hypocrisy.

But this data is from 2011. Things have gotten a lot better since. Sadly, no. Most of our economic growth has simply come from adding more people.

So what’s going on? Our education system is as good as anyone’s in the world. We are a stable economy with all the right basics. Why have we continued to slide?

The answer is relatively simple: we choose to engage is low wage activities.

In 2011 our per capita GDP was $40k/year. To maintain that, we need about $120,000 per job. On average, tourism earns us $80,000 a job. That drags the average down. The wine industry drags it down too – $90,000 a job. If it is wasn’t for dairy farming, NZ would be extremely poor.

And therein lies our paradox: how do we increase our GDP AND be more sustainable when so much of our success is based on an industry that is pushing the limits of our environment?

The NZ Productivity Commission did some great work to try an answer this question. Their key findings are available to all in glorious detail, but the key aspects are:

  1. Our physical distance from key markets
  2. New Zealand’s low R&D investment
  3. How we use information and communication technology
  4. Our managerial practices – i.e. how our companies are run.

It is a significant issue. The empirical studies show that these factors combined account for 17 – 22 percentage points of the 27 % productivity gap.

But there are two key points that stand out for us.

Firstly, there are significant gains available to us by lifting our investment in ICT (as a key driver of innovation). However, “in order to maximise the return on this, our firms must adopt business practices that better exploit the new technology”.

In other words, there is no point in blindly investing in technology without understanding how to exploit it. Practices such as Agile, Lean and Design Thinking help test and validate assumptions and risks early, leading to higher tangle ROI.

But practices alone are not enough. Agility and customer-centricity are more a mindset than a set of processes and methods. As the 11th VersionOne Annual State of Agile Report shows, the top 7 challenges in adopting these practices are all about the organisation and its leadership.

This aligns with our experience. Unless transformation is aligned to organisational strategy, and is led and modelled from the top, its chances of success are low. In order to thrive, organisations need to find better ways to lift their game to increase productivity to more competitive with what they currently have.

The second finding is curious: poorly managed firms survive better in NZ than in high-productivity countries (such as the US). While this isn’t a surprise, it is alarming. In a globalised marketplace, NZ firms have gotten away with complacency only because of low levels of competition. In other words, sleepy old NZ is wide-open for disruption. We need to lift the capability within organisations, as well as those of our leaders and our managers. Leadership and management is drastically different in this day and age, and most organisations have under-invested in the right kind of capability uplift.

You can see this happening now. Companies from highly competitive marketplaces (such as the US or China) decide to expand into NZ sending shockwaves throughout our local companies. Just look the pressure in the retail sector right now with the arrival of Amazon. Media has been experiencing it too – just look at Sky TV’s recent challenges after it’s bid to join forces with Vodafone was rejected.

Yet all of this was predictable and predicted. In 2015 I presented Deloitte’s Digital Disruption Map to a range of clients across NZ in exactly these industries, as well as at various conferences, suggesting this was coming and that organisations needed to become more adaptable in order to respond. I suggested developing a capability in organisational agility – what I refer to as “the ability to change course without penalty”. Yet here we are…

And Accenture recently released a major study showing nearly two-thirds of large companies face high levels of industry disruption, and 44% are highly susceptible to disruption.  And Accenture’s report mirrored findings of the Deloitte report – “disruption is continual and inevitable – but it’s also predictable”.

From the report – “incumbents need to radically transform the core business while scaling new businesses. But pivot too quickly, and they will likely stretch themselves too thin financially; pivot too slowly, and they risk becoming obsolete.”

This is why we started Radically. To help organisations leaders transform their organisations to achieve radically better outcomes. Not small, cosmetic changes. The time for that is over. It is time for Radically better outcomes.

Our mission is to help New Zealand organisations thrive and succeed on a global stage. This is what we strive to achieve.

This is our mission.