A No-Nonsense Guide to Agile
Introduction
Chances are you’ve heard of agile — in fact you probably can’t avoid hearing about agile. It may have got to the point where you’re just sick of hearing about agile! And yet, it’s entirely possible you still don’t really understand what the hell it’s all about.
Having worked for many years helping organisations to adopt an agile approach, I have come to understand that agile fails more often than not because it is misunderstood, misinterpreted and misapplied. It falls at the first hurdle simply because people don’t really understand what it means to be agile.
I am hoping to address this by describing agile in very pragmatic terms. There will be no talk of manifestos, sprints or stand-ups. Instead what follows is (I hope) a common sense explanation which will explain why leveraging an agile approach is a strategic choice that will give your organisation a competitive advantage.
Why all the fuss?
Before diving into what agile is, it’s worth taking a moment to understand why it’s becoming so dominant. Consider these statistics:
- 50% of companies in the Fortune 500 in 1995 had dropped off the list by 2015
- The average lifecycle of a company in the 1960s was 67 years — today it’s 15 years, and it’s falling
What these figures demonstrate is that the world of industry is changing dramatically, and the reason for that is technology. The rise of technology is disrupting the business world.
Today’s world of work involves far fewer repetitive algorithmic tasks. Instead people are spending their time solving more complex problems which require creative thinking. Change has become a constant, uncertainty is high and speed is critical to success.
Agile is becoming more popular precisely because it is an approach designed to cope with high levels of uncertainty and frequent change. Moreover, it enables speed under these conditions.
Agile = Better, Faster, Happier
I describe agile as an approach that allows companies to be better, faster and happier — a description for which I am indebted to Jon Smart.
I’ll briefly outline what these mean, before going on to a more detailed explanation of how they are applied in practice.
- Better: increasing ROI by minimising wasted investment through the adoption of a customer-focused, data-driven and experimental approach.
- Faster: reducing your time to market by aligning relevant people around key outcomes and adopting a relentless focus on a few key goals.
- Happier: increasing employee engagement by creating an autonomous, safe-to-fail environment, providing clear goals and championing a culture of continuous learning.
Getting Better
The Case for Experimentation
Back in 2008, the online craft marketplace, Etsy, launched a new feature — Alchemy. On the face of it Alchemy was a brilliant idea. It would allow Etsy customers to create a description of a product they wanted, and marketplace vendors could pitch for the job.
Alchemy launched with great fanfare, including a glowing review in the New York Times. But three years later, Alchemy was quietly decommissioned. Why? In the three years that Alchemy was live, it generated less revenue than Etsy typically makes in a single day’s trading.
One can only imagine the time and effort that went into creating this feature — from software development time through to marketing and PR. And yet the investment was entirely wasted.
Take, by contrast, Dropbox. In the early days of Dropbox, the founders were struggling to raise capital. Even a simple prototype would require significant funds to produce. Dropbox needed a cheap way to prove a market for their product existed.
To do this, they created a short video which demonstrated how Dropbox would actually work, and what it would do. They placed the video on a single web page, together with an email sign-up for their beta programme, and seeded the link around potential early adopters in Silicon Valley. They acquired 75,000 people for their beta programme virtually overnight. This validated the concept of Dropbox and proved there was a market for it. The rest, as they say, is history.
The lesson of these two tales is that early validation is critical. Good ideas are not automatically successful ideas. Before making significant investment in a product or service, you need to ensure there is a significant customer base who will use it. Validating ideas early is risk management — you minimise the risk of wasting investment in products and services that will not generate any returns.
Adopting an experimental approach
There are three key tenets to producing successful products and services:
Know the customers
Knowing customers is about understanding the problems you can solve for them. And the key word here is problem. The goal of customer research, through interviews and surveys, is to define problems, not solutions. Asking customers what they want is fatal — they rarely know. Moreover, they are unaware of what is actually possible, which means their ideas are limited.
Focus on outcomes
Understanding customer problems allows you to define outcomes. The job of your organisation is to find ways to achieve the outcomes and solve the customer problems.
There are always multiple ways to solve a problem and achieve an outcome. You should look to generate a range of ideas and, through experimentation, quickly and cheaply validate the solution that will be most successful. You can then invest in that solution with confidence.
Use data
Using data to drive decision making is critical. Too many organisations rely on HIPPO (highest paid person’s opinion) to make their decisions. As the Etsy story illustrated all too clearly, opinion is a poor predictor of success.
There are multiple types of data and they serve different purposes.
- Quantitative data generates great insights and potential opportunities. However, while quantitative data will tell you what is happening, it won’t tell you why it’s happening.
- Qualitative data helps identify the “why” behind the “what”. Avoid the temptation to jump from insight straight to solution — instead invest time in understanding what lies behind the quantitative insights.
- Market research has, until recently, been king. While market research is still very valid, it needs to be carefully applied. Rather than being treated as the dominant data point, it should be used together with your own customer data. Market research has a valid role to play in identifying broad trends and changes in industry. These insights should feed into the outcomes you define, rather than defining them. Market research should also be avoided as a form of validation — it predicted that both the minivan and the iPod would be unsuccessful.
Getting Faster
The above illustrates the need for a short feedback loop with your customers — validating solutions early is the key to reducing the risk of wasted investment. To achieve this, swift delivery is essential.
The three key tenets of swift delivery are alignment, focus and autonomy.
Alignment
Functional Structures
Historically, businesses have tended to organise themselves by function — people are grouped into functions based on their skills and expertise. This is based on scientific management principles that perceives the business like a machine. As long as each “component” of the machine has the information it needs, it need not concern itself with any other component of the organisation. It is no surprise, therefore, that organisations based on functional structures risk becoming siloed — they are set up to be siloed!
The inherent weakness with functional structures is that strategic objectives can rarely be achieved by a single function. In reality they require collaboration and coordination between multiple functions. Consequently delivering strategic objectives relies heavily on project management, as a large element of project management is managing dependencies and the flow of information between teams and functions.
Managing projects is further exacerbated when objectives or goals are set at the level of functions, meaning each function has a different set of priorities. This leaves each individual function struggling to achieve its goals as it relies on multiple other functions, none of whom share the same priority. This network of dependencies creates bottlenecks across the organisation and cripples delivery.
Map out the functions of your organisation and the dependencies between them and you will likely end up with a diagram that closely resembles a bowl of spaghetti. Is it any wonder that your organisation is so slow?
Cross-Functional Structures
The fundamental difference with cross-functional structures is that teams are organised around goals and objectives, rather than by skills or expertise. Creating teams around objectives ensures that every skill needed to achieve an objective is contained within the team. When done correctly, this creates independent teams — in other words teams that are able to achieve their goals without being dependent on any other team. Removing dependencies between teams liberates them to move at speed.
Autonomy
Autonomy is instrumental in improving employee engagement — more on this later. However, it is also critical for increasing the speed of your organisation. I discussed earlier the crippling impact of dependencies between teams. Dependencies on management can be just as damaging. When every decision has to be referred to management, management ends up becoming bottlenecks which hamper the speed of the organisation. A critical element of creating autonomy means devolving decision making to teams and individuals.
Focus
Whilst removing dependencies between teams will create the ability for teams to deliver at speed, that can be severely hampered by overloading a team with too many objectives. The more objectives a team is expected to deliver simultaneously, the slower delivery will be.
Consider the following simple scenario:
A team has two objectives, each is estimated to have roughly the same value and requires the same amount of effort to achieve. There are two options — the team can either deliver the options simultaneously, or deliver the objectives sequentially.
When viewed side by side, it’s obvious that Option 2 results in each objective being delivered more quickly. Moreover, in Option 2, the value of Objective A is realised sooner, and continues to accumulate while Objective B is delivered. So focusing the team on a single objective, rather than multiple objectives, increases the speed of delivery and enables the early release of value.
I like to think of focus as the superpower which all organisations have, yet very few choose to deploy. There are not many organisations in the world that don’t wish to move faster, yet few seek to deploy the power of focusing their teams on a few key goals.
No matter the size of your organisation, there will always be a finite number of people, and there will always be more things to do than there are people to do them. Learning to prioritise ruthlessly and focus on just a few objectives at any one time gives you a powerful competitive advantage.
Getting Happier
The NUMMI Story
In the early 1980s, Toyota and General Motors entered into a partnership. GM wished to learn more about the lean manufacturing principles which had made Toyota so successful, while Toyota needed a US manufacturing base in order to avoid impending import duties. To that end, Toyota took over a GM factory in Fremont California, which they named New United Motor Manufacturing (NUMMI). As well as taking over the physical factory, Toyota also retained all existing staff.
At the time, the Fremont factory was the worst-performing of GM’s factories — and to be clear it was the worst of a pretty bad bunch. Unrest and dis-satisfaction were rife. Absenteeism stood at about 20% and strikes — both official and unofficial — happened often. There was even deliberate sabotage on the production lines. This was not a happy camp.
In the course of a single year, Toyota transformed NUMMI from the worst-performing to the best-performing of GM’s plants. The strikes and sabotage died down and absenteeism dropped from 20% to 2%.
What’s interesting is that Toyota achieved this improvement without changing any of the existing staff — the saboteurs and the wildcat strikers were retained. Toyota introduced the Toyota Production System (what we know today as a “lean” system). The improvements they made were achieved through changing the system of work, rather than changing the workers — with one exception. Toyota did replace all GM management with Toyota managers.
While a wholesale change of management is not a prerequisite of adopting an agile approach, what the NUMMI story does illustrate is just how much change is required at the management level. Management owns the system of work — they define the organisational structures, the objectives and the processes. As discussed earlier, poor alignment and lack of focus result in slow moving organisations, dogged by dependencies and stretched too thin. Functions, teams and individuals trapped in these systems are powerless to change constraints imposed by management. Management must own the change.
Intrinsic motivation
In instituting the changes at NUMMI, Toyota tapped into the power of intrinsic motivation. Toyota had long since realised that rather than rely on the traditional methods of carrot and stick, people could instead be motivated by the satisfaction of the work itself.
In his book Drive, Daniel Pink describes intrinsic motivators as purpose, autonomy and mastery. In simple terms these mean:
- Purpose — a clearly defined, meaningful outcome to achieve
- Autonomy — the freedom to figure out how to achieve the outcome
- Mastery — the inclination to get better and better at what we do
Leveraging the power of intrinsic motivation lies at the heart of creating a happier, more engaged workforce.
From manager to leader
Instituting intrinsic motivation requires a fundamental shift in management approach — it becomes about leading, rather than managing. Managers operate as chess players, defining and directing every move. By contrast, leaders operate as gardeners, creating the conditions in which teams can thrive.
Leaders’ first responsibility is to define and communicate purpose — they define the outcomes to be achieved and the problems to solve, but they devolve responsibility for solving those problems.
Their second responsibility is to support the teams to solve those problems and achieve their outcomes. This means communicating the context and providing the clarity which will enable teams to make good decisions. It means improving teams’ thinking by asking the right questions — the best leaders ask the best questions. It means providing the tools, the resource and the environment in which the team can work effectively. It means removing the organisational constraints that impede teams’ progress.
In the world of lean and agile, the term servant leadership is commonly used. Leading is defining and communicating the purpose and mission with context and clarity. Serving is enabling teams and individuals to successfully achieve the purpose and support the mission.
Why “happier” matters
When I describe the concepts of better, faster and happier, I deliberately leave happier until last. It’s easy to dismiss engagement as something that’s a little bit hippy and a bit “group hug”. Sure, it’s nice to have, but let’s be honest, really we just need to be better and faster don’t we?
If you’re thinking this, make no mistake about the importance of “happier”. It is the shift in approach to leadership which allows organisations to move faster and create better products and services. “Happier” is the enabler which unlocks better and faster.
Without enabling autonomy, you cannot get faster. Without getting faster, you cannot achieve the short feedback loop which allows you to get better. Without clear purpose you cannot define the outcomes which will allow you to get better.
Increased employee engagement may be a positive side effect, but building an environment centred around purpose, autonomy and mastery is as strategically critical as anything else I have described — the Nummi Story is testament to this. Focus simply on getting better and faster, and you will fail.
Creating a culture based on autonomy, mastery and purpose can only be achieved by leadership — they alone have the power to enable this. That is why executive sponsorship is critical. That is why agility is dependent on leadership change in order to succeed.
FAQs
Why is agile so popular in tech?
Agile thinking and working have high rates of adoption within technology because software development is inherently unpredictable. Agile is a system designed to deal with uncertainty and change and thus makes it a much more effective approach to developing digital products and services.
Isn’t agile just a tech thing?
In short, no. Hopefully this article has demonstrated that agility is in fact based around a set of principles that are agnostic of technology. These principles actually derive from the Toyota Production System. They weren’t designed for the world of technology, but instead have been adopted by it.
Has this article piqued your interest? Could I help your business to become better, faster and happier? I am a coach and consultant that helps organisations adopt agility. Find out more about what I do at betterfasterhappier.com.
