Senior executives increasingly recognize that “Agile Is Eating The World”. In fact, surveys by both Deloitte and McKinsey show that over 90% of senior executives want to be agile, while less than 10% currently see their own firm as “highly agile.” There are now major efforts under way with “Agile transformations” being planned or implemented in many large organizations, both public and private. Yet in the ensuing scramble to “be agile,” the risk of Agile being dumbed down to become just another a set of efficiency tools aimed at reducing head-count is significant. For instance:
- Agile as cost reduction: At a recent meeting in a large global corporation concerning the implementation of Agile management, a presentation was being made about the potential benefits of Agile. The presentation dwelt on the acceleration of innovation, the improved quality of products and services, the higher customer satisfaction and the improved staff morale. The senior management didn’t appear to be paying much attention until they saw a slide suggesting that Agile would also enable a reduction in the company’s head-count. Head-count reduction was an immediate turn-on. Although the overall thrust of the presentation was about improved innovation, quality and staff commitment, it was clear where the senior executives’ interest lay.
- Agile as scientific management: In another global firm in the midst of a major Agile implementation effort, it was decided at one point to stop using the term “agile” and in its place use the slogan, “better, faster, cheaper.” The reasoning was that the new slogan would win support from late-adopters and avoid the baggage that had become attached to the term, “agile.” The shift in terminology ran the risk that the slogan might become the very goal of the Agile transformation, leading back in effect to Frederick Taylor’s idea of management as cost reduction methodology. (Eventually, the firm changed the slogan to: “Better Value Sooner Safer Happier.”)
- Agile as a patch: In yet another case, a global firm carefully deployed Agile processes and ceremonies such as small teams, short iterations, daily standups and retrospectives, but the work continued essentially as it had before. The teams were supposed implementing Scrum, but their Scrum practice consisted of mini-waterfalls that rarely completed the sprint’s target. The Agile mindset was missing. There were, unsurprisingly, few if any benefits. Agile was in effect no more than a patch on the existing management practices.
- Agile as a sweatshop: In some cases, firms have used Agile with their top talent, but in other parts of the firm, they have continued sweat-shop conditions that are antithetical to Agile management. The tension between the two dynamics in different parts of the organization makes one wonder whether both can co-exist over the long haul. The promotion of Agile management as a tool to promote efficiency is also implicit in the subtitle of Jeff Sutherland’s otherwise excellent book, Scrum: The Art of Doing Twice the Work in Half the Time. A focus on doing “more work in less time” runs the risk of missing the point that Agile is essentially not about doing more work. It’s about generating “more value from less work.”
- Agile as a scaling framework: In some cases, a scaling framework, such as SAFe, has been deployed across the organization, but without significant change in work practices where the work is carried out. Here again, as one might expect, no benefits have ensued.
- Agile as a sham: In another case, a firm was proceeding profitably and making great progress in its Agile implementation when an edict came down from the very top of the firm that costs had to be cut by a significant amount, because of a perceived need of top management to boost quarterly profits and ultimately the share price. In making the cuts, the managers did their best to preserve the gains being made from the Agile implementation and to minimize the collateral damage from the cuts. But the impact in terms of lost trust was significant. The staff had seen that, when push came to shove, the management talk about the primacy of adding value to customers was ultimately subject to short-term shareholder-value concerns.
The Sad History of Business Process Reengineering
We have seen this movie before. Take, for instance, the sad history of business process reengineering (BPR). In the early 1990s, BPR went through a rapid boom-and-bust cycle. At the outset, it was presented as a transformational business management strategy. It focused on the analysis and design of workflows within an organization, working backwards from the customer. BPR was intended to help firms fundamentally rethink how they did their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors. If BPR had been implemented in this spirit, it could have led to deep organizational change.
Initially, there was huge enthusiasm. It was the management fashion of the day. However, it soon became apparent that most companies were not using BPR as its founders had intended. Instead they were using BPR as a pretext to reduce head count. BPR quickly earned a reputation for being synonymous with downsizing and layoffs. Despite the underlying good idea of “working back from the customer” it ran flat smack into the emerging hyper-priority of cost cutting and maximizing shareholder value as reflected in the stock price. As a result, BPR fell into disrepute, much to the chagrin of its founders.
“When I wrote about business process redesign in 1990,” wrote Tom Davenport, an early BPR advocate, “I explicitly said that using it for cost reduction alone was not a sensible goal. And consultants Michael Hammer and James Champy, the two names most closely associated with reengineering, have insisted all along that layoffs shouldn’t be the point. But the fact is, once out of the bottle, the reengineering genie quickly turned ugly.”
Similarly, Michael Hammer said: “I wasn’t smart enough about that. I was reflecting my engineering background and was insufficiently appreciative of the human dimension. I’ve learned that’s critical.”
A similar fate awaited other management reform movements, such as Quality Circles, Total Quality Management (TQM) and Knowledge Management (KM). These management ideas started out as legitimate alternatives or adjustments to the prevailing bureaucratic management paradigm, but in due course they were subverted and turned into subsets of the bureaucracy. BPR, TQM and KM programs still exist. What remains of them now are the almost-lifeless remains of once-bold thinking.
Will Agile’s Fate Be Different?
There are at least three differences between Agile on the one hand and these failed management fads.
One is that Agile entails an explicit paradigm shift in management. Rather than trying to work within the existing management paradigm, Agile recognizes that its dynamic is fundamentally at odds with cost-cutting bureaucracy. The earlier fads had practically nothing to say about the purpose of a firm. So in due course, they were coopted and ultimately undermined by the notion that the purpose of a firm is to maximize shareholder value as reflected in the stock price, a philosophy in which value enhancement inevitably takes a back seat to systematic cost-reduction.
By contrast, Agile management explicitly gives primacy to adding value to customers. Hence it is more threatening to the status quo, but it is also more honest as to what’s at stake. This is both an advantage and challenge. It raises the stakes. It poses an explicit threat to the status quo and is more likely to be stomped on. There are many aspects of Agile that make managers anxious. But by being honest about the nature of the change under way, it gives its advocates explicit guidance as to what’s at stake.
Second, Agile is a more comprehensive and coherent set of ideas than any of these earlier fads. There was never any serious effort to define BPR budgeting, or KM HR, or TQM strategy, in the way that there are serious efforts under way to define and implement Agile budgeting, Agile HR and Agile strategy.
Finally, Agile is deeply rooted in the human dimension of how work actually gets done. It emphasizes what’s involved in generating value for customers and creating workplaces that are genuinely stimulating and frequently inspiring. As a result, it is much more difficult to ignore the human dimension of Agile, or pass off cost-cutting Agile as the genuine article. Fake Agile is much easier to spot than “fake BPR” or “fake KM”, because the human dimension of those movements was much less explicit than in Agile.
Nevertheless, there are continuing risks, particularly as big consulting firms with no particular background in or aptitude for Agile thinking, are engaged to lead large-scale Agile transformations. The risk is that Agile will be turned into a caricature of its essence. The caricature will then be used as a basis for maintaining the status quo or shoehorning Agile into traditional management as just another set of tools and processes for reducing headcount.
What is needed for all of those implementing Agile is to be on the watch for “fake Agile” as well as efforts to turn Agile into a caricature of its innovation-based value-creating principles.
And read also: