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How does a business become agile?

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Clichés are the rotting corpses of insights.

“Agile,” sadly, has become one. It has joined the long parade of business concepts that, like “entrepreneurial,” “professional,” and “proactive,” once meant something, but now just mean “good.”

Let’s resurrect the corpse.

Last week’s column focused on Agile development. This week we’re going to talk about the business as a whole. The questions: What does it mean for an organization to be agile, and what does it take?

What it means isn’t especially complicated. While Wikipedia’s entry on the subject is less than stellar, its definition is as good as any: “Business agility is the ability of a business to adapt rapidly and cost efficiently in response to changes in the business environment.”

There is, inevitably, a complication. As pointed out in KJR from time to time, delayed feedback is destabilizing when delay approaches the speed with which system inputs change.

Call it Agile characteristic #1: Feedback loops need to be much quicker than the speed with which the business environment changes.

Agile characteristic #2 is a superset of AC#1: Fast decision-making.

Yes, this is a cliché. But quick decision-making is by no means automatic.

Look at what slows down decisions in most companies and you’ll find two factors are what pour most of the sand into the gears of progress: Lack of trust, and controls.

Lack of trust leads to overreliance on consensus, as people don’t trust decisions they weren’t involved in making. And as consensus is the slowest way to make decisions, and also isn’t how to make the highest quality decisions, Q.E.D.

Then there are controls — requiring, for example, six signatures to approve a $1,000 expenditure. Why all the signatures? The organization’s trust in an employee’s judgment is pegged to their altitude in the organizational hierarchy.

Not that all controls are a bad idea. You might recall the London Whale — JPMorgan Chase’s trader who lost the company more than $6 billion, violating securities laws as he did so. Requiring a second, and even a third pair of eyes on decisions is just fine. It’s the fourth, fifth, and sixth pairs that slow things to an unnecessary crawl.

Agile businesses prize speed, but speed has the same consequences when it comes to decisions it has when driving a car: The faster you go, the more skillful you have to be so you don’t cause a flaming crash — see “London Whale,” above. So Agile Characteristic #3 is an enormous emphasis on making sure everyone who makes important decisions — which in an agile business is, in the context of their responsibilities, pretty much everyone — is in a position to make them well.

So agile businesses invest heavily in education to make employees experts in their areas of responsibility. They invest heavily in defining and promoting, as Jim Collins put it in Good to Great, a culture of discipline. And, they invest heavily in both a “culture of honest inquiry” and the practices and tools required to support evidence-based decision-making without the desire for evidence slowing decisions down to the point they become destabilizing.

Next … this is Agile Characteristic #4 … agile businesses promote another cultural characteristic: Utter contempt for the organizational chart.

Okay, not really the org chart, but close — for the organizational siloes most org charts turn into. In an agile enterprise, everyone collaborates with anyone who (1) will be useful in pursuing an interesting idea; and (2) is interested in pursuing the idea. And not just individuals. Workgroups and departments show the same behavior.

Which gets us to Agile Characteristic #5. People. Very good people. People who have the expertise, judgment, and attitude required to get things done. Because (drumroll …) …

Agile makes software development a practice rather than a process. In a process, it’s all about following the recipe to deliver repeatable, predictable results. In a process, intelligence resides in the recipe.

In a practice, it’s all about the practitioners. Because by the time a competitor has perfected the processes it needs to compete, the agile business has innovated to the next generation of whatever it is.

Processes and the assembly lines they depend on, physical or virtual, take too long to figure out and perfect.

Skilled employees know how to reach the exalted state of good enough, and how to get there fast enough to stay ahead.

Comments (2)

  • I think software can really help a business become something much bigger. With so much data to analyze these days from a variety of business functions making business changes/decisions needs to be calculated.

  • As always, great insights, even the one about insights turning into clichés! A variation on the lack of trust problem isn’t just having multiple people sign off, its having one person who must review and agree with every decision. Every action request goes into a queue and it may never come out.

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