Hi. We have talked about Agile. We have talked about new ways of working. And today, I'm happy to have with us Martin Danoesastro. So, Martin is a senior partner in our Amsterdam office. He is one of our global topic leaders for Agile at scaling BCG. And I'm very happy to welcome you, Martin, to this discussion. Thank you. So Martin, we have talked about what Agile is, at least the theory part of it. But why is it important now to talk about Agile at scale? What are the benefits that a company will perceive in today's world compared to 10, 20 years ago? All right. So, this concept of Agile has been around for decades already. And as you probably know, it started in software engineering and so, therefore, originally, it was mostly confined to large tech companies and startups really. But over the past five years or so, we see Agile ways of working, making their way to more traditional companies as well. And the reason for that, ultimately, is the fact that the world around us is changing so rapidly, and a lot of that change is driven by technology. So, when we discuss Agile with our clients, it very often comes down to the following: they want to become better and faster in responding to changing customer requirements, they want to increase effectiveness and efficiency by breaking down internal silos and taking out bureaucracy, and they want to increase employee engagement to be able to attract and to retain the talent that they need in the digital world. So, Agile really is not a goal in itself. It is a means to an end. And we want to implement Agile at scale especially if you are a legacy company. What are the trade-offs you need to think of? What are the ways you should be thinking of implementing it in the long run? So, I mean, to a large extent, that depends on the starting position and on how far the top leadership team is already convinced and committed of the need
to change. And so, broadly speaking, we would see two different approaches that companies take to implement an
Agile at scale. Sometimes, you have a top team, a CEO, and a top team that is completely convinced that continuing the way we used to do things is not going to be good enough and we actually have to change our culture, our way of working to be able to survive in our industry. And in those instances, it's very often a top-down CEO led transformation, with all the characteristics of a traditional transformation but doing it in an Agile way. So, you need full leadership team commitment, they need to be willing to embrace change, and they need to drive to change as the leaders of the organization. In other instances, we see companies that say, "Well, we realize that we have to change our way of working but we're not completely convinced yet over Agile." And so, what they often do is they would start with pilots and they would build a few first lighthouse projects in Agile, they will see that this works well and they might scale that up to the level of an Agile portfolio. So, think about, for example, doing all your digital work in an Agile portfolio. And then when this is working well, you add more portfolios. Of course, at some stage, you will come to a tipping point where you would say instead of
trying to manage these Agile portfolios as an exception in our organization, by now, we're actually, A, we're convinced, and B, we realize that things will even become easier if we would go beyond that tipping point and really change the organization into an Agile organization. So, those would basically be the two approaches you see. And wherever you embark with or with the gradual or the more
transformational approach, there is a need to change the whole operating model of a company. It's not about implementing one or two new processes or one two coordinates in the Cartesian. It's really changing the whole operating model. Can you walk us through the key building blocks when you want to achieve such an ambitious target? Yes. So, first of all, I think the three foundational elements of building an Agile organization are first, the actual Agile and iterative way of working. And so, in Agile, you have many ceremonies and artifacts. Think of breaking the work down into small chunks which we call minimum viable products that teams work in short sprints. They have the stand up meetings. They have retrospectives. And all of that is really geared towards the value that Agile brings, by focusing the team on the value delivery, by focusing the team on delivering value for customers, by increasing transparency, and by increasing adaptability. So that's the actual Agile way of working. But to build an Agile organization, there's two other elements that you need to get in place. First of all in Agile, the teams work in small multi-disciplinary persistent teams. Think of these teams like mini startups. And so, having a mini startup and an iterative way of working is actually relatively easy for one team. But the real challenge comes when you try to scale this across hundreds of teams and thousands of people. And that is where the real challenges of scaling coming. And to do that properly, you actually have to adapt all elements of the operating model and it starts with leadership, right? So, if you want to be able to have empowered and autonomous teams, you can only do that if you have super strong alignment as well. So, leaders need to focus on overall company purpose, overall company strategy, and the overall company priorities, and then be able to lead the teams to figure out how to do things. So, it starts with leadership, behavior as a change. But at the same time, you will have to address things like governance and funding because in the old world, you would be allocating, let's say, funding to projects that you would have a discussion on the changed budgets. In the new world, you would be allocating capacity Agile squads or Agile teams to business outcomes. So, it's a whole different way of thinking about funding. You would have to rethink the structures and the roles in the organization because you actually move away from functional silos to small multidisciplinary teams. The role of managers might change but in essence, you actually have to change almost all elements of the HR models around it. So, the way you do recruiting, the way you do performance management, the way you like thinking about new career paths for experts in the organization. And that's the essence of the Agile, is trying to put the multidisciplinary teams together. Ideally, they are co-located so that means rethinking the location strategies. If you have people, part of the organization, that's very often outsourced or even offshore, so it also requires rethinking some of the sourcing strategies. And whenever Agile is supplied in a software environment, you also have to think about the underlying IT enablers. So, we think about modular IT architecture using APIs. Or think about automating the IT processes, continuous delivery automated testing, and so, all of that would actually have to go in parallel to changing the organization into an Agile way of working as well. And lastly, Agile organizations are very data-driven. So, you also have to make sure that you have the data and metrics and tools in place to actually be able to do that. So, with that, I really think implementing Agile at scale does require to address all elements of
that operating model. So Martin, those are a lot of components to get right to scale up Agile. Do you have an example of a company that did it successfully in the last few years? Yes. So, interestingly, I think the industry that we saw going into adapting Agile ways of working first, after the large tech companies and the startups, was banking. And we have banks particularly first in the Netherlands but also in Australia and in the US, we see banks taking on Agile ways of working. And one of the reasons for this might be that banking is, to a large extent, becoming a technology industry and banks feel the heat of these index
all around them. So, they were one of the first who really felt the pressure and
on top of that, banks happened to be probably one of the more traditional and siloed organisations we had. So to them, taking out bureaucracy and breaking down silos was absolute must to be able to survive in banking. Now, and more recently, we see Agile also making its way beyond banking to many other industries. So, these days, we work with companies in consumer goods, in telcos, in insurance, in public sector, in industrial goods, and they are all adapting these Agile ways of working. Great. Thanks a lot, Martin, for all that insights. And great to have you with us on the course. Thank you. My pleasure.
