Because Agile is not about Software Development
In the first part we have discussed evolution of the society and in business environment, that created the need for change. In second part we will observe actions, which responded to those needs.
2. Evolution of Agile and the streams of agility
Development and introduction of Agile started slowly as a response to changes in the society and environment, hand in hand with technological evolution. There are more streams of agility, which originated in various organizational functions. It is often worth mentioning that changes happens under different title and are always associated with solving a particular business problem.
Business and Leadership Agility
In 1980, Ricardo Semler took the company Semco from the hands of his father and start redesigning it the way he internally believed is right. In a steps he basically turned the company upside down. He has abolished too many policies and enabled people to self-organize themselves around the tasks including working hours. He further cancelled the culture of strict command and control and approvals, which was replaced by the culture of trust, mutual respects, collaboration and shared accountability for performance of the organization, thus unlocking motivation and engagement of people. It was allowed to teams to choose their leaders and also people were allowed to decide on their own salaries. Pyramidal organizational structure was replaced by lighter form of smaller self-organized circles. All this changes were motivated by the fact that people are adult. And because as adults they do decisions at their own life, so they could be trusted to do decisions of similar magnitude in the organization, too.
I should mention an important context here. The company was based in Brazil, a country with turbulent development accompanied by economic crisis, hyperinflation, corruption scandals of large scale and enormous amount of poverty. Semler’s changes allowed for better economic performance of Semco organization and better performance in spite of external issues. More importantly, it enabled also employees surviving external crisis better.
From perspective of evolution, Mr. Semler imposed Green practices of Empowerment constrained by Values and Teal practices of Self-management on a pure Orange company surrounded by Red and Orange environment. He was driven by his vision of having organization more human and close to natural human behavior, which resulted in culture change and significant achievement in management innovation.
Mr. Semler wrote a book about his experience which was published in 1993 under the label Maverick. It is probably not a good title, I like title of Spanish edition more, Radical. It was indeed radical to take company in the mid orange stage, and at the very beginning of era of knowledge economy, and fast forward it 30 years toward setup typical for green stage of 2010. There was no known precedence. And there was very reluctant perception of this configuration from other organizations or managers worldwide. As Mr. Semler mentions in another of his books, Você está louco! where he also shares his motivation and believes, it was also difficult to find publisher for the book because of its extraordinary content. I am be sure, it would be possible to find organization exploiting agile principles even before Semco and it is a question, how far to go to the history. I decided to stop travelling back in time at beginning of the era of knowledge economy, because after this there is the same context of external environment. It is also simplification to think Agile was born in a single company. At the time more companies around the world tried to improve managerial practices to achieve techniques to create Agile Enterprise. I would mention Toyota with its LEAN techniques here and cross-functional teams as described in the article The New, New Product Development Game. Further I can mention also members of Agile Manufacturing Enterprise Forum, which started in 1991 to discuss new paradigms in business evolution and how to prepare organizations for these changes (full report here).
Project Management Agility
It was in 1994 and it start to be clear, that building systems in software development projects was somehow broken. Ed Holt then invited a group of people together to discuss experiences of project management. People came from companies like British Telecom, British Airways, or AMEX, vendors like Oracle or IBM, several consultancies, e.g. Logica, and also few respected independent persons from the industry were invited. The group agreed on that there is a mess indeed, and tried to come up with a better way of working. They have formed workgroup and came together with a first version of DSDM (Dynamic Systems Development Method) project method, which several companies decided to test in a pilot. In a relatively short time, 3 iterations followed and resulted in 3rdversion of DSDM, which was officially published in 1997.
At that time British Airways (BA) run an exercise to benchmark their IT development project against other similar organizations, and ended with poor score. It was a shock for the company, that have had culture of trying to be the best. An effect of discovery resulted upon the management with radical decision — let’s give it a try through massive pilot of DSDM. It was a several new projects, with allocation of around 1/3 of people from large IT department, perhaps 2000 persons strong, under the supervision of probably 12 independent coaches. BA found then that using DSDM lifted in 1 year the benchmark up by 25–300% in gained productivity. Subsequently BA decided using DSDM for all projects. The key in performance improvement was close and intensive collaboration between IT and internal customers. Moscow prioritization categorized the requirements and in the end, nearly 70% of the original requirements were delivered. Business sponsors were delighted, because it was first time, when they have got a product ready to use in budget and in time, in spite of low priority functionality was removed. Organizations participated in formation of DSDM created a consortium with a mission to implement DSDM to corporate world. It was task about to demonstrate that new process is actually more disciplined than traditional waterfall. The pre-project and post project parts were added to the framework in version 4 around year 2007. However, the consortium was a closed environment and anyone who wanted to use benefits of the framework needed to become a member of a club for a fee. It has negative impact on spreading the knowledge so decision was done to prepare complete documentation — DSDM Aterns (version 5) and remove barrier through dropping the membership and enable DSDM for free use. Latest upgrade comes from 2011, when version 6 was introduced and labeled Agile Project Management Framework that was implemented to AgilePM (a version designed for educational purposes through training network of APMG).
Project management struggled by problem, where orange based culture of command and control through vertical bureaucracy created tensions as a result of growing complexity in technology projects in the era of knowledge economy. The response was creating a new approach, that reflect the Green paradigm and some Teal ideas.
Finance and Budgeting Agility
There was a problem in financial management — annual budget, and the way how it is created. Organizations spends annually enormous amount of work to design their budget. Process starts four or five months prior the end of fiscal year and hopefully is complete and available at the end of the year. Budget is however very complex structure and typically in a very short time, sometimes in a matter of days, some external variable changes so dramatically that entire work is in vain. There must be a better way. In 1998 from initiative of Jeremy Hope, Robin Fraser and Peter Bounce was formed a group Beyond Budgeting Roundtable. It have had several mostly corporate members who funded the group and its purpose was to carry out research. For almost 3 years Jeremy and Robin were visiting companies that are known for alternative approaches to budgeting, mostly accompanied by different members of the roundtable, and findings were presented at regular meetups. Probably the best case they have discovered at that time was the case of Svenska Handelsbanken, implemented by Jan Wallander, who became CEO of the bank in 1970.
The outcome of the research was compiled into the book Beyond Budgeting: How Managers Can Break Free from the Annual Performance Trap. Research also highlighted, that alternative approach to budget couldn’t be possible without changes in management model, that influence the culture and operations. These changes are summarized into 12 Beyond Budgeting principles.
The principles covers the Leadership, which governs the purpose and boundaries for self-organization of the teams. Further they cover managerial processes, which provides measurable, and adjustable goals, that respect external environment. It is clear that origins of budget originates in Orange stage of the society. As complexity of organizations rises, it starts creating tensions with reality. Solution that was found relates to Green paradigm, perhaps with a gentle influence of Teal. Beyond Budgeting Round Table and its activities to research and spread ideas in financial management and leadership was transformed to Beyond Budgeting Institute.
Software Development Agility
In 2001, authors of software improvements method (Adaptive Software Development, DSDM, Scrum, Crystal Clear, Extreme Programming or Feature-Driven Development) met in Snowbird resort in Utah, for extended weekend, to ski and discuss the methods. It was clear, that these methods have far more in common. Therefore the discussion couldn’t be about which method is better or worst — all were crafted already, and deployed with positive outcomes. Instead, discussion lead to direction describing what does have these methods in common. As a result of these discussions Agile Manifesto has been crafted.
For spreading the ideas behind Agile Manifesto, signatories agreed on guerilla marketing (word of mouth), spreading the word across channels of their peers and contacts. For example, members of DSDM consortium got pointed to this initiative and people started to sign the manifesto. Movement attracted attention and idea start spreading around.
Attention also raised questions, so about a year later signatories met again to craft 12 Principles of Agile Manifesto to clarify, how to handle in practice values that came from Agile Manifesto.
Out of this action, Agile Alliance was born to handle the promotion of agile ideas in software development world.
Agile and Agile Transformation
As it is seen, the Agile was born through many streams in various parts of the organization. It was a change, that was initiated through changes in external business environment and through raise of complexity together with changes and evolution of the society. It is also clear that trigger starting agile activities in every stream of origin was particular business problem. All these however have had one thing in common. It was an attempt of initiators of the change to improve something in the organization.
The agile techniques were invented to improve business performance of the organizations.
It is also clear, that improvement can’t be result of particular process change. It is a change, that shifts organization from Orange into the Green paradigm. As we mentioned earlier, Green paradigm pays attention to people’s feelings. It seeks fairness, equality, harmony, community, cooperation and consensus. For people, who operates from this perspective, the relationships are valued more than outcomes.
The shift from Orange to Green paradigm we call Agile Transformation and it is cross company activity driven by top management. It is a change that address especially soft element of business activity including ways, how the success is perceived and measured. It also changes relations that organization has with its employees and their human capital, with its suppliers, partners, investors, customers or communities.
It is also clear, that Agile did not originated in software development only. Also the word Agile was not used here for the first time. Agileis a response of organizations to increasing complexity of business environment, today often described with VUCA abbreviation (volatility, uncertainty, complexity and ambiguity).
The description of evolution and Agile streams is not complete nor comprehensive, it is possible to go deeper, but my intention is to illustrate big picture and argue against general perception of Agile being originated in ICT only.
What would happen if Agile Manifesto would not be written?
Let me speculate a bit here. As was said, that Agile is in its core adopting organizations to change in external environment. The change, which is driven across cultural adaptation rather than process. Therefore I think another one of Agile streams would take initiative. It would most probably be called Agile, because label was already in use, and it would lead to a movement, which is at least 80% similar as it is today.
Different would be level of business impact. We can observe that all Agile streams have as underlying precondition some sort of culture change. It fuels endless debates about Doing Agile (Orange, process change with enforced element of Teal self-organization) and Being Agile (Green, natural culture change evolving to Teal). Agile implemented by engineering parts of the organization as their own initiative tends to be process focused and tolerated by the rest of the organization. There is very few examples of impactful achievements here, only Spotify is being mostly mentioned. If Beyond Budgeting would take initiative, it address mostly management and initiates cross company cultural change. Even if not perfect, there are plenty of examples of successful achievements here. Even at technical Agile conferences there are presented mostly BB examples and not technical ones.
And how we can benefit from Agile movement and Agile Transformation if applied right?
(to be continued … )
About author: Michal Vallo builds agile organizations and helps managers to understand agile techniques, benefit from its adoption and consequently radically improve organizational performance. He is agile trainer, coach and manager at Aguarra, founding member of Agilia community and organizer of Agilia Conference / Agile Management Congress.