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The Age of Agile: How Smart Companies Are Transforming the Way Work Gets Done, by Stephen Denning
ARE you interested in finding a way of flourishing in a volatile, uncertain, complex and ambiguous (VUCA) world, where your customers run the marketplace with the power of dictators? This book offers a compelling answer that is based on running your business very differently to how it is probably running today.
Far from being yet another unproven, “super-exciting” new way to create a more energising, prosperous and meaningful mode of working, it is widely accepted and well established.
Author Stephen Denning worked at the World Bank in various management positions for decades and after retirement, began a career as a management consultant. This book focuses on how some organisations are learning to operate in a way that is better for those doing the work, better for those who are recipients of the work, better for the organisations, and better for society.
The default operating system for almost every medium-sized and large-scale organisation on earth is bureaucracy, an organisational caste system that discriminates between the thinkers (managers) and the doers (employees).
The bureaucratic system of management was designed to produce consistently average performance to a set of internal rules. Its vertical chain of command was never designed, nor is it capable of, moving fast enough to respond to a VUCA marketplace. The alternative paradigm, called by various names, is referred to as ‘Agile’.
The Agile movement began decades ago in the manufacturing arena but gained traction recently in an unexpected place - software development. It was published as the ‘Agile Manifesto’ in 2001. The unusual part is that no one would naturally associate the IT department with a robust management system.
The manifesto values “individuals and interactions over processes and tools; working software over comprehensive documentation; customer collaboration over contract negotiation, and responding to change over following a plan”.
Organisations that operate as Agile are capable of being highly innovative and efficient, as well as passion-filled and pragmatic. If this sounds too good to be true, consider well-known companies that are shining examples of Agile applied.
Radical transparency
Nucor, the most consistently profitable steel company in the world, practises radical transparency. Every employee knows the profitability of every order that it delivers. The frontline employees, not managers, are responsible for maximising margins.
Morningstar, the world’s largest tomato processor, has no managers, and all key investment decisions are taken by ‘blue collar’ employees. Instead of moving decisions upwards at Morningstar, they have moved competence down to the individuals who have the information and the context to make the best decisions.
How do you get individuals to think and behave like owners and reap the financial benefits that flow from this? The organisation must be transformed into small, localised units, each with its own profit and loss responsibility. Essentially, you would have to dump the traditional management practices of manipulating both staff and trying to manipulate customers, and instead treat people as adults.
The more common alternative for extracting value out of a company is through financial engineering. This involves short-term cost-cutting, offshoring, share buybacks, tax dodges, and other devices. These can create the illusion of prosperity for investors, but they are in fact systematically destroying real shareholder value.
The Agile paradigm is neither easy to understand nor implement for traditional managers. Agile has become widespread and popular over the past decades, with tens of thousands of organisations around the world having adopted its principles.
“The new management paradigm is a journey, not an event. It involves never-ending innovation, both in terms of the specific innovations that the organization generates for the customer, and the steady improvements to the practice of management itself,” Denning explains.
Agile management is based on three “laws”: the Law of the Small Team, the Law of the Customer, and the Law of the Network.
The law of the small team requires that work be done in small, autonomous, cross-functional teams, working in short cycles on relatively small tasks, and getting continuous feedback from the ultimate customer or end-user.
When you work in such teams, situations can be analysed, decisions made and action taken as a single, uninterrupted motion. Immediate conversations sort out differences, work can be fun, and everyone can be in a “flow” state.
Team in nothing but name
This is very different to what we generally call a ‘team’. Most teams in twentieth-century organisations were teams in name only. Most of them weren’t real teams at all. The team-leader was a boss like in any other bureaucracy.
The law of the customer is that the highest priority is to satisfy the customer. In IT, that is early and continuous delivery of valuable software that is instant, frictionless, intimate, and preferably free.
Many managers are familiar with the phrase “The customer is number one!” while continuing to be internally focused, bureaucratic and fixated on delivering ‘shareholder value’.
In an Agile organisation, “everyone is passionately obsessed with delivering more value to customers. Everyone in the organization has a clear line of sight to the ultimate customer and can see how their work is adding value to that customer - or not.”
The third characteristic is the Law of the Network, where leaders are not fierce conquering warriors, but rather like curators or gardeners. You can’t command tomatoes to grow: you can only choose the most appropriate seeds and then provide the appropriate environment in which they can grow best.
When the whole organisation truly embraces Agile, it is less like a giant warship and more like a flotilla of tiny speedboats. This law is the recognition that competence resides throughout the organisation and outside the organisation, and that through networking inside and out, problems can be solved and innovation emerge.
Agile organisations are not flat – there is a hierarchy, but one of competence, not authority.
The author cites common mistakes leaders make when planning to implement and derive the benefits of Agile. These include introducing Agile as just another business process, with top management hedging their bets on its success by a less than fulsome commitment.
Then there is the mistake of rigidly applying a methodology conceived somewhere else, for some other business, and attempting to micromanage the change. And there is the common mistake too, of skimping on training and coaching, so that people only understand the idea, but don’t embrace its mindset as their very own.
When done right, Agile can continuously deliver more value to customers from less work, which results in terrific returns to the organisation.
Readability: Light --+-- Serious
Insights: High -+--- Low
Practical: High +---- Low
- Ian Mann of Gateways consults internationally on leadership and strategy and is the author of Executive Update. Views expressed are his own.
