Organizational Agility

The Agile Manifesto was written in February 2001, at a summit of seventeen

independent-minded practitioners of several programming methodologies. The
participants didn’t agree about much, but they found consensus around four main
values. This Manifesto was expanded into Twelve Principles that expand on what
it is to be Agile About software development.

These are in the following areas:

1. Early and continuous delivery
2. Harness change for competitive advantage
3. Deliver working software frequently
4. Business and ICT working together
5. Build projects around motivated individuals.
6. Have face-to-face conversations
7. Working software is the primary measure of progress
8. Maintain a constant pace
9. Technical excellence
10. Simplicity
11. Self-organizing teams
12. Team reflection

Mike Cottmeyer claims that there are 12 keys that are fundamental to a
successful Agile organization that he has observed over the years.
These are:
1. Cross-Functional Teams
2. Empowered Team Members
3. Single Voice of the Business
4. Shared Accountability
5. Servant Leadership
6. Continuous Flow of Value
7. Value over Activity
8. Attention to Technical Excellence
9. Rapid Risk Reduction
10. Early Feedback and Adaptation
11. Total Openness and Transparency
12. Trust
Steve Denning has been researching the application of an Agile approach in
organizations .

Denning claims that “traditional 20th Century management has failed”. He argues that
to deal with a radically different marketplace and workplace, organizations must
change the way they think and seek to create a stream of additional value to
customers through continuous innovation. The other major change is that they need
to be delivering it sooner to ‘delight the customer’. This different approach to
management reflects the Agile/Scrum/Lean approach used for software
development and applies it to the whole organization.

Why Do You Need Organizational Agility?

Nowadays, most businesses operate in a so-called VUCA market (volatile, uncertain,

complex, and ambiguous) where requirements change frequently. What customers
might have deemed exciting product functionality yesterday, it can easily turn into just a
satisfier today. Furthermore, emerging startups quickly develop innovations, making it
harder for traditional organizations to keep up with their pace. As a result, those
organizations risk becoming obsolete and ultimately uncompetitive on the market.

An example is McKinney’s study based on the S&P 500 Index, which found that big
companies' average life-span fell from 61 years in 1958 to about 18 years in 2011.
Furthermore, projections show a considerable risk for 75% of companies currently
quoted on the S&P 500 to have disappeared by 2027.

To prevent that, many of them have already turned to Agile practices and applied them
on the team level, usually looking to improve product development efficiency. However,
ensuring long-term business survivability asks for a scaled approach where the entire
company adopts Agile ways of working, not only separate parts of it. The idea is to
enable it to more quickly and effectively adapt to a changing environment, continuously
improve, innovate at a faster rate, and thus better meet customer requirements. In
reality, this is what can be defined as organizational agility.

To achieve it, there needs to be alignment between all organizational levels, faster
communication, more frequent releases of value, and a way to ensure that the right
thing is worked on at the right time.

Denning claims that traditional management systematically kills off all of the
creative parts of an organization.
Layton claims the following advantages from implementing Agile into an organization:
1. Better product quality
2. Higher customer satisfaction
3. Higher team morale
4. Increased collaboration and ownership
5. Customized team structures
6. More relevant metrics
7. Improved performance visibility
8. Increased project control
9. Improved project predictability
10. Reduced risk
In particular, Agile allows an organization to operate in a complex or chaotic
environment and
Achieve outcomes.
Denning observes that Agile makes the assumption that all people in an
organization are competent. It expects performance and forces action if it doesn’t
occur. It assumes a workforce that knows what they are doing and provides a
transparent framework for them to show what they can do. He identifies a number
of disadvantages of agile including:
Technique for projects or assignments.
Zilberfeld claims that Agile is popular because the concepts around Agile all call to the
Objectives that executives crave for:
1. Reduced waste
2. Increased Speed to market
3. Improved Productivity
4. Improved Decision Making
5. Improved Confidence
6. Improved trust and safety

However, none of these happen without a significant change in governance to

release
Controls and put in place a monument framework that encourages autonomous groups.
This has a significant amount of risk associated with it and organizations that
embrace Agile need to have an increased appetite for risk. Projects will fail and will
still go over budget and schedule. However, they have a better chance of delivering a
product that is useful to the client. Collet (2009) argues that Agile is popular because it
has a ‘flavor of the month’ feel about it. He contends that Agile has been
designed and implemented by experienced, smart, and high- achieving people.
These types of people excel in self-managed groups. unfortunately, not all employees
fall into this category and may not perform at all well in an Agile arrangement.
Agile requires both individual and team freedom with people operating (sometimes)
in multiple cross-functional teams, constantly adapting to work, and switching roles
as needed. This requires a significant change to corporate culture and governance
arrangements where processes are secondary to people. Many proponents of Agile
will argue this, saying that Agile requires greater discipline to remain focused on the
task at hand while still maintaining an eye on the objective. Agile works best in small
teams that are co- located. This is not always possible. Agile rewards team success
and dominant individuals are required to relinquish their egos for the good of the
team. This is not always possible.

Where has Agile been successful?

Robinson Meyer provided a synopsis of how a team of young developers, living

in a repurposed McMansion in Maryland, helped rebuild Healthcare.gov after the
failed launch of the system. The website and the applications behind it were so
badly developed that it nearly broke the Affordable Care Act. The US
government spent millions on paying project managers and IT development
houses to create the system. It performed so badly that on Healthcare.gov’s first
day, only six people successfully used it to sign up for health insurance. An Agile
approach by a small team of young people successfully redeveloped the
application using open source software and cloud services.

Developing an Agile Organization in an Evolutionary and Data-Driven Way

To drive organizational agility, companies need to have a complete management system at

their disposal that they can leverage to build radical transparency, create a symbiosis
between all structures, and facilitate information flow within them. Another critical part of the
equation includes the organization's ability to improve predictability and thus better balance
demand with capabilities.
But how can you tie all those things together to make your organization more resilient to
changes? One way to accomplish that is to implement the workflow management
method that can improve organizational survivability through evolutionary change
management. Focusing on visualization, data-driven continuous improvement, and
engagement for all stakeholders is an appropriate answer to the turbulent pace of change in
today's business environment.
Let's dig deeper to see how this can happen in practice.

1. Kanban System for Every Service in the Organization

As mentioned earlier, agile organizations aim to view their structures as a network of
interdependent services and thus see the flow of a given solution from concept to fruition. In
reality, this can happen by introducing interconnected Kanban boards where the value
stream of every service is visualized.
This provides unmatched transparency and, through integrating various practices such as
limiting work in progress (WIP), uncovers bottlenecks, and enhances flow efficiency. As a
result, teams can build a Kanban system for every service delivery process and then
gradually evolve it to meet service level agreements (SLAs).
Those represent commitments made to the customer regarding service delivery rate, which
is defined by metrics such as lead, cycle time, and throughput. It is the criteria against which
we should frequently measure how "fit for purpose" our processes are and discuss potential
improvements to ensure customer satisfaction.

2. Feedback Loops to Build an Information Flow

When talking about frequent collaboration, agile organizations aim to achieve it through
regular cadences across all company levels. This contributes to the creation of symbiosis
between structures and streamlines information flow to ensure that the right things are
executed at the right time.
In Kanban, for example, there are seven cadences, which are essentially meetings that aim
to streamline communication between teams. Those include Strategy Reviews, Operation
Reviews, Risk and Service Delivery Reviews, as well as Replenishment, Delivery Planning,
and Daily Meetings.
3. Data-Driven Continuous Improvement
Developing an Agile organization also requires improved predictability so you can better
match demand with capabilities and meet customer delivery requirements. The way to
accomplish that is by analyzing service delivery data and then derives improvements based
on the findings.
To do that, you can use metrics such as lead and cycle time, WIP, and throughput. You can
measure and collect data on those metrics with Cumulative Flow Diagrams (CFD), Cycle
Time Scatter Plots and Histograms, WIP, and Throughput Run charts, which will help you
analyze workflow stability and come up with service level agreements across the
organizations.
For example, in Kanbanize, we apply those charts and plot our historical service delivery
metrics in Monte Carlo Simulations. This allows us to forecast when and how many work
items we can deliver to the end customer or shared services based on probability rather
than estimation.

As a result, you will be able to improve service delivery or project predictability and have
a way to anticipate demand better. This will enable you to make the right decisions
based on real data to continuously improve overall organizational agility.

4. Understand and Focus on Customer Expectations

Last but not least, remember that the path to organizational agility is never-ending. The
ideas discussed above can help you boost it, but your primary target for ensuring long-term
survivability should be to continuously delight your target market.
That's why don't be afraid to experiment. Just make sure you collect your feedback as soon
as possible, so you can better understand your customer's expectations. This will enable
you to adapt to their changing needs and innovate faster.

In Summary
Achieving organizational agility requires a cultural shift to a more transparent environment
and a mindset of “test, learn and adapt”. To create an Agile organization, you need a
complete management system at hand that allows you to:

 Achieve radical transparency across all organizational structures;

 Build an information flow within them;
 Improve predictability to balance demand with capabilities.