Agile Transformation Part 2: Tackling the Challenges of Scaling

This requires serious thought and effort when applied to a greenfield environment, and is even more complex within the constraints of a large corporation. The introduction of agile ways of working necessitates change along many dimensions that define the way a business operates, and this change needs to be managed in a way that avoids disrupting ongoing activities.

In this Executive Insights, we share our experience of working with large corporations to develop and execute agile transformation programmes, going beyond traditional textbook approaches to provide implementation options and support approaches tailored to the specific business context.

Defining the model for agile rollout

A primary consideration when adopting agile ways of working is defining the overall rollout model. Rightfully so, many corporates prefer a sequenced approach, starting with pilot projects rather than a ‘big bang’, in a bid to minimise disruption, generate learnings from pilots, and iteratively create and adjust the working model to their specific requirements.

Corporates typically prefer greenfield-like environments for pilots to facilitate fast and easy application of textbook agile methodologies, and to minimise disruption to other parts of the business. While this yields rapid progress and results for the individual pilots, scaling to the broader organisation then becomes the key challenge. As pilots grow and gain exposure to non-agile parts of the organisation, they tend to hit structural barriers, requiring change to the culture, structure and processes of the broader organisation.

The textbook approach to agile implementation advocates for a consecutive rollout of agile processes into the broader organisation by scaling agile pilots. In practice, however, this strategy is suboptimal, as it ignores the necessity for a mindset shift and does not resolve structural barriers. At L.E.K. Consulting, we believe that an organisation won’t change if teams are simply presented with methods, tools and processes. Successfully scaling of agile requires a deeper, DNA-level change, and we strongly recommend an inside-out transformation approach, starting with culture (see Figure 1).

• Evaluate required cultural shift: It is essential to not only have clear business targets for the agile transformation but also to have a unified understanding of the culture and mindset shift required to reach the target state. Large, hierarchical organisations find it particularly hard to adopt some of the key aspects of agile that require decentralised decision-making and comfort with reiterative outcome development rather than upfront agreement on a desired outcome and a clearly defined path.
   
• Address structural barriers to cultural change: The culture of an organisation derives from its organisational choices. Consequently, a successful cultural shift to implement agile across an organisation necessitates the removal of structural impediments. A typical example is the combination of people leadership and content leadership in the same roles across the management hierarchy, especially senior business unit or department lead roles. While this organisational set-up supports a successful waterfall development approach, it impedes the autonomy of agile development teams and reduces the focus of the content leader (the product owner), who should focus on the development of the best product for the customer, rather than be involved in human capital development. The right solution therefore is often to implement a clear organisational separation of content responsibility and people management responsibility.
   
• Roll out processes to the broader organisation: Once the key structural barriers are addressed and the cultural shift is initiated, the new agile working model can be rolled out to the broader organisation.

Designing an optimum agile working model

Defining a suitable agile working model (AWM) is a critical step in the agile transformation journey. The AWM serves as the central reference point, providing guidance on key decisions. Textbook frameworks for scaling agile (e.g. LeSS, SAFe) are often too vague, were built for the software industry and fail to offer concrete answers for all the dimensions that need to be considered in the complex organisational and business context of major corporations in different industry sectors. Given these blind spots, agile coaches, who focus on training an organisation in the application of working methods, may fail to properly identify and resolve all the issues that arise and consequently often lose the confidence of management. When it comes to achieving and retaining buy-in from management, the choices made to implement agile need to be considered in light of structural constraints and then documented so they can be applied consistently across the organisation.

Working with an industrial client, we teamed up with agile coaches to observe and understand their friction points in the broader organisational context. We documented their learnings and used it to define a framework that captures key decisions and provides definitive guidance on five dimensions (see Figure 2).

Within an organisation, business requirements may differ significantly across business units as a result of the technical complexity of products, availability of required skills, level of interaction with other departments and the use of external parties. As a consequence, a universal solution may not exist. The AWM therefore needs to provide clear, consistent guidelines for key decisions in most cases (e.g. description of agile roles and responsibilities) while retaining a degree of flexibility for individual initiatives to address a subset of decisions based on their unique circumstances. For these situation-specific decisions, the AWM should offer guidance regarding the key dimensions to consider. For example, when considering ‘location set-up’, a full co-location is recommended, but some pilots may, for unrelated practical, budget or contractual reasons, need to choose virtual co-location.

The existence of these guidelines provides flexibility while facilitating a rollout of the AWM and scaling of agile across the organisation. All major building blocks of the AWM are considered and defined through:

• Structured analysis of the target AWM and codification of learnings from pilots
• Evaluation of the need to adjust the AWM to the business requirements, or to develop additional guidelines to cover ‘white spaces’ in the established agile theory
• Development of a comprehensive agile ‘playbook’ to codify the organisation’s AWM ready for broad rollout

Ensuring the AWM remains dynamic is key; knowledge sharing across different agile initiatives or teams (e.g. through scrum master roundtables) is a crucial success factor, enabling iterative refinement of the AWM based on the continuous learning of agile teams and/or evolving business requirements.

Embedding evolution with a powerful change management programme

A successful agile implementation requires careful planning and execution of a holistic change management programme encompassing five main elements (see Figure 3). Investment in designing, implementing and continuously adapting this complex programme is critical, and measures to ensure the new working model is embedded — to complete the cultural shift and to minimise disruption to business operations — must also be deployed.

1. Timing and sequencing for the rollout of new structure and processes

The simultaneous implementation of an agile transformation programme across all business units may be deemed too complex and disruptive for many organisations, with a sequenced rollout approach favoured. To expedite positive impact across the organisation, it is necessary to assess the target benefits and ease of implementation for each individual unit, prioritising rollout for those with the most favourable profile. Critically, interdependencies between individual business units should determine the rollout sequence to minimise friction between units with different AWMs.

While the exact length and planning of any rollout process is dependent on the organisation, we believe there are merits to rolling out as fast as possible within the constraints of available resources and capacity for transformation management, training and coaching. This enables transformation to gain momentum and overcome organisational inertia.

2. Leadership involvement to drive required cultural shift

Successful implementation of agile ways of working requires significant management commitment, including time commitment, to lead the cultural shift. Moreover, the role of the leader is significantly redefined in an agile setting, compared with the management role in a traditional organisation, needing a flatter, more team-orientated structure and a reduction in overall management roles as the traditional hierarchy is flattened.

Early involvement of senior management in designing the target operating model, as well as the provision of leadership coaching along the way, is therefore key to creating buy-in and to enabling leadership to drive the required cultural shift.

3. Timing, format and messaging of communication

The development of a comprehensive communication programme is a critical ingredient of success, aligning the organisation behind shared goals and highlighting progress towards their achievement. The communication programme needs to comprise consistent messages, delivered regularly before the start of the transformation programme and throughout its course. The starting point should be the creation of a joint, motivational purpose and a compelling case for change that highlights the key shortcomings of the existing model, and demonstrates the need for agile by detailing how the new model will deliver benefit.

4. Development of competencies in line with the requirements of the AWM

Agile ways of working require a different set of individual competencies than the traditional waterfall development approach. Ensuring timely development of these competencies is one of the key enablers for any successful agile transformation. To ensure competencies meet the requirements, businesses need to define clear competency requirements for each type of role, map existing competencies at an employee level and identify the competency gaps that need to be closed, and then define role-specific training and coaching paths required. While the principles of skill adoption and personal development are firmly rooted in agile, a large-scale transformation may require external recruiting.

5. Tracking implementation progress and delivery of expected benefits

Finally, successful implementation of agile transformation requires effective mechanisms to track implementation progress and the delivery of benefits. Tracking helps teams improve faster, enables product owners to better evaluate the performance of delivery teams, and provides management with transparency on transformation progress at both the team and overall levels.

In collaboration with agile pilots and leading agile coaches, L.E.K. developed an Agile Health Check Self-Assessment Tool, which helps assess progress across all dimensions of an AWM and can be tailored to suit each organisation.

Key success factors to ensure successful agile implementation at scale

Based on experience with multiple agile transformation projects, L.E.K. has identified the six principal factors that underpin successful delivery:

1. Develop a clear business case to secure senior management support
2. Start with and learn from pilots in a greenfield-like environment
3. Define a customised AWM for your specific business situation, rather than follow a textbook approach
4. Scale inside-out, starting from cultural shift and addressing organisational barriers
5. Introduce a holistic change management programme, driven by senior leadership
6. Roll out the AWM fast to the wider organisation and track progress consistently

Of these success factors, the top four are the most critical. The benefits case will carry the organisation through the tough choices to be made, pilots are essential in understanding what’s working and what isn’t early in the process, and a tailored AWM will enable the organisation to reap maximum agile benefits while addressing constraints that cannot be ignored.

Following these lessons will enable leadership teams to leverage agile as a methodology for driving organisational transformation, and as a strategy to increase speed to market; overcome the constraints endemic in large and complex organisations; and leverage the opportunities presented by digital technologies and solutions.

Editor’s note: Agility Part 2: Tackling the Challenges of Scaling was written by Karin von Kienlin, Sebastian Olbert, Michael Ringleb and Vassilis Economidis. Aubry Pierre also contributed to this article.