Today’s enterprises are navigating global turbulence and disruption, which for many means rethinking their digital business strategies and reimagining how they operate. Since customer centricity is at the core of every successful digital business strategy, the pressure to provide exceptional customer experience remains constant, and drives the need to deliver higher quality software, faster. More than ever, an organization’s ability to rapidly assess a situation and then pivot quickly in response is imperative to survival. Agile business management has never been more critical to making this happen.
Organizations that have expertly embraced and adopted agile business management fare much better than those who don’t. In his article, “Agile Isn’t New: What’s New Is The C-Suite Embracing It,” Steve Denning compares the stock market performance of companies whose executive leaders have been embracing agile business management principles for several years and those who have not. And the differences are dramatic.
For example, Amazon, who is arguably the world’s most agile enterprise organization, grew their market cap by almost 1000X, from $1.43 billion in 2014 to $1.41 trillion in 2020. When Amazon.com launched in 1995, it was with the mission “to be Earth’s most customer-centric company…” and that hasn’t changed. CEO, Jeff Bezos describes Amazon’s customer centricity as, "The secret sauce of Amazon [...] the number one thing that has made us successful by far is obsessive compulsive focus on the customer as opposed to obsession over the competitor." Amazon views their stock performance as a direct result of their customer centricity, rather than an operational goal.
Conversely, during the same time period, IBM’s strategy has been to focus primarily on maximizing shareholder value and increasing earnings per share at any cost, instead of driving share price through productivity gains, agile business management and market leadership. The result? During the same six year time period, IBM’s market cap has declined—from $158.8 billion in 2014 to $105.8 billion today.
The benefits of agile business management are clear. But, according to Forrester, who has been analyzing agile adoption for more than a decade, over 50% of the organizations in their Q2 2019 Global State Of Agile At Scale Survey “are still neophytes; they're not making full use of Agile practices, scaling Agile, or complementing it with DevOps.”
There’s no question that organizations that practice agile business management create more value for the business faster. So, why have so few organizations managed to make the transition to agile business management?
In some cases, teams may think they are "doing agile"—but performing "check the box" activities without understanding their connection to improving outcomes, or without shifting to a more customer-centric mindset is really just agile theater. Doing things like having daily status meetings and calling them ‘stand ups’ will not get rid of old behaviors, nor will it improve collaboration, communication, or transparency.
Teams who have embraced agile development to deliver digital products quickly may see small successes at the team level. But this doesn’t necessarily equate to agile business management; when agile teams interact with and depend on others within the organization, critical challenges are exposed. These agile teams struggle to scale their successes across the enterprise and achieve real speed to market because the rest of the organization is still clinging to traditional planning cycles, funding mechanisms, and command-and-control style leadership.
As a C-level executive, it’s up to you to model and encourage the beliefs and behavior that support agile business management. While it’s highly unlikely that you’re opposed to, or actively fighting agile business management efforts, unless you’ve been through training, or read a lot of books, you may not have a solid understanding of the approach. So, you could unknowingly be managing in ways that run counter to agile business management principles and practices, and can undermine the effectiveness of the agile teams that report to you.
On the other hand, if you’re a C-level executive who is embracing agile business management, you recognize that it’s an ongoing continuous improvement program; a behavior system and a change framework, not just a project method. You understand how agile business management applies to your role and how to perform your role in ways that enhance and support your teams’ efforts to drive this approach.
CEOs in particular need to understand the tight connection between digital business, customers, agile business management, improving revenue growth, and reducing costs-to-serve. However, these are the realities:
If you’re one of these few CEOs, you understand the critical role that you play in achieving successful agile business management, and are actively working to eliminate some of the biggest barriers, which include:
Communication is integral to agile business management. Every organization faces changes and challenges each day, many of which require a rapid response. Communication among team members about schedules, requirements, results, priorities, and budgets must be immediate, flexible, and copious. Team members who constantly share conversations, knowledge, and responsibility are able to course-correct quickly and stay aligned with real requirements to deliver outcomes faster. They’re able to focus and prioritize tasks and share domain knowledge and competencies. Anything that a team member writes down with the intent to inform others must be quickly followed by a conversation—people actually need to talk to each other. Senior executives need to interpret and communicate the meaning of events and make connections to business priorities as often as needed.
CEOs must not only insist on teamwork and collaboration, in some cases they may need to force it by identifying and collapsing divisive silos. If business teams and technology teams are not working towards the same goals, you may need to break down silos by aligning business outcomes across the company. In previous decades, it was normal for leaders within the organization to have diametrically opposed goals and MBOs; business was paid on meeting dates and engineering was paid on quality. The push and pull of competition was supposed to get us to a happy medium, but in most organizations that hasn’t happened. For agile business management, it works much better if both are required to pay attention to the same things (both quality and dates), prioritizing customer centricity and relying on the customer to determine success through their usage of the product.
For successful agile business management, discussions need to happen regularly to gain agreement, collaborate, and ask for feedback. At first you might need to set up these feedback loops within meetings to open the door to healthy dialogue. Try modeling this behavior by asking a respected member of the team to provide open feedback and disagree with a colleague during a meeting to demonstrate an open and respectful conversation. Remember, you are all working towards the same goals of happy and engaged customers.
Agile teams must be empowered to work in a way that enables them to be fully accountable and self-sufficient, rather than relying on traditional command-and-control style of management. If there is a lack of trust in your organization, it may require extra effort to convince people that it is safe for them to speak up and that changes will be made based on their input, so it may take longer for these actions to show benefits.
Guiding your teams with questions—like “What do you recommend?” and “How could we test that?”—can help functional experts grow into general managers, and enterprise strategists and organizations evolve from silos battling for power and resources into collaborative cross-functional teams.
Changing culture is hard because it involves so many different complex elements of organizational dynamics, such as acceptable behaviors, expectations, planning processes, funding mechanisms, employee management, attitudes and viewpoints. These values and beliefs drive employee behavior.
The key to changing culture is to identify and then address the behaviors and values that create barriers to innovation and transformation. For example, values and behaviors such as risk aversion, work silos, and hierarchical accountability can cause delays, stall decision making, and impede your ability to extract value from your transformation efforts.
Consistently guiding change across these elements to alter behavior and shift mindsets, is a major undertaking that can be overwhelming, unpredictable, repetitive, and exhausting.
As a CEO, changing culture means exploring new methods of working and new organizational structures, empowering employees, and modeling the behavior you want to encourage. Many successful CEOs do this by applying agile business management methodologies to C-level activities such as planning, strategy development, resource allocation, and improving organizational collaboration. In addition to leading by example and modeling the behavior you want to see, pulling your senior executives together to function as an agile team and learning to apply the discipline enables them to:
If your development teams have embraced agile to successfully deliver digital products faster, planning is a great choice for the next place to extend agile, to consolidate and build on your initial success. It is also a great starting point for executive teams to begin adopting and modeling agile business management methodologies.
One of your first steps might be to think about how well your team plans, and how well you plan for change. Plans are desires, not reality. Since we know that we can never be 95% sure a plan will be completed on time, on budget, with a certain scope, and with a set number of people, we need to expect change to occur and build that expectation into the plan. Planning is important, following a plan is not.
In agile business management circles we talk about precisely wrong vs. roughly right plans. There have been countless studies done on estimating and planning. One of the key findings was that a plan that takes a team 3-7 days to create is often just as accurate as a more detailed, traditional development plan that a team spends months on; dotting every "I" and crossing every "T." So, in most cases, you can easily eliminate approximately 6-10 weeks of planning time and still put together a plan that is just as accurate, effective, and close to reality as the traditional version, if you use more agile techniques. I won’t go into great detail here but there are many good articles on how to plan more efficiently.
This isn’t to say that you don’t have target dates or understand the progress being made against objectives, quite the contrary. Along with planning, predictability is vital to meeting goals and objectives. Which brings me to my next category: data.
The traditional methods of measuring success by what milestones are achieved and when, no longer apply. Metrics need to measure the real value of what teams are delivering to customers and stakeholders and they need to be used to help drive continuous improvement. This means shifting from on-time/on-budget metrics that only measure the speed and frequency of releases. Metrics need to measure speed as well as business value and quality delivered to customers; they need to measure doing the right things as well as doing things right.
While working with a Fortune 250 financial organization, we talked about using real data to understand the status of every strategic plan. We showed how we do things: The systems we have in place to track the breakdown of work from strategy to user story, and to track the work as it moves through the teams, so we know the day-to-day status of any strategy. This helped the financial organization realize they had a gap in their systems. When they quantified what went into the process of rolling up their data (general numbers of people involved in gathering the data, the levels it went through, and how many reviewed it), they discovered they were spending more than $100M/year on having people roll up data that was approximately 3 weeks old and had been sanitized at least twice. In other words, they had no real insight into the status of their key objectives.
Teams at every level must have the data they need to run their part of the organization, including your front-line teams. After you have these metrics in place, it’s time to make sure you aren’t creating anti-patterns by viewing data you shouldn’t be and by enticing people to make the data look better than it really is.
Once you have data at every level, be sure you are looking at data that makes sense and, initially, don’t use metrics punitively. You want people to get used to sharing their reality with you. Having data that obfuscates the truth can be worse than having no data at all.
One of my standard practices when I would interview to join a company and lead their transformation was to reach an agreement that metrics would not be used punitively for at least two years. During that time, I would get everyone to feel comfortable with sharing real data and could guarantee that any negative trend was taken as an opportunity for coaching or analysis to determine the root cause. An added benefit was that it also taught the leadership team to view metrics differently. They realized that you can wish something was different, but when you step back and determine the root cause, you often learn that people are trying to do a good job but something beyond their control is stopping them. This then gives leadership the opportunity to fix the larger issues.
A successful transition to agile business management is no longer a nice-to-have option; it is rapidly becoming a business imperative. As a C-level executive, you will soon be helping to lead this effort, if you aren’t already. One of the most important things for you to remember is that implementing agile business management is very likely to expose issues across your entire organization. It will not create issues, but it will make every single one of them visible. So, assume that issues will occur and that problems will arise—and be prepared to help guide your teams through their resolution. While this may not be a comfortable or easy process to get through, keep pushing. Take an agile business management view and recognize these issues for what they are; an opportunity for your entire organization to improve and grow. The rewards are well worth it.
Laureen Knudsen is an award-winning senior business leader with 15+ year career that spans IT, financial and healthcare systems, and analytics. Co-Author of Modern Business Management: Creating a Built-to-Change Organization. Laureen leads a team of experts working to define the future of business to bring Lean principles and agility to all parts of an organization, focusing on optimizing end- to-end process flows and removing waste.