BCR Advisory

Digital Transformation Requires Enterprisewide Agile Transformation

This article was sourced from Forbes. Article by Jason Bloomberg.

In many corporate boardrooms, the word Agile conjures up images of small teams of hotshot software developers, iterating over their backlogs of requirements so rapidly they don’t have time to sit down during their daily status meetings.

At ICAgile’s inaugural Business Agility 2017 conference in New York last week, however, it was clear that Agile had jumped the technology shark, expanding outside the software world. Enterprises are now increasingly adopting Agile practices across their organizations in order to successfully navigate the disruptive waters that threaten to drown them.

Business Agility, with Emphasis on Business

Agile – spelled with a capital A – refers to a core philosophy and set of principles for developing better software. While Agile principles date back decades, the publication of the Agile Manifesto in 2001 marks the founding of Agile as a distinct movement.

 During the intervening 16 years, the connection between building better software and business agility, however, has been a tenuous one at best. But now that Agile is maturing and digital transformation is driving change across enterprises large and small, companies are realizing that their best bet for achieving business agility is to take the best of Agile and apply it across the entire organization.

The first step in this ‘Agile transformation’: moving away from traditional hierarchical organizational models to small, self-organizing teams. “You can’t put Agile teams in a bureaucracy,” according to Steve Denning, author, consultant, and fellow columnist for Forbes. “A mix of Agile and bureaucracy is unstable. One or the other will take over.”

Given how ingrained hierarchical thinking has become among today’s managers, however, this transformation is difficult for people to get their heads around. “Is a reorganization necessary for adopting Agile?” asks Katy Saulpaugh, Practice Lead at Enterprise Knowledge. “Yes, but that will frighten people.”

Yet, without such a reorganization, Agile transformation efforts will fail. An even greater risk, however, is a bad reorganization, where Agile becomes the bad guy – also a route to failure, as healthcare technology provider Cerner CERN +0.40% Technology Services learned the hard way. “Cerner rolled out Agile too fast and ended up with a lot of ‘fake Agile,’” explains Matt Anderson, Director, Service Management Office at Cerner. “It took us four years to recover.”

Creating the Proper Balance

While hierarchical organizational models sound the death knell for business agility, doing away with hierarchy altogether is a recipe for chaos. The challenge, therefore, is balancing Agile and traditional management approaches. “The key is the right balance between control and autonomy,” Denning explains.

At least one enterprise is on this page. “A balance of agility and control is essential,” says Jonathan Smart, Head of Development Services and Agility Lead at Barclays Group. “They appear to conflict, but they don’t.”

For Barclays, creating a ‘holistic’ approach to Agile across the organization is essential. “We’re implementing holistic agility: the same inside and outside IT,” Smart explains.

Agile Leadership is Essential

By control, however, we don’t mean the top-down management approach characteristic of hierarchical organizations. Instead, executives must learn the fine art of Agile leadership. “No amount of organizational change can make up for a lack of transformational leadership,” says Charlie Rudd, Chairman of SolutionsIQ.

Agile leaders must be willing to take risks. “To succeed with Agile transformation, someone has to be willing to get fired over it,” Cerner’s Anderson explains.

Such leaders must be more than simply risk tolerant, however. In fact, Agile transformation requires a complete rethink of how an organization quantifies and manages risk, as the strategic risks of not being sufficiently agile trump the risks inherent in the Agile transformation itself.

Instead of measuring traditional key performance indicators (KPIs) like profitability or transactions per hour, therefore, executives must shift their focus to how well the enterprise is able to deal with changing customer preferences and a shifting competitive landscape. As Phil Abernathy, Agile Alchemist at IBM IBM -0.17% puts it, “measure what matters.”

Customer delight is one of these new KPIs, but employees are also critical to the success of Agile transformation. “Better, faster, cheaper – and happier, for both customers and employees,” Abernathy explains.

Employee morale has always been an important metric for management to track, of course, but as organizations adopt Agile practices, it becomes even more important, as self-organizing teams cannot function without high morale.

Once again, the risks inherent in not adopting Agile exceed those that Agile presents. “20% of the people in a traditional hierarchical organization are actively undermining it,” Denning points out.

And yet, Agile has only recently gotten a handle on this issue. “It took ten years working with the Agile Manifesto to get small teams right,” Denning continues. “You have to disaggregate big projects into small pieces.”

All In with Agile

Perhaps the most important lesson from the Business Agility conference is that to succeed with Agile transformation – and thus, with digital transformation – you can’t simply stick your toe in the Agile waters. You have to be all in.

Faking it won’t cut it. “‘Lipstick Agile’ doesn’t work,” Isabella Serg, Agile HR consultant and Talent Advisor at IBM, points out.

It’s not cheap. “Agility costs money,” Timothy Lister, Principal at The Atlantic Systems Guild says. “It’s not fairy dust.”

It won’t be neat. “It was messy and it still is,” according to Paul Cobban, Managing Director and Chief Operating Officer, Technology and Operations at DBS Bank (see my earlier interview of Paul Cobban).

And chances are, you’ll fail along the way – but in the transformed Agile world, even failure gets a rethink. “Failure is how we generate new knowledge,” posits Pat Reed, Agile Consultant at iHoriz and Adjunct Professor at University of California, Berkeley.

The bottom line: digital transformation requires business agility, and applying the lessons of Agile to the entire organization is the only approach that has shown consistent success. It’s time to crack open your software development organization and bring Agile into the light of the business.

For specialist advice regarding your specific circumstances, please contact the BCR team.

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BCR team
The BCR Advisory team are a national represented firm with its main office located in Sydney. It is a boutique corporate advisory, recovery and insolvency firm that specialise in the SME market. The team’s reputation is built on their extensive experience within the industry as well as their fresh and innovative approach to problem solving for distressed business owners.Let us know what you thought about this article by leaving a comment below. Alternatively, you can get in touch with the BCR Advisory through our contact page.