Agile Organizations shift from a focus on predicting and controlling work to embracing complexity, using experiments and feedback loops to learn and grow.
This post is the second in a series where we will explore each of the Principles of Agile Organizations in more depth.
The world has become less predictable. Reductionist management models of predicting and controlling are incompatible with complexity, which presents a fundamentally different set of conditions from the complicated challenges of the past. Agile Organizations create structures that embrace complexity to gain competitive advantages in the 21st century.
Planning for Complexity
— Dwight D. Eisenhower
This quote has always intrigued me. What is so indispensable about planning, if the resulting plan is useless? As I’ve discussed this with leaders in Agile Organizations, they’ve given me some good reasons for why they agree with Eisenhower:
Planning provides Agile Organizations with:
- A shared understanding of the purpose of the work–why it matters, and to whom (see principle 1)
- A shared understanding of which problems or opportunities are most important–what will we say no to?
- Careful consideration of what it might take to solve the problem
- An opportunity to weigh the likely return on investment on doing that work
- An opportunity to consider risks and contingencies
To gain these benefits, Agile Organizations do a lot of planning. They research customer needs, explore possible solutions, create strategies and consider risks. They have long term strategies, agile roadmaps, and forecasts. Teams create Sprint Goals and Sprint Plans. None of this is radically different from what traditional organizations do. The key difference in Agile Organizations is what happens next.
Rather than build structures, processes, and incentives around delivering what was planned, Agile Organizations build structures, processes, and incentives around learning as quickly as possible and adapting the plan based on what was learned.
Structuring the entire business around this principle gives Agile Organizations a competitive advantage. It also leads to higher engagement for those doing the work, due to the higher levels of autonomy and the sense of play and discovery that naturally results in such a learning organization.
One of the first things I noticed when talking to Linda Barnes, CEO of Geonetric, is that she describes everything about the company using the language of experimentation. They don’t roll out a new process or org structure, they test a hypothesis. They describe clear outcomes, create timeframes for the experiment, and put explicit feedback loops in place to understand if the experiment is leading to the expected outcomes.
They have also created teams with tremendous levels of autonomy and the skills and understanding to use that autonomy successfully. Every team at the company owns the Profit and Loss (P&L) for their team, and has undergone years of training from their CFO so that they can rapidly adjust in order to reach their goals. You will hear Product Owners at Geonetric discussing reprioritizing their backlog to maximize revenue recognition in the next sprint, since their monthly P&L is a bit below their team forecast.
Geonetric uses these approaches to enable their teams to thrive in complexity, resulting in high employee engagement and happy customers.
Putting the Principle to Work
Evaluate your organization’s structures, processes, and incentives for whether they encourage rapid learning and adaptation at the team level, or whether they encourage delivering to the original plan. Each instance of the latter is an opportunity to move towards being an Agile Organization, with all of the benefits described above.