The Apocalypse of Cloud-Native Is Already Here… And Your Agile Transformation Will Not Save You

I originally posted this on LinkedIn in February 2017 and wanted to share this with my Medium readers.

Over the last eighteen months, I’ve been co-writing a book on the future of large companies and their pathway to reinvention in the age of cloud-native computing. The book is a candid examination of how agile adoption has distracted large companies from their single biggest opportunity and threat in the last thirty years — the paradigm shift to cloud-native computing and the exponential organizational models under which modern digital platform companies operate.

This article is about what we’ve learned from countless hours spent meeting with, listening to, and observing the work of individual contributors, managers, and executives working inside traditional firms as well as the early pioneers of cloud-native business models. This research points to an inescapable truth: agile transformation in traditional enterprise companies is complete nonsense. Don’t believe the hype or the survey data. Everyone is deceiving themselves, including the leaders of these companies, and particularly the agile cottage industry of consultants and tool makers.

Agile transformation hasn’t happened. All the talk, all the conferences, all the local meetup groups, the tweets, all the lists of agile leaders — it’s all hand waving; virtually none of it is real.

And, sadly, nothing has changed.

Companies are delivering virtually the same services they did in 1985, just with websites and customer portals (including web and mobile) instead of brick and mortar storefronts. Too many people are claiming that agile transformation is happening, when in reality, all companies are really doing is applying local, tactical, and incremental improvements to their legacy life-cycle approach to building digital platforms and solutions.

It’s improvement for sure. Less time between software releases, less waste in the process. But it’s not transformation, a word even more abused than innovation.

The Sober Truth, Your Agile Transformation is the Wrong Focus

Here’s what transformation should be focused on instead: Helping ALL your CxOs (CEO, CIO, CFO, COO, and CMO) understand, I MEAN REALLY UNDERSTAND, what cloud-native computing is really all about.

The business implications for future growth and new competitive threats are extraordinary. Cloud Native is NOT about hosting your apps in the cloud to save money. It’s not even about agile process frameworks like Scrum, Kanban, or SAFe. It’s a radical deconstruction of your business both organizationally and digitally into small functional building blocks that can be programmatically composed and infinitely recombined — not only with your own building blocks, but with literally millions of other third-party services as well. The result? The ability to authentically experiment, innovate, and create new digital products, services, and customer experiences in hours and days with — and here’s the kicker — one-tenth the digital workforce you operate with today.

An example of this kind of exponential organization is Monzo, a dynamic new company that has built a globally scalable banking platform in months, not years, and with 10% of the staff typical of traditional Enterprise.

In one of Monzo’s recent engineering blog posts, you can see how differently they think, organize, and execute with cloud-native architecture and open source frameworks.

Start owning up to the truth about sunk cost

Your fragile digital platforms built on the 1990s’ paradigm of client-server computing need to be flushed.

There I said it. Yep, your CFO will howl, your CEO will roll his eyes, and your board will question why you’ve spent billions over the last three decades only to suggest we need even more money to transform these systems from fragile monoliths (a fancy term for the way your software teams have been building software since 1990) to microservices and serverless computing (a new way of building software that looks more like interchangeable Lego blocks).

Guess what? Your CFO and CEO are going to howl either way. You can either step up to the plate and move your company to a strategic sustainable future, or you can opt for the incremental benefits of tactical agile and lean improvements only to find that cloud-native competitors are taking increasing market share away from your company.

By the way, there is very good news here: With the right strategy and leadership, you can harvest your cloud-native building blocks (something called microservices) from your existing software monolith platforms to avoid starting over. More importantly with the right analytics you can fund your transition to the future from the assets you already have.

With the right strategy and analytics, you can fund your transition to a cloud-native future from the software assets you already have

Spoiler alert: There are many technical and organizational reasons why monoliths are easier and less risky to operate than cloud-native microservices. Beware, however, of those suggesting that because microservices are harder and require more sophisticated infrastructure they should be reserved only for your newest and most strategic digital initiatives. This is the same logic used by companies to kick down the road nearly every other can that represents a disruption to long-standing routines.

Click here for an explanation of microservices that even your six year old can understand.

Ditch Agile scaling frameworks (SAFe, DAD, etc.) and replace them with Cloud-Native platforms and T-Shaped digital service teams

The current fad of scaling up agile across large numbers of teams by employing complex process coordination frameworks is nonsense. Yes, they do provide marginal relief to companies saddled with tightly-coupled monolithic software platforms. But this approach to scaling agility is the equivalent of giving someone Demerol when they suffer from an abscessed tooth. Sure, we can mask the pain, but we’ve done nothing to cure the patient.

If your goal is authentic, systemic company wide agility, then avoid use of elaborate Agile scaling frameworks

Companies should be pursuing what I call an “opposite” strategy that involves scaling down, not up. By making cloud-native your target state, you create a pathway to realizing this goal. Doing so results in displacing monoliths with more atomic, composable building blocks. It is this new digital DNA that unleashes freedom and autonomy and blows up dependencies between teams. Ask yourself this question: If monoliths and tight coupling between teams were such a good thing, why are today’s cloud-native leaders (Amazon, Google, Netflix, Zalando, etc.) doing everything they can to avoid working this way? They’ve learned that when you enable teams to work autonomously and asynchronously, they out-produce, out-innovate, and outmaneuver their competitors.

For these reasons, I urge you to avoid continuing any transformation effort that is not built on a strategy to scale down (not up) to small, T-Shaped, cross-disciplinary teams comprised of business, strategy, design, and engineering/ops professional’s. Each of these teams will own a complete business service, product, or capability (with economic, market, technical, and operational responsibility) supported by cloud-native compute platforms (Microservices, Container Orchestration like Kubernetes, Docker Containers and Serverless Architecture). This means avoiding reliance on scaling frameworks that are optimized around coordination, planning, and synchronization as a means by which to manage the dependencies between teams.

Scaling agility is NOT a process problem, it’s a problem of tight coupling and dependencies between teams.

Check out this 12 minute video on how Zalando used cloud-native API’s and microservices to free teams from the tyranny of tight coupling and provide the autonomy and scaled agility no process framework could ever match.

Replace dysfunctional command and control management with a modern agile management system

While we’re tackling the limitations of fragile monoliths, we need to also slay the dragon of hierarchy. Despite the protests of many in the agile community, hierarchies actually have value — the problem is we’ve been using them for the wrong things. So rather than kill the hierarchy, we should narrow and refocus the hierarchy on those few things it does really well — namely, establishing mission, communicating company wide goals, and dynamically allocating resources based on market performance. All other decision-making should be pushed to local full-stack digital teams.

So how do we distribute authority and decision-making that accelerates corporate performance while also advancing authentic agility and organizational speed? The good news is that Andy Grove, while at Intel, invented the ideal agile performance and distributed-management system for companies. Remarkably, large traditional companies have almost never heard of this replacement for command and control management. Its name? Three simple letters: OKRs, which stands for Objectives and Key Results. One heads-up though: Most companies implementing OKRs are doing so poorly. Forget how Google uses OKRs. You’re not Google. The secret to how OKRs work best in large traditional firms is to mobilize them with natural teaming and network structures. We devote two chapters in our upcoming book to why this approach works so well. I’ll also be writing about this approach in upcoming article — stay tuned.

If you want to learn more about the success companies are having with OKRs check out this video by Ben Ross of MYOB, one of world’s leading accounting software companies. In this video, Ross describes how MYOB is transforming a legacy software company into a modern agile enterprise by employing OKRs to push out decision-making and autonomy to teams — while simultaneously increasing corporate performance and alignment.

Unleash hyper productivity with ruthless automation — with one important catch

Automate your digital product development ecosystem everywhere, but here’s the catch: You must simultaneously and ruthlessly strip out the fragile digital infrastructure built up over the last twenty years. This means rescuing high-value services and functions from your current monoliths and recombining these services in a cloud infrastructure built for a serverless world. Will you do this in one fell swoop? Of course not. But the nonsense of bimodal IT (a really bad idea from our experts at Gartner) is not your friend. Bimodal is the equivalent of New York City taxis’ trying to build an app for you to hail a cab. Do you really think that a bimodal taxi system has any hope of slowing Uber? Not gonna happen. You’re either all in or not in at all.

The folks over at Ansible are crushing this problem with some amazing new #DevOps tooling innovations. Check out this Ansible Explainer Video to learn more about how ruthless automation radically reduces the overhead and cumbersome coordination of departmental silos.

The shift to cloud-native starts by engaging your leadership and organization with a few tough questions

• When will your leadership acknowledge, and embrace that you are a digital business?
• When will your chief information officers (or equivalent) be part of the realexecutive function?
• How long will companies remain anchored to the relic of project funding when we know your digital platforms are always under continuous transformation?
• If agile methods and processes are so critical to digital transformation, why after ten-plus years of investment are there so few authentic enterprise success stories of reinvention?
• What will it take for leaders and middle managers to start experimenting with decision-making and alignment systems that displace the relic of hierarchy?
• If we know cross-disciplinary, full-stack digital business teams are the future of work, where is your road map and vision for blowing up your departmental silos?
• When your agile and lean improvements wring out every possible speed and efficiency improvement, on what basis will your company differentiate? Said differently, speed and efficiency are not what customers will fall in love with. Will they expect it? Sure. But is that all that your brand promise conveys?

If you want to know more about our book, or just need help engaging your organization in answering these tough questions around the transition to cloud-native agility, please drop me a line at brad.murphy@gearstream.com or chat with me on Twitter at BradAMurphy