This is the second installment in a series of posts about the benefits of realizing Agile at scale. Be sure to check out part one, “3 Key Shifts Necessary for Scaling Agile,” first.
There are many benefits to scaling Agile, both tangible and intangible. Embracing an Agile mindset and culture shift across the enterprise has helped startups and global giants alike realize faster speeds to market, greater customer satisfaction, and better returns on their strategic investments. It can also improve the health of an organization, which can in turn attract top talent and reduce costs due to turnover.
Let’s start by breaking down three of the top benefits of achieving Agile at scale, including how to realize them in your organization.
1. Strategic Alignment Across the Enterprise
Are your teams designed to sustainably deliver on your enterprise objectives? If you aren’t Agile, the answer is probably no. Most organizations are designed to maximize control over employees and the work they do with rigid, hierarchical team structures and top-down communication.
Put another way, traditional organizations aren’t designed to quickly, sustainably deliver on enterprise objectives. They weren’t built for the world we live and operate in today—they were designed during a time when the two biggest challenges facing organizations were:
- Getting semi-skilled employees to perform repetitive activities competently and efficiently; and
- Coordinating those efforts so that products could be produced in large quantities (source).
The challenges facing organizations today are far different:
- Power has shifted from seller to buyer, demanding a deliberately customer-centric approach;
- Continuous innovation is required to compete with a global economy of “better, cheaper, faster, smaller, more personalized, and more convenient;” and
- Skilled knowledge workers demand more from their employers and their working environments.
Perhaps this is why only 15% of enterprise executives say they feel “very confident” about making the changes necessary to respond to disruption and market shifts.
Why? Innosight’s research points to the persistence of “shadow strategy”—when organizations default to standard operating procedures that perpetuate flawed models at the expense of new growth strategies. 40% of survey respondents blamed “day-to-day decisions that undermine our stated strategy to change,” as the primary reason for their organization’s inability to transform.
The Agile Difference
Scaling Agile both across and up the organization creates a way to focus on and deliver against the organization’s strategic objectives. By organizing around value streams, delivery teams are aligned to what produces value for customers (internal or external). The organization fosters transparency and cross-team coordination, giving the entire organization faster response times and the ability to quickly pivot if priorities change or the market shifts.
Put It Into Practice
- Build strategic plans to translate key objectives and outcomes into roadmaps
- Utilize enterprise Kanban boards to visualize the progress and relationships between high-level goals, business milestones and initiatives
2. Fund the Value Streams that Matter Most
Funding practices—that is, the way budgets are allocated throughout the organization—dictate nearly every business outcome. Very little can be accomplished in an organization without the investment of time, money, and resources; so, it’s important to ensure that the way we make funding decisions aligns well with the business outcomes we’re trying to drive.
Adopting Lean-Agile budgeting practices helps to decrease funding overhead and friction while maintaining financial governance, helping to align budgeting practices with Lean-Agile goals. In order to understand the impact Lean-Agile funding practices can have, let’s first define the problems that project-based funding creates:
- Organizing temporary teams around projects (moving people to the work) results in low-performing, inefficient working groups
- Project-based funding requires detailed plans based on inaccurate projections, which takes time and people away from actually delivering value
- Planning on an annual basis creates a state of perpetual overload, which decreases productivity, morale, and throughput
- Progress is measured based on compliance to plan, instead of actual business outcomes or customer satisfaction
The term value stream describes the set of steps from the start of value creation until the delivery of the value to the customer. Organizations can form value streams around a specific product or solution, specific verticals, or in other ways, and might have several Agile Release Trains (ARTs) within each value stream.
The Agile Difference:
Rather than trying to fund individual projects through the PMO, the Lean approach allocates budgets to value streams, with guardrails to define spending policies, guidelines, and practices for that portfolio.
This removes the PMO from the project level, providing Agile teams with more autonomy for faster, better decision making. Within value streams, teams can self-organize to optimize capacity, which also results in greater morale and job satisfaction. Small changes to the budget can be handled at the project level without having to escalate to management, which frees up management’s time for more strategic work.
Budgeting by value stream also makes it easier to measure organizational effectiveness, by simplifying the data collection required to assess performance. Budgets are typically fixed across a Program Increment (PI), but teams have the ability to prioritize or delay completion of work based on their actual capacity, and are not penalized for not completing work according to inaccurate estimates. This means that teams are able to incorporate new information and learnings in real-time.
Put It Into Practice:
- Analyze past spending by value stream and then adjust based on go-forward priorities
- Create Lean business cases to identify opportunities for the organization
- Measure progress and value delivered; adjust funding and capacity based on internal and external factors
3. Optimize Capacity and Resource Management
Optimized capacity and resource management is another key benefit of scaling Agile. As you learned above, traditional work management methods don’t make the best use of your organization’s most talented people.
Project-based funding means that people are moved to the work—meaning that teams are constantly shuffling around, making it difficult to achieve the deeper levels of collaboration typically only found in established teams who have experience working together.
The root of each of these issues is the way work is funded and who controls the decision-making power around funding. In traditional organizations, this power resides with the PMO. In order to make informed decisions, the PMO requires teams to gather requirements and data and create plans for work that likely won’t be started for months. By the time the PMO receives the plan, it might already be out of date.
Funding a project might require pulling from multiple cost center budgets, creating a slow, complicated budgeting process that requires estimates, plans, and details far before they are able to be accurate. By the time a plan is approved, and the team is able to begin work, it likely already has to be updated to account for new information, changing requirements, etc.
But accounting for new information might require additional paperwork; so, teams are actually incentivized to not incorporate new learnings into the project.
Once budgets have been approved and work is ready to begin, new challenges emerge. With project-based funding, budgets are fixed for the duration of the planned project.
You can see how traditional work management methods systemically promote poor capacity and resource management practices.
The Agile Difference:
Capacity management is easier when people are aligned consistently to value streams, each with clear success metrics as guidance to the work to complete. The balance of capacity by value stream is revisited as feedback comes in and priorities evolve. The most commonly recommended practice is to refocus and reevaluate capacity/resource management decisions during Program Increment (PI) planning. This cadence provides an opportunity to reflect and re-balance with minimal disruption to organizational flow.
Put It Into Practice:
- Plan solution, release train, and team capacity against epic, feature, and story backlogs
- Balance capacity and demand by team, skill, location, and other factors
Continue reading the last installment of this three-part series, Part 3: Experience the Scaled Agile Difference. In this post, we take a closer look at three more benefits of scaling Agile, and the key steps to implementation. Or, you can read through all the benefits right now by downloading the full whitepaper, “The 7 Benefits of Scaling Agile.”