David Williams
The Agile Organisation A case study on creating a more nimble organisation September 2015
About the author: David's background is in project management in the construction industry and Defence projects before working across the management fields of program evaluation, human resources, information, knowledge, quality, risk and enterprise architecture. He was previously the information architect for a large government department and has managed and implemented several major projects. He now consults for Lange Consulting & Software to all three tiers of government and into the private and not for profit sectors. David has a Diploma in engineering, a Grad Dip in Public Sector Management and a Master’s degree in Project Management. He is a Certified Knowledge Manager, Project Director and is an accredited workplace Trainer and Assessor. He is the President of the Australian Society for Knowledge Management (AuSKM) and is on the Board of the Institute for Information Management. He chairs the AIIM International KM Standard working group and is a founding member of the Knowledge Management Global Network. David lectures at the University of Canberra on Information Systems in Organisations and Knowledge Management Systems at the post graduate level. Ph: (62) 412 237 695
[email protected] [email protected] linkedin.com/pub/david-williams/0/346/36b
Abstract: The Agile software development approach to software development is being touted as an approach to structuring and operating organisations. Concepts such as Agile and Lean are currently popular because of the flexibility, value and productivity they can bring to an organisation. However, implementing Agile in an organisation is a challenge and like any other organisational development activity, is fraught with risk. This article looks at Agile for organisations and includes a case study of a small consulting organisation that has attempted to implement an Agile approach. This has realised a number of benefits and some unintended consequences. Keywords: agility, service, intellectual capital, future, networks, organisational development, innovation.
Introduction In my previous paper on the Future of Work (delivered to the Hong Kong Knowledge Management Society in May 2015), I discussed how to survive and thrive in an increasingly hostile and chaotic environment. That paper concluded that successful organisations need to address the four tenets of awareness, agility, personalised service and responsiveness. This paper expands on the area of agility in organisations to build the flexibility into the workforce, technology, workplace and structure to be able to respond to changes in the market. It draws on recent work on Agile organisations and presents a case study of a small consulting firm that has attempted to introduce a more Agile approach to delivering services. Future
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papers will address how organisations protect their intellectual assets and resources and the other actions identified as strategies to meet future challenges.
What is Agile? The Agile Manifesto was written in February 2001, at a summit of seventeen independent-minded practitioners of several programming methodologies. The participants didn't agree about much, but they found consensus around four main values. This Manifesto was expanded into Twelve Principles that expand on what it is to be Agile about software development. These are in the following areas: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.
Early and continuous delivery Harness change for competitive advantage Deliver working software frequently Business and ICT working together Build projects around motivated individuals. Have face-to-face conversations Working software is the primary measure of progress Maintain a constant pace Technical excellence Simplicity Self-organising teams Team reflection
What is an Agile organisation? Mike Cottmeyer (2011) claims that there are 12 keys that are fundamental to a successful Agile organisation that he has observed over the years. These are: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.
Cross-Functional Teams Empowered Team Members Single Voice of the Business Shared Accountability Servant Leadership Continuous Flow of Value Value over Activity Attention to Technical Excellence Rapid Risk Reduction Early Feedback and Adaptation Total Openness and Transparency Trust
Steve Denning (2012) has been researching the application of an Agile approach in organisations and describes his approach as “Radical ManagementSM”.
Denning claims that “traditional 20th Century management has failed”. He argues that to deal with a radically different marketplace and workplace, organisations must change the way they think and seek to create a stream of additional value to customers through continuous innovation. The other major change is that they need to be delivering it sooner to ‘delight the customer’. This different approach to management reflects the Agile/Scrum/Lean approach used for software development and applies it to the whole organisation. Denning claims that traditional management systematically kills off all of the creative parts of an organisation. Layton (2015) claims the following advantages from implementing Agile into an organisation: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Better product quality Higher customer satisfaction Higher team morale Increased collaboration and ownership Customised team structures More relevant metrics Improved performance visibility Increased project control Improved project predictability Reduced risk
In particular, Agile allows an organisation to operate in a complex or chaotic environment and achieve outcomes.
Disadvantages Denning observes that Agile makes the assumption that all people in an organisation are competent. It expects performance and forces action if it doesn’t occur. It assumes a workforce that knows what they are doing and provides a transparent framework for them to show what they can do. He identifies a number of disadvantages of Agile including:
Agile may not fit the organisational culture Agile is designed for smaller projects Agile requires co-location to work effectively Agile lacks or undermines project management processes Agile can subvert an organisation’s accountability systems There are other/better ideas than Agile such as JIT, Lean, Six Sigma, etc There is nothing really new in Agile as much of it is common sense Page | 2
It is not fair to compare Agile with other management approaches as Agile is more a technique for projects or assignments.
Shifting an organisation Denning claims that moving to an Agile or radical management practice requires the following shifts: 1. 2.
3. 4.
5.
A shift in the firm’s goal from producing outputs to delighting the customer A shift in the role of the manager from a controller to an enabler of self-organising teams A shift in the way work is co-ordinated from bureaucracy to dynamic linking A shift from the main values of efficiency & cost cutting to values such as transparency, improvement and sustainability A shift from top-down commands to peer-topeer collaboration.
Why is Agile popular? Zilberfeld (2015) claims that Agile is popular because the concepts around Agile all call to the objectives that executives crave for: 1. 2. 3. 4. 5. 6.
Reduced waste Increased Speed to market Improved Productivity Improved Decision Making Improved Confidence Improved trust and safety
However, none of these happen without a significant change in governance to release controls and put in place a monument framework that encourages autonomous groups. This has a significant amount of risk associated with it and organisations that embrace Agile need to have an increased appetite for risk. Projects will fail and will still go over budget and schedule. However, they have a better chance of delivering a product that is useful to the client. Collet (2009) argues that Agile is popular because it has a ‘flavour of the month’ feel about it. He contends that Agile has been designed and implemented by experienced, smart, and highachieving people. These types of people excel in self-managed groups. Unfortunately, not all employees fall into this category and may not perform at all well in an Agile arrangement. Agile requires both individual and team freedom with people operating (sometimes) in multiple cross-functional teams, constantly adapting to
work, and switching roles as needed. This requires a significant change to corporate culture and governance arrangements where processes are secondary to people. Many proponents of Agile will argue this, saying that Agile requires greater discipline to remain focused on the task at hand while still maintaining an eye on the objective. Agile works best in small teams that are colocated. This is not always possible. Agile rewards team success and dominant individuals are required to relinquish their egos for the good of the team. This is not always possible.
Where has Agile been successful? Robinson Meyer (2015) provided a synopsis of how a team of young developers, living in a repurposed McMansion in Maryland, helped rebuild Healthcare.gov after the failed launch of the system. The website and the applications behind it were so badly developed that it nearly broke the Affordable Care Act. The US government spent millions on paying project managers and IT development houses to create the system. It performed so badly that on Healthcare.gov’s first day, only six people successfully used it to sign up for health insurance. An Agile approach by a small team of young people successfully redeveloped the application using open source software and cloud services.
Case study Lange Consulting & Software is one of Australia’s leading procurement and evaluation management consultants. We deliver services and solutions, as well as support to both the public and private sectors. We provide specialised services in all facets of the procurement and contract management process, including tender preparation, project planning, evaluation strategies and systems, training, facilitating tender evaluations and negotiation. Our Mission is to deliver those services in a way that enhances our reputation and that of our clients. Our staff and associates excel in planning and delivering outcomes and our core business is supported by people with solid management skills, technical track records and experience. Clients outsource complex procurement and evaluation projects wholly to Lange because approaching the market and evaluation services Page | 3
and solutions is our core business. It's our bread and butter and we are involved in multiple projects across a range of clients every day. These projects have involved authoring Request for Tenders (RFTs) and Evaluation Plans (for example), handling tenderer enquiries, evaluating all tenders, authoring evaluation reports, negotiating contracts, raising deed management plans, and conducting tenderer debriefs. In most cases these projects are delivered for a fixed price. We provide services in the following streams: 1. Procurement and contract management 2. Training in commercial management areas 3. Systems development, hosting and support
What is the problem (or opportunity)? The business model for Lange is no longer valid in a shrinking and more competitive market. We operate in an environment where the key customer (Federal Government) effectively closes down over the Christmas break and it is not until well into February that they go back out for services. So the problem that continues to be an issue for Lange is ‘achieving a positive cash flow from December to February’.
Symptoms Some of the symptoms indicating this problem are: 1. The opportunities for consulting services have reduced. 2. Lange does not have a positive cash flow from December to March. 3. Rates have had to be reduced to win work 4. Success rates on tenders and quotations have dropped. 5. New sales of software have dropped
Current situation As the consulting and services market has reduced in size slightly over the past few years, we find that the top 4 consulting firms have dropped their prices to compete for work that would normally be ours with minimal competition. In addition, a number of senior public servants have taken redundancies and are now contracting/consulting (with very low overheads) back into their agencies in direct competition to us. Therefore, we are being squeezed from both ends of the market and need to respond in the near term or risk becoming insolvent.
Desired future state We seek to be a larger organisation that can: • • • •
increase our ability to adapt to the market broaden the scope of our capacity to provide services improve our reputation compete with larger consulting firms
Options There are a number of options to address the current problem. 1. Move all staff onto a contract arrangement where they only get paid for billable hours to reduce costs 2. Look for alternative markets over the summer period or even beyond 3. Sell the business to an organisation that wishes to buy market share, enter the market, build capability or vertically integrate. 4. Do nothing and hope the market with increase.
Other Opportunities The organisation is also facing a situation where the owner is seeking to retire and become less engaged with the business. This raises the opportunity for investment of change of ownership and the potential for renewal that comes with that extent of change.
Actions taken To make the initiative successful, there are a number of strategies that we put in place: We considered the five shifts in practice proposed by Denning that are required to move to an Agile or radical management practice. We undertook a skills and experience stocktake of staff and found that we had extensive experience in the areas of managing intellectual capital, systems analysis and development and assessing performance. We also had experience in the areas of the construction industry, the environmental management area and the aged care industry, none of which we had traditionally operated in. We then sought out opportunities in these areas and updated our public profile to incorporate our capabilities in these areas. We reviewed and replaced our online presence to match our capabilities and align with the industries we intended to target. For example; we Page | 4
recently added the capacity to provide consulting services in Managing Intellectual Capital to our services. In this, we assist organisations to better manage their intellectual capital through contemporary Information and Knowledge Management strategies and techniques. This was in response to an opportunity to undertake some Post Implementation Reviews for a Government Agency and to undertake a review of performance management activities for another agency. We expanded our ability to design, develop, implement and support solution to meet business challenges. Where an ICT solution is involved, we are experts in evaluating the market and sourcing solutions as well as development, support and hosting. We expanded our scope of interactive training workshops to meet the growing demand for targeted training in the workplace. In some instances this is delivered to the desktop via webinar or via video conference, to meet the client’s needs. We sought out Subject Matter Experts across a number of fields where opportunities arose and developed a trusted relationship and a flexible commercial arrangement with them to provide services. We started competing for work where the requirements were unusual and did not suit the standard service providers that we normally compete with. We increased our prices to provide additional contingency for changes required by the clients we are now targeting and address the increased risk.
Success criteria We considered that we would be successful when: 1. The organisation did not lose money over the Christmas shutdown period 2. We would continue to add software licences without losing clients 3. We could provide modest bonuses to staff in reward for excellent effort 4. We increased the number of clients for consulting services
What happened? As we changed our business model to be more Agile in our operations, we noticed a number of benefits and dis-benefits:
Market penetration We increased the extent of Business Development, competed more broadly in the market and won more work against our larger competitors and in markets we would not normally compete.
Cash Flow The different approach to our business development resulted in an improvement in our cash flow and importantly, our profitability. This was particularly successful in the summer months which had previously been a significant issue for Lange.
Staffing numbers Lange was able to increase the number of staff to meet the increased demand for services. This has been done on contract arrangements but in doing so, we have integrated the sole providers into the organisation with very much a Lange profile and style.
Assignment completion We found that the increased flexibility provided more options for our clients and staff to modify our services and deliverables. This resulted in far more of our assignments and projects running over time.
Sick days After an initial flurry of activity where we obtained more assignments of varying nature, we found that staff, both permanent and associates, had an increase in unavailability due to illness. We believe that a significant component of this is related to the additional stress placed on staff due to the increase in tempo.
Staff turnover Staff turnover has not been a problem to date but we consider that it may be too early to tell. The challenge that we do have is availability of contracted and permanent staff as they are engaged in multiple assignments.
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Working environment After researching the preferred environment for millennials for a previous activity, we realised that this was a preferred model for many of our ‘Baby Boomer’ staff and we moved to a working environment that provides far more flexibility and delegation of authority and process. The questions raised were related to how sustainable this model may be.
Governance We found that the executive management of the company were challenged with the change in operations. We previously had an arrangement where all of the senior consultants copied in the executive and a peer to ensure that we have coverage if the lead consultant is not available. As we worked to a more adaptive and Agile approach with our clients and operations, we found that the executive would intervene on occasions without the full context of the changing assignment. This was creating some confusion with our clients and additional work in clarifying actions on assignments that were in constant change.
Systems We moved from a structured and physical VPN network to holding all of our working documentation and systems in the cloud. This enabled us to take a BYOD approach to our workforce and have the flexibility to bring people on and off as required with almost no impact on overheads. We adapt our licence structure accordingly and only pay for what we need. We adopted SaaS tools such as:
Dropbox for business – for document management Trello – for tracking changes to software Zendesk – for customer support Confluence – for Wiki based collaboration Smartsheet – for project scheduling Zoho CRM - for CRM Plaza – for contract management
We are still evaluating options for a cloud based financial management solution. We trialled Yammer but found that the organisation was not quite large enough for a collaboration tool like that to be effective, so continue tophone, Sype or email.
We will probably move to Office 365 on our next hardware refresh but have to evaluate that arrangement first.
What we learned from the activity
Agile works well in smaller organisations and teams with competent and motivated people. Agile reflects the way in which these types of people prefer to work Agile is just as attractive and relevant to Baby Boomers as it is to Millennials Agile takes more effort to make work where the team members are not co-located, but is still achievable Agile requires more co-ordination and reporting to enable the executive to take their hands off the operation.
What are we doing differently as a result? We find that we are now becoming more selective but adventurous in our tendering for services. We are continuing to build our networks across different areas. We are now constantly on the lookout for unique personnel that can provide high quality consulting services and have the flexibility to adapt to our business model. We are now trying to balance our workloads across individuals and provide more time for our assignments. We are providing executive management with better reporting on the day to day running of various assignments to ensure independence of operations and trust in the team’s ability to achieve objectives.
Strategies for the Future
Develop a more robust strategy for the future Determine what skills, knowledge and experience we need for different markets Find really clever and available people Market our services more broadly Improve how we track performance Increase internal reporting
We seek to be a larger organisation that can:
Flatten our cash flow profile Increase our ability to adapt to the market Broaden the scope of our capacity to provide services Compete with larger consulting firms Improve our reputation Page | 6
Conclusion To survive and thrive in an increasingly hostile and chaotic environment, organisations will need to address the four tenets of agility, awareness, personalised service and responsiveness. As identified in the earlier paper, the global trends indicate that there are a number of actions that organisations can take to meet future challenges: 1. Listen for weak signals – what might happen in your industry in the future and what signs may indicate something is about to happen. 2. Become a learning organisation – one that can observe, create, share and use knowledge more effectively than your competitors. 3. Protect your intellectual assets and resources. 4. Build the flexibility into your workforce, technology, workplace and structure to be able to respond to changes in the market. 5. Test the market for non-core activities and take advantage of expertise and services available from contingent sources. 6. Worry less about structure and more about delivery. 7. Keep talking to your clients (and your suppliers) – how can they help you help them when they need you. 8. Become a global citizen – with the spread of social media, your reputation is even more important now.
Collet, B. (2009) Limitations of Agile Software Development [accessed 17 May 2015] http://www.pmhut.com/limitations-of-Agilesoftware-development Cottmeyer, M.(2011) 12 Keys to Success with Agile [accessed 17 May 2015] http://www.leadingAgile.com/2011/01/12keys-to-success-with-Agile/ Denning, S. (2012) Making The Entire Organization Agile in Forbes http://www.forbes.com/sites/stevedenning/ 2012/06/06/making-the-entire-organizationAgile/ Denning, S. (2012) What Is Radical Management? http://www.stevedenning.com/radicalmanagement/default.aspx Dwyer, C. (2014) The State of the contingent Workforce, Ardent Partners, [accessed 17 May 2015] https://sharena11.springcm.com/Public/Doc ument/11608/10383159-6a6e-e411-b769d89d67132a6d/dbb517c9-a96e-e411-b769d89d67132a6d Layton, M. C. (2013) Ten Benefits of Agile Project Management [accessed 17 May 2015] http://www.dummies.com/howto/content/ten-benefits-of-agile-projectmanagement.html
The challenge for us is to have the agility to operate within the evolving social, political and economic environments while still providing a safe and secure future for our families, employees and community.
Meyer, R. (2015) The Secret Startup That Saved the Worst Website in America, The Atlantic, [accessed 17 May 2015] http://www.theatlantic.com/technology/arc hive/2015/07/the-secret-startup-savedhealthcare-gov-the-worst-website-inamerica/397784/
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