DISCOVER AGILITY, BE THE CHANGE Massimo MaffioliAgile organization: an organic model for your business 1 THE CONTEXT Companies feel it’s time to move to new working paradigms, based on agility principles, in order to achieve higher level of effectiveness in processes and results, but they are struggling in finding the right way, in terms of approach and scope of change. From a recent research of Politecnico di Milano (“Osservatorio Enterprise Application Governance 2017”), only 17% of IT Directions in Italy fully or significantly apply agile to IT projects. Do they need to change the whole organization or IT departments only, or part of them? Which are the most effective ways to proceed, which are the challenges and the expected results? Many of the paradigms comes from IT world, so what and how IT changes with the adoption of paradigms related to Cloud, DevOps, Continuous Integration/ Continuous Delivery, etc? Every business is a digital business said Satya Nadella, but technology change rate is fast while organizations change rate is slow. Organizations are traditionally based on the “machine model”: they are hierarchical and specialized (Ford, Taylor, Gantt). At the same time, several trends are impacting organizations: Quickly evolving environments (demand for growth, acquisition, restructuring, regulatory, fast changing priorities); Constant introduction of disruptive technology (digitization, bioscience, automation); Accelerating digitization and democratization of information (volume, transparency, distribution); War for talents. Moreover, competition continues to increase, driven largely by new technologies, and business and technology are strictly linked: it is impossible to have a workable business strategy not underpinned by technology strategy. So, more frustration comes by inability to execute strategies that can handle the uncertainties, because heritage of systems is complex and poorly integrated: changes are hard to make, taking lot of time, at high cost, while business cases tend to focus on immediate requirements and not long term implications for maintainability. At the end, demand for changes is increasing and rapid responses are expected. In order to gain effectiveness, in the past IT was designed as a dedicated function or a shared service. IT as a dedicated function in different sectors of the organization was responsive, informal, able to deliver rapid changes tailored to the need, but at the same time prone to duplication and causing increased complexity and heavier cost to the wider organization. IT as a shared service was able to provide access to wider range of skills, enable standardization and reuse, but at lower speed and un-tailored functions. Likely, innovation was discouraged or ignored. Other kind of answers were outsourcing, global delivery and standardization.Outsourcing and global delivery were used to increase capacity and reduce unit cost, but IT became even more isolated from the rest of the organization, and user satisfaction fall. Standardization was driven from the top, with involvement of senior business process owners, but few organizations were able to concentrate the needed power to obtain and manage it. 2 ISSUES WITH TRADITIONAL Traditional organizations struggle with conflicting requirements: there is a need to achieve benefits in speed and responsiveness while ensuring the sharing across the global organization. Relationship between IT and Business is based on a continuous negotiation approach on the objectives. The focus of last years on standardization, industrialization, centralization, offshoring, shared service, cost reduction, has created a culture that caused to ignore what was happening outside, for example and specifically in software engineering world, in order to avoid disturbs. The only way to ensure success in complex waterfall projects is to overestimate delivery effort and plan, and result is often lost productivity: analysis early in the cycle can be wasted by misunderstandings and often test is squeezed or delivery is delayed. Basically, IT is separated from Business: the feedbacks from customers tend to be non-existent, theoretical (few read the documentation) or late (at the UAT stage), risks are not accepted, innovation is blocked. The answer is that enterprises must be agile to keep pace in the rapidly changing world. 3 WHAT DOES IT MEAN AGILE Traditional organizational models are “functional”, that is dedicated to a specific function with high effectiveness and a fixed structure, costly to build and maintain. If not aligned with the objectives, the effectiveness rapidly decreases. New models are “organic”, which means based on the ability of groups of people to self-organize and -rule in an adaptive way on the basis of the context. Agile organizations are organic. An agile organization is a network of teams within a people-centered culture that operates in rapid learning and fast decision cycles which are enabled by technology, and that is guided by a powerful common purpose to co-create value for all stakeholders. Agile organizations seek for the balance between stability and dynamism, more customer centricity, faster time to market, higher revenue growth, more engaged workforce. Briefly, the expected benefits from an agile organization are: Faster time to market Reaction to change in the context Promote innovation Enhance IT role in the Company by creating alliance between IT and business Reduce waste Reduce risks Maximize the result with fixed resources The path starts to be clear: there is evidence that organizations redefining the way they deliver services to business enable business change and generate consistently better results. Apple, Google, Zara have shifted the entire organization from maximizing shareholders value to delighting the customer, IBM experimented agile transformation in IT organization obtaining quality as a by-product, higher productivity and reuse, shorter cycle times. For IT, the journey should be holistic: customer management, architecture, software development tooling, people. 4 WHAT DOES IT MEAN GOING AGILE Shifting from traditional to agile is first of all a matter of principles: FROM TO Goal is to make moneys for shareholders Goal is to delighting and create value to customers Those doing the work are individuals reporting to a boss Work is done in self organizing teams Role of Managers is to control individuals Role of managers is to enable those doing the work to contribute all they can, and remove impediments Coordination is through bureaucracy: rules, plans, reports Coordination is through agile, lean practices with iterative work cycles and direct feedback from the customers Values are efficiency and cost cutting Values are transparency, improvement, sustainability Communications are top down commands Communications are horizontal conversations Specifically, to the manager role: FROM (traditional, large organization) TO Identify what needs to be done Enable capabilities to generate value for customer and eliminate any impediments on the way Tell the employees what to do Trust on those in touch with customer as to what work needs to be done and how to do the work Control they complete the work according to the instructions The boss is the customer, not the manager The boss is the manager, not the customer Goal is on delivering value to the customer Goal is to make moneys for shareholders Making moneys is a result, not the goal 6 PILLARS OF THE TRANSFORMATION Technologies and methodologies/approaches are the pillars enabling an agile organization, that eventually transforms the environment culture and becomes behaviour, by enabling: Easy interaction Fast response Transparency State-of-the-art tools and methodologies have reached a level of maturity to effectively allow the creation of an agile organization and culture, through the following enabled factors: Tools-related Interactive and iterative growth of alignment and awareness (simulation) Fast response to environment creation or tuning (cloud / infrastructure provisioning) Transparent and continuous stream of activities in product development (product life-cycle) Effective and lean activity management and control (activity / decision control) Methodology/approach-related Continuous integration, delivery, deployment (DevOps) Lean and collaborative rules-of-the-game for work organization (Agile) 7 ADOPTION WITHIN TRADITIONAL ORGANIZATIONS Of course, there are challenges and issues in the adoption of the principles. In organizations with a top-down belief, it is difficult to implement agile: there is a continuous friction between goals and approaches, shareholders and command-and-control approach alliance commonly produces employees not fully engaged and passionate, resolving the tensions between agile and traditional management cannot be achieved by pure rational means, changing a corporate culture can’t be achieved by introducing methodologies and job descriptions, the organizational culture makes it difficult to change acting as a boss, for an interlocking set of goals, roles, processes, values, attitudes, assumptions, drawing back the changes at team level, prose remains unread, conventional communication focuses on lifeless elements. The following approaches can be adopted to facilitate the adoption and widespread in traditional organizations. Reach people at an emotional level through experiences and storytelling. Use “people management” tools in the following order: «leadership tools», at inspiration level: vision and stories of the future, conversations, persuasion, role models. Leadership (wherever leaders sit) storytelling as a living participation to make meaning emerging from inside «management tools», at information level: role definitions, measurement and control systems, training, procedures, hiring «power tools»: incentives, disincentives, promotions Organize around the product: Ensure interaction between business and IT on the product development Modify organizational structure to be more product oriented Redefine roles within business and IT organizations Reconsider budget and planning model Chose the level of involvement based on the organization maturity: Lab approach, in which agile model is set up apart from the rest of the organization to serve as a testing ground. It makes sense when there is limited support from senior management for larger change and needs to prove the business case. Big-bang redesign. Senior leadership must be in from day one, which is unlikely Waves and spikes. Move teams into agile in waves of training and deployment, with training material developed or revised for next wave. 8 SO WHAT There are lessons learned that emerge from experience. Recognize becoming agile as part of Company/IT strategy Break the journey into a roadmap of small steps Tooling is critical, continuous build and integration to increase delivery quality Infrastructure provisioning is critical to reduce provisioning to minutes Set responsiveness, collaboration and quality from the start in change delivery Every department of company organization could become agile, even if benefits for IT are more experienced due to proximity to the context where agile philosophy emerged. Tooling and methodologies for development are mature, but a clear roadmap and coaching for the organization are critical to obtain the results. e*finance consulting Reply is the Reply group company specialized in management consulting services for financial institutions. we accompany our customers in defining and implementing their strategic lines through the development of new business and distribution models, the evolution of processes and operating tools and the design of new products and services. more and more often, this means embarking on a digital transformation path that requires the ability to combine industry expertise with full mastery of technological innovation and the ability to make it relevant to the business.