December 1, 2022

Sapiensdigital

Sapiens Digital

Seven success factors to close the Agile achievement gap

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Organisations that want to be faster on their feet, transform end-to-end customer experiences and gain an edge over newer, nimbler competitions often turn to Agile. They establish daily stand-up meetings and retrospectives, and create Agile teams to develop innovative new apps, build better business processes, or craft technology solutions. But as we have seen play out time and time again, despite earnest intent and significant investment, no real agility is gained. 

Despite the embrace of Agile methods to transform businesses, catalyse innovation, and accelerate profitable growth, we see companies barely realising Agile’s vast potential. While they use Agile techniques to make some progress, they don’t become more agile as an organisation. They plant a lot of Agile trees that don’t grow into Agile forests. In technical terms, they don’t achieve what we call enterprise agility. When companies scale Agile effectively across the enterprise, they gain the capability to adapt to everything the market throws at them. In doing so, they remain competitive and fiscally sound, no matter the scenario.

In the following article, we identify seven mission-critical factors for closing the Agile achievement gap.

1. Listen to your customers—and the function that advocates for them

Your product management function guides every step of a product’s life cycle—from development to positioning to pricing—by putting the customer first and ensuring that finished products meet and exceed customer expectations. Although most organisations understand the importance of being customer-centric, many companies struggle to grow their product management function within a broader Agile transformation.

One reason for this is talent management. The high-performing companies we’ve studied as part of our research create clear roles and skills matrices for their product managers (PMs) and product owners (POs) and offer hands-on coaching and opportunities for advancement. The result is greater retention and acquisition of talent.

2. Tie your teams—and their daily work—to broader business objectives

In Agile, an initiative’s success hinges on the composition and ethos of high-performing teams and their ability to deliver in compressed time frames. Yet we’ve observed that organisations often overlook how the work of Agile teams is tied to the overall objectives and strategy of the business.

Companies need to connect the dots for their teams, such as by using design-thinking approaches to planning and training. Breaking down silos between business and IT units, improving transparency into how tasks are executed, and increasing the frequency of feedback loops with an eye toward continuous improvement of processes will also help teams come away with a clearer understanding of how their work is driving broader business strategy objectives.

3. Connect strategy to execution through lean portfolio management

The primary role of the lean portfolio management (LPM) function in Agile-minded organisations is to align Agile development with business strategy. In most cases, this function is made up of staff from the organisation’s finance, IT, and business units, and also draws on expertise and input from human resources and IT teams. Most important, the LPM function aligns the annual planning and funding processes with the Agile methodology. It also establishes objectives and key results and key performance indicators (KPIs) to measure the effectiveness of the work being done and to keep deliverables on track. These tasks are often time-consuming and involve large change management efforts, which is why the LPM function must be implemented early in the process.

4. Prioritise talent development in your Agile transformation

It’s easy to focus on business and IT and overlook the vital role that human resources plays in an Agile transformation. Agile hinges on people being empowered and autonomous, and that requires HR to build the systems necessary to ensure the program’s success. We’ve observed that in many Agile transformations, HR tends to get involved only as a formality to approve role definitions. But because your people will determine the success of any initiative, HR should have a permanent seat within the Agile transformation office, helping drive the organisation’s change agenda from the beginning. HR should work closely with the business and IT leaders to publish clear career paths for Agile roles and provide continual learning, coaching, and certification so employees can be as productive and engaged as possible.

5. Give your Agile transformation office some teeth

Empowering the Agile transformation office with actionable mandates and support from the C-suite sends a clear message to the organisation that senior leaders are invested in Agile as a value differentiator and not a mere management fad.

In our experience, the ATOs that are given the lowest investment and lightest touch from the C-suite tend to establish generic training and focus merely on educating the enterprise about Agile. Conversely, the Agile transformation offices that get the most investment and buy-in from senior leadership tend to be cross-functional and dynamic. They’re likely to be made up of business and IT personnel, along with representatives from HR, finance, corporate communications, and change management. They create standards and playbooks, provide hands-on coaching, partner with the business teams for change management programs, and take an active role in collecting data and key metrics on the Agile transformation.

6. Take an end-to-end approach to performance measurement

How does a company know if an Agile transformation is working? That’s a complicated question. It takes time for an Agile transformation to drive cost reduction or revenue growth. And even when a company sees new cost efficiencies or an uptick in sales, it can be devilishly difficult to attribute any success directly to Agile.

That’s why Agile transformation offices tend to create metrics such as ‘business units touched’ or ‘number of employees trained.’ In doing so, they sometimes struggle to measure and articulate the real business impact. In our experience, the most successful ATOs incorporate three types of metrics from an early stage and take an end-to-end approach to tracking performance. In the beginning, transformation progress metrics (such as businesses, teams, and personnel covered, or employees trained and/or certified) provide indicators of how well the Agile transformation is progressing. As teams start to operate in Agile rhythms, execution metrics (such as velocity, cycle time, volatility, and defect rate) become more important. Once products go live, business-value metrics (such as revenue, core earnings, cost, and Net Promoter Score) tell a story of the overall business impact. With these measurements, the key for leaders is to recognise any early indicators of a problem that needs to be fixed.

7. Find your Agile stars and let them lead the journey

Many organisations undertake Agile transformations with set timelines and predetermined expectations of ROI. Yet they fail to account for the massive change that Agile requires of the organisation. Employees must make huge shifts in how they work, prioritising collaboration over individual outcomes and activities, thinking in increments, and becoming more comfortable with rapid experimentation and failing fast. To effectuate this kind of change, top management needs to be active and involved in elevating its Agile stars and bridging divides between business functions and units.

Adopting Agile, gaining agility

When companies master Agile methods and scale them across the enterprise, they can accelerate innovation in order to remain market-relevant and fiscally sound. But as we’ve seen in helping companies manage their Agile transformations, pitfalls abound. Often, organisations spend so much time and energy setting up their transformation program that they lose sight of organisational challenges such as breaking down silos between the business and IT functions or devising the right KPIs. By the time they reach the execution stage, it can be too late—and that’s where the problems emerge. But the pressure on businesses to transform themselves to drive greater productivity, speed, customer engagement, and employee retention has never been greater. But with the right starting point informed by these seven success factors, companies can use Agile to gain a decisive edge.

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