Holding a daily meeting early in the morning is often considered one of the first steps of “becoming Agile.” You get your team together, and everyone says what they’ve done the day before, what they plan on doing today, and mention any issue they might have faced.
The problem is that, more often than not, when you get to it the magic just isn’t there. You find yourself with a group of people standing up together and talking aimlessly. You might even start being mad at them for not having things happen the way you see them in your head.
Here are simple questions to ask yourself to help you improve your daily meeting.
Why do you have a daily meeting?
When you set up this practice in your company, you might know precisely what you’re expecting to get out of it. Or you might have heard that it is a great practice, that it will help make your company more Agile.
You might want to try to use this daily meeting as a way for everyone on a team to synchronize, make sure the project is on track, and have an opportunity to help each other.
Now, whatever your reason is, you need to have one. If you can’t find one good reason for taking people’s time every day, you shouldn’t feel ashamed to simply put an end to it.
Is it a ritual?
The best way to anchor a daily practice in everyone’s mind is to make sure everything happens in the same setting every time. You want to make it a habit for people to be there daily.
Do you have the right space for holding your meeting? You need a place where you can fit your whole group. If the location you choose, may it be behind a desk or in a dedicated room, can’t hold your entire group at the same time, then you might have to rethink your choice.
Have the meeting happen every day at the same time. Your daily meeting should be a ritual, which means starting right on time, but also being timeboxed. It should never last longer than the maximum amount of time allocated to it. A maximum of fifteen minutes usually prevents from becoming a full-on meeting.
Do you have visual aids?
Talking as a group about what is going on with the project is great. But it might be hard to keep every task’s current status in mind. What is being worked on? Is this feature completed? Have we fixed this production issue?
One way to help get everyone on the same page is to have a visual aid. It might be a wall with post-it notes holding everyone’s tasks, or a Trello board on a screen. Maybe it’s your internal ticketing system or even a list on a whiteboard.
Whatever you choose to use, adding a visual component to your meeting can help make the various discussions more concrete in people’s minds.
What are people working for?
People will feel more invested in their daily meeting, and the project in general, if they feel they have a reason to. Yes, they are paid, that’s why they’re there and why they do the work.
But being invested is more than that. It’s about finding meaning in your work, knowing that you give a part of yourself for something. People must have a goal that they can get behind.
If your team members really are trying to accomplish something, they will use the daily meeting as a tool to reach that goal.
Do they work together?
It might seem like a weird question, but if you put people together and have them talk about what they’re working on, they better be sharing work at some point.
It’s not enough that they are in the same team or company. If they work on different projects that have nothing in common, then they aren’t really working together.
Going back to the first point, where you have this perfect vision of a meeting in your head. Have you shared that vision with your team members?
For people to participate and do well in their roles, they need to understand the role. What are they supposed to share? When are they suppose to intervene during other people’s speeches? What liberties do they have? What are the do’s and don’ts of the meeting?
Make sure the rules are clear for everyone so that people can be at their best.
Have you asked others for their opinions?
You have a vision for what this daily ritual should be like. Whether it happens how you want it to or not, remember that you are working with human beings.
People participate in this meeting every day. That makes it their meeting too. How do they like it? What issues can they see? What would they change to make it better? Having people share ownership of the meeting by being allowed to make it better will definitely make them more invested. It will matter to them on a whole different level.
Feel free to experiment
Rome wasn’t built in one day. The right recipe for your daily meeting won’t be found in one day either. You have to allow yourself and your team to experiment. Make sure you’re honest about how things go, what works, and what doesn’t. Only through regular improvement will you find what works for you and your team.
Agile is fast maturing and its time to look at what’s next. In my opinion, it’s called teal. Agile, but more. But first, a short walk down memory lane to get some context.
Remember the Future
Agile took the world by storm and Scrum quickly became more synonymous with software development than rugby. Scrum Masters popped up like cosmos flowers after the first summer rains, polluting the software development job boards as the need for more agile organizations grew.
The word Scrum (to me that is) implies separate teams pushing against each other with the strongest team winning, the other team being the loser. There can be only one winner, with the most agile on the field the most likely to win.
In the background, however, a much more subtler, softer shade of agile has been growing for the past decade or more called teal with companies like Patagonia, Buurtzorg and SoundsTrue a few of the super successful examples. These companies all have one thing in common — better than expected return on investment and continuous, long-term growth.
More like the gentle lavender fields, it takes much more care and nurturing to grow compared to the weed-like cosmos which grows wild next to the road in rural South Africa, exploding in splashes of pink and white as far as the eye can see.
The word teal to me implies integration (blue and green), wisdom, freedom, power, together, tranquil — the color I most associate with the vast open skies or the palegic ocean.
Software development and good coffee to me is like salt and pepper — an undeniably excellent partnership. I haven’t met a technology geek who doesn’t love good coffee. It’s just one of those small little unwritten rules if you want to be part of the technology club. If there was to be an ad for the typical persona on a dating website for technology geeks, there will be stipulated:
“Must love good coffee.”
Agility and caffeine just goes well together it seems. It’s fast, exciting, and changes direction quickly. The stronger, the better. It kicks you into action if you’re procrastinating or bored and it fuels the fires while you burn the midnight candles to get the release out the door.
Teal, on the other hand, is much more comparable like tea-time. It’s gentler, softer, slower. Teal is more about human connection, wholeness, purpose.
Where agile can be compared to a smooth running machine where each spoke is well-oiled and running at optimum speed, teal can be compared to a delicate living organism. It’s more sensitive to the surroundings and needs time to rest and restore, like all living things. It can’t run on optimal power for extended periods of time like a machine, but it can think for itself and service itself when needed and before it breaks down. This eco-system needs to be nurtured and is always in search of equilibrium, compared to an engine in search of optimization. Where Scrum often aims to do everything faster, better, more, Teal aims keep these forces in balance with a continuous improvement culture.
Teal vs Agile — a Rough Guide
There are more differences than an be mentioned in one post, but on a high level, here are the top five elements that differentiates agile from teal, taking into consideration that teal inherently means that a company is fully agile. However, an agile company is not guaranteed to be teal.
1. Organizational agility
Agility originated when developers realized they’re not able to meet expectations if they’re so tightly managed and controlled in a super-structured waterfall approach, run by control and demand of the managers.
With agile, these development teams were given a little more freedom in a less structured Scrum team where they were encouraged to report to each other rather than a team lead, take ownership of their workload and provide more input into estimations, amongst others. The rest of the organization however remained as structured and controlled as before.
A difference between agile and teal is that agile is focused on the software delivery process, one part at a time mostly, whereas teal expands towards organizational agility, including not only the software delivery process, but the supporting processes too as a whole. Teal organizations are not limited to software development or technology, but can be applied equally to a farm, a building site, a law firm, a bank or a software development house.
2. No Standardization
Scrum aims to standardize work — again driven by the control-and demanding leadership style that drives it. The process is standardized, the workflow (to-do, in progress, done) is standardized, even the ceremonies and schedule for these ceremonies are standardized. The only freedom the team has is often choosing the sprint duration.
Teal, on the other hand, doesn’t standardize anything. Rather, it relies on good cross-functional communication and includes an advisory process and a conflict resolution process to ensure alignment between different teams and the organizational purpose.
What is more important than standardization is good communication and an organizational team spirit.
3. Coaching rather than Consulting
Scrum and agile generally relies on consulting as teaching mechanism. Each team has a Scrum Master or Agile Coach who’s role it is to make sure that the team understands and follows the process.
Typically, a Scrum Master will be asked what to do in a specific situation and the response will be advise based on experience. Basically, it’s telling the team what the answer is or what to try.
Teal, on the other hand, takes coaching to the next level. The management team is replaced by team coaches. Agile coaches and Scrum Masters become team coaches, driving change and establishing equilibrium within a team.
The role of the team coach is to maintain harmony within an entire team by asking the right questions to help guide the thinking of the team, without ever giving a direct answer.
As apposed to pointing out the problem to the team that, for example, the CEO is talking too much or demanding too long sessions at a time, the team coach will notice the issue, then ask the team what they notice or how they feel or what they think they should do next in an attempt to raise their awareness to identify problems themselves.
The world of coaching started with individual coaching, yet team coaching is fast becoming the norm. A team coach is all about getting the team as a whole to function together whereas a personal coach is about developing a single person at a time, outside the context of the team he or she works in. Teal adds context and more perspectives to a problem, enabling solutions to be discovered exponentially faster than what is possible in an individual session.
4. Inclusive rather than Exclusive
Agile, or Scrum, is commonly viewed as a competition, where different teams are compared to each other to see who the ‘best’ performer is, much like the word “scrum” implies. That is like comparing the heart to the liver in a human body, trying to see which one is the better one, while both are equally important, just for different reasons. You can’t live without either.
Teal organizations view the entire organization as a living organism where each part is as necessary as the next. They even go one step further and include the suppliers and customers and even competitors in their goal to maintain equilibrium. They understand that there’s no business if there’s no suppliers or customers, as there is no business without employees.
Teal organizations seek strategic partnerships and win-win relationships between everyone involved. It’s an intersection of needs and wants based on a shared purpose.
It’s not teal if everyone doesn’t win.
5. Happiness matters
In agile organizations the emphasis is mainly on delivery, whatever it takes. It matters that the customers are happy and it matters that the shareholders are happy, but when employees are unhappy, it is the individual that often is expected to change.
In teal organizations, the primary measure for success is happiness. If the workers aren’t happy it is considered a serious problem that needs to be addressed. It’s not acceptable for the leader to enforce his ideas or rules on the workers, rather, it is a collaborative, inclusive creation. Where the general leadership style in agile organizations are still demand-and control, the general leadership style in teal organizations are more free, compassionate and empowering.
The unhappiness is viewed as an indication that something is not working, with the assumption that the worker is the best informed person to know when something needs to change. Employee happiness becomes one of the most important measures of the organization’s success, as teal organizations understand that happy people do good work, they are more engaged and thus more productive and innovative.
In a perfectly predictable world, what’s the best way of organising a business? My guess is that it would be run like a perfect machine. Or like a big, monolithic computer. Programmed in best in class business processes. In a world with no surprises, you could build the perfect machine, program it perfectly by complex business processes, hire only the ‘resources’ that fit perfectly into those existing processes, and hone the whole organisation to deliver the ideal input/output ratio.
In fact, this is the way most businesses are set up. At least it’s the target state of most traditional companies. This is because the world used to be much more predictable and therefore better suited to such ‘Tayloristic’ models. The underlying goal was to distribute known packages of work in the most efficient manner. Today, however, things are increasingly unpredictable and fast. And this has some fundamental impacts. In such an environment, it’s impossible to plan the perfect organisational machine.
So, rather than planning for efficiency, forward-looking businesses are rebuilding their organisational structures around agility, robustness and innovation. And as businesses adapt to this new normal, the top-down management structures of old are coming under pressure. It’s easy to see why: the centralised decision-making, business siloes and organisational hierarchies of old put barriers in the way of adaptable operations.
Organising around adaptability
What does the future-fit organisation look like? For me, the answer’s simple: businesses need to put in place a structure which gives their people the freedom to act autonomously and quickly. It’s a simple idea, but one which demands profound change.
The first step is to enable employees to accept ownership over things, again. Interestingly enough many engaged leaders are caught by surprise, how difficult this is for many of their employees. Many experiences and traditional ‘tayloristic’ principles have to be ‘unlearned’ to accept ownership. Decision ownership has to be pushed out to every single employee and allows to think and decide for themselves. Step two goes further; creating an organisation in which employees are encouraged to seek out the most important and immediate challenges for the company, and to solve them.
At Siemens, we call this ‘ownership culture’: employees are empowered to make decisions for themselves and proactively drive change. We know that we can’t “switch it on” from one day to the other. But we implement it as an increasingly fundamental guiding principle across the company. The model is like that used in Open Source software development, where developers work in loosely organised networks to solve challenges. And it’s an approach makes perfect sense in a wider business context; after all, who’s better placed to understand how to improve the business and adapt to change than the people on the front line?
Here, the role of the manager changes. Rather than telling employees what they should work on, managers act as coach and guide their teams through their work. Their role is to ask those important ‘why’ questions to help employees stay on track. It’s an incredibly rewarding role and one that we know managers embrace once they’ve made the initial adjustment from linear management processes.
At Siemens, we’ve gone further and encouraged self-organised, bottom-up communities to flourish. These are entirely created and run by employees, with absolutely no functional management oversight. Indeed, they spring up in response to challenges that are often not even on managements’ radar and earn their legitimacy through their value-creation, purpose and passion of the employees that participate in them. There is no filtering process for the best initiatives, but it is evolutionary and the best will survive.
One such initiative is Grow2Glow (G2G). The aim of G2G at Siemens is to help women unlock their potential through coaching and find the inner strength to strike out for new horizons. The programme helps match trained coaches within the Siemens family with women who request coaching. Today, some 140 qualified coaches across all areas and disciplines respond to the needs throughout the company. The role of management in this success has been limited: all we’ve done is give the network the space it needed to grow.
I still rememeber the initial days when it was not mere than the initial idea of some engaged people, who wrer not beeing completely sure whether they’d be ‘allowed’ to start this at that time. Absolutely amazing what it has grown into in less than 2 years, globally.
Another great example of the power of self-guiding networks can be seen in the development of some of our most visible internal tools at Siemens. One of the tools was intended to be a simple way of showing employees our organisational structure. Traditionally, we would have briefed a group of designers to build it based on our specification. Instead we opened the project up to our employees and told them to create the solution they wanted. As a result, we now benefit from a far more user-centric AND feature-rich tool than everything we would have imagined. And it’s not finished: through our social page employees are still contributing new ideas to make the tool ever-more relevant and useful for them — at an amazing speed!
Unlearning the past
As professionals, we’re taught to be efficient. To work only on the jobs we’ve been tasked with. To play our roles as cogs in a well-defined machine. As managers our task was to program this ‘monolithic computer’ with best in class business processes. Ideally with business processes that treat people as anonymous resources rather than individuals. But this approach is no longer fit-for-purpose. Instead, as employees we must take ownership of our work and focus change and innovation on those areas where we know it needs to be focused. And as managers, we must give employees the space and freedom to innovate while providing coaching and support to ensure their innovations thrive. We must, in short, unlearn Tayloristic approaches and embrace flatter and more fluid organisational structures. This is not easy, especially for people who are long trained in such an environment. But the result will speak for itself: even more rewarding careers and better business outcomes.
By Robert Neuhauser, EVP and Global Head of Siemens People and Leadership
One of the challenges of agile is the word ‘agile’. Even now, the word puts some people off. They get, understandably, sceptical about the jargon, dismissing otherwise helpful insights as yet another digital fad.Meanwhile, other people end up embracing nothing but the jargon, without the substance underneath. They start standing up for their meetings and think this will deliver better outcomes for their customers or users.This is an important issue for digital transformation which, after all, is much more about transformation than it is about digital. i.e. good digital transformation is all about culture, and that means it relies on engaging people, communicating clearly on issues of substance, and persuading.
A. Boil it down to basic principles
So how do you do agile without the distraction of ‘agile’?One approach that can be helpful is to focus less on the word itself and more on two irreducible principles for how good products/services are designed.
You should always build solutions quickly and simply at first — just get something workable finished. Then, show it to your customers/users to see what they think, and change it enthusiastically in response.
These rules capture many of the upsides of agile without the jargon.They also have the nice property of being both right and revolutionary. They’re right in that, when you apply them well, they lead to better products and services. But they’re also revolutionary, in that they’re the opposite of how most traditional organisations function, so although they sound simple, applying them well is really, really hard.
B. History also helps
The second approach I find useful, as a way of avoiding an unproductive debate about agile terminology, is to bring in some of the history.If you can give a good account of why agile makes sense today, it helps you focus on the substance, and it also reassures people that the ideas aren’t a fad. To do this, you need to show that material things have changed in our economy and that these changes privilege more iterative/adaptable ways of working.So what has changed in the world to make agile methods more effective?My sense is that the answer to this question has two parts, both of which stem from technological changes that have taken place since c.1994.
First, the economics of service delivery have changed.
In the old, pre-digital world, organisations could typically reach thousands of people with one instance of their product or service, and updating these products or services was a costly and imprecise business.To change a product or service was expensive, requiring retooling, repainting, or relaunching. It was also highly imprecise — even after you made changes, you couldn’t be all that sure they had been worthwhile.In 2018, things are different. With digital technologies, even a small organisation can reach millions of people with a single instance of their product or service.Meanwhile, revisions are cheap and, with good analytics, instantly informative. You can tweak a few lines of code and test the new version live (perhaps even alongside the old version). You can then learn, instantly and with statistical rigour, if your changes have worked. (And, if they don’t, you can even revert to the old one.)This simple change in the economics of service delivery means that iterative methods, in which you build something quickly so that you can start changing it sooner, are much more economically attractive than they used to be.
Second, real-world testing now matters more than it used to.
We could leave it there. But I think it’s important not to overlook a second, subtler shift, which explains why real-world testing — and, therefore building a workable product/service as early as you can — now matters more than it used to.At root, this comes down to two mega-trends in our economy: the shift from hardware to software and the shift from an economy based on manufacturing to one based on services.If the archetypal outputs of the old economy were physical objects like cars, appliances, and clothing, the archetypal outputs of the new economy are digital services like search engines, social networks, and banking apps.This changes what you need to know in order to create valuable things.Let’s take the early days of industrialism as a starting point. It’s pretty clear that, right back at the start of the industrial age, knowledge of engineering was paramount over knowledge of user experience. Who cared if your loom/steam engine/high-speed steel was a pleasure to use? The value of innovation lay mainly in whether it worked.Later, in the age of mass-production, the balance shifted. If you’re making a mass-market consumer product, of course it still has to work in an engineering sense — but it also has to be gracefully designed. That’s why the 20th century was captured by the idea of combining form and function. And it’s why the iconic products of this era, from the Coca-cola bottle to the iPhone, are lauded for being both well-engineered and beautiful. They’re a delight to use.Today, the case for graceful, usable, beautifully-designed products/services — beyond those that are purely well-engineered — is surely more powerful than ever.Of course, that is not to say that engineering matters any less. The goal of all good products/services is still that holy grail: a fusion of form and function.But now, more than ever, you simply cannot get away with overlooking — even for a second — the design/user-testing side of things. The age in which you could occasionally get away with shoddy UX is dying, if it’s not dead already.Why? Again, for a really simple reason: because badly-designed digital services are literally worthless. They have no value whatsoever, in a way that isn’t quite true for a badly designed hammer or washing machine.In fact, badly designed digital services often actually destroy value. If you don’t believe me, just call O2’s voice-activated customer service line, as my partner did the other day. She phoned them with a query about her bill and, by the time she got through, she was so furious she cancelled her contract.
Agile without ‘agile’
To get the benefits of agile, then, it can be helpful to downplay the word in favor of underlying principles and reasoned arguments about why these methodologies and mindsets work.Two trends explain the need for more iterative/adaptable methods in service design. One is a change in the economics of product/service design. The other is a subtler shift in the kind of knowledge you need to build valuable things.Together, these trends explain why people who develop products/services today, whether in charities, government, or businesses, should focus more obsessively on user needs and should build workable stuff more quickly than they used to.Agile is not, in other words, a fad. It’s a new way of organising people to do good work, reflecting real changes in the way our economy functions.
Who knew George Washington was big on diversity? Or that Ben Franklin was all about agility? And that, save for his famous midnight ride, Paul Revere was an expert on teamwork?
Indeed, the traits and skills that helped build a nation nearly 250 years ago could also work pretty well running a modern-day organization. In honor of Independence Day, here are four of the most important lessons today’s leaders can take away from America’s Founding Fathers.
Respect for Diversity
George Washington’s leadership style was completely at odds with not only that of England’s but also much of the history of leadership up to that point. Instead of being hierarchal, Washington encouraged discussion and consideration of alternative approaches. He had to—his army consisted of a diverse mix of volunteers and militias with different traditions and backgrounds, primarily loyal to their own town, region, or colony. “Washington made that diversity an asset by actively seeking the advice of his subordinates,” says Signe Spencer, a senior consultant with Korn Ferry.
Ben Franklin’s capacity for learning is both well-known and unmatched. The scientist, philosopher, cartographer, postmaster, diplomat, and journalist spent his life acquiring knowledge. That ability to adapt to constantly-changing conditions is in demand at the highest levels of modern-day organizations, says Kevin Cashman, global leader of Korn Ferry’s CEO and Executive Development practice. “Franklin embodied the best of transformational leadership,” says Cashman.
Most know of Paul Revere only as the lone hero who rode a horse through the streets warning citizens that the British were coming. In fact, he was uniquely adept at uniting disparate and often competing groups around a common cause. Revere’s ride might never have been successful had he not first convinced several distinct Boston patriot groups, each with hundreds of influential citizens, to work together. “These groups all had their own focus and goals, with few connections and little or no formal communication between them,” says Spencer. “There was little overlap between them, and no overarching organization or command structure uniting them.” That is, until Revere took charge.
Many factors contributed to the victory over the British—and the creation of the US Constitution, for that matter—but none perhaps more important than how everyone rallied around a common purpose. The Founding Fathers and the new country’s citizens all firmly believed in independence and came together to achieve it. Today, employees, consumers, and investors are demanding that organizations stand for more than just profit. They want to work at and back companies and leaders who are committed to making a positive social contribution. If harnessed correctly, purpose creates the conditions for success.
Agility is catching fire, and there is growing recognition of its transformational benefits. But moving to an agile operating model is tough, especially for established companies. There are several paths to agility and many different starting points, yet successful agile transformations all share the common elements described in this paper.
Agile organizations are different. Traditional organizations are built around a static, siloed, structural hierarchy, whereas agile organizations are characterized as a network of teams operating in rapid learning and decision-making cycles. Traditional organizations place their governance bodies at their apex, and decision rights flow down the hierarchy; conversely, agile organizations instill a common purpose and use new data to give decision rights to the teams closest to the information. An agile organization can ideally combine velocity and adaptability with stability and efficiency.
Transforming to an agile operating model
Any enterprise-wide agile transformation needs to be both comprehensive and iterative. That is, it should be comprehensive in that it touches strategy, structure, people, process, and technology, and iterative in that not everything can be planned up front (Exhibit 1).
There are many different paths to enterprise agility. Some organizations are born agile—they use an agile operating model from the start. As for others, broadly put, we see three types of journeys to agile: All-in, which entails an organization-wide commitment to go agile and a series of waves of agile transformation; Step-wise, which involves a systematic and more discreet approach; and Emergent, which represents essentially a bottom-up approach.
Born-agile organizations are relatively common in the technology sector (for instance, Spotify or Riot Games1 ), with rare examples in other industries (Hilcorp, a North American oil and gas company, is a case in point). Most organizations must undergo a transformation to embrace enterprise agility. Such transformations vary in pace, scope, and approach, but all contain a set of common elements across two broad stages (Exhibit 2).
First, successful transformations start with an effort to aspire, design, and pilot the new agile operating model. These elements can occur in any order and often happen in parallel. Second, the impetus to scale and improve involves increasing the number of agile cells. However, this involves much more than simply rolling out more pilots. Organizations may iterate among these stages as they roll out agility across more and more of their component parts.
Aspire, design, and pilot
Most transformations start with building the top team’s understanding and aspirations, creating a blueprint to identify how agility will add value, and learning through agile pilots. These three elements inform one another and often overlap.
Successful agile transformations need strong and aligned leadership from the top. A compelling, commonly understood and jointly owned aspiration is critical for success.
The blueprint should, at first, be a minimum viable product developed in a fast-paced, iterative manner that gives enough direction for the organization to start testing the design.
Adopting an agile operating model can alleviate challenges in the current organization (such as unclear accountabilities, problematic interfaces, or slow decision making). Yet a desire to address pain points is not enough; there is a bigger prize. As one CEO observed, “I’d never have launched this agile transformation if I only wanted to remove pain points; we’re doing this because we need to fundamentally transform the company to compete in the future.” This aligns with McKinsey research showing that transformations emphasising both strengths and challenges are three times more likely to succeed.
To build the top team’s understanding and aspiration, nothing beats site visits to companies that have undergone an agile transformation. For example, the entire leadership team at a global telecommunications company contemplating an agile transformation invested a week to visit ING (a Dutch bank), TDC (a Danish telecommunications company), Spotify, Entel (a Chilean communications company), and others prior to launching an agile transformation.2
The blueprint for an agile operating model is much more than an organization chart and must provide a clear vision and design of how a new operating model might work (Exhibit 3). An agile transformation fundamentally changes the way work is done and, therefore, blueprinting also needs to identify changes to the people, processes, and technology elements of the operating model. The blueprint should, at first, be a minimum viable product developed in a fast-paced, iterative manner that gives enough direction for the organization to start testing the design.
The first step in blueprinting is to get clear on where the value lies. All operating-model design must be grounded in an understanding of how value is created in the industry and how the individual organization creates value. This fundamentally links to strategy.
Next comes structure. An agile organization doesn’t deliver work according to a classic organization chart; rather, it can be thought of as a series of cells (or “teams,” “squads,” or “pools”) grouped around common missions, often called “tribes.” The blueprinting element should produce a “tribe map” to illustrate how individuals that are grouped get work done, as well as a more recognizable organization chart to show the capability axis along which common skill sets are owned and managed (Exhibit 4).
Individual agile cells are defined by outcomes or missions rather than by input actions or capabilities. Teams performing different types of missions will likely use different agile models. However, three types of agile cells are most common. First, cross-functional teams deliver products, projects, or activities. These have the knowledge and skills within the team and should have a mission representing end-to-end delivery of the associated value stream. The “squads and tribes” model developed by Spotify and used by ING, among others, is one example. Second, self-managing teams deliver baseload activity and are relatively stable over time. These teams define the best way to set goals, prioritize activities, and focus effort. Lean-manufacturing teams or maintenance crews could be examples of this agile approach. Indeed, more broadly, lean-management tools and practices are highly complementary with enterprise agility. Third, flow-to-work pools of individuals are staffed full time to different tasks based on the priority of the need. Functional teams like HR or scarce resources like enterprise architects are often seen as “flow” resources.
One telecommunications company identified five major activities across their business and selected an agile approach for each: channel and delivery units (for example, stores) were organized as self-managing teams to increase local flexibility with joint accountability; segment ownership, product development, and enabling teams were organized in cross-functional squads and tribes; and centers of excellence for all other activities (including subject-matter experts and corporate support activities) combined flow-to-work and temporary cross-functional teams for specific tasks.Would you like to learn more about our Organization Practice?Visit our Enterprise Agility page
Working in teams may sound familiar, but at scale this requires change across the whole operating model to provide appropriate governance and coordination. The organizational backbone comprises the stable components of an agile operating model that are essential to enable agile teams. Typically, these backbone elements include core processes (for example, talent management, budgeting, planning, performance management, and risk), people elements (including a North Star,3 core values, and expected leadership behaviors), and technology components. In trying to scale up, many agile transformations fail by simply launching more agile teams without addressing these backbone elements.
The final step of blueprinting is to outline the implementation road map. This road map should contain, at minimum, a view on the overall scope and pace of the transformation, and the list (or “backlog”) of tasks.
The five steps of the blueprint form a coherent approach. A commercial insurer in North America used an agile blueprint to accelerate innovation of digital and business processes. It defined a chapter-based organization structure and created a new organization of product managers (who played product-owner roles in agile teams) to guide teams toward business outcomes. They defined a team structure mostly aligned to customer and internal user journeys, with dedicated teams to grow selected businesses. They created a stable planning and performance-management backbone, as well as a culture of risk taking, and they used an 18-month road map to create all the new positions, train personnel in the new roles, and implement the change in full.
Nothing convinces skeptical executives like teams of their own employees having verifiable impact through agile working. For example, one oil and gas company launched a series of agile pilots through which cross-functional teams managed to design wells in 50 to 75 percent less time than the historical average.
The purpose of a pilot is to demonstrate the value of agile ways of working through tangible business outcomes. Early experiments may be limited to individual teams, but most pilots involve multiple teams to test the broader elements of enterprise agility. Nothing convinces skeptical executives like teams of their own employees having verifiable impact through agile working. For example, one oil and gas company launched a series of agile pilots through which cross-functional teams managed to design wells in 50 to 75 percent less time than the historical average.
Initially, the scope of the agile pilot must be defined and the team set up with a practical end in view; this might include deciding on team staffing, structure, workspace, facilities, and resources. Next, the way the agile pilot will run must be outlined with respect to structure, process, and people; this is typically collated in a playbook that forms the basis for communications with those in the pilot.
Scale and improve
Agile transformations acknowledge that not everything can be known and planned for, and that the best way to implement is to adjust as you go.
Scaling beyond a few pilots is no small feat; this is where most agile transformations fail. It requires recognition from leadership that scale-up will require an iterative mind-set: learning is rapidly incorporated in the scale-up plan. In this, enough time is required—a significant portion of key leaders’ time—as well as willingness to role model new mind-sets and behaviors. Agile transformations acknowledge that not everything can be known and planned for, and that the best way to implement is to adjust as you go. For example, a leading European bank first deployed four “frontrunner” tribes to test the blueprint in action and adapted important elements of the blueprint across the delivery enterprise. Such an iterative rollout approach enables continuous refinement based on constant feedback and capability building for key roles across the organization, including agile coaches, product owners, scrum masters, and leadership.
Agile cell deployment and support
Agile scale-up first and foremost requires standing up more agile cells. However, an organization can’t pilot its way to enterprise agility. The transformation should match the organizational cadence, context, and aspiration. But at some point, it is necessary to leap toward the new agile operating model, ways of working, and culture. For large organizations, this need not be a day one for the entirety but will likely progress through a series of waves.
Many chose to start by transforming their headquarters and product-development organizations before touching frontline, customer-facing units (call centers, stores, or manufacturing facilities). It is possible to transform one factory or one end-to-end customer journey at a time, but highly interconnected functions in the headquarters may need an All-in transition approach.
The size and scope of waves depend on the context and aspiration. For example, a large Eastern European bank designed waves of nine months, where the diagnostic, design, and selection for 10 tribes, 150 squads, and 1,500 roles were performed in the first three months and then deployed over a six-month period, launching a new tribe every two weeks. Furthermore, the scale-up effort was a top priority for C-suite executives, which dedicated more than 10 percent of their time to the transformation.
Resources to support new agile cells—for example, availability of agile coaches or appropriate workspace—can often limit the speed of scale-up. Failure to address the support of new agile cells can cause friction and delay in the transformation.
Reflecting on its agile experience before scaling up, one executive observed: “Most of our agile pilots are working despite, rather than supported by, our broader organizational ‘wiring’ [processes, systems, and even beliefs and values] that forms what we call the backbone of an organization.” The backbone governs how decisions get made; how people, budgets, and capital get deployed; and how risk gets managed. Taking an organization to an agile operating model requires that this backbone be transformed (Exhibit 5).
Successfully scaling an agile operating model requires new skills, behaviors, and mind-sets across the organization. This is vitally important and constitutes an intensive phase of an agile transformation. Most organizations require existing staff to take on these new roles or responsibilities, and as such, need a way to build new skills and capabilities. Specifically, any successful agile transformation will invariably create a capability accelerator to retrain and reorganize staff, make the agile idea common to all, and develop the right skills across the organization.
A typical capability journey may well have distinct phases. First, organizations need to identify the number of trainers (agile coaches) required, and then hire and develop them; a failure to do so can cause delay and blockage when the agile transformation extends across the whole organization. Second, as part of building capabilities, the organization must define the new agile roles (agile coaches, product owners, tribe leads, chapter leads, and product owners, for example), along with a clear idea of what success looks like in each role. Third, learning and career paths should be set for all staff, making clear the opportunities that the agile transformation opens up. Fourth, the organization needs to enable continuous learning and improvement across the organization (this will entail a large-scale digital and communications program). Finally, it’s necessary to design and run a whole-organization effort to raise agile skills (often by means of intensive boot camps) and ensure that new staff are onboarded appropriately. Larger organizations often set up an academy to consolidate and formalize these functions.
The importance of investing in culture and change on the journey to agility cannot be overstated. Agile is, above all, a mind-set. Without the right mind-set, all other parts of the agile operating system can be in place, and yet companies will see few benefits.
Focusing on culture and the change team
A culture and change team is an essential coordinating element of an agile transformation. But it is not a traditional project-management office; rather, the emphasis should be on enabling the other transformation elements, helping to remove impediments and catalyzing culture change.
As an example, Roche, a global healthcare company, launched a global leadership initiative as a central component of its transformation to become a more agile enterprise. It designed a four-day program with a combined focus on personal and organizational transformation. More than 4,000 leaders have now been touched by the effort, helping to shift the collective consciousness and capabilities for leaders to deliver the change.
The importance of investing in culture and change on the journey to agility cannot be overstated. Agile is, above all, a mind-set. Without the right mind-set, all other parts of the agile operating system can be in place, and yet companies will see few benefits. In contrast, when leaders and teams have a strong agile mind-set, then a clear aspiration alone is often enough for a successful agile operating model to emerge.
Understanding transformation archetypes
All successful enterprise-wide agile transformations include the elements described above, but there are several different ways in which the elements can be combined and sequenced. As introduced earlier, there are three major transformation archetypes:
Step-wise. Transforming to an agile organization often feels like a step into the dark for senior leaders. Perhaps understandably, then, the most common transformation archetype shows a clear distinction between the aspire, design, and pilot phase and the scale and improve phase. Many companies will run multiple rounds of pilots and iterate their blueprint several times before fully committing to scaling up across a large part of the organization. It is not uncommon for this process to take one to two years, as leaders and the organization build familiarity with agility and prove to themselves that agile ways of working can bring value in their organization. Organizations may well go through several subsequent rounds of aspire, design, and pilot before scaling up elsewhere.
All-in. Although less common, an increasing number of organizations gain strong conviction early on and fully commit up front to move the whole organization to an agile model. Leaders from these organizations define a plan to execute all steps of the transformation approach as quickly as possible. Even in these types of transformation it is rare for the whole organization to transform to an agile model in a single “big bang”; rather, it is more common for the transformation to proceed through a number of planned waves.
Emergent. It is impossible—and not very agile—to plan out an agile transformation in detail from the start. Instead, most agile transformations have emergent elements. Some organizations have chosen to progress their entire agile transformation through an emergent, bottom-up approach. In this archetype, an aspiration from top leaders sets a clear direction, and significant effort is spent building agile mind-sets and capabilities among leaders.
“It’s like this,” one CEO explained. “We are 3,000 people on a giant cruise ship. But what we need to be is 3,000 people in a few hundred yachts. So, how do I get my people safely into those smaller boats?” As is increasingly common, the discussion had moved from if an agile operating model was applicable to how leaders could help their organization transform. Navigating an organization to an agile operating model is not easy. The elements of an agile transformation described in this article provide a guide.
Digital is driving major changes in how companies set and execute strategy. New survey results point to four elements that top performers include in their digital-strategy operating model.
For many companies, the process of building and executing strategy in the digital age seems to generate more questions than answers. Despite digital’s dramatic effects on global business—the disruptions that have upended industries and the radically increasing speed at which business is done—the latest McKinsey Global Survey on the topic suggests that companies are making little progress in their efforts to digitalize the business model.
The online survey was in the field from May 15 to May 25, 2018, and garnered responses from 1,542 C-level executives and senior managers representing the full range of regions, industries, company sizes, and functional specialties. Respondents who participated in this year’s and last year’s surveys report a roughly equal degree of digitalization as they did one year ago.
As measured by the shares of the organization’s sales from products, services, or both sold through digital channels; of core products, services, or both that are digital in nature (for instance, virtualized or digitally enhanced); and of core operations that are automated, digitized, or both, as well as the volume in the organization’s supply chain that is digitized or moves through digital interactions with suppliers.
The previous survey was in the field from June 20 to July 10, 2017, and garnered responses from 1,619 C-level executives and senior managers representing the full range of regions, industries, company sizes, and functional specialties. Of those who completed the survey in 2017, 345 also completed the 2018 survey. suggesting that companies are getting stuck in their efforts to digitally transform their business.
The need for an agile digital strategy is clear, yet it eludes many—and there are plenty of pitfalls that we know result in failure. We have looked at how some companies are reinventing themselves in response to digital, not only to avoid failure but also to thrive. In this survey, we explored which specific practices organizations must have in place to shape a winning strategy for digital—in essence, what the operating model looks like for a successful digital strategy of reinvention. Based on the responses, there are four areas of marked difference in how companies with the best economic performance approach digital strategy.
We define a top economic performer as one that has, according to respondents, a top-decile rate of organic revenue growth (that is, of 25 percent or more in the past three years), relative to other respondents. We also looked at respondents in the top decile for growth in earnings before interest and taxes (EBIT) and have made note of any practices for which the top-decile revenue and top-decile EBIT results correspond or differ. compared with all others:
The best performers have increased the agility of their digital-strategy practices, which enables first-mover opportunities.
They have taken advantage of digital platforms to access broader ecosystems and to innovate new digital products and business models.
They have used M&A to build new digital capabilities and digital businesses.
They have invested ahead of their peers in digital talent.
Increase the agility of creating, executing, and adjusting strategy
One of the biggest factors that differentiate the top economic performers from others is how quick and adaptable they are in setting, executing, and adjusting their digital strategies—in other words, the velocity and adaptability of their operating models for digital strategy. Both are necessary for companies to achieve first-mover (or very-fast-follower) status, which we know to be a source of significant economic advantage.
So how do they do it? We looked at the frequency with which companies follow 11 operational practices of digital strategy. With the exception of M&A—which typically requires a much longer time frame than the other ten, often due to regulatory reasons—respondents in the top revenue decile say their companies carry out each one more frequently than their peers (Exhibit 1). The link between frequency and performance also holds up when looking at earnings before interest and taxes (EBIT).5 5.In our analysis, we looked at the relationship between frequency and economic performance in multiple ways. The results indicate that when these digital strategy practices are carried out more frequently, revenue and earnings before interest and taxes (EBIT) are greater. The inverse also is true: when companies carry out these practices more slowly, their revenue and EBIT performance is worse. Exhibit 1
That speed in strategy links with financial outperformance is not surprising and is consistent with our other work on strategy planning. As the pace of digital-related changes continues to accelerate, companies are required to make larger bets and to reallocate capital and people more quickly. These tactical changes to the creation, execution, and continuous modification of digital strategy enables companies to apply a “fail fast” mentality and become better at both spotting emerging opportunities and cutting their losses in obsolescent ones, which enables greater profitability and higher revenue growth.
Invest in ecosystems, digital products, and operating models
The companies that outperform on revenue and EBIT also differ from the rest in their embrace of the economic changes that digital technologies have wrought. Based on the results, they have done so in three specific ways: taking advantage of new digital ecosystems, focusing product-development efforts on brand-new digital offerings, and innovating the business model. We know that digital platforms have enabled the creation of new marketplaces, the sharing of data, and the benefits of network effects at a scale that was impossible just a few years ago. As these factors have converged, the digital ecosystems created by these platforms are blurring industry boundaries and changing the ways that companies evaluate the economics of their business models, their customers’ needs, and who their competitors—and partners—are.
The top EBIT performers are taking better advantage of these ecosystem-based dynamics than other companies—namely, by using digital platforms much more often to access new partners and customers. Respondents at these companies are 39 percent more likely than others are to say they do so. And while the share of global sales that move through these ecosystems is still less than 10 percent, other McKinsey research predicts that this share will grow to nearly 30 percent by 2025, making platforms an ever more critical element of digital strategy. The needs of customers become broader and more integrated in an ecosystem-based world, and the companies that are already active in their respective ecosystems are better positioned to understand these needs and meet them (either on their own or with partners) before their peers do. It makes sense, then, that the top performers seem to be developing much more innovative offerings than their peers.
On average, companies’ digital innovations most often involve adjustments to existing products. Yet respondents at the top-performing companies say they focus on creating brand-new digital offerings (Exhibit 2). What’s more, these respondents are about 60 percent more likely than others are to agree that they are more advanced than peers in adopting digital technologies to help them do so. This result is consistent with our previous findings that first movers and early adopters of digital technologies and innovations also outperform their peers. Exhibit 2
Last, innovation of the business model is more common at the top-performing companies. In our past survey, only 8 percent of respondents said their companies’ current business models would remain economically viable without making any further digital-based changes. In the newest survey, we see that the companies that have embraced digital are well ahead of their peers in their preparation for digital’s new economic realities. At the top performers, respondents say they have invested more of their digital capital in new digital businesses, compared with all other respondents (Exhibit 3).
Our research also shows that companies overall invested a greater share in new digital businesses as the overall digital maturity of their sectors increased. The more successful companies appear to be the ones that made these moves earlier than their peers, rather than being forced into making such investments late in the game.Exhibit 3
Use M&A to build digital capabilities and businesses
According to the results, M&A is another differentiator between the top-performing companies and everyone else. Not only are they spending more than others on M&A, but they are also investing in different types of M&A activities (Exhibit 4). At the winners, respondents report spending more than twice as much on M&A, as a share of annual revenue, as their counterparts elsewhere.
Includes only respondents working at privately owned companies, n = 767. Respondents working at publicly owned companies (n = 318) were asked how much their organizations invested in M&A as a percentage of market capitalization over the past three years. The same is true of respondents reporting top-decile EBIT growth, relative to respondents at other organizations. Exhibit 4
Given the pace of digital-related changes and the challenges companies face to match that speed through organic growth alone, this isn’t so surprising. What is surprising, however, is that top economic performers take a different approach to their M&A activities. While top performers and their peers have used some part of their overall digital investments to acquire new digital businesses in recent years, the top performers are investing more in acquiring both new digital businesses and new capabilities. By contrast, other respondents say their companies focus most of their M&A spending on nondigital ventures—an area where lower-performing companies seem to be doubling down.
Invest ahead of peers in digital talent
From earlier work, we know that getting the right digital talent is a key enabler for digital success—a point that our latest findings only reinforce. Talent is also a major pain point: qualified digital talent is a scarce commodity, as the pace of digital still outstrips the supply of people who can deliver it. But the top economic performers are making a greater effort to solve this problem. Compared with others, these respondents say their companies are dedicating much more of their workforce to digital initiatives (Exhibit 5).
It’s not just the degree of investment that distinguishes top performers, though. They are also much nimbler in their use of digital talent, reallocating these employees across the organization nearly twice as frequently as their peers do. This agility enables more rapid movement of resources to the highest-value digital efforts—or to clearing out a backlog of digital work—and a better alignment between resources and strategies.
Make your strategy process more dynamic. By definition, a digital strategy must adapt to the digital-driven changes happening outside the company, as well as within it. Given the breakneck pace of these changes, such a strategy must keep up with the pace of digital and enable first-mover opportunities by being revisited, iterated upon, and adjusted much more frequently than strategies have been in the past. Companies need their digital strategies to act as a road map for ongoing transformation—a living organism that evolves along with the business landscape. In other work, we laid out the four main fights that companies must win to build truly dynamic digital strategies.
Organizations must educate their business leaders on digital and foster an attacker’s perspective, so people are more likely to look at their business, industry, and the role of digital through the eyes of new competitors. They must galvanize senior executives to action by building top-team-effectiveness programs. Organizations also must leverage data-driven insights to test and learn—and correct course—quickly. And they must fight the diffusion of their efforts and resources—a constant challenge, given the simultaneous need to digitalize their core business and innovate with new business models. These steps will put companies in a better position to move first in delivering new products and meeting customers’ and partners’ evolving needs in the new ecosystems that platforms are creating.
Invest in talent and capabilities early and aggressively. Talent is already known as one of the hardest issues to solve as companies transform themselves in their pursuit of digitalization. The results confirm that companies need to embrace this reality and then look at how they can solve it best, whether through smarter, more dynamic allocation of these resources or the use of M&A to accelerate the building of new digital capabilities. Digital is driving an ever-faster pace of innovation, and companies can take advantage of the potential benefits only if they have the capabilities to harness it. For the survey’s top performers, one way forward is leveraging M&A to help build their digital capabilities, rather than trying to build them through a slower, organic approach. These companies are also getting the most from their digital capabilities and investments by deploying them in much more agile ways and creating a more flexible, responsive operating model.
Redefine how you measure success. The digital era requires that companies move nimbly in order to succeed. Yet many are still measuring performance with the same metrics they used previously—which were designed for a slower pace of business and a rigid strategy-setting process. Companies must move away from old metrics (market share, for example) that are no longer meaningful indicators of economic success. With markets becoming ill-defined due to shifts in industry boundaries and shrinking economic pies within a given sector, market share is no longer a gold-standard metric or even relevant. Companies need to hold themselves to new standards that will indicate whether or not they are truly leading the pack on innovation, productivity, and the adoption of digital technologies. In our experience, outcomes such as being first to market with innovations, leading on productivity, and working with other businesses in the ecosystem (that is, moving from an “us versus them” mind-set on digital to one of partnership) are better indicators of future digital success.
About the author(s)
The survey content and analysis were developed by Jacques Bughin, a director of the McKinsey Global Institute and senior partner in McKinsey’s Brussels office; Tanguy Catlin, a senior partner in the Boston office; and Laura LaBerge, a senior expert in the Stamford office.
They wish to thank Soyoko Umeno for her contributions to this work.MeasureMeasure