Working in a Lean/Agile way of working is not new anymore for a lot of organizations. Many best practices are available showing examples how the organization can benefit from working in an agile manner. But many of the bigger organizations with a potential of hundreds of autonomous teams struggle with the question how to scale the agile way of working in such a way that it works in their context. This article describes the concept of Aligned Autonomy as a way to help big organizations to fully benefit from agile ways of working.
If an organization considers to start a transformation towards an agile organization, the following drivers are often mentioned:
- Faster time to market
- Improved customer experience
- Higher productivity
- Great place to work.
You may have heard all of these buzzwords in one form or another. And although they are all legitimate transformation drivers, you can ask yourself the question if the organization really has a choice. According to a recent McKinsey article (‘a tale of two agile paths: How a pair of operators set up their organizational transformations’ – February 2019) companies that go agile are 50 percent likelier to outperform their competitors financially. That’s a real driver that CFO’s will easily convince. But it also means that organizations who will not go agile, will be most likely outperformed by their competitors and in the end cease to exist. So, becoming an agile organization in the fast changing world can be considered as a way to survive. This sounds dramatical but in many cases this is truly the case. Take a look at the Banking industry. An often heard sentence in that domain is ‘people need banking, not bankers’. This is a real game changer in that domain and already quite visible. Society and regulators put more and more regulations into the Banking industry, sometimes heavily influenced by public opinion stating that ‘banks take too much risks’ or ‘banks are not strict enough in preventing financing criminal activities’ and when it all goes wrong society has to step in.
So generically the real ‘why’ for organizations to go agile is more often expressed as a means to boost our digitalization strategy as this becomes or is the discriminating factor between competitors. And yes this means that the 4 bullets mentioned at the beginning are all relevant in order to achieve this.
- Faster time to market; We cannot wait anymore on the results of a 2 year change programme that will deliver the required business value at the end
- Improved customer experience; The customer who ultimately defines our added value as an organization, need to see a quick series of improvements. If not, they will go to a competitor
- Higher productivity; We cannot afford to work on change projets anymore where the notion that we prioritized on the wrong product features only comes after spending massive time and money
- Great place to work; we need to create a working environment that reveals the best out of professionals
If we project these 4 drivers into the Banking industry you will see the following patterns. Regulations are quickly piling up and absorbing a huge portion of the change capacity. New technologies are disrupting the traditional way of performing banking services. Examples of this are the use of chatbots instead of human operated customer contact centers or the use of blockchain technology in the domain of Trade Finance. Banking products become more and more commodities implying that the main differentiator between those commoditized banks is to deliver a differentiating customer experience. But the standards for that are not set by banks, they are set by the Tech Giants like Google, Alibaba etc. The same set of companies that is well equipped to quickly adopt new technology, deliver data driven personalized services and attract the best IT people. So an increasing number of banks are recognizing this and responding to that. For example ING came to the conclusion that they should behave as an IT company with a bank license. This is translated at ING in their formal strategy as explained at the Investor days and a crucial enabler for that strategy is their groupwide agile way of working model. Although nobody can really foresee what banks look like in a few years from now it is the strong belief at ING that the ones that are best capable of being adaptive to changing circumstances are the ones that will survive.
And just like ING was once inspired by digital innovators who were born agile like Google, Netflix and Spotify other organizations become inspired by the agile transformation within ING. The main challenge for all those inspired organizations will be to define their ‘why’ in the context. Copy/Paste will not work but becoming inspired by others and being open to learn from others is extremely valuable and also a cornerstone of an agile organization.
How does it work?
Now that the why question is clear, the how question quickly comes next. An important bridge to cross are some organizational characteristics that most of the bigger organizations share:
- Siloed organizational structures;
- Many managerial layers;
- Bureaucracy is leading the organization;
- Personnel feels like a small part of a big machinery;
- Only focus is on efficiency and costs.
This is very recognizable for a lot of organizations and creates the feeling that a giant leap is needed towards an agile organization where teams that happily collaborate form the organizations backbone with leadership purely focused on facilitating that. Leadership that is able to constantly define strategy, learn from achievements and use it to adapt the strategy and finally creates the environment for teams to excel. But do we really have a common understanding of an agile team?
An ultimate example of an agile team can be found at the Special Forces, especially teams on a mission. Each member in the team has a specific role but also capable of doing things that all team members can (a T-profile set of competences). The team has a clear purpose. It is the team that decides on the Definition-of-Done according to their envisioned context but within the supplied strategic guidance and last but not least there is no bureaucracy telling them what to do. For a lot of organizations the power of such autonomous teams would dramatically increase the action oriented vibe. But is it possible to project that on the total organization? An organization that consists of hundreds or thousands of those autonomous teams?
Scaling can only work if you apply the concept of Aligned Autonomy. By doing that in the proper way you create organizational mechanisms that allow organizations not to act as a big mammoth tanker but as a fleet of small vessels heading in the same direction. Take the metaphor of a flock of birds. Every single bird acts autonomously, they now how to fly, accelerate, change direction etcetera but each bird is also capable of collaborating with each other in such a way that the whole flock is going south to warmer places when winter starts in the north. Going south is the strategic direction and each bird knows perfectly well how to contribute to that, look outside the window for the magnificent capability of the flock to operate, after performing some trial sessions in smaller groups. Nice metaphor but organizations do not consist of birds. Nevertheless there are good examples of huge organizations with thousands of autonomous teams where they implemented a model for aligned autonomy.
In the McKinsey article ‘The journey to an agile organization – May 2019’, they distinguish 3 transformation archetypes:
For a step-wise transformation you can find good examples in the Implementation Roadmap of SAFe (https://www.scaledagileframework.com/implementation-roadmap/). It describes a way of starting small with an Agile Release Train (ART), extending it to more ART’s towards ultimately all ART’s in the identified Value streams. It also provides guidance to extend the SAFe way of working on Enterprise level with Lean/Agile Portfolio Management practices.
In this article I would like to show you an example of the second archetype being the All-in variant. This is based on the best practice of ING Group. ING recognizes that everyone in the company performs activities that can and will be organized as teams. This includes the entire organization so not only the product- and change management practice but also operations, sales and support.
ING calls the domain where the products and services are developed and maintained the Delivery organization. If we only concentrate on that part of the organization we still count hundreds of multi-disciplined teams called squads. Each of those teams has a clear purpose, is aligned with the design principles on sizing and acts as autonomous as possible. In order to make it work as the above described flock of birds, they created some mechanisms in the agile organization.
They combined squads into bigger entities called tribes. A tribe also as a purpose that is the sum of the individual squads of the tribe. This stimulates collaboration within the tribe.
But still there are many tribes like that with their own purposes. Purposes that should be recognized from a customer journey perspective being an internal (for instance for a tribe in a support domain as Finance) or an external customer (for instance for a tribe around a specific products like mortgage). So we need mechanisms that stimulate alignment and collaboration between tribes. ING has chosen for the combination of Quarterly Business Reviews and Obeya rooms. The Quarterly Business review assures that all tribes and teams within the tribes contribute to the strategy. In the way how that should be performed the tribes and squads are as autonomous as possible. The QBR process aligns the objectives of the company (Strategic Themes, KPI’s) with the objectives of the tribes and squads. This is a balanced set of priorities that should prevent that for instance the Life Cycle Management activities of a squad are always deprioritized in favor of business value activities causing panic at the moment that existing systems run the risk of being out of support. But only aligning on a quarterly basis is not very agile as the teams work in sprints of 2 weeks. So every 2 weeks the full set of the teams learn by doing, creating the necessity to collaborate and decide on a much more frequent basis. This is amongst others established by feeding the QBR output into the Portfolio walls of the Tribe Obeya. The agile Obeya rhythms and routines facilitate the execution during the quarter in a very transparent way. This Obeya transparency also encourages quick decision making during the quarter on impediments (road blocks) for a squad or tribe.
In order to prevent a huge cascade of QBR and Obeya mechanisms (like in the traditional organizations via the stack of management layers) the agile organization need to have as less layers as possible. For most of the bigger international operating organizations a 4 layer agile organization should be possible. Imagine the increase in speed of decision making and the quick involvement of senior leadership in solving impediments without an attitude of command & control.
Programmes and tribe delivery in harmony.
But there is one more topic worthwhile mentioning. As said all delivery in an agile organization as described above takes place via the squads in the tribes.
But most of the bigger organizations also have an enterprise strategy that need to be implemented in an orchestrated way. For those transformational changes, programmes fulfill an important role. Not in the old style anymore where big programme organizations were created with their own governance and roadmap. This is now performed via small agile programme organizations that focus on the orchestration of the delivery via the tribes. This is extremely valuable in case of complex cross-tribe/cross-country involvement in the delivery and in cases where regulators require compliance at fixed moment in time.
So in the QBR and Obeya process the programmes are also active as ‘stakeholders’ for the tribes with the programme roadmap and deliverables also visible in the Obeya room.
As this creates the complexity that big organizations are familiar with in their portfolio activities, it helps big agile organizations if they use tooling that connects the portfolio objectives to the tribe objectives (OKR’s) up until the level of backlog management used by the squads.
The value of agile teams is not only available for small organizations with a handful of teams. If the transformation towards an agile organization includes implementing mechanisms for scaling, the full value of working in an agile manner also contributes to the success of the former mammoth ships turned into a fleet of smaller vessels.
Henk Venema is an experienced consultant helping organizations in their transformation towards agile organizations.