Several endemic problems facing companies can be solved with Agile. Time to switch to it

· Etiquetas: , , , Change

Change is coming progressively faster in the markets. This is the result of the ever-increasing interrelation of technology, regulation, social changes, black swans, etc.

Companies’ must respond with more cohesion and better agility to decide and execute. The growing digital density will heavily impact that transformation. Data growth is exponential and it’s only just begun. Artificial intelligence and machine learning coupled with talent will make work processes more and more responsive to the principles of agile that we mentioned earlier.

Changing the way of working is going to require serious motivation among top management, a healthy complicity of many to bring it to fruition, the right methodology and the tenacity to drive things forward for as long as it takes.

Cultural changes require a good story, new metrics for success, new strategic priorities, new values, better leadership and a redesign of the employee experience. And a change in the management tools that are prioritized within the company—such as the budget process.

The agile movement will be met with resistance because it implies giving autonomy and relinquishing control. It will cause fear of disrupting the status quo, especially if the prevailing culture is one of not making mistakes. It will give rise to doubts and questions such as: Where do these principles apply? Is it all or nothing? Can we find a balance and apply it ad hoc in areas to try it out? How do we manage the talent that has already incorporated the agile principles? How do we guarantee professional development? How can we get away from traditional systems of objectives and incentives? How do we scale it?

Coping with resistance, fear and doubt is part of upper management’s job. Culture is a pattern of behavior that has to start at the top of the organization. Agile requires that employees see that its principles are respected and embodied at the highest level of the organization.

The new reality will make the traditional model of work unfeasible and this new way of working can alleviate specific problems that many companies have. Here are the most serious issues that agile could seemingly resolve:

Silos. Workplace silos reflect the lack of connection and collaboration between departments. Within each silo the information or processes tend to work well. However, difficulties arise when activities need to be coordinated between the silos. If the company culture is very hierarchical, cross-functional collaboration is quite complicated, since all problems and decisions are escalated to the highest level overseeing the areas involved in the project or decision.

Information is power and tends not to be shared. When information is not shared with other departments, they lose peripheral vision, which is vital for solving complex problems that affect multiple areas.

Non-aligned objectives. Different areas of the company may have specific annual objectives for their sphere of influence that are not necessarily aligned with those of other areas. In some cases the objectives are not contradictory but simply different and hard to combine. In some extreme cases they can be contradictory.

As an example, let’s consider an area focusing on safety in an automotive company. Their objective might be to prevent fatal accidents with their vehicles, so they may want to use heavier materials to protect passengers. However, the area in charge of sustainability may want to promote lighter materials to reduce vehicle weight, since their objective is to increase fuel economy. The lack of incentive to agree on an objective that benefits the whole means conflicts get resolved by whichever side has more power.

The Nobel Prize laureate John Forbes Nash demonstrated through mathematics that when the different sides pursue their own interests, it ends up hurting everyone. Who suffers the consequences of an internal lack of coordination? It is the end customer and shareholders who ultimately pay the price.

“Everyone looks out for themselves.” A siloed view means each area does its job without needing to ensure the overall effectiveness and efficiency of the organization. Thus, the problem shifts from one area to the next without necessarily making progress as a whole. The phrase “I already sent an email” is both common and pathetic at the same time. As if merely sending an email liberates the person from having to coordinate with other areas to improve synergies and symbiosis. Projects and related solutions often fall in the gaps that exist between different areas. It’s like being in a relay race and letting go of the baton without ensuring that the next runner grabbed it.

When financial metrics rule, the customer loses. In the day-to-day at many companies, the customer’s place is secondary and residual. Just not in their public-facing communications. The key drivers are the hard financial metrics and the compensation systems linked to them. Each person strives to meet their goals and assumes that the customer is everyone’s responsibility and so, at the end of the day, no one takes care of them.

Rarely do we see organizations with a truly human ethos focused on customer service. The end-to-end view of the customer experience should be everyone’s mission, and the specific responsibility of a department with enough execution power.

There is only one customer. In reality, the company has just one customer. That is the external customer. It is the customer who each day decides to stay or turn to the competition. It is the one that pays everyone’s wages. Talking about “internal customers” only causes confusion.

The different areas of the company should be on the same side of the table trying to solve problems from the perspective of the customer, who, thanks to their trust and loyalty, allows it to pay salaries and bills.

Slowness. The traditional way of working has caused many organizations to be perceived as slow by their customers or the institutions they collaborate with. This slowness comes at a cost, in the form of delays in both new product launches and the reformulation of strategies in response to competitors’ initiatives.

Inadequate planning cycles: Planning cycles are not in line with the times. Most budgets are yearly and strategic plans are done 3-4 years out and reviewed annually, at best. These cycles must be reduced to enable a greater capacity for anticipation.

It would be great if all the energy wasted on the budget process were put into running the business. Flexibility requires shorter cycles. At small companies, the budget gets adjusted quickly if the market or business conditions demand it. At large companies, this owner mentality is gradually starting to resemble that of public officials riding out their career, who are risk-averse and slow to respond.

Unmotivated talent. The fear of mistakes is a consequence of long planning cycles and asymmetry in the rewards and punishments linked to the outcome.

As a result, before acknowledging a mistake and trying to learn from it, employees are compelled to cling to their past decisions, often compromising the company’s future. Moreover, each new decision requires an inordinate amount of internal validations and approvals.

At many companies, any sort of project requires the blessing of too many people, who with a simple rejection or by not responding, impede the initiative. The fear of approving something that might fail overshadows the potential for project improvement.

Very few managers dare to approve, present or carry out the projects of their subordinates. The consequence is that nobody dares to experiment, despite the fact that all companies officially claim that innovation is vital for survival.

The lack of motivation also comes from not seeing progress or impact in what is being done. This is the consequence of feeling removed from customers and perceiving little value in the day-to-day matters. These are people who would like to move to a different area, but the existence of silos reduces mobility within the organization.

As we know, the perceived power of leaders is reflected in the size of each silo and the amount of resources that are managed, which constitutes a serious obstacle to horizontal careers.