Before the COVID-19 crisis hit, the trend for increased business agility was being driven by opportunity.
Organizations were employing business agility to become more competitive and to access opportunities previously inaccessible to them. As Darrell K. Rigby, Jeff Sutherland and Andy Noble pointed out in their 2018 Harvard Business Review article Agile at Scale, improving the levels of autonomy and alignment within an organization through agile practices leads to "higher team productivity and morale, faster time to market, better quality and lower risk."
These benefits saw agile catch fire.
Leading management consultants like McKinsey have been busy helping Fortune 500s with their agile transformations. And as its popularity has grown, the need for senior teams to strike the right balance between speed and flexibility on the one hand, and stability and efficiency on the other, has grown.
Enter a much stronger focus on leadership with regards to business agility. The Agile C-Suite, also published in HBR and written by Darrell K. Rigby, this time with Sarah Elk and Steve Berez, provides a blueprint for adopting agile at the executive level. It hinges on leaders fully understanding what agile can enable, and knowing where and when to use it.
To apply agile effectively, you need more than simply lots teams using agile methods like Scrum. Leadership teams and the whole organizaion need to truly embrace agile principles, just as Spotify has done with the so-called "Spotify Model".
Article author Patric Palm, Favro co-founder and CEO, has for almost two decades been helping some of the world's most innovative companies with their agile transformations.
So, what has COVID done to this trend? In short, the reasons for companies to push autonomy and alignment have completely changed. Pre COVID, it was to access new opportunities. Post COVID, it is simply to survive.
We now live in a world where agile is being driven by necessity. Take Spotify. Their recent announcement that Spotify employees will be able to work from anywhere has fundamental implications for their processes and structure. Thankfully, Spotify are trailblazers when it comes to implementing and scaling agile. If they weren't, this move would probably not be possible.
The key concept here is autonomy. Employee autonomy is no longer a nice add-on that might improve morale, or inch up productivity a few notches. As more and more companies plan to move to hybrid or fully remote working, employee autonomy is now an essential.
I usually say that "alignment enables autonomy."
If people are aligned towards the right goals, you can allow them to be autonomous. But if people are going in the wrong direction, how can you give autonomy? How can you trust them to make the right choices?
So alignment is essential. But alignment that comes from an old fashioned command and control approach is no longer effective with employees who need and expect more flexibility. It is also much harder to implement when your workforce is dispersed in various geographies.
This is where business agility comes in. Agile provides a framework for creating alignment while enabling autonomy. And if autonomy is a "must-have" in the new post-COVID workplace, that means agile is too.
Alignment enables autonomy.
So, having established that agile has moved from being opportunity-driven to being survival-driven, let's take a deeper look at the reasons why business agility matters more than ever post COVID.
In my opinion, the most interesting venture backed startups right now are SaaS companies.
Investors love SaaS startups. Why? Because the SaaS business model brings significant benefits such as stable recurring revenue streams.
And customers love SaaS companies too. Thanks to their lower costs, savings are passed on to end users, while the fact that products can be regularly updated and improved is another big bonus.
These successful venture-backed SaaS startups are not only disrupting larger incumbents - they are inspiring them as well. In fact, Fortune 500 companies are evolving their product offering to become more like SaaS companies.
This evolution brings a big challenge for large companies. The SaaS model requires very frequent feature and content drops, as the product constantly iterates. For this to be possible, your teams - product, operations, marketing, leadership - need to be in sync on a weekly basis. Leaving this for monthly reviews is one of the big mistakes project managers and product owners are still making. The agility needed to achieve this level of coordination between your teams is difficult even for startups. So for big companies, it's a major headache.
The key is to scale agility. Your agile processes will need to be rolled out to 1,000s of people in a coordinated fashion (if you're a fast growing venture-backed startup headed for unicorn status you should also be planning for this). Thankfully, there are now good strategies and tools available for organising business agility at scale.
In summary, the SaaS model is proving so effective, companies of all sizes are adopting it. And this will give them a big advantage in the post-COVID business landscape.
As I have already mentioned, agile is now a necessity. That's because COVID has resulted in permanent changes to the way businesses operate.
Perhaps some assumed that the shift to distributed working would be temporary. But all the signs indicate that, even as lockdowns are eased thanks to the roll out of vaccines, companies are doubling down on hybrid or work-from-anywhere policies.
Workplace Intelligence surveyed 1,000 C-suite executives in the Spring of 2021. 79% of respondents said they plan to give their employees a hybrid working arrangement, split between home and the office. Some organizations, like Spotify, are going fully remote and offering work-from-anywhere policies.
This trend shows us that, far from being an inconvenience that COVID forced upon companies, flexible working is a smarter, more effective way to run an organization. The main reason for this is happier employees.
Naturally, how an employee feels about working from home will depend on a number of factors, including:
But research on working from home by Harvard Business School in March 2021 indicates that, overall, work from home is popular. 81% of those surveyed said they wanted either to continue working from home full time, or to have a hybrid schedule. The most popular option was to work 2 or 3 days per week.
Another key trend has been the rise of working locally. Instead of hours of commuting, residents in big cities like London are opting for 5 minute bike rides to work hubs in the suburbs.
So, what is it about work from home (or local coworking spaces) that employees like so much? Again, the Harvard Business School research is illuminating. Employees value not having to commute every day. They also enjoy more time with their family: 70% of respondents said they have spent more time with loved ones over the last year.
Ultimately, employees value the increased flexibility and choice available. Research by Workplace Intelligence suggests that 75% of employees would be willing to lose at least 1 benefit in return for more flexibility as to where they work.
The challenge for executives today is to run a location-agnostic organization smoothly and efficiently. The solution is to become even more agile, and to continue to move away from old fashioned command and control organization.
Offering hybrid or work-from-anywhere arrangements is important for meeting the needs of your existing employees. But it is also a great way to access new talent around the world.
Now that your organization is no longer tied to an HQ, you can radically adjust your recruitment policy. Instead of being limited to the specialists in your region, the world is your oyster. And this applies to venture-backed startups just as much as big companies.
The only constraint could be timezones, and there are a couple of ways to manage this:
One final remark I would make is that you should see this access to talent not just in terms of cost reduction. There is actually lots of potential to both save on costs and increase on quality at the same time. This is especially true if you are based in a location with a high cost of living. Well-qualified specialists in other parts of the world may simply be able to get by on less - the lower cost doesn't mean they are any less qualified.
How does this apply to agile? Alongside the points I've already mentioned about running a location-agnostic organization, there's the question of onboarding to consider.
It can be difficult for new remote recruits to get up and running. But agile working practices like daily online "stand ups", and agile workflow management tools, can make it much easier for them to know what their priorities are and to feel in the loop from day one.
It is simply a demographic fact that most of the new talents joining your company are millennials or from Gen Z. The agile culture seems to appeal more to these generations, who value autonomy and accountability.
As a result of this shift, a new breed of leaders is also emerging - they are facilitators, visionaries, coaches and communicators. The days of basing your authority on your expertise are over. We are witnessing the death of the micro-manager and the rise of the facilitating leader.
And what is it that these new leaders are communicating? It is the values and vision of the organization. And from this vision stem clear objectives to aim for and clear results to measure. This process, and why it is so effective, is brilliantly explained in John Doerr's TED talk on setting the right goals.
With these objectives and key results (OKR) in place - along with an agile organizational structure - the need for micro-management evaporates. Instead, each employee understands what they are trying to achieve and how their success will be measured.
And, thanks to their leaders' clear communication, they understand why they are striving to reach these goals. Millennials and Gen Z are often more motivated by a sense of purpose than anything else.
In an agile company, evolved leaders are not command and control style dictators, but rather facilitators of collaborative planning within autonomous teams, between these teams, with management, and with external partners.
So, what can you do to change how teams and management are organized?
1. Focus on team composition. Management should, like agile teams, be organized into small autonomous groups — optimized to solve problems together, rather than working solo. This can be a tough mindset change for many managers who are not used to working in teams but rather work solo using sharp elbows to achieve success.
In a super adaptable world group performance matters — not individual achievements. Leaders need to handle two different roles here — the role of being a part of a team with manager peers, and the role of having autonomous teams reporting to them.
2. Make the mission super clear. There can’t be any uncertainty about what the teams or management groups need to achieve to be successful. Actions towards the mission must be structured with agile leadership techniques to be streamlined.
This means that goals and initiatives are being organized in a backlog, a list, where the agile principle of prioritizing what is most important, entails the highest risk and is most valuable, are worked on first and all the rest cut out. (Yes, there are agile strategies for the long-term things as well.)
3. Visualize your flow. Flow management techniques will limit your work in progress and create a focus on speed and throughput. Visualization of the workflow will also make it transparent and make co-workers aware of what is going on in the organization without spending time on creating advanced reports.
Everybody from interns to the CEO will have instant insights into progress and impediments.
Favro is the first platform specifically designed for team autonomy and organizational alignment. Favro collaborative planning gives you a new, next level category of tools for the management of your company.
Learn more and try it for free at favro.com.