Embracing Agile3 May, 2016 / Articles
Agile innovation methods have revolutionized information technology. Over the past 25 to 30 years they have greatly increased success rates in software development, improved quality and speed to market, and boosted the motivation and productivity of IT teams.
Now agile methodologies—which involve new values, principles, practices, and benefits and are a radical alternative to command-and-control-style management—are spreading across a broad range of industries and functions and even into the C-suite. National Public Radio employs agile methods to create new programming. John Deere uses them to develop new machines, and Saab to produce new fighter jets. Intronis, a leader in cloud backup services, uses them in marketing. C.H. Robinson, a global third-party logistics provider, applies them in human resources. Mission Bell Winery uses them for everything from wine production to warehousing to running its senior leadership group. And GE relies on them to speed a much-publicized transition from 20th-century conglomerate to 21st-century “digital industrial company.” By taking people out of their functional silos and putting them in self-managed and customer-focused multidisciplinary teams, the agile approach is not only accelerating profitable growth but also helping to create a new generation of skilled general managers.
The spread of agile raises intriguing possibilities. What if a company could achieve positive returns with 50% more of its new-product introductions? What if marketing programs could generate 40% more customer inquiries? What if human resources could recruit 60% more of its highest-priority targets? What if twice as many workers were emotionally engaged in their jobs? Agile has brought these levels of improvement to IT. The opportunity in other parts of the company is substantial.
But a serious impediment exists. When we ask executives what they know about agile, the response is usually an uneasy smile and a quip such as “Just enough to be dangerous.” They may throw around agile-related terms (“sprints,” “time boxes”) and claim that their companies are becoming more and more nimble. But because they haven’t gone through training, they don’t really understand the approach. Consequently, they unwittingly continue to manage in ways that run counter to agile principles and practices, undermining the effectiveness of agile teams in units that report to them.
These executives launch countless initiatives with urgent deadlines rather than assign the highest priority to two or three. They spread themselves and their best people across too many projects. They schedule frequent meetings with members of agile teams, forcing them to skip working sessions or send substitutes. Many of them become overly involved in the work of individual teams. They talk more than listen. They promote marginal ideas that a team has previously considered and back-burnered. They routinely overturn team decisions and add review layers and controls to ensure that mistakes aren’t repeated. With the best of intentions, they erode the benefits that agile innovation can deliver.
Innovation is what agile is all about. Although the method is less useful in routine operations and processes, these days most companies operate in highly dynamic environments. They need not just new products and services but also innovation in functional processes, particularly given the rapid spread of new software tools. Companies that create an environment in which agile flourishes find that teams can churn out innovations faster in both those categories.
From our work advising and studying such companies, we have discerned six crucial practices that leaders should adopt if they want to capitalize on agile’s potential.
- Learn How Agile Really Works
Some executives seem to associate agile with anarchy (everybody does what he or she wants to), whereas others take it to mean “doing what I say, only faster.” But agile is neither. (See the sidebar “Agile Values and Principles.”) It comes in several varieties, which have much in common but emphasize slightly different things. They include scrum, which emphasizes creative and adaptive teamwork in solving complex problems; lean development, which focuses on the continual elimination of waste; and kanban, which concentrates on reducing lead times and the amount of work in process. One of us (Jeff Sutherland) helped develop the scrum methodology and was inspired to do so in part by “The New New Product Development Game,” a 1986 HBR article coauthored by another of us (Hirotaka Takeuchi). Because scrum and its derivatives are employed at least five times as often as the other techniques, we will use its methodologies to illustrate agile practices.
The fundamentals of scrum are relatively simple. To tackle an opportunity, the organization forms and empowers a small team, usually three to nine people, most of whom are assigned full-time. The team is cross-functional and includes all the skills necessary to complete its tasks. It manages itself and is strictly accountable for every aspect of the work.
The team’s “initiative owner” (also known as a product owner) is ultimately responsible for delivering value to customers (including internal customers and future users) and to the business. The person in this role usually comes from a business function and divides his or her time between working with the team and coordinating with key stakeholders: customers, senior executives, and business managers. The initiative owner may use a technique such as design thinking or crowdsourcing to build a comprehensive “portfolio backlog” of promising opportunities. Then he or she continually and ruthlessly rank-orders that list according to the latest estimates of value to internal or external customers and to the company.
The initiative owner doesn’t tell the team who should do what or how long tasks will take. Rather, the team creates a simple road map and plans in detail only those activities that won’t change before execution. Its members break the highest-ranked tasks into small modules, decide how much work the team will take on and how to accomplish it, develop a clear definition of “done,” and then start building working versions of the product in short cycles (less than a month) known as sprints. A process facilitator (often a trained scrum master) guides the process. This person protects the team from distractions and helps it put its collective intelligence to work.
The process is transparent to everyone. Team members hold brief daily “stand-up” meetings to review progress and identify roadblocks. They resolve disagreements through experimentation and feedback rather than endless debates or appeals to authority. They test small working prototypes of part or all of the offering with a few customers for short periods of time. If customers get excited, a prototype may be released immediately, even if some senior executive isn’t a fan, or others think it needs more bells and whistles. The team then brainstorms ways to improve future cycles and prepares to attack the next top priority.
Compared with traditional management approaches, agile offers a number of major benefits, all of which have been studied and documented. It increases team productivity and employee satisfaction. It minimizes the waste inherent in redundant meetings, repetitive planning, excessive documentation, quality defects, and low-value product features. By improving visibility and continually adapting to customers’ changing priorities, agile improves customer engagement and satisfaction, brings the most valuable products and features to market faster and more predictably, and reduces risk. By engaging team members from multiple disciplines as collaborative peers, it broadens organizational experience and builds mutual trust and respect. Finally, by dramatically reducing the time squandered on micromanaging functional projects, it allows senior managers to devote themselves more fully to higher-value work that only they can do: creating and adjusting the corporate vision; prioritizing strategic initiatives; simplifying and focusing work; assigning the right people to tasks; increasing cross-functional collaboration; and removing impediments to progress.
- Understand Where Agile Does or Does Not Work
Agile is not a panacea. It is most effective and easiest to implement under conditions commonly found in software innovation: The problem to be solved is complex; solutions are initially unknown, and product requirements will most likely change; the work can be modularized; close collaboration with end users (and rapid feedback from them) is feasible; and creative teams will typically outperform command-and-control groups.
In our experience, these conditions exist for many product development functions, marketing projects, strategic-planning activities, supply-chain challenges, and resource allocation decisions. They are less common in routine operations such as plant maintenance, purchasing, sales calls, and accounting. And because agile requires training, behaviorial change, and often new information technologies, executives must decide whether the anticipated payoffs will justify the effort and expense of a transition.
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