The ability to change organizational culture is often one of the key pressure points businesses feel when they move to more agile working practices. For the CIO changing how they see their businesses, and how they communicate their new vision plus how they intend to implement these changes, means they must lead by example
The role of the CIO has changed
Over the past 100 years we have successfully engineered complicated outcomes – we put men on the moon, we conduct almost $500m in online transactions per year in the US, we construct 100+ story buildings, and we can travel across the globe in a day without losing our luggage (most of the time).
Yet CIOs now face a world where engineering complicated outcomes is not enough. Spotify can engineer an elaborate cloud-based music service delivered to millions of subscribers – that is a complicated solution. However, the leadership team of Spotify is tasked with more: The leadership team is tasked with creating a pleasurable subscriber experience – that is a complex outcome.
Irene Ng, Professor of Marketing and Service Systems at the University of Warwick, identifies a key factor of complex outcomes: You cannot “mission-control” complex outcomes, rather, they emerge from the system.
The role of the CIO has changed from mission-controlling complicated solutions to facilitating complex outcomes. Complex outcomes are achieved through co-creating, collaborating, and iterating solutions. This is the core of agility.
Driving fast in the fog
Imagine you are driving a car and encounter some fog, what do you do? The obvious answer is to slow down, turn on your lights, and pay more attention to the road ahead. But what if slowing down is not an option? The likely answer is again to pay more attention, but this time, ready for a sudden response, and brace for impact.
This is the world within the CIO’s purview, complex technical projects running as fast as the speed of change due to shifting business, human and economic factors. And while project goals may be clear, often the path to achieving them is fuzzy at best. The complexity of technology, dependencies across technologies, the varied people systems implementing the technologies, and the diversity of stakeholders depending on the resulting solution create a rather thick fog.
Project plans drafted at the onset do little to account for these complexities and cannot respond to the emerging discoveries, issues and impediments. To facilitate effective complex project delivery, CIOs must create an environment that enables project teams to intensify their focus, increase their visibility, adapt more quickly to external changes, and improve their safety in the inevitable minor crashes along the way. These are the elements of agility.
A Cautionary Tale of Change
Most CIOs today either see a need for increased organizational agility or are being told to boost their agility from their CEO or Board of Directors. There is little disagreement of the need: the challenge lies in the effectiveness of execution.
In 2005, a leading retail organization was transitioning their approach to increase effectiveness at delivering new products to market through adopting agile practices. Leadership re-aligned teams to the products they were developing, i.e. a classic reorganization. The organizational energy and focus were good. The teams’ productivity improved and new products were making their way to market. It was a successful transition…
Or was it?
About a year and a half later, that same organization’s energy and focus had evaporated. What remained was a shell of practices; people no longer really understood why they were doing what they were doing, and the company was struggling yet again. How often have you witnessed change initiatives that only temporarily improve situations and then deteriorate over time? You are not alone; this is a common challenge.
For the past 10 years, industry surveys have consistently identified organizational culture as a key barrier to increased agility. Assigning people to cars and telling them to drive faster in the fog is not enough. Effective and sustained agility requires a culture where safe, focused, and fast-feedback team-based navigation is valued, honed and supported by leadership and where leadership models the behavior they expect to see.
Why agile change initiatives fail
Change expert John Kotter identifies a key failure in organizational change initiatives: the lack of anchoring that change into the culture. The cautionary tale illustrated above demonstrates an “Outside-In” approach to change. An “Outside-In” approach focuses on changing behaviors and reorganizing people.
While this approach is often initially successful, corporate structural and cultural inertia pushes back (e.g. departmental functions, financial policies, HR measures and incentives, managerial ownership, distributed locations, third-party relationships, etc.).
Organizational structures stem from values. For example, when predictability is valued, likely a Project Management Office (PMO) is formed to protect it. Since financial prudence is valued, organizations create financial teams and monetary policies to govern their finances.
As agility is introduced into an organization, new agile values often compete with these rooted values. Without proper consideration and intention, the new agile values will succumb to the values already well entrenched in the organization.
To counter the failure of agile change initiatives, and to foster a culture of agility that not only is successful today, but also fosters a sustained and evolving agility for success tomorrow, an “Inside-Out” approach is required.
Agile “Inside-Out” starts with leaders and values. Leadership seeking increased agility and innovation must first align these new agile values with the well-entrenched values in the organization. Once there is alignment in the both sets of values with the changes required to refocus the organization, structures can be built to support, sustain, and grow these new agile values. Structures may include roles, responsibilities, teams, departments, locations, technical infrastructure, etc.
To illustrate this “Inside-Out” approach further, consider developing a new technology-based application. Can this new application be built without a defined architecture? Sure. Will that application be secure and effectively scale? Unlikely. The same is true with introducing agile within your organization. You can accomplish it by simply refocusing people, but it will not scale nor sustain.
Model agility before scaling agility
While many CIOs are seeking to scale agility across their organizations and portfolios, the place they should be looking first is in the mirror. Their own thinking and behaviors are reflected in the organization, and their organizational culture going to be a significant factor to any attempted change initiative.
Scaling agility through a process-oriented change may seem like a clear, easy and straightforward approach. Heck, there are scaling frameworks available that provide you a picture illustrating how to proceed. However, this approach will likely result in only short-term performance improvements at best. This is an “Outside-In” approach.
A values-based approach is considered “Inside-Out” because it starts first by first understanding the cultural tendencies of the organization, and then roots effective organizational structures and policies to support, sustain and grow competency into that culture. Effective agile practices are based on aligning agile values with corporate values.
Due to the unique agile mindset, and the vastly different structures required to enable agile practices to thrive, the culture that leaders foster is the key to success. Through understanding your role as a model in this change and exposing the values embedded structurally throughout the organization, CIOs can begin to co-create, collaborate, and iterate on an effective, sustained and growing agile organization.
Case Study: Integrating silos over building bridges
In 2008, a large consultancy IT organization was challenged with escalating application support costs. There was plenty of blame to go around between poor quality applications, inexperienced support staff, and more. Finger pointing was not addressing the issue and raising staffing costs further was no longer an option in a downturned economy.
Departmental approaches to this problem might lead to building support competency and engineering quality, each with their own initiatives to improve performance and lower costs. We have seen these “Outside-In” patterns before with limited success.
Through an “Inside-Out” approach, the organization explored value-based approach anchoring into their creative and transformative culture: integrating functional silos over building a better bridge between them. They ran a three-month experiment to fully integrate their application architects with application support teams in a hyper-collaborative teams performing root-cause analysis on every single ticket – thousands per month. This transformative effort was entitled “Support 2.0” – illustrating their new mash-up based organization.
Across US and India, and across dozens of applications, the integrated teams reconfigured, fixed, documented and educated support on every issue and underlying problem. The experiment was so beneficial and popular they continued these hyper-collaborative teams for another 3 years, reducing their annual application support costs from over $12m to below $3m – a 75% reduction in support costs.
Based on their success across a broad range of integrated programs in reducing time to market to under three-months, improving application quality, and reducing overall development and support costs, this organization created a digital delivery service to help their clients do the same – a cost center transformed into a profit service center.
Case Study: Competitive teams over individual heroes
In 2006, a small player in the Customer Relationship Management (CRM) space was challenged by their recent growth. Increased complexity overwhelmed their heroic individually competitive culture, essentially exposing a Gordian knot of dependencies, which suspended all new product releases for an entire year.
Common “Outside-In” thinking to address this challenge is to add oversight to manage decisions, governance policies to control change, and boundaries to quarantine risk. However, this type of thinking ran counter to their competitive fast-paced culture.
Their “Inside-Out” approach sought to anchor to their competitive tendencies by funneling all work through competitive teams, iterating monthly deliverable goals, and sharing their successes and challenges in open-air sessions in a hyper-transparent environment. This new orientation created a healthy team-based competition increasing focus, reducing complexity and dependencies, and fueling progress.
This new team alignment required two key role changes – splitting the development manager responsibilities and enhancing their product manager responsibilities. Development managers increased their focus on staffing and growing competent engineers while handing off responsibilities of the product to their product manager peers. In addition, all work now funneled through teams rather than being assigned individually, forcing priority decisions and feedback earlier in the development cycle.
Today this organization is the global leader in CRM and has spread their team-based competitive agile mindset and approach across their entire organization. Having grown their stock over 700% since 2006 and expanded their agile practice throughout their development, operations, and marketing organizations, their agile culture is the core DNA fueling their sustainable growth.
Pete Behrens is a Leadership Agility Coach and founder of Trail Ridge Consulting. He provides guidance to senior executives on how to transform themselves and their companies to work more effectively with more agility. Pete is a Certified Leadership Agility 360 Coach providing one-on-one assessment, development and guidance for increasing the agility of organizational leaders. Also, Pete is a Certified Enterprise Coach (CEC) and a Certified Scrum Trainer (CST) working deeply with organizations to improve their organizational agility. He led the development of the Scrum Alliance Enterprise Coaching and Agile Leadership Programs and continues his role as a Director. Pete shares his experiences at conferences, gatherings, retreats and user groups as a keynote speaker.