For large organisations, the challenge of moving to agile ways of working can be compounded by years of heritage, tradition and certain ways of doing things, as well as the need to manage shareholder sentiment and reduce any negative impacts on short-term results.
To effectively embrace agile working, organisations need to re-wire their culture through a combination of top-down leadership vision and bottom-up organic change, according to HR leaders. Piloting initiatives in certain business units or functions is often the most viable starting point during an agile transformation.
HR leaders shared their challenges and approaches to embracing agile working at a recent ChapmanCG roundtable hosted by PepsiCo in Reading, UK
Agile Working: Speed Boats vs Oil Tankers
One organisation shared the analogy of driving change by creating ‘speed boats’ rather than trying to turn the ‘oil tanker.’ To drive more genuine agile thinking and action, they have created splinter groups made up of cross-functional teams that have the freedom to be more agile on the product side.
These teams essentially operate ‘outside of the rules’. They have more freedom to create and move quickly, and adopt different processes and ways of working. They also require a different type of talent, often recruited from start-up companies, and different rewards structures. Bonuses are based on success at driving innovation, which can cause some tension in the ‘oil tanker’ as this creates a new group of people more motivated by financial rewards and quick results.
Differentiation where it matters
Whilst these ‘speed boats’ operate differently, they still adhere to the DNA, principles and purpose of the broader ‘oil tanker’ organisation. They have kept R&D and leadership separate, but execution capability still sits in the ‘oil tanker’, which means that certain consistencies are important to keep a thread of alignment with the main organisation.
This approach of creating agile squads to innovate more rapidly in certain areas can sometimes be a stop-gap in the absence of an organisation-wide disruption instigated by leadership that puts agile at the heart of the organisation. For larger-scale organisations, this can be a much quicker, easier and more palatable approach to implement.
There is an interesting parallel here with the move to ‘digitalisation’ within many organisations, particularly in financial services, where digital hubs are created with completely different cultures that essentially operate as a different organisation. These subcultures are also given the freedom to innovate and are less restricted by the hierarchy and politics of the main organisation.
The ‘speed boat’ approach can work well as it helps with competitive advantage in the short-term, but it doesn’t solve the long-term conundrum many organisations face about how to make a large-scale change.
There are examples where organisations in more traditional sectors have adopted a more widespread, integrated shift to agile working. For example, ING recently went through a complete agile transformation, inspired by organisations such as Google, Netflix and Spotify.
Their approach included:
- Setting up squads, which are temporary, self-steering, autonomous groups of up to nine people with a range of types of expertise. They constantly test what they might offer customers, and are dismantled as soon as their mission is executed. They are part of a broader tribe, which is a series of squads with interconnected missions.
- The appropriate organisational structure, and clarity around the new roles and governance.
- A continuous delivery approach within IT, with an ongoing succession of launches and new releases.
- A new people-management model that focuses on how people deal with knowledge, rather than projects and the size of a team.
For these types of organisation-wide shifts to work, progressive leadership is required.
Whilst many large organisations will begin by piloting agile initiatives in some parts of the business, the most courageous will continue to disrupt their core businesses. For example, a technology company based in China has set up competing squads with the sole purpose of disrupting the current model. The squads compete against each other and the most popular innovations are adopted.
Acquiring Start-Up Agility
It is not easy for established organisations to compete with those that are ‘born agile’. Start-ups are created to disrupt, and have much more freedom to move quickly and innovate.
A recent example of an effective disruption in the male grooming market is the Dollar Shave Club model. Competitors such as Unilever couldn’t compete with the pace and agility of that organisation, so they bought it for 1 billion USD.
We are seeing a growing shift towards organisations gaining agility and innovation by acquiring new start-ups. Whilst in some respects this is a quick and easy solution, it also brings its own challenges in terms of managing change through a merger or acquisition, and trying to mesh two very different cultures.
Creating more ‘responsive working’ was how one organisation described a recent overhaul of decision-making. They have put in place an innovative way of speeding up the process, creating a situation where getting feedback, reaction, iteration and decision-making happens rapidly.
They have named this process a ‘round’, which essentially flows as follows:
Proposal –> Questions –> Reactions –> Edit proposals –> Objections –> Decision
There are dedicated facilitators within the leadership group and each ‘proposal’ has a sponsor in the leadership team, with the ultimate aim of trying to move quickly and align stakeholders in the meeting. This exercise also brings the leadership team out into the open and makes them more accessible. They drive consent, accountability and speed, and counter uncertainty. This is both a physical and a virtual process, with technology such as Microsoft Teams providing assistance. The outcomes are then measured with surveys.
The organisation has found this relevant for all decisions on a day-to-day basis, and a true enabler for creating diverse and inclusive thought.
HR’s role in the agile working movement
For agile working to succeed, leadership buy-in and having some aspects of a top-down strategy are critical. However, HR can still drive certain changes to disrupt the status quo and move the culture toward agile.
From an organisational development perspective, this could include:
- encouraging more of a SCRUM mentality and utilising tribes, squads, and chapters
- evolving the performance management philosophy to create continuous feedback loops
- designing flexible and progressive rewards models and incentives to help attract and retain the right type of agile talent
- operational improvements, such as speeding up the interview or offer letter processes.
Ultimately, larger organisations may end up being truly agile in some areas, for example in new product development, whilst other functions may just have the trimmings rather than being agile at their very core.
There is also a natural tension between hierarchy and agility. For example, if you are part of a squad but also have a normal day job, this can be a difficult balance to manage.
The creation of a ‘north star’ and having a clear purpose as an organisation will continue to be critical as the agile movements creates more sub-cultures, particularly in different geographic markets and business functions. Having a ‘north star’ that contains some agile values and an open, social form of leadership, can truly help to transform the organisation.
A big thank you to our host Jesper Petersen from PepsiCo, and the HR leaders present for contributing their insights to our discussion.
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