Agile, Scrum, Kanban and other types of Agile Development are presently the predominant topics in all media as well as in various conferences and blogposts. In most cases the focus is on software development and software teams. But (our) experience shows that agility is gaining in importance across a broader range of companies and, most importantly, also involving the management levels of companies.
This article describes the possible areas of application of an agile approach, using examples applicable to all types of business and showing effective agile tools especially for management.
Let’s face it. Companies often fail to adopt to new market requirements in time and tend to miss social trends and other influences on market development. And without analyzing or understanding the nature of the problems observed, they try to apply old methods to new situations. Let us first have a look back.
What are the changes in the business world over the past years?
A large number of economists, sociologists and even historians are dealing with this question. And certainly they have the proper qualification to analyze the various farreaching dimensions of the changes. Our point of view is far more pragmatic. We describe the changes from the perspectives of Managers and Entrepreneurs, trying to give a holistic picture of the “What” and “Why”.
Let’s dig deeper into the topic and find answers to the following questions:
Why are established companies currently struggling so much to keep up their position in the market?
Which change of old ways and rules makes it difficult for companies to persist?
Is there a recipe for staying competitive?
At the beginning of the 20th century new products and services were introduced at a very low rate with rather controlled and simple marketing methods and messages via print, radio and later on television. Only a few decades later there were hundreds of private channels advertising new and changing products at any time. This resulted in a larger distribution of products and raised the demand for new products, causing many companies to enter new markets, both for production and the fast generation of new ideas and products. The main objective at that time was “merely” raising the cashflow and profit in a fast growing business environment. The only thing necessary for selling more was producing more.
Quality was a minor issue, or putting it more precisely, unsatisfied customers didn’t have a platform for their complaints and could not ask for improvements in quality. In order to stay competitive it was more important to provide product novelties instead of establishing longterm customer relationships based on a certain product or production line.
–> Products were controlling the market.
Today we are facing a completely new situation. The speed with which society and economy develops has constantly grown within the last few decades and brought us to the point, where previous markets and organizational structures, which worked well in the past, are put under new pressures. What is the reason for this?
It’s simple. Thanks to the internet, Google and social networks, communication has become more independent. Customers can get free and vendor-independent information. Reviews from other customers, competitive comparisons, quick and easy feedback to vendors and the power to publish negative product reviews, have changed the role of the customer. A facebook analysis showed that 73% of facebook users trust their friends’ recommendations without trying the product themselves (http://www.getelastic.com/facebook-like/). All the changes show
–> Today customers are controlling the market.
To sum it up, we can say that the internet with all the changes coming along with it, has been causing massive cultural and economic effects, perceptible for almost every organization or company – be it consumer behaviour changes or employee behaviour. Today’s big companies must deal with the fact that a start-up can be serious competition for them. Innovation is possible without big budgets and marketing.
Deloitte’s “Big Shift Index Report” of 2010 reveals: “In the last 25 years only in the USA 40 millions new workplaces per year have been created, none of them by the fortune 500″. (http://www.nytimes.com/2010/04/04/opinion/04friedman.html)
These figures cannot be ignored. So we should examine what it is that start-ups do better than old economy companies.
4 Factors that a Company has to face
During many assessments, Lean Workshops and Agile Trainings that we are hosting, we encounter the same 4 major organizational aspects with regard to the aforementioned changes. These 4 aspects are influencing each other and should be looked at and evaluated as a whole. They are the key factors to achievement of goals and thus the success of a company.
Time to Market:There are two aspects here. One is the time needed to get from an idea to a real product and the related revenue, respectively. The other is the expectations and attitudes of the consumers putting continuous pressure on the vendor.
Customer Behaviour:Steve Denning describes the Now as “Customer Capitalism Age” where the customer has taken over control of the business. The Customer is free to use products or services and in case of dislike step back or make a new choice. In this way every single one of us has a direct influence on the success of a product within shorter product life cycles.
Organizations & Structures:Many companies offer value to their customers in the form of products and services. The structures, which are implemented within a company to pursue the overall corporate strategy, are crucial for employee morale and behaviour.
Management Processes:All processes for managing and coordinating production in a company are based on the principle of creating and delivering business value. In a classical sense these processes are “owned by” a small group of people within the company, called “the management”.
Many companies in the IT sector (upward trend) have already discovered the advantages of agile principles and processes helping them to take advantages of the complexities, insecurities and challenges of today’s business environment, instead of sticking to fixed processes.
Agile Processes for IT companies only?Companies and departments of all business sectors and sizes, are equally affected by the massive ongoing changes. So no, Agile Change is not for IT companies only. We may need a little renaming of methods and this would even be necessary, as for instance the agile framework Scrum doesn’t by far cover the above-mentioned complexity, and also doesn’t contain any agile management techniques or tools, like e. g. the Agile Strategy Map.
Along the two following examples we will describe the agile approach as well as agile methods and tools, which, given an appropriate adaption, are applicable and productive in all kinds of organizations.
Example 1: Agile Methods in political educationThe public law institutions “Medienanstalt Berlin Brandenburg” (mabb) and the “Medieninnovationszentrum Babelsberg” (MIZ) are sponsoring creative and
interdiscliplinary projects. Their aim is to encourage innovation and help developing ideas and prototypes which further the diversity of broadcasting services, especially by supporting private broadcast, and thus adding value to the society.
From August to September 2011 the “MediaCamp” took place at MIZ. Based on the survey of Prof. Dr. Bettina Fackelmann “Sprichst du Politik?” (Do you speak politics?) 15 young media professionals and people interested in politics worked on the subject “Politische Partizipation im Jahr 2020″ (Political involvement in the year 2020).
The challenge was to develop, within four weeks, new creative approaches and contents ready for broadcast. To enable efficient and productive collaboration in such a short time, Kai Krabbenhöft and Holger Heinrich, in charge of the project, decided to apply agile methods for the project with the following goals.
Challenges and ApproachThe biggest challenge of the project with regard to the time constraint was to form a team of 15 young individuals with different backgrounds and expectations who had never worked together before. In addition, the team was expected to be innovative and produce their own ideas with no targets or specifications given except the fixed timeframe (there had to be results after four weeks’ time).
Facing the time constraint and the challenging task, both the organizers and the team members were sceptical towards the two day teambuilding phase. We get this reaction a lot when we are dealing with projects where time is crucial factor. But usually during the first sessions on the topics self organization and empirical process control all agree that without clear direction and basic regulations goals cannot be reached.
So our 2-day workshop was dedicated to team-building and the teaching techniques for answering the following questions:
- How to work on global goals in distributed teams?
- How to realise effective daily communication?
- How to decide which ideas can be realised and which not?
- How to define “done” and make sure all requirements were met?
Thanks to the structured agile process the teams were able to create the website “Sehen was Passiert” (Seeing what is happening), produce the image film “Sei nicht Kopflos” (Don’t be mindless) and realise a road show on the topic “Do you speak politics?” for presenting the results.
The MIZ project shows well, that the agile approach is not only relevant for IT projects.
Example 2: Agile Managers make companies agile
In 2011 agile42 formed an international team of agile coaches (mainly Certified Scrum Coaches, CSC) for undertaking a large-scale agile transition of a global
telecommunications provider company.
One of the goals was creating the basic agile working environment for many hundreds of software developers working in distributed teams around the world. Although the coaching of the distributed teams was an important part of the transition, we would like to focus on the challenges for the management of this global player, to demonstrate that agile methods are not only relevant for production but also effective for the management. Using the Agile Management Framework which will be described in the following chapter, the managers with the support of the coaches succeeded to implement agile structures, which take into account the 4 aforementioned factors (Time To Market, Customer Behaviour, Organization & Structures, Management Processes).
The Agile Management Framework – More Than Scrum
The Agile Framework Scrum offers many useful tools for working in and with teams.
However, for the management we need more.
One simple but illustrative example is the so-called “Commitment”. At the beginning of each iteration the team makes a commitment for a certain output at the end of the iteration. They can make this commitment because they are responsible for production and delivery of the output or product respectively.
For managers things are different. Despite the fact that they are also often organized as teams, they ususally are not the ones who produce the output. But they are responsible for the producing teams.
With the awareness of the limits of Scrum in mind and the learnings in many projects, agile42 developed the Agile Management Framework, based on the principles of Scrum but with the addition of elements for agile management.
Challenges for the Management
Often the changes that come with the introduction of agile methods create insecurities and fears in the management. Besides the question whether Agile is really the right method CEOs and managers also have to deal with the issues of employees (roles and careers), changed customer relations, their own fears of losing power, etc. Although agile working is in accordance with the human nature, we are used to working differently and shy away from everything new. To be able to decide whether agile is right or wrong, good or bad, managers should consider the following:
Agile Managers create the appropriate working conditions for their employees, they communicate a clear vision and goals, and they support their teams in self-organizing.
This leads to higher job satisfaction, motivation, and brings forward new ideas and innovation. In order to accomplish this the classical hierarchical structures must be broken up. The classical image of a manager has to change.
Here are a few examples of how this change can be achieved.
Rethinking with Marshmallows – Agile Management Tools 1/4
A marshmallow, 20 pieces of spaghetti, some string and masking tape – The marshmallow challenge (http://marshmallowchallenge.com/Welcome.html) is a quick and captivating exercise for the management demonstrating that it is often not possible in complex environments to provide a final and complete working plan in advance, which takes into account all circumstances and side-effects.
In just 18 minutes the participants learn:
- coordination optimizes the results of team-work
- prototyping and iterations win over the illusion of getting things done perfectly the first time
- proper collaboration is the most effective factor for reaching goals
Another learning effect of the Marshmallow Challenge is the realization that mere monetary rewarding of creative processes has a negative influence on the performance of teams. Monetary rewarding in creative working as opposed to mechanical processes produces a pressure that can have undesirable effects on the product. This perception is contrary to the statement of Tayler, who says that the more money employees get the more and better they will work.
Here is what we think motivation of creative work requires:
- The knowledge of the whole purpose
- The experience that working on the task is challenging and allows for extending personal skills
- The possibility that work can be done in an individual way (Book: Daniel Pink, Drive)
Transparency of Vision
Whether you are introducing a new method, developing a new product or a setting up a new service, it is important to recognize the constraints as well as their effects.
People who are supposed to work on their own responsibility not only need appropriate payment but also a vision telling them what to do and why. Of course it is not enough to just set up a vision and send it to everyone via a mailinglist. A vision has to be communicated and shared with all employees. Also the employees have to be involved in the further development of the vision which is not just a fixed presetting but a living and moving topic that requires communication on all levels.
Companies that value self organization highly consider the company vision as basic
aspect for employees to identify with the company. And only if people feel that they are part of something will they contribute to acomplishing shared goals and being successful. It is the management’s responsibility to communicate vision and at the same time enable their teams to realize their role and take part in the creation process, and also propose changes if necessary.
Elevator Pitch Template – Agile Management Tools 2/4
This template is a simple tool for phrasing or rephrasing a vision. It allows reviewing the vision with respect to all connected topics and thus helps in:
- Defining target groups
- Recognizing/Identifiying USPs
- Describing goals (not products)
From Vision to Strategy
Based on a vision the management should define and visualize goals and sub-goals in sufficient detail allowing for the deduction of further steps. So the vision is basically considered a distant beacon which the management approaches stepwise by defining sub-goals and the corresponding strategies for reaching them. Usually the management should not rely on just one path for reaching a goal but traditional tools for planning often only support linear planning without support for multiple approaches or ideas. But especially at the beginning of strategical planning this is fundamental in order to maintain flexibility with respect to the big picture.
Agile Strategy Map – Agile Management Tools 3/4
The Agile Strategy Map™ is based on the strategic “Intermediate Objectives Map” which was introduced in the “Theory of Constraints“ (TOC). It is a cause-effect-diagram which considers all necessary preconditions for reaching a certain goal. An Agile Strategy Map is created by following these 3 steps
- Defining the goal
- Identifying the possible success factors (PSF)
- Identifying the necessary conditions (NC)
From Strategy to Action
The Strategy Map tells us WHAT has to be done. Next we have to look at HOW things are done. At any time the management has to be aware of the strategic and tactic aspects for reaching the goal. To this end – in compliance with the Scrum process – a backlog is created and filled with tasks that have to be prioritized. The tasks are created by breaking down the necessary conditions (NC) into more detailed, manageable bites. Furthermore the backlog contains all operative problems identified by the teams. The management has to take care of these problems to ensure effective working. It is quite evident that the backlog like most of all agile tools is subject to constant adjustment and change.
The Management Backlog – Agile Management Tools 4/4
So the management backlog is a list containing “Action Items” based on the “Necessary Conditions” (of the Agile Strategy Map) and the requirements of the company’s entire organisation. The tasks are prioritized by the following criteria:
Combining the Agile Strategy Map and the Management Backlog creates optimal synergy between strategy and tactics. This is how the management succeds in aligning operations with the vision.
The tools of the Agile Management Framework provide the transparency which the management and the staff need to pursue a common goal. In addition, they show the differences to hierarchical structures and illustrate the added value of selforganizing teams. Thus they support the process of adapting and maintaining the new approach without switching back to old problem solving patterns and mechanisms.
Conclusion – Deciding what is right rather than deciding right
Agility is becoming a more and more important aspect when it comes to consulting companies and other institutions. There is no doubt left that in the 21st century we have come to the point where the old ways of consulting are no longer valid and need to be replaced by new methods of communication, iterative approaches and new paradigms of collaboration.
In the past “Agile” was often – mistakingly – described as a chaotic method that has no need for documentation, requirements definition and planning. These times are over now. When introduced and applied properly agile methods lead to goal-oriented communication with customers, improved processes and quality, as well as improved budget- and timemanagement. And these are only some of the crucial factors for surviving in today’s business world. Models and processes like the Agile Management Framework also allow businesses to analyze career plans, sales and order processing and many more importants aspects of modern companies.
But all this is not easily achieved, since agility – requiring profound rethinking and change of behaviour of all people involved – is an empiric process. As opposed to defined processes the agile process is not based on future assumptions and the according extensive plannings. Agile processes do not try to prevent changes, they rather make it possible to deal with them fast and reasonably.
With the possibility of continuously questioning and optimizing of the process steps, agile and lean processes are powerful tools that allow quick adaption to fast changing market requirements. “Agile” helps deciding what is right.