Building Agile Culture Across Business Elements
Expanding the number of agile teams is an important step in improving a business. However, the most important thing is to apply agility in interacting throughout the organization. Even Amazon, Spotify, Google, Netflix, Salesforce, Tesla, and SpaceX still operate with a combination of traditional structures.
The bureaucratic function is basically still needed. However, it is equally important to ensure that bureaucratic functions do not hinder teamwork or fail to adopt and commercialize innovations developed within teams. Therefore, the company is pushing for greater change in at least the following four areas.
1. Values and principles
Traditional hierarchical companies can usually accommodate a small number of agile teams scattered around the organization. Conflicts between teams and conventional procedures can be resolved through personal intervention and solutions. However, agility can also continue to press on every front line while the other half maintains the status quo.
Leaders, especially directors, need to instill values and agile principles throughout the company. This is of course not limited to parts that are required to operate agilely, but also to conventional parts that are still structured.
There is a reason why leaders develop new leadership principles and spread them throughout the company. They want to make sure that everyone understands that things will be different. In general, the principle of agility will become an important value that becomes a culture in the company.
2. Operational architecture
Implementing agile at scale requires modularization. After that, the workflow should also be well integrated. For example, Amazon can deploy software thousands of times a day because its IT architecture is designed to help developers deploy quickly without compromising complex enterprise systems.
However, many large companies will deliberately limit it to a few times a day or a week because that's how their architecture works. Building on the modular approach to product development pioneered by Toyota, Tesla meticulously designs the interfaces between its car components to allow each module to innovate independently.
Tesla is also abandoning the traditional annual release cycle in favor of real-time feedback on customer feedback. CEO Elon Musk said that the company makes about 20 engineering changes a week to improve the production and performance of the Model S, including a new battery pack, safety hardware and autopilot.
In companies that have increased agility, the organizational chart of support functions and routine operations generally looks the same as before. Often this does come with fewer layers of management and a wider span of control to trust and empower people.
Ahmed Sidky at Riot Games instills that within the organization, financial partners are embedded in every team. They don't control what a team should or shouldn't do. His role is more likely as a coach who asks tough questions and trains hard so that the best decisions are made.
3. HR recruitment and motivation
Agile companies need a system to get quality talent and motivate them to make the team better. There is no easy way to do this without changing HR procedures. A company can no longer recruit solely for expertise.
In order to evaluate the achievement of individual goals, it is now necessary to look at their performance in a team. For this reason, a performance assessment is needed which is usually carried out every week or several months to obtain relevant self-development.
Training and coaching encourages the development of cross-functional skills tailored to individual needs. Position is no longer a significant thing and rarely changes, especially at the startup hierarchy level which is usually still small.
Companies may also need to change the compensation system to reward groups rather than individual achievements. Public recognition is better than secret cash bonuses in reinforcing agile values in a company culture.
4. Annual planning and budgeting cycle.
In a bureaucracy, annual strategy sessions and budget negotiations are powerful tools for aligning the organization. It is also considered ideal for securing commitment in achieving goals. Different assumptions arise when companies adapt an agile culture.
They see that consumer needs change frequently and innovation can occur at any time. In their view, the annual cycle limits innovation and adaptation. Unproductive projects will only waste resources until their budget is exhausted, while critical innovations will have to wait in line in the next budget cycle.
In an agile company, the funding procedure is different. Funders recognize that for two thirds of successful innovations, the initial concept will change significantly during the development process. As a result, the funding procedure has evolved to resemble that of venture capital (VC).
VCs will see funding decisions as an opportunity to ‘buy’ options for further discovery. The goal is not to create a large-scale business instantly, but to discover the critical components of solution adoption.
Change, of course, causes many failures, but also accelerates and reduces learning costs. Such an approach works well in agile companies to increase the speed and efficiency of innovation.