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How to organize for business agility at scale

From a single 7 people squad, to a 200 people business, up to a 0,5 million people mega enterprise.

The world is spinning fast and companies and organizations need to reinvent their ability to adapt to change. The cliche that the only constant is forever change is actually true. Right now we live in a post-industrial world moving into the age of artificial intelligence where human abilities like creativity, innovation and teamwork will be rewarded and adaptability must be the core of every part of the organization — including the executive layer. So how can this strategy be scaled for big organizations?

The first mindset is that being agile is more important than doing agile. This might sound like a play of words but choosing methodology is not the important thing — it’s just a method. If you have autonomous teams that successfully adapt and perform in a fast-changing environment without using Scrum or Kanban — you are still agile and that’s what matters.

Secondly — understanding of how autonomy and alignment are interconnected is key. At first these two concepts may seem to be contradictory and two extremes on a scale. But what an agile organization really needs is a lot of both. The more alignment an organization has — the more autonomy it can grant to its teams. This is a key factor and something that successful companies like Spotify are spending a lot of time and effort to get right.

chart alignment vs autonomy
A graph showing autonomy vs alignment

Why autonomy?

Modern ways of adaptable and fast-moving companies are based on the foundation of small autonomous teams. Amazon call them two-pizza teams — not more people than they can share two pizzas and feel happy. The most used methodology, Scrum, advocates that a team should consist of seven people, add or subtract two people depending upon skill sets needed.

But why a team of seven people? When looking at it from a group psychology perspective seven persons are the optimal group size to make good decisions. When the group grows bigger it will be hard for everyone to be truly involved in making decisions, it becomes more of a seminar discussion. If the group is being smaller it may lack the competencies and skills needed to solve the problems at hand.

I would like to emphasise the relationship between team size and creative work — small autonomous teams are simply the most productive and efficient composition when solving highly creative and complex problems which is something that most companies are constantly facing in today’s hyper-competitive markets. The reason is that creative problem-solving is totally dependent on well functioning group dynamics. Performing a non-creative task can be solved by two or twenty people — the major difference will be how long it takes but a creative discussion is short-circuited by 20 participants and lacks perspectives and skills when participants are too few. To put it in other words — a single person can be creative but a small group with diverse perspectives can be more than the sum of its member’s creativity if the group dynamics are right.

When recruiting for teams, remember that people still need to have a special skill set but also need to be what is called T-shaped personalities. This means that the best members of the teams are highly skilled but can combine this with a wider and more versatile skill set and therefore have a greater understanding of the goals and objectives of the team which improves collaboration inside and outside of the team. In addition to this, the millennials who are constituting the workforce that now is filling most vacancies at companies around the world, prefer autonomy. They simply seem to like to have influence over what they do at work — rather than feeling like cogs in the machine.

Why alignment?

Autonomous teams that are not aligned towards the bigger vision and the objectives of an organization will basically be an armada where everybody is going in its own direction. Chaos. Historically this has been controlled by using command and control. That does not work with autonomous teams — de-empowering the teams will ruin the autonomy and the possibility of moving fast and being rapidly adaptable. But if teams themselves align towards bigger goals — we will experience an organization prone to adjust to change. When big change is coming, a competitor releases a great product, for example, there is no time to wait for the management to analyze the situation, brainstorm, come with suggestions and send executional orders down the hierarchy of the organization. Marketing, product development or management — everybody must independently start working, addressing both long and short term efforts to counter the big change in the market.

This way of alignment requires different leadership than in the old days. Being a leader in this kind of organization is something completely different than micromanagement. The teams need a clear vision and objectives — and the leaders must evangelize the vision, curate the culture, set clear objectives, and explain key results to be achieved. This leader does not get results by micromanaging how things are done but rather coaching the teams to autonomously find the best way.

Leaders also need to understand and act upon the maturity of the team — if it is newly put together and has not reached a high-performance state — more instruction and guidance is needed compared to a team that has gelled together and is in a high-performance state. The high performing team requires only high level objectives and coaching from time to time. This is more deeply described in my bell curve lab piece.

Formulating goals for autonomous teams — what does the objectives look like?

The objective needs to have a why. What is the purpose of the objective that we are about to accomplish? Without a why — the team will lack a sense of purpose of what they do. The purpose is fundamental for everything we do as humans and must never be neglected.

The objectives need to make a clear understanding of the desired results — what does success look like? The objective should be easily understandable by everyone — inside or outside a team or organization. Simply put — so easy to grasp that any human can understand it. For example: Your team is responsible for a website. The objectives are to get people to subscribe to a newsletter. An easy to understand goal could be that the number of website visitors signing up for the newsletter should improve by 50 percent by the end of the year.

So we have a why and a clear objective — and somebody needs to take responsibility for this to be turned into reality. In the old traditional way of organising the manager would decide how this should be solved and who should be tasked with what. But being agile means that this responsibility is moved from the manager to the team. The team looks together at what tasks need to be done to complete the objective and individuals then commit to doing the tasks needed. Another way of seeing this is that a team is given objectives rather than tasks and that the leader now needs to worry less about how the objective are solved.

A good objectives for a team does not describe how to solve the tasks and who should be responsible for what in achieving it. It’s up to the self-organising team itself.

I strongly believe that objectives formulated in this way will be the most motivating way for autonomous teams to work in. People are, as Dan Pink describes it, only to a certain degree driven by money or status but rather by a sense of purpose, autonomy and mastery.

Structure of a scaled autonomous organization

There are no size limits for companies and organizations to go agile. The golden number of seven will remain the smallest unit.

Here are the maths to scale any size of autonomous organization:

  • Squad, 5–9 people. The smallest unit is a team of seven (plus minus two) people. Seven teams of seven people form a group of 50 people — including the manager of the group.
  • Tribe. Those seven groups can then form a tribe. It will, with the same formula, consist of 351 persons. However — in practice the tribe should not be 350 people — it should stay around Dunbar’s number of approximately 200 people. That is the maximum number of people one person can maintain stable social relationships with. It is simply human nature and it’s worth to stick to that number when forming tribes so that a community of “we” can be fine-tuned within the tribe. Keeping the number down to about 200 can be done by adding less groups or work with some smaller teams where a less broad skill sets is needed.
  • Big organizations. Above about 200 people the organization will have tribes grouped in units, often being business units or subsidiaries. When leading organizations with several tribes top leaders need to have strong indirect leadership skills such as storytelling. Internal communication from top leaders will look more similar to marketing, PR, and even politics (in its good form).
  • Largest organizations in the world. With seven tribes in a unit lead by a unit leader, we have 1 400 people organized in an autonomous way and can continue like this and add three more organizational layers — 9 600, 68 600 and 480 000 people . Now we have covered the size of some of the biggest organizations in the world.
  • Still a flat organization. Seven levels of management might sound much but knowing how many big organizations are organized today — this would be a relatively flat organization.
chart showing squad, group, tribe and business unit
A visual of types of teams


Leading and expanding teams

There is an old debate in the agile community if small teams/squads should have “managers” or not and if the ownership of the list of objectives (often called backlog) sits within or outside the team.

What I have found is that squads that have their own squad manager and own their own list of objectives (backlog) are more resilient to fast change. The squad manager can be appointed from above but most successful is when the manager is promoted and voted from within the squad. The reason for this, as I see it, is trust. Somebody voted from within the squad tends to have more trust from the other team members.

An interesting side note: this is what special forces often do. They all have the same rank, and the team of soldiers will choose their own leader.

There are also arguments for having no team manager at all which I think is wrong. The reason is — again — group dynamics. If the conditions for a team are changed someone needs to make sure that decisions are made. He or she does not have to be the one making decisions, but make sure that decisions are made. When conditions change and fast and swift decision-making is needed teams will lose time if they need to be reformed. But remember — the best result is achieved if the team manager is appointed from within.

If a team gets an objective and is successful there will be a need to form more teams to work on the objectives of this business — and a need to form a group of teams.

It is, in my view, important to always recruit leadership talents — new teams can have managers appointed (it is not possible to vote from within before the team is set and running) from the original team and they will have enough leadership talents to fill the gaps in the original team. By doing so teams can seed without losing direction.

squad seeding new squads
A visual of squad seeding new squads without losing direction

Staff functions can be a part of the agile organization but can be handled with many exemptions. In my point of view staff functions can be shared between groups or even tribes — composed in a team reporting to a higher level manager.

Other sections — loosely formed community of practice (in the Spotify model they are called guilds) — can span across the organization.

However, keep in mind that here is a purpose with simplicity of organizational practice so each and everyone can understand the bigger picture of the organization instead of the organization becoming a mysterious spaghetti mess.

Agile will not only make you successful but also make you feel good

The world is spinning faster and faster, creating stress and anxiety for many of us. Relax, the good news is that we, as humans, are actually very good at handling change. That is how we have survived and prospered as a species for so long. But being good at handling change does not make it less scary and uncomfortable. That’s why facing these challenges are best done in the strength of a group rather than as vulnerable individuals. By doing this together in the right kind of organization and with the right tools specifically designed for agility at scale, we will reduce stress and anxiety making change exciting and even fun.

So remember the vise words of Sansa Stark, quoting her father in Game of Thrones:

“When the snows fall and the white winds blow, the lone wolf dies, but the pack survives.”