The Age of Agile

How Smart Companies Are Transforming the Way Work Gets Done

Stephen Denning
Copyright © 2018 AMACOM, a division of American Management Association
256 pages
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Rating Take-Aways

8
9 Applicability • Toward the end of 2003, a well-trained, well-equipped US Army task force in Iraq
couldn’t defeat a group of poorly armed extremists.
7 Innovation
8 Style • The task force functioned as trained while its foes united as a flexible network. In such
a volatile situation, a military machine couldn’t match an insurgent network.

• Like the armed forces, businesses have now come to see that flexibility is their best
  hope for survival in an uncertain world.
Focus • Today’s companies must quickly and inexpensively create value.
Leadership & Management • Businesses suffer when good management practices stop working due to rapid change.
Strategy
Sales & Marketing
• Complex initiatives often fail because companies can’t change their plans fast enough.
Finance • Agile management, which grew out of the software development industry, offers
Human Resources solutions.
IT, Production & Logistics
• Agile businesses adopt small independent teams, reduce team size and narrow the scope
Career & Self-Development
of projects. They focus primarily on the customer.
Small Business
Economics & Politics • Agile teams pursue precise projects they can complete in a limited amount of time.
Industries
• Conventional managers may initially find it difficult to implement agile management.
Global Business
Concepts & Trends

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getabstract

getabstract
Relevance
getabstract
What You Will Learn
In this summary, you will learn:r1) What principles drive agile management and 2) How its emphasis on the centrality
of the customer transforms management.
getabstract
Recommendation
In industries across the spectrum, businesses suffer when conventional good management practices stop working
amid rapid change. For that reason, many businesses have chosen to adopt agile management practices. In 2001,
the pioneers of this approach, which originated in the software development industry, created the “Manifesto for
Software Development,” often called the “Agile Manifesto.” This core document asserts that developers of high-
quality software must abandon some of the core principles of 20th-century management to enter “the age of agile.”
Management expert Stephen Denning lucidly explains the origins and principles of agile management with illustrative
case studies. getAbstract finds that his manual offers useful guidance for managers grappling with the dynamics
behind revolutionary change.
getabstract
getabstract

getabstract
Summary
getabstract
The US Army and Agile Management
Toward the end of 2003, the US Army’s Task Force had a dilemma in Iraq. Despite
its superior training and equipment, it couldn’t defeat poorly armed extremists. General
Stanley McChrystal, one of the US Army’s most acclaimed commanders, took charge that
getabstract October. At first, he couldn’t grasp how a motley group of insurgents could defeat his
“At the heart of 20th- troops. In time, he came to understand that while the task force functioned well following
century management…
is the notion of a its training and routines, its foes worked as a flexible network. In a highly volatile situation,
corporation as an a military machine couldn’t match an agile insurgent network.
efficient steady-state
machine aimed at
exploiting its existing McChrystal found he was making decisions from headquarters that his teams should have
business model.”
getabstract been making on the ground. Though sophisticated, the task force functioned slowly. Its
plans became outmoded before it could enact them. Each part of the task force concentrated
on its own duties, and its teams didn’t work collectively to defeat the enemy. The task
force found coordinating with other organizations such as the CIA, the FBI and the NSA
a daunting challenge. McChrystal transformed the task force from a bureaucracy into a
network. In this new framework, competence – not rank – determined who made decisions.
McChrystal created a new command center where personnel, regardless of their rank, could
understand the Army’s current operational status by glancing at a wall of real-time TV
screens.
getabstract
“Market-creating value
propositions involve Those who needed quick access to information worked in the middle of the command
a shift in thinking center. Those who undertook projects with a longer time frame worked on its fringes so
from the known to the
unknown.” they could concentrate on their jobs. Regardless of rank or department, anyone could cross
getabstract the room to consult with a colleague. Partner agencies like the CIA could use electronic
communication to participate in discussions. McChrystal conducted daily briefings for all
personnel. This reinforced the concept that leaders no longer created predetermined plans
for others to follow. McChrystal delinked rank and responsibility. He sent “decision making
and ownership” as low in the hierarchy as possible. This was a radical change for the US
Army, a strictly hierarchical system. But McChrystal built his team – including top officers

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 – of like-minded soldiers who prioritized the mission over personal status. This is a positive
foundation of the agile management concept.

Survival Through Flexibility

getabstract Like the armed forces, businesses have come to realize that in an uncertain world, their best
“The living customer
with mercurial thoughts hope for survival lies in flexibility. Companies, including the largest and most admired,
and feelings is now have quietly initiated changes that will have a profound impact on the world around them.
the center of the
commercial universe.” They created an environment in which they can quickly and inexpensively create value. For
getabstract example, Apple and Samsung have established platforms that can serve the requirements
of millions of people. Tesla, Saab and Ericsson can now deliver software upgrades to their
products over the Internet.

Across a variety of industries, businesses suffer when conventional good management

practices stop working due to rapid change. To move ahead, many firms have adopted
agile management methods that originated in the software industry. These tactics allowed
companies to excel even during extraordinary change. They learned to manage technology
getabstract and data more effectively.
“Agile management
is at odds with much
of what is practiced in The “Agile Manifesto”
public corporations In 2001, pioneers of the agile approach created the “Manifesto for Software Development,”
and taught in business
schools.” also known as the Agile Manifesto. It asserts that creating higher-quality software requires
getabstract abandoning some of the traditional principles of 20th-century management. It prizes people
and their cooperation over “processes and tools.” It considers functioning software more
important than exhaustive documentation. The Manifesto says software developers should
concentrate on “customer collaboration” rather than “contract negotiations.” It proposes
that software developers should see responding to change as a more significant priority than
following a set routine.

getabstract Many traditional managers have found these practices, commonly called “agile
“Southwest Airlines… management,” difficult to understand and implement. Yet those who’ve put it into practice
based its business on
eliminating the very accrue substantial benefits. Take Spotify, the musical streaming service, which has used
features the rest of the agile management since its debut in 2008. Its self-directed teams constantly seek to
airline industry were
trumpeting: meals,
improve its offerings. In 2013, Spotify launched its News-Feed product, which gave
lounges and seating users customized recommendations. In 2014, it upgraded the feature, calling it Discover.
choices.” However it found that users still preferred to follow the service’s editors’ playlists. Two
getabstract
Spotify engineers then analyzed billions of customer-created playlists. They suggested that
the service should use the results of this analysis to tailor playlists to meet the specific
preferences of each individual user.

With a series of quick iterations and little need to battle bureaucracy, Spotify staffers came
up with the further enhanced Discover Weekly. Every week, more than 100 million users
getabstract
receive a playlist of music they’ll like. With this new feature, Spotify gained an edge over
“When you outsource its rivals, which also had vast stores of music but lacked the ability to help users to discover
the making of the
products, your whole
music they’d enjoy.
business goes with the
outsourcing.” (Lou Organizing Principles
Lenzi, head of design,
GE Appliances) Firms that embrace agile management follow its three organizing principles:
getabstract
1. “The Law of the Small Team”
Agile small teams follow this set of common practices:

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 • “Work in small batches” – Many large, complicated initiatives fail because businesses
can’t change their plans fast enough amid conditions of uncertainty and rapid change.
Businesses that use agile management change the way they manage. They shrink the
getabstract scope of their projects and the size of their teams. At the same time, they enhance how
“The Law of the Small swiftly they respond to customer feedback. By embracing these methods, businesses can
Team concerns a mind-
set, not a specific set efficiently track project development, even with large-scale, complex initiatives.
of tools and processes • Deploy “small cross-functional teams” – Agile management recommends the use of
that can be written
down in an operational small independent teams of seven to twelve members each. Team members should bring
manual.” a variety of skills to a project, and each team should have the capability to meet specific
getabstract
customer requirements.
• Limit “work in process” – Teams should focus on precisely targeted projects they can
complete in a limited amount of time. Using this approach, businesses can ensure that
work across the enterprise doesn’t slow down or get stuck in a bottleneck.
• Establish “autonomous teams” – Once businesses decide which tasks they must
accomplish and what time frames they must meet, different teams – not executives –
determine how to achieve those objectives.
• Focus on “getting to ‘done’” – Assessing how successfully teams complete their
getabstract
“It was frustrating for goals is one way of gauging the effectiveness of agile implementations. Teams must
managers to find that complete their assignments and not get bogged down in a state of “almost finished.” Big
the more they tried to
control things, the less bureaucratic companies often react slowly and miss opportunities because they have so
progress they made.” many unfinished tasks.
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• “Work without interruption” – Once teams begin a cycle, they complete their work
without taking on new tasks or shifting to other, ongoing projects.
• Facilitate “daily stand-ups” – Teams hold daily meetings – or stand-ups – to discuss the
work they’ve completed and the challenges they face. Teams undertake these meetings to
enhance their internal communication, not to provide information to senior management.
getabstract
“The four questions • Practice “radical transparency” – Agile teams share information publicly so anyone
are: What is the can understand the status of the project, the progress made, likely stumbling blocks and
important customer
and market need? any obstacles the team faces.
What is your approach • Collect “customer feedback for each cycle” – Customers provide feedback at the
for addressing this
need? What are the end of each short work cycle. In collaboration with management, teams decide how to
benefits per costs of incorporate this new information into their project.
your approach? And
how do those benefits
• Conduct “retrospective reviews” – Teams regularly evaluate what they’ve learned on
per costs compare with each project and how they can apply that knowledge to the work in process.
the competition and the
alternatives?” (former
SRI International Agile management successes demonstrate that teams are the most effective approach, even
president and CEO for big, complex projects.
Curt Carlson)
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2. “The Law of the Customer”
The customer’s increasing centrality in business is another major impetus forcing changes in
corporate strategies. In 1954, management expert Peter Drucker pointed out that a business
must consider creating customers as its prime objective. At that time, most companies
getabstract felt they should focus their energy on making profits. In the 1970s and 1980s, academics
“Rapid horizontal
communications were
justified this argument, which “hardened into a formal economic doctrine…that firms must
more important than maximize shareholder value.”
vertical consultations
and approvals.”
getabstract Businesses offered their products and services and expected customers to buy them.
Globalization, the growing importance of knowledge work, and changes in technology and
in the regulatory framework mean that customers now dominate the firms that serve them.
The law of the customer places your buyers at the center of your universe. Firms that adhere
to this axiom follow these practices:

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 • “Target” – Businesses must select their “primary customers.” Companies that try to
address everyone spread themselves too thin.
• “Constantly experiment” – Try options without deciding at the outset which ones are
best. This works best in industries like software that can experiment cheaply.
getabstract • “Partner with start-ups” – Your established characteristics could hinder what you need
“There is no longer
a choice to be made to do to change. You don’t have to do everything by yourself.
between disciplined • “Increase product malleability” – Changing from physical to digital products – for
execution and
innovation through instance, “from hardware to software” – enables easier customization and upgrades. This
teams. The new way of works only if you can adopt your customer’s perspective.
operating enables the
firm to do both at the
• “Focus” – Design your product to be the simplest version your customers like.
same time.” • “Innovate in short stages” – Bring your offering to the market with the main attributes
getabstract
customers want, and then gradually enhance it.
• “Evaluate” – Make sure that every enhancement adds substantial benefit.
• “Be willing to disappoint” – Identify the customers you want to please, and don’t worry
about satisfying the others. Amazon tries to please its customers; it “does not delight
book authors, publishers or brick-and-mortar retail product sellers.”
• “Deliver value faster” – Offer enhancements as rapidly as you can.
• “Customize” – Let customers tweak your products to their individual requirements.
getabstract
“The ability to 3. “The Law of the Network”
adapt to complexity
and continuous Aim to create a network of teams that work together with the same energy and commitment
unpredictable change as the members of your small teams. Organize your network according to the law of small
was more important
than carefully prepared
teams.
plans.”
getabstract
Most traditional managers regard large, effective networks as contradiction, believing that
networks can’t be both large and effective because it’s “not managerially possible.” From
time immemorial, human beings have believed that only hierarchies can manage large
organizations. However, several large agile organizations have functioned effectively as
networks since the early 2000s. These include Riot Games, Spotify and the Developer
Division at Microsoft. Some organizations with more than 1,000 employees manage
through teams, not hierarchical structures. In these companies and others, groups in
effective networks make up the organization, as opposed to functioning within it. In true
networks, competence beats legal frameworks as an organizational principle.
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“Complexity responded Organizations that want to transform into networks can consider three tactics Some have
to competence, not
authority.” tried the drastic “top-down big bang” approach of suddenly ripping out the bureaucracy.
getabstract “As with Mao’s Cultural Revolution, the collateral damage here can be significant.” If
organizations don’t transform correctly, they can suffer substantial costs. The second
approach, a gradual “bottom-up” transformation effort, can fail unless it has senior
management’s unswerving commitment. The third option – which can work well – is a
“combination of top-down and bottom-up” change – as exemplified by the success of
Microsoft’s Developer Division. The agile movement itself began as a grassroots initiative
that garnered “genuine enthusiasm” at all levels.
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About the Author
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Stephen Denning worked at the World Bank for several decades in various management positions. A consultant
to governments and companies, he’s written business books, many articles on management, a novel and a volume
of poetry.

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