Staying Agile Beyond a Crisis

AI is transforming the world. And it starts with the right compute. ARM is the AI compute platform trusted by global leaders, proudly Nasdaq listed, Built for the future. Visit arm.com discover. Welcome to the hbr ideacast from harvard business review. I'm kurt nickisch. In a crisis, bureaucratic rules go out the window. Companies go from having detailed strategic plans with multi stage budgeting, approval and operational processes to suddenly crunching all of that into just a few meetings. Decisions get streamlined. Product timelines get compressed. What used to take months and years now could just take weeks or days or even hours. That's happened in the current crisis. The coronavirus pandemic. Some breweries pivoted to making disinfectants practically overnight. Some retailers added curbside pickup. The British company Dyson designed a ventilator in 10 days. Today's guest believes that despite the struggles, this sudden nimbleness has been great for many organizations to adopt. And he worries that once this crisis has passed, too many of them will go back to their and he's here to talk about how companies can maintain their newfound agility. Our guest is Darrell Rigby. He's a partner at the consultancy Bain & Co. And he's the co author, along with Sarah Elk and Steve Bures, of the HBR article the Agile C Suite and the new book Doing Agile Transformation Without Chaos. Darrell, thanks for being.

Here. Kurt, it is a pleasure to be with you. Thank you for having.

Me. Now, agile, just as a word, is tricky. Can we just start with what is your definition of agile? How do you understand.

It? Agile is a tricky word, but we define Agile as a mindset and a method for improving innovation through deep customer collaboration and adaptive testing and learning. A lot of people define Agile as the antithesis of hierarchy. We really don't believe that's right. We think that on one end of the spectrum you have stasis or you have stability, you have things that don't change. On the other end of the spectrum is chaos. Are chaotic situations that can spin out of control. And what Agile is, is a great way of adapting, of accelerating evolution. That's what we think Agile does. It protects and preserves the good parts of what's going on. It changes the parts that need to adapt. So it's at that golden mean between stasis and.

Chaos. Now, this may sound foreign to some people because they think of Agile as this product development methodology that has its roots in software development. How do you think about applying it to other sectors and other kinds of.

Companies? You're exactly right. And the history the evolution of Agile is pretty interesting. In fact, the truth is Agile did not begin in technology or software development. It began much earlier. Fuji and Xerox and Honda were developing physical products and. And then in the late 80s 90s, early 2000, when the Internet started taking off and software had to change so rapidly, there were a lot of people that were developing new methods for developing software. One of those was a fellow named Jeff Sutherland, who co created the Scrum method. And he came across a paper in 1986 called the New New Product Development Game that said this is the way innovation teams should work. And so he adapted the methodology to fit software development and it took off very, very quickly, very strong in technology organizations. What I started getting interested in was I'll bet this methodology is capable of doing a lot of innovation beyond technology. So we started experimenting throughout the organization in marketing, in new product development, in changing business processes. And so we moved from Agile in technology to agile beyond technology, to agile at scale, where we were often launching hundreds, maybe thousands of teams throughout the organization and then finally saying, I wonder if we could make the whole company agile like this, what we call the Agile.

Enterprise. Yeah. Can Agile be top down? I mean, a lot of expansion of Agile has been the expansion of teams, right. Kind of bottom up, nimble, democratized almost. Why is it important for leadership to be adopting this way of thinking and these.

Methodologies? Yes, it's a great question. And like so many other parts of Agile, it's a matter of balance. It really needs to be both top down and bottom up. The truth is that a lot of Agile spread throughout the organization at first without top down guidance, without senior controls, and in a sense, I think that's good. Sadly, there were not a lot of senior executives that had grown up through technology departments and so they didn't pay much attention to what was going on in technology. As long as they were doing a great job and getting better and better at it, they were happy to just let it go. But one of the things that we find is if you're going to have hundreds, maybe thousands of Agile teams in an organization, the CEO, the executive committee, the senior leaders, first of all have to understand how Agile works just so they don't get in the way of it, so they don't inadvertently, with the best of intentions, squash these Agile initiatives throughout through more traditional ways of working. And second of all, to really work effectively, the executive committee, the Agile leadership team has to work like an Agile team itself. The biggest challenge with a lot of executive committees is that they will have, let's say, 12 to 15 people on them. And that's a big group to be making fast decisions. And so sometimes you don't need that full team in order to prioritize the initiatives to help stand up the agile team. So we find that creating a team of maybe five, six, seven of the senior executives so that they can get together every morning for 15 minutes to listen to what's going on with the agile teams provide direction, make decisions that unblock those teams. It just moves faster with a smaller.

Group. Can you tell me about a leadership team that's set up with roles like this that you think is a good example of what companies can do when they orient themselves this.

Way? I can think of companies in every industry that are more agile than their competitors and therefore are gaining market share and customer loyalty faster than their competitors are. One of the most advanced is probably Amazon. A lot of people think, well, that's not fair because Amazon was born agile. And that's not true. To watch the evolution of Amazon as they learned how to develop these two pizza teams, for example, and they'll have more than 3,000 of them running at any given.

Time. I love this notion. By the way, you said two pizza teams. You're talking about teams that can be fed with two pizza.

Boxes. That's right. If it can't be fed with two pizzas, the team is too big. So Amazon, it didn't start out agile. It's been interesting to watch how they evolved over time. It's been interesting to watch Microsoft. I was pleased to be at the World Economic Forum in Davos this last January and to spend some time with Satya Nadella. Listen to him talk about how the team has evolved to be more agile at Microsoft. At one point there was a woman who described how she had left Microsoft because of the bureaucracy and how slow it had been. And she said, as I listened to you, I'm tempted to want to come back. It sounds like a fun place. It sounds like you're doing exciting things and it has been interesting to watch that. I love to watch a company like Bosch. A lot of people don't think of somebody making dishwashers or power tools as being able to be.

Agile. Well, let's dig into to Bosch for a little bit. What specifically did Bosch do? And you know what, what has the effect.

Been? Well, first of all, their results are impressive and results are always the acid test of any strategy. So their levels of customer satisfaction and innovation and market share gains have been extraordinary, especially in some of the places like the tools division that got on board with this early. But I also love the way that their senior executive team said, if we're going to be serious about this, we ourselves have to set the direction. So the management team set out essentially an agile manifesto for itself that outlined the way that a senior executive in the corporation should behave. And as a team, they agreed to do that. We interviewed several leaders there that talked about how their perceptions of what their role as a leader had changed, that they used to think that the way they added value was to have a vision and to predict exactly what should happen and get other people to follow their instructions. And that by gathering greater feedback from the people that they worked with, that they changed their own leadership style, that they listened more, they empowered people more. And this is what we find over and over again, that inside real agile organizations, the productivity of people may expand by 20, 30, 40%. And that the main value that a leader will add is not to get better at being a visionary at predicting the future, that they add value by unleashing that 20, 30, 40% of their people, making them happier, creating greater innovation, greater creativity inside their organization. And it completely changes their mindset about what the role of a leader.

Should be and where they spend their time. Right. As part of your research, you studied how executives on these agile leadership teams change their behavior and their calendars, and you found that leaders, over three years quadruple the time that they spend on strategy, they reduce the time that they spend on operations by more than half, and then they spend a little more time managing talent, which is an interesting reflection of the.

Prioritization. It was a fascinating insight to look into the calendars of executives and how they had changed. I actually had one client that invited me into their executive committee meetings for a couple of days and. And then at the end said, well, what do you think? And I was shocked by how much of the time was being spent with 15 to 40 people in some of these meetings, just reviewing operating reports, readouts for what groups in the organization had been working on. It had taken hundreds of hours to prepare for these executive meetings. And success was gauged by whether the group was allowed to continue for another six weeks before they came back to the executive team. It was just awful. It was a waste of time, it was a waste of energy, it was a waste of talent. It was a. And just months later, to see how they had reconfigured their meetings to say, I don't even need to have these meetings. They should be able to do those themselves. And at the beginning of every meeting, to start off with, what is the goal of this meeting? What decisions need to be made? What do you need us as an executive team to do that you can't do for yourselves? And if this meeting can finish in 15 minutes instead of two hours, because that's all you need from us.

Great. Now, the current situation, I think, is a good thing to talk about here at this point, because I'm just curious what you're seeing from companies and how they're having to make those clear, simple decisions quickly. What are you seeing? What have you been.

Hearing? It is so interesting to both watch what's happening at companies and talk to executives about how companies are changing. During this pandemic. There are a lot of agile zealots who will say, the only thing that is going to change the culture, the ways of working in an organization, is if you begin by completely restructuring the organization in one big bang. You create all sorts of squads and tribes and chapters and guilds. You train people for two days, you bring in new talent, you get rid of 30% of the people, and you bring in people who have been trained in agile, and you train people in workshops, and you will have an agile organization overnight. The thing I find most interesting in this current pandemic is without changing organizational structures or without changing the talent pool, that simply by changing the ways of working, the decision speed, the cadence of meetings, the way that we empower more junior people in the organization to be able to experiment, to listen to customers, to react quickly, and we're finding all kinds of innovations pop up all the way from the way Chick Fil A is managing takeout orders in their restaurants. And companies are changing over to producing personal protection equipment from producing cars or abrasive materials. It's just extraordinary to watch how many corporate MacGyvers have been buried inside the organization that nobody knew about. I've had executives tell me, you know, we used to make five major decisions in a month. We make five in a day now, and the quality of those decisions is as good as they've ever been. Had another executive talk about how proud he has become of the organization and how quickly they responded. He said, what I want to do now is just bottle this up and make sure that it doesn't go away when this crisis passes. Because this is the kind of urgency, this is the kind of speed that we should be able to do all the time. And so it's nice to see this happen. My biggest fear is that when it passes, people will slip back into more traditional bureaucratic ways of working. People will forget about the strengths that they discovered here when the current pandemic starts tapering.

Off. Yeah. So how do you do that? What can you be doing now to keep that momentum and these behaviors in place when they don't feel so urgent and perhaps vitally.

Necessary? One of the things I've learned in 42 years of consulting is that systems are more powerful than individuals. It's the reason I've watched athletes move from one team to a next, or watch executives move from one successful company to another. And they can be very successful in one team and not so successful in another team. So the answer is you have to create a system that will turn these haphazard, these bootstrapped innovations into a normal way of working. Build a system that makes it happen. The first step there is to just say, things over the last few months have worked well. Why? What went so effectively over the last two months? What was different? And as executives start talking to people and they say, well, with all due respect, you've given us more freedom. We've been able to make these kinds of decisions without all of these layers of approval. And you've accelerated the budgeting cycles. You've given us money without waiting for a year to get it. And we've had to, of necessity, prioritize things. We've just stopped doing some things that didn't matter that much. I had one very concerning discussion with an executive who said, I can't wait to get our people back into the office. And I said, that's interesting. Why is that? He said, well, at home, we don't really know if they're working or not. And here in the office we can watch them and tell if they're working or not. Which made me say, isn't there a deeper problem if you can't tell from the outcomes from the outputs of people whether they're working or not? And we had a serious discussion about priorities. And what would happen if a third of this work just stopped? If it went away, would anybody ever notice it? And if not, then why are we doing that work? How do we constantly shift resources from lower priority, lower return activities to the highest priority, highest return activities that everybody really wants to work on? I don't think there's anything more fulfilling for a person than to believe that they're making an important difference in any organization, that if they feel like their work matters, that they can influence that work. It just creates so much enthusiasm and engagement. That's what we need to do. We need to figure out what work is going to really matter and how do we make sure that everybody in the organization, whether it's running the company operations, whether it's innovation, changing the company, how do we get them to work together and feel great about their contributions As a member of an important.

Team, one thing I want to bring up is just the fact that we started this conversation talking about how Agile is a balance somewhere between static and chaotic. But we've mostly been talking about unfreezing, moving from moving away from static towards chaotic, and we really haven't talked about going too far or coming back from that. Is that a problem? Do some companies go too far as they're trying to do this? Or even now, are you observing companies that are not striking the right balance and going too far? Is that really not something you have to worry about too.

Much? No, it is definitely something that you have to worry about. We believe it's all about balance. We've seen companies that can create too much chaos in their organization. I don't mean to speak poorly of anybody, but if you look at a company like WeWork, you might say the system was geared towards creating a little too much chaos and that that is what the new CEO is trying to bring back into balance. It's in every business cycle. It's different for every company. It's different for every activity within a company. Maybe it's the drug approval process that needs to be very rigid. There are other parts of the company, maybe perhaps doing marketing where they're going to try an advertising campaign or a new loyalty program where you want more experimentation. But it's impossible to predict up front exactly where you're going to need to be and stay that course. Because the environment is constantly changing, your strategy will change. The need to improve processes and technologies will change. Getting it right is a constant, constant balancing.

Process. Darryl, thanks for taking the time to talk about.

This. It's a pleasure. Thank you for having.

Me. That's Darrell Rigby, a partner at Bain and Company. He's a co author of the HBR article the Agile C Suite in the May June 2020 issue, as well as the new book Doing Agile Transformation Without Chaos. This episode was produced by Mary Dew. We get technical help from Rob Eckart. Adam Buchholz is our audio Product manager. Thanks for listening to the HBR IdeaCast. I'm Kurt.