The Evolution of a Company - Why Enterprise Agility is Hard
An enterprise, a large company or corporate endeavour, is rarely formed overnight. Instead a company usually comes from much more humble beginnings, and over a number of years or possibly decades grows to be the successful enterprise it has become.
The growth journey this company or government institution goes on shapes the way it operates, embeds a culture, forms structures, all of which have a direct influence on the ability to get stuff done, the business agility of the enterprise.
Micro Business
A micro business employs between 0-4 people. You might find agile in practice but you won’t typically find any “Scrum Masters” here. Although Scrum can work very well for small businesses, something I have practised in the past.
Typically there is no-one that needs to be called out to be accountable for team effectiveness. There might be a boss or a group of business partners. Everyone should know their role and work as a team when required to get stuff done.
It is pretty clear if someone is not pulling their weight or doing a bad job. Which means they would likely be fired, or the micro business has some serious underlying issues, the boss’s kid syndrome for example, and will suffer in the long term.
Here company wide agility is easy. Changing direction and planning should be simple enough. Practices to focus on continuous improvement, enable a safe, fun and inclusive workplace are still important if you want to run a healthy and successful business.
Small Business
The step up to being a small business is significant (5-19 people) - this is where things begin to get more complicated. Processes are established to maintain order.
It is unlikely to be productive for everyone to plan together as the number increases. Different people and groups have different goals and focus areas. You might start to see departments and structures begin to emerge.
The company might have growth potential and need to spend more time on hiring and have a stronger focus on staff retention.
Medium Business
In the next state, a medium business (20 - 200 people) you might start to see the introduction of projects, project managers and / or even Scrum Masters / Product Owners.
Complexity is emerging. Governance structures and processes might be put in place as a control. The owner or founders might no longer be leading every initiative. This oversight is delegated to a degree, control and authority are given to others to lead.
Large Businesses / Enterprises
Large enterprises, this is where things start to get even more complex. We might start to see additional governance in place, like PMOs for example. We have teams of teams sitting in departments. More structure is put in place to help manage this complexity. Senior leaders cannot be across everything to a low level of detail, so hierarchies are put in place to guide and control. This is where it starts to become difficult to maintain agility.
Typically if a business has grown this large there is a lot at stake. The business is hopefully turning a decent profit or at least has the promise of returning a very healthy profit some time in the future.
This should be protected. Hence the controls are put in place. Managers and people leaders are brought in to hire and retain good people. Processes and tools are installed to manage work and keep track of requests and inventory.
Hierarchies grow and additional structures are created, which often leads to new silioed teams and departments. Over time this results in increased dependencies and additional handovers, leading to the need for multi team alignment which increases cost of planning and execution significantly.
If these controls, processes and siloes grow unchecked over time this leads to organisational glue.
Large companies and businesses should be considered as complex adaptable systems. Lines of communications are formed, people are hired, fired or promoted into new areas in the business. Efforts need to be put in place to assess the system of work, the effectiveness of structures and processes. A continuous improvement mindset needs to be applied at the organisational level.
Otherwise , if left unchecked bureaucracy can creep in, which can impact alignment and cohesion between business units. Politics gets in the way. Getting stuff done becomes hard, energy sapping. In bureaucratic organisations decisions take a long time. Which leads to idle work, which creates waste, non value adding activities built up. Good people grow tired, disengaged and leave or worse still grow accustomed to and reinforce the status quo.
If this is not counteracted, profitability will be impacted. Worse still the large, a once successful and profitable enterprise might go bust and as a result have to lay off it’s workforce and shareholders stand lose their investments. Peoples lives are negatively impacts.
Data shows that the average age of large businesses is rapidly declining. Statistics from Statista show the company life space in the Standard and Poors 500 index peaked at 36.7 years in 1977 and is predicted to be as low as 15.7 years in 2028.
It is simply harder to maintain competitive advantage for larger companies and enterprises, in today's face paced markets.
Startups
One label we have not covered are startups. There are typically tech companies that focus on growth. According to Paul Graham, founder of Y Combinator, “a startup is a company designed to grow fast.”
Startups are usually optimised for innovation and have a desire to grow and generate profitability. They strive to find a market fit on a budget, with a goal of landing on an idea and proving demand to raise capital or turn a quick profit. Attracting funding and scaling. Becoming a unicorn!
Start ups do not typically talk about doing agile. They are by their very nature agile. Often product based startups will pivot based on earlier learnings, at least they should be doing so, otherwise they will not be around for long.
They value getting stuff done quickly. Get it out the door, seeking feedback and iterating. They want to prove value and an income stream. Seek quick returns or draw on further investment. The focus is growth and speed of learning.
Now there are many definitions of when a company is considered no longer a startup, one example, if it meets or exceeds the following; 100 or more employees, has $50 million in revenue, or is worth more than $500 million.
Either way, startup or otherwise, if successful this new venture will grow and need to scale. It will become a medium or large enterprise. As it grows, agility becomes harder.
Embracing Agility
As a result of ever increasing competition many organisations who have grown to become large enterprises are looking to refactor their operating models, often as part of a funded transformation program. Companies are keen to embrace lean and agile practices to reduce waste and keep pace with an ever changing market.
Over the past two decades the ways of working (WoW) pioneered in the software engineering space have proven themselves to work well in complex areas of work and dynamic environments where adjustments, collaboration and learning is required.
This has resulted in growth and a populism of Agile practices, techniques and frameworks to new areas of business outside of just tech. 94% of people reported that their company is practicing agile, 52% say a majority of all of their company's teams have adopted agile.
Key Drivers - What problems are companies looking to solve
The kicker is the ability to focus and quickly re-prioritise scarce resources (people, time and money). In a dynamic market, those that move fast get ahead and stay ahead. Survival of the fittest.
Quick adjustments to strategy
Shortening learning loops. Being able to gather data and feedback to influence corporate strategy and being able to act on new information quickly and thus change direction if required. Therefore unlocking new valuable opportunities or importantly limiting wasteful or damaging endeavours.
Improved speed to market
Reduction in organisation glue and handovers to enable quicker delivery and breaking up work into smaller batches, with a focus on data gathering and reducing risk. Thus speeding up the learning loops and enabling adjustments.
Team health
Create an environment where people are supported, feel safe to call out and have a voice. Enabling a sustainable pace and providing opportunities for people to grow, and improving the retention of motivated and skilled individuals in a competitive job market.
Quality
Improve and maintain quality. Create customer experiences that will delight. Ability to look after, tune, refactor and simplify the complex systems needed to run an enterprise in today's world. Further to this, a quality focus will often find ways to automate quality checks and enable consistency via repeatability.
As you might have realised, each of these drivers are intertwined and related. Each are required holistically to enable enterprise agility.
Below is a complete list of drivers from the state of agile survey.
Challenges - how many actually succeed?
All this may sound great, even idealistic, and companies and enterprises investing hundreds of millions of dollars in transformation programs. Data from McKinsey, one of the leading consultancy firms that plays in this space indicates that 70% of transformations fail.Reasons cited are:
Insufficiently high aspirations
Insufficient investment in building capabilities across
Lack of engagement
So if the market leading consultancy in this space is saying that the vast majority of transformations are doomed to fail, what can be done to help tilt the odds in your favour, so that you can improve and evolve your enterprise agility?
Key Tips
Think Big, Start Small, Learn Fast
Have a clear and ambitious target state, a North Star that everyone can rally behind and focus towards. This will line up with your wider business strategy and be broken down in such a way that each team and department are clear on the role they play and can be aligned on purpose.
Once your targets and objectives are confirmed, find steps to get started. Iterate towards your target state with small adjustments and increments. Be wary and careful with big bang transitions, these are far harder to manage and create much greater risk.Have a focus on learning fast. Try out new ways of working, team structures and topologies, or enabling tech and a suitable scale. Prove the value first, set examples and pathways for others to follow.
Have a focus on learning fast. Try out new ways of working, team structures and topologies, or enabling tech at a suitable scale. Prove the value first, set examples and pathways for others to follow.
Focus on outcomes
The goal of enabling agility within an organisation should not to become more ‘Agile’, ‘DevOps’, ‘Digital’, ‘Design Centric’ or whatever the flavour of the month focus is currently in the industry. Being any of these things alone will not guarantee success.
Instead of pushing a focus solely on any of the above practices an enterprise should be focused on a clear set of outcomes. Outcomes that can be measured and correlated back to adding real value to the enterprise.
Depending on context around outcome, the best choice of skills mix, delivery approach, tooling should be chosen. There is no one way to solve all problems. Instead look to guide, support and enable rather than impose and fix one way of working to all teams and all problems in an organisation.
Nail it before you scale it
Start changes on a small enough scale to reduce risk and enable quick feedback cycles. Prove that any changes or adjustments to ways working or digital tooling changes are successful.
Often the biggest improvements in fact come from descaling and simplifying the operating model and way of working. Doing this in a smaller localised way is much easier and once proven can then be rolled out elsewhere if suitable.
Track key metrics around the drivers previously mentioned. Think about what could be used as leading indicators and be sure to measure longer term outcomes and bankable results.
Start with those willing
The best place to start is with people that are interested and keen. These early adopters will be open to try something new in terms of way of working, processes and tooling.
With this first group you should make waste, idle work and impediments visible. Prioritise and tackle these key issues one by one. Encourage leadership at all levels and engage those participating in this experiment so they have a voice and feel a sense of ownership. Importantly you must provide evidence and make benefits visible to all.
This way you can build up awareness and a desire in other teams, and then invite those interested to expand any improvements that have been proven to work well. This way you can roll out improvements in increments, which will ensure there is time, space and support for those adjusting to a new way of working.
By doing this you are creating pull from teams and departments who want to adjust their own ways of working, rather than forcing changes on them if they are not ready or have no desire.
If you ignore this advice and roll out any changes across the entire organisation you will face considerable challenges, including a lack of support for those who are willing to embrace changes and disengagement of those feeling forced into something they have not signed up for.
How we can help
I hope you have found this guide to why enterprise agility is desirable and some of the tips on how best to approach rolling out improvements. If you are interested in learning more, or if your organisation is looking to improve its own enterprise agility, then we can help in the following ways.
Ways of Working Coaching, Mentoring and Capability Uplift
Training in the Enterprise Agility, Patterns and Practices (EAPP) course
Facilitation and Improvement Workshops, helping you guide your own path