In my seminars and talks about business agility I ask attendees to rate themselves on the internal and external rate of change scale. Nearly all indicate that their businesses are struggling to keep up with the external rate of change and manage successfully. Those who are not create an interesting discussion about an already successful agile transformation or an amazingly stable industry, so it seems.
If the rate of change outside exceeds the rate of change inside, the end is near.
Jack Welch
For the rest of us, answers about how to manage an agile transformation are available and come from the successful application of agile ways of working pioneered by software engineering.
The 2001 agile manifesto
The agile manifesto from 2001 is an important milestone for the agile movement. It established clarity about urgently needed new ways of developing software to avoid the all-too-common death march projects of the 1990ies. I have been there. Since then, it has guided the transformation to agile software development across the world.
With the help of the manifesto, our understanding about how to run agile teams has matured significantly. There is general agreement about the best practices of team agility with Scrum having established itself as the dominant methodology.
The success of team agility created growing interest in scaling agility within and from software development projects to other parts of the organization. This had led to the rise of scaling frameworks like LeSS, Nexus, and SAFe. Those frameworks enable individual agile teams to collaborate effectively to build larger solutions. But they can only go so far.
A business is more than a combination of teams and it is not only about building products. Scaling agile teams bottom-up has its limitations and does not provide all the answers needed for business agility. This created the need for a more comprehensive agile manifesto for business agility to complement the original manifesto which stands firmly for teams.
Introducing the agile business manifesto
“Agility starts bottom-up, but it completes top-down”. Creating business agility top-down requires executive sponsorship, cultural change, and an agile transformation plan but it also requires a guiding vision for how an agile business should operate. The agile business manifesto provides such a vision.
It uses the same format as the original agile manifesto. Its value statements contrast traditional properties on the right with agile properties on the left. Each statement of the manifesto describes what is valued more compared to what is valued less. By this, the right side of the manifesto characterizes an old, traditional business and the left side the new, agile vision for a business.
The agile business manifesto captures the essence of several agile methodologies and is based on discussions with and the experience of many agile practitioners and colleagues I have worked with.
| Layer | Property | We value… |
| WHY | External Impact | Customers over standardization Results over perfection |
| WHAT | Flexible Organization | Self-organization over fixed roles Cross-functional teams over silos |
| HOW | Engaged People | People over processes Potential over past performance |
| Small Teams | Proactive discovery over planning Iterative development over big-bang solutions Being change over being changed Continuous learning over unconditional knowing | |
| Active Culture | Explicit over implied values Lived over stated principles | |
| Servant Leaders | Coaching & context over command & control Competencies over titles |
The agile business manifesto uses the following blue print for an agile business:
An agile business creates external impact by staying flexible internally. Its foundation is engaged people working in small teams, governed by an active culture and supported by servant leaders.
Using the Golden Circle as reference, agile businesses Start with Why.
The WHY of an agile business
VUCA requires external orientation and outside-in management. To respond to change you first need to recognize it and then act quickly. An agile business is built for external focus and impact. It aims at continuously and iteratively delivering superior customer results.
Agile businesses deliver external impact and value:
- Customers over standardization
- Results over perfection
Globalization and individualization cause market fragmentation down to a market size of one. Generic strategies like cost leadership OR differentiation don’t work anymore. Successful businesses offer both: a superior, differentiated, customized product AND an attractive price.
Agile business aim at understanding their individual customers and their needs and avoid standardizing their approaches. They deliver results aiming at speed rather than perfection. By following both approaches, they maximize customer value. They use agile teams to build long-lasting customer relationships. On the business level, they use foresight and an iterative strategy process to constantly learn and adapt.
Your WHY, purpose, cause or belief may differ. It may be different from Customer Results. It may be social; it may be the environment. But it will be about external impact, not about internals, standardization or (internal) compliance.
The WHAT of an agile business
With external impact as its key objective, an agile business aligns everything else towards it while keeping everything else flexible.
Traditional organizations often suffer from in-flexibility in the form of silo-mentality, rigid roles, not-my-job attitudes, and over-regulation that limit their external impact and become synonyms for organizational failure.
An agile business continuously learns, is prepared to adjust and change as needed to maximize its external impact. Its flexibility ensures its survival.
Agile businesses have a flexible organization and value:
- Self-organization over fixed roles
- Cross-functional teams over silos
They favour flat, horizontal, process-orientated organizations over tall, vertical hierarchies dominated by functional silos. They assign people into cross-functional teams that work together closely to drive tangible business outcomes and empower and enable those teams to self-organize.
The HOW of an agile business
Agile businesses are flexible because they use flexible building blocks. Those are engaged people, small teams, an active culture, and servant leaders.
Engaged People
Staff engagement levels are notoriously low and don’t change much over the years. Many work for money only and are frustrated to the point of internal resignation by office politics, micro-management, and adverse work conditions.
Agile businesses are built on engaged people and value:
- People over processes
- Potential over past performance
Engaged people are energized about the work they do, what they achieve each day, and how they learn and grow. Agile businesses adapt their talent management processes to create energizing work experiences and recognize that capabilities, purpose and potential may matter more than experience when facing an uncertain future.
Small Teams
In agile businesses, engaged people work in teams throughout the organization but most commonly at its edge facing and interacting with a dynamic external environment, its customers, other external stakeholders, and competitors, where time-critical decisions need to be made frequently based on local information.
Agile businesses organize engaged people in small teams and value:
- Proactive discovery over planning
- Iterative development over big-bang solutions
- Being change over being changed
- Continuous learning over unconditional knowing
Small, agile teams regularly and proactively seek feedback and discover change. They develop solutions iteratively in close interaction with customers, welcome and impersonate change as change agents in the context of their own teams and beyond. They learn continuously and are empowered to change their ways of working.
This may sound like the perfect new world: engaged professionals work independently delivering value and driving customer satisfaction. Hundreds if not thousands of teams around the world in parallel. The beauty about agile organizations is that they are good at execution. Gone are the days of strategy execution failure.
But nothing is perfect. Without a common execution strategy, an agile organization risks losing its coherence and ability to achieve its objectives. It risks execution strategy failure. Avoiding it needs culture and leadership.
Active Culture
In a traditional organization, structure is provided by hierarchies and clear role definitions. An agile organization needs to remove or at least reduce them to become flexible. How can it ensure that those teams make the right decisions and execute consistently in the best interest not only of the customers they serve but also the larger business they belong to? Culture is part of the answer.
Culture is often described as “the way we do things around here”. In many organizations, it is implicit and allowed to form uncontrolled and inconsistent across the business. Corporate culture often differs by location, department and manager and is hard or even impossible to describe. Yet, “culture eats strategy for breakfast”. This is not acceptable in an agile business.
In an agile business, culture becomes the operating system. It uses a common agile mindset, clearly defined, consistent, and enforced values and principles supported by practices, tools & processes to provide the guidance needed for cross-functional decision making, the delivery of consistent results, and autonomous execution.
Agile businesses create an active culture and values:
- Explicit over implied values
- Lived over stated principles
Across the entire organization, regardless whether traditional or agile ways of working are employed, an agile business requires a single, agreed, unifying, consistent set of values and principles. This requires top-down design and enforcement. They guide hiring and performance assessments. People hold each other accountable for living them actively every day. People call on them to make and justify decisions. Amazon’s agility results from living its explicit leadership principles in that way. An agile culture transformation is probably the most important part of making an agile transformation successful, but it requires serious change management efforts and time.
Servant Leaders
Even the best-defined culture cannot provide all the answers required for daily execution. This require leadership.
If the values and principles are the cultural building blocks of an agile organization, leadership is the mortar that connects everything and fills the gaps and patches the imperfections that even the best top-down design cannot foresee and avoid.
Agile businesses have servant leaders who value:
- Coaching & context over command & control
- Competencies over titles
Leaders set and clarify priorities, help the team to understand the greater business context and customer situation. Leaders support and coach the teams in making the right decisions. They actively remove organizational impediments beyond the control of the team to improve their productivity and velocity.
This requires experienced, caring leaders. Probably more, than the organization currently has. These roles will be highly appreciated and valued. Nobody in a current management position will have to be afraid of being without a job or getting paid less. But they need to be prepared to experience agility, learn, experiment, and, if they like it, make the change and become servant front-line leaders.
Conclusion & Recommendation
Agility offers tremendous benefits in addressing business challenges with often dramatic impacts on productivity, quality, time-to-market and staff engagement.
Be it for the internal benefits, for external impact, or for coping with the VUCA environment, pursuing an agile transformation and journey is top of the agenda for many organizations.
But as stated by the agile manifestos, the old is not obsolete. It is just valued less. In most cases, an agile business will combine old and new ways of working and establish itself as a hybrid organization that balances the best from both worlds. The amount of agility needed depends on the individual situation. And more is not necessarily better.
In the old world, detailed and highly automated business processes, clear roles and quality standards have provided stability and reliability that enable business efficiency, security, low cost, and quality. Those are not obsolete. Agility does not challenge these achievements. For example, I would not want to fly with an airline that claims to be 100% agile.
Agility and agile methodologies may be just another tool in the ever-growing organizational toolbox. But, at the current times, it is probably the most important new addition to the toolset. Everybody and every organization must invest the time to understand it.
Each business will have to decide for itself where it requires higher levels of agility and how to achieve it. This makes business agility so much more difficult to define than software development agility. It is highly individual. Therefore, the agile business manifesto is not a strict prescription but an inspiration for an individual agile vision. A vision that creates clarity and urgency to act. 93% of organizations are implementing agility and most are ready to scale agility to the business. If you don’t, your competitor will.