Agile Way of Working: The Super Catalyst For Digital Transformations

October 18, 2022 Bruce Schoor

6 min read

In a Pragmatic Guide to Agile Ways of Working, I have described what is possible with Agile ways of working in different contexts.

When we look at organizations in the context of digital transformations, technology and data usually come to mind as the key enablers for radically improved or changed customer experience. Digital platforms, AI, personalization, analytics, automation, omnichannel communication, and completely new solutions are the results of these enablers.

As an IBM study and other surveys reveal, technology and data alone are not enough to thrive. Lack of skills, organizational silos, the traditional concept of projects, planning with fixed scopes, and fixed mindsets are all very inconvenient when you want to be fast, pivot, or innovate. We need new capabilities in our teams and organizations.

In this post, I look at Agile Way of Working (WoW) as an essential catalyst for digital transformations. What are the key organizational capabilities that Agile WoW provides for the digital context, and how do we develop these capabilities? Let's find out.

Table of content:

1. Customer centricity
2. Value creation
3. Systematic innovation
4. Strategy-execution alignment
5. Adaptive and responsive delivery
6. Continuous learning

Takeaway

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1. Customer centricity

Digital transformations are focused on new customer experiences. It, therefore, makes sense to create an organization-wide focus on the customer. Simple changes like prioritizing work by customer value can help. Agile WoW takes a more powerful approach by treating customer centricity as a mindset. Doing so changes not only the processes but also the behaviors.

To actually live this mindset, we need several things.

By composing cross-functional Agile teams that focus on product/service areas rather than functional specializations, we create a good basis for customer understanding and collaboration. Agile teams are small (typically 5 to 9 team members), long-lived, cross-functional, and self-organizing. Teams are generally customer-focused, either directly or indirectly. Even if a team builds for example platform functionality, it is usually still part of a customer-facing program or release train. The key notion here is that a team has all the expertise to build customer value.

To actually get to understand the customer, teams use several approaches. Gemba visits or walks make sure you really get to understand the customer’s or end user’s challenges through observation. Design Thinking is a process that uses empathy as the first explicit step to understanding customer challenges and framing the problem. Empathy also plays a key role in sparking innovation, as articulated by Satya Nadella in a 2021 HBR interview.

Two other Agile WoW notions are important with respect to the teams.

Agile WoW extends the Agile team construct to the entire organization and the cross-functional composition therefore applies to both development and business disciplines. For example, an organization could set up mixed business-development teams where marketing and HR professionals are fully integrated.

In these situations, having T-shaped people in the team helps. By growing skills beyond a strict area of specialization, teams achieve better collaboration. And it gives more flexibility when prioritizing and planning work.

Customer collaboration is key here as well. Instead of only involving customers at the start and end of the development life cycle, you can add your customer as a virtual team member. Especially when defining and building incrementally, it is super useful to involve customers continuously. Customers can tell you what currently works or doesn’t work. And when you have developed a new product or service functionalities, they can help you validate what you’ve built and provide feedback.

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2. Value creation

A primary goal in both Agile and digital journeys is to maximize value for both the business and customers. The capability to identify, focus, and deliver value is therefore crucial.

Lean lends a helping hand here. Lean Thinking begins with one simple thing: identifying value meticulously. Value is more than a set of features. It relates to the gains and pains that a customer or end-user experiences.

I like the usage of empathy maps and customer journey maps for this purpose. Empathy maps are perfect for identifying both the technical and emotional patterns that we need to address. Customer journey maps show how end-users experience the interaction with the product over time. Understanding the value we need to build allows us to drive vision, define solution details and prioritize development work.

In order to focus on value creation, Agile teams use a radically different approach to planning than traditional organizations. In fact, their planning and execution goal is different. Instead of setting the goal of finishing a list of features or tasks by a magic date, our Agile goal is to maximize value creation in a given timeframe with a given team of people. Note that the focus is on value outcomes, not on the output of features.

This means first of all that we plan with a flexible scope. In the time we have available, we try to build that part of the scope that brings us the highest value. What’s more, requirements themselves may change at any time because of new insights about what generates the highest value. This is why most Agile teams work with short iterations. More about delivery later.

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3. Systematic innovation

Agile WoW also enables value creation through innovation. The key problem with innovation in traditional organizations is that there is no organization-wide mindset nor any global investment of time. Activities are often limited to ad-hoc hackathons or a small technology group is the only driver for innovation.

With Agile WoW, we treat innovation systematically. For larger 'bets', we use hypotheses that formulate our beliefs of what will produce targeted value. Agile teams often use a lightweight Lean Startup approach when product ideas are still invalidated. This consists of short build/measure/learn cycles to produce Minimal Viable Product (MVP) versions and get real feedback without going into full development mode.

At any point in time, you can also use stand-alone experiments to brainstorm and prototype new ideas. In this way, innovation becomes part of our daily behaviors. One condition to make this work is to accept a fail-and-learn approach in your culture because experiments do sometimes fail by design.

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4. Strategy-execution alignment

Agile WoW integrates Lean concepts to ensure that the entire organization aligns on a shared purpose.

One good instrument is lean portfolio management. Portfolio management clarifies strategic priorities and links to execution. Concretely, we can use strategic themes to establish where the organization wants to invest.

Focused on these themes, we can then create epics that each represent a major product or service capability that we need to build. In the beginning, an epic could be nothing more than a hypothesis or business case. Once analyzed and validated, these epics feed the different teams for implementation.

If you decide to start with portfolio management, I also recommend that you set up value streams, especially when you have a large number of teams. Value stream mapping tells you how value flows through the entire organization. Even though value streams are not processes, they are an excellent replacement for stage-gated processes, because they map end-to-end who needs to collaborate with what activities to develop and deliver a solution.

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5. Adaptive and Responsive delivery

Digital organizations operate in a world of change and innovation. Technology trends, market movements, new product ideas, and customer feedback make it impractical to fix precise plans for the long term. Agile WoW addresses this with several elements.

Agile teams use adaptive planning and execution.

Agile methods such as Scrum and Kanban implement this approach in the form of incremental development cycles. Scrum for example uses timeboxes (‘sprints’) of typically 2 or 3 weeks in length, while Kanban uses a continuous pipeline with small increments. This means you define only the part that you'll work on during the next few weeks, plan the tasks for that period, execute, and deliver.

Short planning cycles open up the possibility to obtain early and frequent feedback and incorporate changes in the next cycle. This is especially important if you are not sure about a new idea or functionality. Early feedback can tell if you are on the right track and if you need priority changes for the next cycles. And by augmenting that feedback with data analytics, you get a very powerful and early validation.

On the delivery and deployment side, we can apply agility as well. DevOps is a combination of mindset, collaborative processes, and continuous delivery pipeline. A continuous delivery pipeline makes it possible to release new product/service additions quickly. This applies to both software and non-software. For example, DevOps can enable a marketing team to launch small marketing campaigns frequently.

In the case of uncertainties, DevOps pipelines can also help you deploy selectively to mitigate risks. And high-quality monitoring can help understand what happens to your product or services after releasing it to customers.

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6. Continuous Learning

In order to leverage digital technologies such as AI, IoT, cybersecurity, and big data, non-native digital organizations need significant upskilling efforts. Of course, effective talent acquisition addresses the biggest skill gaps where learning a completely new domain is unrealistic in the short term. But learning is not only about building hard skills.

We need a workforce with modern power skills. In an Agile WoW, all employees develop some entrepreneurial acumen, are able to apply creative thinking, possess collaboration skills, and participate in data analytics. We also see leadership more distributed which means more people need to obtain leadership skills as well. And this is in addition to a growth mindset, EQ, and resilience to change.

Concretely, this means that the organization needs to invest in more learning, and different learning. Learning isn’t anymore about sending people to multi-day public training outside the office. We now learn in the flow of work, and together with our teammates. By creating a learning environment where people can learn on-demand, share learning experiences, and mix learning and doing during the same day. Learning becomes part of the culture.

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Takeaway

Technologies only create opportunities. To take the full benefit, you also need an operating model that provides customer centricity, value creation, responsiveness, and more. An Agile Way of Working implements such an operating model, providing key capabilities and traits that a successful digital organization needs to possess. Feel free to share your own key capabilities in the comments.

ABOUT THE AUTHOR

Bruce Schoor is an Agile Way of Working coach, trainer, and transformation leader. After a track record at Microsoft, he has been globetrotting the last 15 years enabling organizations to reach better outcomes with Agile Ways of Working. Bruce shares these experiences as a facilitator, speaker, writer, and through his agileXL Academy.