In one sense, Agile is a big idea. In another sense, it isn’t: Agile is simply management. Agile is what we need to be talking about when we talk about leading and managing work in the 21st Century. Agile is the way private sector firms must be run if they want to cope with the massive rapid change, increasing complexity and pervasive disruption of the 21st Century marketplace. Agile is fundamental for all organizations if they are to deliver the gold standard of 21st Century organizational performance: instant, intimate, friction-less, incremental value at scale.
When we talked about leadership and management in the 20th Century, the discussion would typically begin with an assumption of top-down bureaucracy. We might have talked about how to adjust or improve top-down bureaucracy by introducing a variety of subtopics, like teams, R&D, de-layering, re-engineering, restructuring, zero-based budgeting, quality management, and the like. But the basic assumption was that the organization we were talking about—after the discussion—would still be recognizably a top-down bureaucracy. None of the adjustments or modifications disrupted that assumption.
Today when we discuss leadership and management, the discussion needs to proceed on a fundamentally different assumption: the necessity of organizational agility and the obliteration of top-down bureaucracy. We may discuss how to modify or improve agility, with a variety of management subtopics, such as digitization, big data, ecosystems, platforms, artificial intelligence, or the Internet of Things. But none of those discussions will prosper unless and until the organization as a whole has the versatility to implement those notions.
If the firm slides—perhaps unwittingly—back into an assumption of trying to implement those ideas in a top-down bureaucracy, it will end up in a very-20th-Century conversation, and little if any good will come of it. Without a foundation of agility, digitization, big data, ecosystems, platforms, artificial intelligence, or the Internet of Things will be no more than empty buzzwords.
The phenomenon of Agile can also be seen as part of a tumultuous set of social, economic and political changes underway. Just as capitalism is being challenged, and democracy is faltering, so too the very idea of leadership is being re-conceived and management is being transformed. Agile management and leadership have emerged because they are aligned with the times, while top-down bureaucracy is not: bureaucracy was “built to last” in a largely stable world, whereas Agile is “made for change”.
Organizations that are still being run as top-down bureaucracies are likely to display symptoms of what Alvin Toffler in 1970 called “future shock.” (Toffler also foreshadowed the concept of Agile organizations with the term “adhocracies.”)
The very concept of leadership is also changing. Leaders who are still proceeding on the 20th Century assumption that they can issue orders and expect obedience are apt to be taken aback: General Stan McChrystal showed us that leaders may need to learn how to act more like gardeners.
Why Agile Happened
There are many reasons why Agile happened. It has been driven in part by financial factors: Agile makes more money. It is also driven by human considerations: it offers the possibility of humanizing the workplace and drawing on the full talents of the people doing the work. It is also driven by social pressures: the new generation, particularly top talent, has little tolerance for bureaucracy. There are also ethical elements: it can be part of what Peter Drucker talked about as the virtuous firm, as opposed to the firm only interested in making money for itself. Ultimately, it’s also driven by pragmatism: it’s a necessary element to coping with the turbulent context of organizations today.
Meanwhile, the evidence of the need for Agility continues to pile up. For one thing, the largest and fastest-growing firms on the planet are implementing various forms of Agile management. For another, surveys by Deloitte and McKinsey show that more than 90% of senior executives give high priority to becoming agile, while less than 10% of firms are now highly agile.
And CEOs increasingly recognize that they have no option but to change. Symptomatic is the recent declaration by the Business Round Table (BRT) that shareholder profits are no longer the only purpose of a corporation. This is important: for the last two decades this group of some 200 powerful CEOs has stuck to the anti-Agile mantra, “maximize shareholder value”, and its members had, for the most part, implemented it.
Indeed, for most firms, Agile will entail deep change. For some, it will, as a recent McKinsey article pointed out, amount to “a change in the firm’s fundamental DNA.” Agile thus “calls into question deeply entrenched wisdom around core processes such as budgeting, capital allocation, or people evaluation. Even a fairly uncontroversial organization norm—that annual people evaluations are done by ‘your boss’—doesn’t have to hold true when implementing enterprise-wide agile.”
How An Age Emerges
How could The Age of Agile be happening if most firms are not yet Agile? One part of the answer is that an era emerges at first almost imperceptibly, particularly for those living in the transition. If we think about big epochal changes of the past, like the Protestant Reformation, it’s not as though people woke up on one morning in 1517 and said, “Hey, did you hear? Martin Luther nailed 95 theses to the door of a church in Wittenburg last night. I guess that means we’re now living in the Protestant Reformation.”
Ages come upon us very slowly. It took another hundred years of fragmented history while the advocates of a Protestant reformation like Martin Luther and Huldrych Zwingli argued ferociously about what exactly was involved. Similarly, it took several hundred years before the Copernican revolution in astronomy was finally accepted.
The birth of a new age is never easy because it can take a long time to figure out what exactly the change involves. And the powers-that-be usually resist it, deny the need for it, and oppose it. It’s only after the change has largely taken place that they belatedly claim credit for having introduced it in the first place.
The Five Biggest Challenges Facing Agile
Although Agile is making rapid progress, it now faces five particular challenges. Unless these challenges are met, the eventual spread of Agile could be delayed by years or even decades.
- Agreeing On The Meaning Of Agile
Although there was never an official definition of bureaucracy, there was a generally agreed understanding of what it involved. As management guru Gary Hamel explained:
Strategy gets set at the top. Power trickles down. Big leaders appoint little leaders. Individuals compete for promotion. Compensation correlates with rank. Tasks are assigned. Managers assess performance. Rules tightly circumscribe discretion.”
Those were the assumptions on which 20th Century organizations operated, as anyone who worked in one will testify, as I did in the World Bank.
Today there are multiple versions of what is meant by Agile.
There has been some progress made towards converging on a common understanding of what is meant by organizational agility. Agile is not about doing more work or just doing work more efficiently: it's about getting more value from less work. An obsession with delivering more value for customers is central.
The Agile mindset and the Three Laws of Agile, The Heart of Agile, The Agile Manifesto, and the vast number of books on the subject are all efforts to clarify the concept. The World Agility Forum taking place in Lisbon later this month will bring together many of these players who are intent on accelerating convergence on a common understanding.
- Getting Top Management Buy-In
In most large organizations today there are usually some executives in middle management who grasp the management revolution and have an Agile mindset. But there is a still a shortage of C-suite leaders who have an equivalent grasp of Agile or the know-how to proceed with implementation. While the recent BRT announcement is a promising development, with almost 200 CEOs of the very largest corporations abrogating a major constraint to Agile, more leadership from the C-suite is needed. Change agents need to be able to succinctly and powerfully state the case for Agile and be able to share convincing stories that resonate and inspire the C-suite to get with the program.
- Combating Agile As A Buzzword
With most firms giving high priority to becoming agile and very few actually being agile, it’s not surprising that many firms claim to be being Agile without much basis. There are several varieties:
- Early stage Agile: A transformation journey for a large organization can take years. Microsoft has been at it for then 10 years. During the transition period, a firm is clearly not yet fully Agile, but it has pockets of Agile.
- Misapplied Agile: In other cases, management may be doing its best to implement Agile, but through a lack of understanding ends up implementing a caricature of Agile. The satirical depictions of Scrum and the Lean Startup methodology in the popular article, “The End of Agile” are noteworthy. “Agile sweatshops” are also problematic.
- Scaling frameworks: Some of the scaling frameworks are particularly troublesome, with the pursuit of deliberately non-Agile ideas such as an internal focus at the expense of the customer and top-down processes that are antithetical to true Agile.
As the term “Agile” becomes co-opted into general popular speech without the specific meaning that generated the benefits that led to its spread, there is a risk of the equivalent of Gresham's Law: the devalued popular meaning of Agile will undermine the value of genuine Agile. This risk underlines the urgency of reaching stronger and wider consensus on the fundamental meaning and principles of Agile.
- Fleshing Out The Details Of Agile
The major thrust of Agile in the first 15 years since the Agile Manifesto of 2001 was spent in figuring out how to make Agile work at the team level, first with individual teams, then with multiple teams and finally with large numbers of teams. In the last few years progress has begun to be made on the fuller agenda of making the whole firm Agile. We have begun to see progress in understanding Agile in manufacturing, Agile in retail, Agile in petroleum, Agile in strategy, Agile in human resources, Agile budgeting, Agile auditing, and Agile organizational culture.
This is progress but further work is needed on those subjects, as well as on fleshing out how Agile provides a necessary basis for the subtopics of 21st Century management, such as digitization, big data, ecosystems, platforms, artificial intelligence, or the Internet of Things.
- Professionalizing Agile
To date, Agile has been a phenomenon led by implementers. The Agile mindset is an attribute of practitioners more than theorists. It is action-oriented more than a theoretical philosophy. It is a basis for diagnosis and action more than a set of beliefs. It is built on the hard-won knowledge of experience. Much of what has been written has been done by Agile advocates. Large consulting firms are now entering the field en masse, and adding to the quantity of marketing literature.
Business schools have been conspicuous by their absence from the Agile world, being apparently content in many cases to be teaching yesterday’s expertise. In future, they could and should play an important role in several ways.
One is undertaking rigorous research on the outcomes of Agile transformation journeys, of both success and failure. Why did Microsoft succeed why GE failed? Given the long duration of Agile journeys, meaningful studies will need to be longitudinal in nature and carried out in such a way that they look behind labels and get to the substance of what is really going on, carefully distinguishing between different mindsets.
If it is true, as I have suggested, that acquiring the Agile mindset is something akin to acquring the mindset of a profession, such as that of a lawyer, a doctor or an economist, then a more professional type of training is needed. Agile practitioners think about certain problems in characteristic ways, notice certain kinds of information, data, and concerns in their respective subjects, and analyze the issues in their respective ways, and pursue their respective kinds of solutions.
These different ways of thinking, perceiving and acting are acquired over years of training and practice, which in turn generate characteristic attitudes, values, modes of thought and approaches to problems. The Agile mindset is not something that can be acquired in a two-day training course. Although some training and various certifications are already available, they fall way short of what is needed, particularly at higher levels of responsibility.
At present, Agile leaders are emerging haphazardly, practically by chance. What is needed in future is the development at scale of Agile management as a true profession. Business schools could and should play a major role in helping this happen.
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