Changing the way we change: Applying Lean & Agile Principles to Corporate Transformations
We live in a time of massive disruption. To respond to that disruption we need to not only change the products and services we build and how we build them, we also need to change the way we change. We need a new approach to corporate transformation.
We have all seen the data showing how fast market incumbents lose their position relative to the good old slow days, and how many of the current crop of leading companies will still be around in the next decades (spoiler: it’s not going be pretty). We see it in the headlines on a daily basis; Toys R Us is only the latest once dominant retail giant to fall, arguably at the hands of e-commerce trends and Amazon in particular.
One take away from that is fairly straightforward. Change or die. There is no alternative.
On the product side, the need to innovate and build better faster has led to the emergence of Design Thinking, Lean Startup, and Agile Development to change how we consider what we build and how we build it. Companies can use a powerful set of principles that form the backbone of these methodologies to build portfolios of products and services that are closer to customer needs.
Changing the mix of individual products and services we deliver while critical, is not enough if we intend to truly and holistically transform our companies so they are ready for the inevitable disruption ahead of them. What is the value of building product team capacity to quickly validate a customer need by running small targeted experiments, if the finance department is still demanding a 10-year P&L before any development work can begin? So we need to think more broadly, but attempts at large scale transformations are notoriously painful and frequently fail. A McKinsey survey from 2013 found that 70% of transformation programs failed to achieve their intended goal for a variety of reasons ranging from culture to process to finance. More recently the news for digital focused transformations was even worse with 84% failing according to Michael Gail and the Pulsepoint Group.
What is emerging in our work at Spinnaker is an understanding that we can apply the same principles used to manage our approach to building products, to manage our approach to driving enterprise-wide transformation.
To be successful, companies need to establish a culture that recognizes that change is inevitable; that it is simply part of the fabric of every company. That inevitability is already clear when it relates to consumer expectations of technology, but it applies as much if not more to a multi-year program of change. The landscape companies will have to accommodate in 3–5 years, the typical length of a large scale transformation program, is going to be substantially different than it is today. If we go in with this mindset we can avoid the trap of our transformation approach being almost immediately out of date.
Just as we define our metrics of success for Lean Startup experiments or Agile sprints we need to do the same with transformations. We have to avoid transformation for transformation sake. Let’s stop moving the deckchairs on the Titanic and calling it a new operating model. Instead, let’s be clear about what business goals we are trying to achieve and use clear and simple metrics to tell us if any specific component of the transformation initiative is actually having an impact or not.
Rolling out a transformation program across the entire company simultaneously is a recipe for disaster. Roger’s adoption curve approach to finding early customers ready to embrace and support change is crucial here. We look for parts of the company that are experiencing the target problem, that know they are suffering and have started to take action to resolve it. If we can’t find a part of the company that fits this category then this likely isn’t a problem that needs to be fixed.
Run small-scale pilots
Once we have an early adopter identified we are self-conscious about rolling out the change approach as an experiment. Our goal is to get the maximum amount of learnings while doing the least amount of transformation work. Any of you familiar with the MVP concept will recognize this approach. We are using pilot programs to experiment with Minimum Viable Transformations.
Embrace failures and apply learnings
Very few plans in a corporate setting go smoothly. For wide-scale transformations involving thousands of people and many many months of work, it is almost inevitable there will be bumps in the road. Just as the disciples at the church of Lean Startup (guilty as charged) will preach the value of embracing failures for product experiments as long as they happen quickly and we apply their learnings, the same applies to transformations. We don’t need to wait until the full program is delivered and rolled out to analyze what is working and what isn’t. We don’t need to be seen as personal or corporate failures if we are reviewing a small experiment that didn’t work well. If we wait 36 months after investing millions of dollars on a new program until we find out that the entire program was a failure, then heads should indeed roll.
Scale when you have traction
Lastly, let’s again follow the rollout approach for successful products. We have run pilots for a specific component of the transformation with early adopters and learned valuable lessons along the way about what works and doesn’t work in the context of the transformation initiative. Only once we have evidence of traction and the capacity to deliver value that aligns with our broader business goals, only then do we roll it out formally as a wide scale initiative.
Find out more about our work at Spinnaker and read more about the challenges and objections to Enterprise-wide Lean Transformations in The Case for Change, my upcoming book with Sonja Kresojevic in the Sense and Respond Press book series.