The agile thinking mistakes #1: Being antifragile
The dogma of endless efficiency and growth poses the greatest threat to companies and prevents them from dealing with Black Swans
Benchmark
What do board members and entrepreneurs believe they are measured by? How do they determine their business and personal success? Simple and straightforward: by key figures such as company growth, profitability and efficiency. A large market share, double-digit margins and a healthy cost-income ratio still define a successful company. And along with that an effective and successful entrepreneur. Nevertheless, aspects such as sustainable use of environmental resources, social responsibility, equality and integrity have been added and increasingly emphasized in recent years. But the concept of success continues to be tied to the “classics” mentioned above.
A company’s share price remains stable if its corporate policy is insufficiently resourceful or its salary structure discriminates against women. However, if sales collapse and profitability is threatened, the markets and shareholders suddenly become nervous.
Trend
So, it is not surprising that there is a trend towards adaptable, aka agile, cooperation and an iterative approach in software development. And that this trend has attracted increasing attention and recognition especially from business managers over the past 15 years. What started as solutions especially for the IT business is now established and common practice. They are supposed to continuously absorb and process adjustments and changed arrangements, and thereby increase productivity and delivery capability. Anyone who still develops software sequentially is considered weird. Agile cooperation has become an indispensable part of IT.
An entire industry has developed around this topic. Methods are being invented. So-called frameworks are being created. Consulting companies have emerged at incredible speed, and certification offerings have created new qualification benchmarks for employees. Anyone who cannot call themselves a Scrum Master or an Agile Coach in IT or as a consultant will have a hard time explaining themselves.
Conclusion?
And you might have guessed the questions next in line. Is it possible to put an entire company into the same productive state as software development? Can you scrumify an entire company? It worked for Spotify, after all! We could just give our company the same organizational structure that Spotify did. Including squads and tribes and guilds and such. If we work with agile methods … It’s sure to work anywhere, right?
And lo and behold! A lot of companies around the world have picked up buzzwords like new work, agile teams, or servant leadership in recent years. They’ve introduced them to themselves with indescribable zeal. Some of them were tentative at first, starting from a base of self-initiated employees, while others agilized an entire corporation by the deadline.
At congresses at home and abroad, in self-awareness videos on YouTube and in podcasts, one can admire the successes and insights of the pioneers of agile organizations. Yet something is missing. Something doesn’t seem right.
Thinking mistakes
If you look a little closer, however, you will see that apples and oranges may have been compared or even confused with each other. To clear up things up, we have to take a step back and look at software development. In this guild, the concept of incremental approaches has evolved for a very simple but valid reason. In the days of waterfall and sequential-structured ways of working, software development was an expensive, incalculably risky and in 90 % of all projects frustrating gamble.
Software turned out to be a highly complex subject area that could not be mastered with the traditional thinking models of engineers. The still young field of computer science has many similarities with mathematics or physics. But its context and dynamics are not the same as those of a mechanical or plant engineer. Agile and iterative-incremental approaches are thus the result of a maturing process that has allowed computer science to outgrow the phase of puberty, of trying things and blowing off steam.
So much for the apples. Now for the oranges. What corporate leaders, utterly conditioned to think alongside tayloristic concepts, derived from IT’s adolescence was that agile working lowers software development cost, reduces the risk of IT investments, and continuously produces measurable and potentially saleable work results.
Bingo! Jackpot! Clearly, agile working can increase organizational efficiency and effectiveness! We’re doing that across the enterprise now!
We are gradually approaching the thinking mistake. Cause is the original dilemma of information technology; effects are what you can achieve by agile cooperation — from the business economists’ point of view. But they don’t have a causal relationship! Thus, among other things, the central concern of the inventors of the Scrum method was to reduce the gap between business and IT in order to finally produce usable software solutions at all. Business-focused profitability has never been the main objective.
Effect
If we look at the gradually visible results and findings of companies that have taken the decision to implement an agile transformation, we can already note two fundamental observations. Individual and collective satisfaction scores rise among employees who practice self-organized collaboration: applying agile rituals, reflecting regularly on their ways of working in retrospectives, giving each other the gift of feedback, and establishing a work culture of mutual respect. The percentage of employees who quit internally decreases as well as the sickness rate, and all in all, it seems as if having fun at work continuously flourishes. Growing self-esteem by self-organization obviously has a positive effect on the culture of cooperation in companies.
But what about the economic side of this development? Does the investment made by corporations pay off in terms of productivity, profitability or efficiency across the entire organization? Does the effect in IT take over the entire company? Does the sales department make more sales and win new customers if it organizes its teamwork with Kanban? Does the accounting department book more favorably if it works on its Sprint backlog weekly? Does the controller have better transparency about costs and investments if she exchanges information with her colleagues in the daily stand-up? Simply put, companies don’t know how because their existing performance analytics are unable to measure the benefits and impact of agility.
Blind Spot
We have reached the point that we can call the blind spot, the misunderstanding or the mistaken belief. The described error or trap in thinking is as obvious as it is fatal. Agile cooperation has never pursued the goal of leveraging, achieving or increasing purposive economic effects alone. Agile cooperation has always had the goal of establishing agility as a capability in organizations. Agility is defined as the ability to adapt to unpredictable changes in a dynamic, complex environment. Agile cooperation is simply about being able to deal with high-frequency surprises or even to surprise one’s own environment with innovative ideas, products or services.
Consequence
The tayloristic, business management-focused requirements and expectations of entrepreneurs and board members will not be fulfilled. It becomes obvious that the dreams and hopes projected on agile working in terms of even greater profitability, productivity and growth were misplaced.
This would certainly be tolerable if this did not result in a fundamental problem at the same time, and if these very decision-makers and corporate leaders were to squander a development opportunity due to inadequate knowledge. Or even stigmatize it in the long run.
In the dynamics of a global economy and society that already surround us today, neither steadily increasing profitability nor an ever-growing market share is essential for companies to survive. We have long since entered the era of post-growth, since all resources are acknowledged to be finite.
Whether a company survives in its market in the future or shares the fate of Nokia, Motorola or Kodak will be determined above all by its ability to adapt and change — which is the defining skill of agile an agile organization.
The phenomenon of Black Swans, as Nassim Taleb calls them in his remarks on Antifragility, and thus the effects of exponential change are the central influencing factors that internationally active companies in particular must deal with. And those who continue to confuse the possibilities of agile work and organization like apples with oranges as similar kinds of fruit have still not understood the disruptive impact of digital business and expansion models from the likes of Google, Apple, Netflix, or Amazon. Nor have they recognized how fragile our global economic structure is, when a single freighter stuck in the Suez Canal can unhinge the international gears.
The Author
Andreas Slogar worked in 24 countries, in the USA, Europe, the Middle East and Africa and has, inter alia, as CIO gained significant expertise in strategic and operative management. He is the founder of the Blue-Tusker expert network. All fees collected by the network are donated to charitable organizations. As an expert Slogar is specialized on the transformation of entire companies into adaptable states of collaboration and cooperation. He authored a variety of articles and podcasts and wrote the book “Die agile Organisation”[The agile organization], (2nd edition) which was published by the Carl Hanser Verlag.
