Introduction to Agile and Agile Transformation — Environment
Because Agile is not about Software Development
Every day at the workplace we are more and more bombarded by the word Agile. It goes to the level, when many become allergic. Although Agile brings undoubtedly a new perspectives into the organizations, in the same time it creates resistance and controversy. Tons of articles, blog posts or messages are published daily in a media and at the social networks. And there are many schools that pray Agile, which further add to the mess. Then the personal inclination to some ideas influences one’s perception. But why Agile? Why that hysteria? We have had better life without it, isn’t it?
Let me guide you through evolution of business environment, which resulted in this Agile movement. In my three articles I want to show you first, what changes in the society led to need for Agile, second, what was the evolution of Agile and what are the agile streams and finally, what is it Agile Transformation and Business Agile, a definition and content. I hope it will help better understand what is Agile about and highlight some common misconceptions, that are omnipresent in today’s agile community and organizations.
1. Changes in Society and Business Environment
Let me start broadly from the perspective of the evolution of the society. Frederic Laloux in his famous book Reinventing Organizations popularize the idea of categorization of evolution in the society. It’s inspired by Integral Theory, and use color codes to describe consciousness paradigms associated with each stage in the evolution of mankind and its impact or influence on evolution of organizations. The stages does not have a clear boundaries. As evolution accelerates, each new stage last shorter. It has its peak and then fade away. It means that it possible to see organizations designed to operate for particular stage of societal evolution being present also in following stages. There they operates side by side with organizations designed for a new paradigm for some period of time. They will either adapt themselves to a new paradigm or slowly disappear. Let’s look now at each stage.
Infrared paradigm — Reactive
Is an early development stage from period 100.000 to 50.000 BC, people lived is a small bands of family kingships, typically dozen or a few in size.
This model requires no division of labor and there is no organizational model nor hierarchy.
Magenta paradigm — Magic
Around 15.000 years BC, society starts shift from family bands to tribes of few hundreds of people. People live in presence and with spiritual worldview, thus believing things around them happen by magic. As a response to unknown, the tribes seek comfort in rituals.
Division of labor is very limited and elders gains some authority.
Red paradigm — Impulsive
Around 10.000 years BC first forms of organizational life starts appearing. To survive, people have to be physically strong, and who is strongest, he is the leader.
The division of labor is now possible, because there is chief and there are soldiers, and first empires grew to thousands of people. Red organizations are highly reactive, live mostly in presence, and are poor in planning and strategizing. Examples of such organizations could be today’s street gangs or mafia.
Amber paradigm — Conformist
Around 2.000 years BC, tribal world shifted to an age of agriculture, states, institutions, bureaucracies and organized religions. Farming requires self-discipline. Care and concerns are expanded to the group. Late period of amber see rise of craftsmen and their organization in guilds.
Amber organizations are able to deliver long-term projects (e.g. cathedral), which duration can expand over decades. They start using processes to replicate past experience. Organizations brings stability to power, with formal titles, hierarchies and org. charts — pyramids. Planning happens at the top and execution typically happens at the bottom. Order and discipline are secured through command and control mechanism, and punishment of disobedience. Metaphor to describe organization could be “Organization is run as an army”.
Orange paradigm — Achievement
Even before industrial revolution around late 1700s, society starts shifting toward valuing material gain. It started with minority groups of artists, scientists and craftsmen. As industrial revolution got traction, orange worldview began dominating in business and in politics. From orange perspective all individuals should be free to pursue their goals in life. Those, who are the best in their field should be able to make it to the top. People wants and needs to be seen as socially successful, so they adopt various social conventions when they are helpful, to achieve such ambition.
Orange organizations are process and project driven. They retain the pyramid as their basic structure and they overcome rigid nature of it by project groups, virtual teams, cross-functional initiatives or use of consultants. Orange organization predict and control through management by objectives. Leadership does not care how the objectives will be met as long as they are met. Role of the management is to define control: strategic planning, mid-term planning, yearly budgeting, KPI’s or Balanced Scorecards.
Orange organizations are seen as machines — leaders and consultants design organizations. Humans are resources and must be aligned to the plan. Changes must be planned and mapped in blueprints and carefully implemented according to plan.
Leadership is typically goal oriented, focused on solving tangible problems and putting tasks over relationships. Through innovation, accountability and meritocracy managers push results into entirely new magnitude. Questions of meaning and purpose feel our of place. Because the worldview is solely materialistic, the more of something is considered better. Incentives were created to motivate employees through personal appraisals, bonus schemes, quality awards or stock options. People are changing their positions or organizations every few years. Individual status within the pyramid is on continuous decline, therefor people wear professional mask — be busy and composed, competent and pretend you are in control. System values rationality. Emotions, doubts and dreams must remain kept behind the mask.
Global corporations are examples of orange organizations. Businesses try to create needs, pretending that more of the stuff and more possession will make people happy. This economy based on fabricated needsseems to be unsustainable from financial and ecological perspective.
The dark side of the orange organizations is individual and collective (corporate) greed, political short term view, overleverage, overconsumption and sackage of planet’s resources and ecosystems. A small circle of CEOs grant themselves ever higher salaries, they lobby government for favorable rules, corrupt regulators, play off governments to pay little or no taxes and abuses their power over suppliers, customers and employees.
Green paradigm — Pluralistic
Green paradigm tries to bring spectrum of options in between both extremes of success and failure of orange with its materialistic obsession, the social inequality and the loss of community.
Green pays attention to people’s feelings. It seeks fairness, equality, harmony, community, cooperation and consensus. For people, who operates from this perspective, the relationships are valued more than outcomes. They gather inputs from all involved and trying to bring opposing points of view to eventual consensus.
Leadership is typically service oriented toward those who are led. Leaders are supposed to be generous, empathetic and attentive. Green leaders should be problem solvers but also servant leaders listening, empowering and developing their subordinates. Much time and effort is invested in helping people become servant leaders. Candidates are screened on their mindset and behavior. Training budgets are on managers to train them in servant leadership. Green organizations insists that there should be no such things like hierarchy among stake holders. Business have the responsibility not only to investors, but also to management, employees, customers, suppliers, local communities, society at large and environment. Leadership is responsible for the right tradeoffs.
Downside of green perspective is that it becomes stuck if people abuse its tolerance or puts forward intolerant ideas. It is relatively easy to feign that orange has changed to green by pretending certain rituals and activities, as described in my article How they hijacked the agility… and it take some time to demask this behavior.
Green organizations struggle with power and hierarchy. Bringing consensus among large groups of people may often be difficult. If not managed, it may end up in endless talk sessions and paralysis, which in turn trigger the power games to get thing moving again. It is not easy to wash away power and hierarchy.
Innovation brought by green organizations are Empowerment and importance of Values in organizational culture. Empowerment means that organization retains hierarchical structure of the orange organization, but push majority of decisions down to front line workers or to the level where most information is available. Values-driven cultures provides inspirational purpose. Strong shared culture is the glue that keeps empowered organizations from falling apart. Frontline employees are trusted to make right decisions guided by a shared values rather than policies. When orange organizations defines set of values, they post them in office walls and company web site, and ignores them whenever it is better for their bottom line. Contrary, in green organizations leadership plays by shared values, defines them and nurture them. Green organizations can be encountered with vibrant cultures in which employees feel appreciated and empowered. Values driven organizations often outperform their (orange, amber) peers by wide margin.
Orange organization is about strategy and execution. Green organization is about value of inspiring culture.
Teal paradigm — Evolutionary
Teal paradigm originates in Maslow’s Hierarchy of Needs at “self-actualizing” level. Society shifts to Teal when people learn to break away from their ego and shift their attention to inner values — Does this decisions seems right? Am I being true to myself? Am I being of service to the world? If something unexpected happens, or a mistake, it is seen as an opportunity to learn and grow. External values are being replaced by capacity to trust. In the striving for wholeness the people learn to be non-judgmental.
Teal pays attention to how do people live a good life. Recognition, success, wealth and belonging are viewed as pleasurable experiences and perhaps traps for one’s own ego.
Leadership in Teal could be represented by a metaphor — “Organization is living system or living organism”.
Innovation that brings Teal organizations rely on three major breakthroughs: Self-management, Wholeness and Evolutionary purpose.
For effective operation, even at large scale, Teal organizations created systems based on peer relationship that enables for self-organization, without need for prescribed strict hierarchy and consensus. Fluid organizational structures, configured on demand by affected peers, are better fit for this paradigm. Teal developed and exploits new sets of practices, that invites people to reclaim and evolve their inner wholeness and relations with others (e.g. mindfulness) and bring their entire personality to work. In Teal organizations instead of trying to predict and control the future, members are invited to listen in and understand what organization wants to become and what purpose it wants to serve, so they can actively participate on discovery and evolution of purpose.
Is the Teal organization the last stage? Unlikely. As well as researches recognizes more layers on the top of the Maslow’s pyramid, we can expect more stages humanity will evolve into. It is not easy to predict its evolution forward unless new ideas starts popping up, but it is possible to observe various stages backward as society does not move from stage to stage in a discreet manner. We are concurrently seeing operating next to each other companies in various stages of their evolutions.
Industrial Revolution, Knowledge Economy and Creative Economy
In the amber stage, technological advancement laid foundations and initiated the industrial revolution. People moved from villages to form towns build around manufactures, which eventually grew into companies. As companies and advancement in division of labor led to higher living standards and innovations, more people were attracted to work in the industry. Hand in hand with companies and innovation we can observe need for education. Knowledge became essential for growing number of careers, which further accentuated specialization. This gave rise to a knowledge economy and knowledge workers.
It was in the mid of the orange stage, when knowledge starts becoming important asset. Organizations built in the beginning of industrial revolution are mostly organized as pyramid structures. It’s consequence is evolution of excessive bureaucracy. Decisions are being slow, planning is essential and many methods are invented to control deviation from the plan. Cost of bureaucracy and its negative impact is being studied to identify that more than 30% of resources are being spent on administration of the organization — “management tax”. To address this issues, attempts to having flat organizations popped up, which tried to eliminate several managerial layers from the structure. Customer perspective however did not changed that much. When customer is approaching the organization, it is often not possible to resolve the issue with front line workers, and other parts of the organizations have to be involved. Sometimes action must be escalated few times before completed. Flat organizations works on the same principle, only since there is less layers, action may be completed a bit faster. With reduction of layers, there is more people reporting to a single manager.
Rising of the knowledge as important asset pushes organizations changing their setup. It is no longer possible having overview of the action on the top layers of the pyramid. Knowledge economy, which gained its significance in last 40–50 years only, made it possible to delegate significant amount of decisions to lowest layers of the pyramid. It was also supported by new techniques, which supports working in a small autonomous or semiautonomous teams coupled together by new tools and techniques of social collaboration. The pyramid starts breaking apart when some pieces of organizations are structured by new way while the rest of the pyramid remains traditional. It also brings a lot of tensions across the organization.
New structures and new technologies further enabled new types of work. While traditional organizations deliver output through use of their assets, including human labor, increasing of output is mostly possible through increasing amount of these assets. It is often true also in organizations that fits into the knowledge economy, which is seen in IT companies.
There is one issue associated with vertical bureaucracy, an unintentional side effect present in both traditional and knowledge organizations. Studies shows that up to 85% of the people are actively disengaged in the work which further deteriorates the economic gain.
While many organizations struggle with their adoption to knowledge economy, we can already observe the rise of creative economy. Creative economy, in past 10–15 years, radically change the paradigm of output. It is now delivered value and user experience that matter, not a quantity anymore. Value is measured mostly by money and business impact. Volume of revenue for unit of work multiplies economic wealth, without the need to invest into extensive infrastructure or accessing enormous resources. It is achieved by applying significant amount of knowledge and designing the culture of organization the way people feel intrinsically motivated to apply this knowledge. In fact, capability to engage people, who were disengaged under bureaucratic structures is essential success element for creative industry. Then engaged people search for ways to redesigning and improve processes, for deployment of collaboration techniques and also for involvement of customer into designing of the solution. Creative companies are formed mostly by very small teams that are supported ad-hoc by individuals and small teams from outside of the organization to supply specialized knowledge or action.
(to be continued…)
About author: Michal Vallo builds agile organizations and helps managers to understand agile techniques, benefit from its adoption and consequently radically improve organizational performance. He is agile trainer, coach and manager at Aguarra, founding member of Agilia community and organizer of Agilia Conference / Agile Management Congress.