The case for Agile: What, Why and How?
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The document discusses the differences between traditional management structures and Agile frameworks. It notes that 88% of surveyed organizations report tensions between Agile teams and traditional management. Traditional management is described as hierarchical and top-down, focusing on efficiency and control, while Agile emphasizes self-organizing teams, iterative development, and customer collaboration. The document argues that Agile approaches are better suited to today's dynamic environment that requires continuous innovation, noting that horizontal companies using Agile principles like Google and Apple are outperforming traditional vertical firms.
The case for Agile: What, Why and How?
- 1. The Case for Agile: What, Why and How? 27 January 2015
- 2. Management versus Agile • 88% of 400 people surveyed reported tension between Agile managed in their organisation & the way the rest of the organisation is managed
- 3. What is Management? • Vertical mindset – strategy set at the top, power trickles down, high rise buildings • Big leaders appoint little leaders • Individuals compete for promotion • Compensation = rank • Tasks assigned, managers assess performance • Rules circumscribe discretion • Purpose: make money for shareholders & top executives • Communication top-down • Values = efficiency + predictability + preserve gains of the past + conservative • Tight control = CSF • Systematic disruption = large-scale fast-paced innovation that can disrupt stable businesses very rapidly
- 4. What is Agile? • Horizontal mindset – low flat buildings, established foothold in most vertical organisations, • Purpose = delight customers + liberate full talents & capacities • Making $$$ = result, not goal of activity • Focus is on continuous innovation + enablement • Communication = horizontal conversations • Creation of the future Banking, not banks; transport, not cars. • Creative economy
- 5. So what’s working? Market capitalization • Apple – $660 billion Horizontal • Google – $362 billion Horizontal • Facebook – $222 billion Horizontal • IBM – $155 billion Vertical • GM – $54 billion Vertical Vertical firms are struggling with declining revenues & cost cutting reorganizations. Horizontal firms like Google & Apple are busy growing & inventing the future
- 6. More on Agile • Self organizing teams that work in iterative fashion & deliver continuous additional value directly to customers • Practices include Scrum, XP, Kanban, DevOps and Continuous Development Source from lean manufacturing
- 7. • “This new emphasis on speed and flexibility calls for a different approach for managing new product development. The traditional sequential or “relay race” approach to product development… may conflict with the goals of maximum speed and flexibility. Instead, a holistic or “rugby” approach—where a team tries to go the distance as a unit, passing the ball back and forth—may better serve today’s competitive requirements.” ~ Hirotaka Takeuchi and Ikujiro Nonaka “The New New Product Development Game” in HBR in January 1986
- 8. Hierarchical Bureaucracy • Current firms with hierarchical bureaucracy – Falling rates of returns on assets & invested capital – Dispirited workforce – Decline in competitiveness – Widespread disruption of existing business models – Basic idea = people report to boss who tell them what to do, control their work & provide order
- 9. Hierarchical Bureaucracy • Solves 2 problems – Get semiskilled employees to perform repetitive activities competently & efficiently – Coordinate efforts to produce large quantities of products • Good for stable environments = Scalable + efficient + predictable + reliable average performance • Weakness = Vertical + non-collaborative + linear plans + internal focus + dispirited workforce + inflexible + customer absence
- 10. Changes in economy • In the past, – Change wasn’t important because of stable context where firms can predict what customers would buy – Semi-skilled employees cared they had a job & paycheck collaboration was secondary – Managers knew best • Globalization, deregulation + new technology changed everything: – Power in the marketplace shifted from seller to buyer. Customer was now central. – Now the new norm as “better, cheaper, faster, smaller, more personalized and more convenient.” Average performance wasn’t good enough. Continuous innovation became a requirement. – In a world that required continuous innovation, a dispirited workforce was a serious productivity problem. – As the market shifted in ways that were difficult to predict, static plans became liabilities. – The inability to adapt led to “big bang disruption.”
- 11. Changes in economy • In this turbulent context, the strengths of hierarchical bureaucracy evaporated. – Scalability turned into unmanageable complexity. – The efficiency of economies of scale turned into diseconomies and inefficiency. – Predictability turned into a crippling lack of agility. – Reliable average performance wasn’t good enough for customers who wanted “faster, better, cheaper, smaller, more personalized and more convenient.”
- 12. Horizontal world of Agile • Features of agile approaches – Work is done by self-organizing teams that could mobilize the full talents of those doing the work. – Work is focused directly on meeting customers’ needs. – A “lens” focuses attention on the customers’ needs (when the lens is a person, as in Scrum, the person is known as a “product owner”; in large scale applications, the lens is “a platform.”) – Work proceeds in an iterative fashion so that it can progressively satisfy customers’ needs better.
- 13. Horizontal world of Agile • Features of agile approaches – Workplace interesting, inspiring and autonomous – Customer central & purpose is to delight the customer – Basic dynamics of traditional economy reversed