How can my organization become digital ready? This is a question that I frequently hear from clients. But why is it so hard for them? Because becoming digital already requires a massive change in how an organization thinks and how it functions. You have seen in the previous videos that executing a digitization agender or exploring new digital disruption require a whole new set of capabilities. And ambidextrous leadership, fast execution, experimental mindset, trial and error approach. These are qualities you see a lot in small companies and startups with a strong entrepreneurial spirit. But as my guest discussed in Madia too, this is also something that older or larger companies lose of a time. Maybe with some exceptions, Subbass the online retailer acquired by Amazon for more than one billion dollars or you all know Spotify with their 1600 employees. These are examples that we can learn from. But before we go there that's a look at traditional ways to organize for digital transformation. Well, there are many different models but here are the three common archetypes. In the decentralized archetype digital activities integrated in each of the existing business units. Each BU has its own digital team. With this model, companies can develop BU specific digital strategies and execute them more or less independently. In the centralized archetype, companies create a separate digital entity, may be headed by a Chief Digital Officer to lead the transformation. This center of excellence defines a priorities, steals allocation of resources and executes the digital transformation programs in collaboration with the BUs. Then, there's the excubator model where the digital activities run in parallel, sometimes in competition with other business units. In this configuration, the CEO and surest orchestration and potential arbitragers needed between the traditional business and the new ventures. In reality, companies often choose to run hybrid models. Having both a central unit as well as a separate incubation lab. Or both business unit teams and a centre of excellence for support. Depending on the company's priorities and starting point, those structural solutions can have put the right emphasis on digital and support the transformation agenda. However this doesn't fully change the legacy processes that are crippling many large organizations today. Beyond structural change, those organisations need to adopt a whole new way of working suited to the needs of the digital age. A way similar to how Sub Bass and Spotify have worked to maintain the competitive edge despite strong efforts. This is what we call agile scale. At the moment Agile is probably one of the most used words in business context. The part that everybody agrees on is a set of four principles that define the philosophy behind Agile. You should check them out in our next section. Beyond that there are different interpretations tools and methodologies, that different thought leaders have developed to manage complex projects. Agile Scale, for us BCG, refers to the ability to expand the Agile philosophy from a team or project to a whole organization. But first of all, let me introduce two core concepts that Agile scale is trying to reconcile. Alignment on the one side, Autonomy and the other. Traditional organizations ensure alignment for a hierarchical structure, a surgical line of command prevelly inherited from military strategy. But this doesn't allow much autonomy to the troops and makes movements slow. This is not what you need when you want to keep up with exponential growth. To allow for more autonomy, Agile at scale relies on small execution units. Spotify for example, calls them squads. Squads a fully autonomous multidisciplinary teams usually 10 to 15 people. They are fully responsible to deliver a certain product. For example, I'm building a new Spotify app feature. They are empowered to take the decisions required to ensure their delivery meets the end objective, make customers happy. But you don't want to have a collection of squads each running in different directions. This destroys alignment and it becomes anarchy. Many squads working on related topics can coordinate as part of the same tribe. And people with the same expertise, for example, the iOS app developers can align on standards and so-called chapters. To ensure all those entities remain aligned over time, they need to be comfortable with another fundamental characteristics of the Agile way of working. The iterative delivery of value. Here is an example from a totally different domain, painting. Imagine you create Leonardo da Vinci's Mona Lisa in a traditional approach often called the Waterfall. You would go for a linear process of analysis, design and execution. Means you would understand exactly how the painting is composed, gather a team by the colours and then start painting perhaps from the bottom and then step wise create the whole picture. If all goes well, then great. But what if not? If you realize that something went wrong midway, it's hard to reverse. In an iterative approach on the other hand, you do things repeatedly in short iterations until you get them right. These short iterations often refer to as sprints, and enable you to change direction and react quickly as needed. And in Mona Lisa example, this means that you would start with a rough sketch, then add color, then perhaps contours and finally higher resolution. In each of the steps, you have a minimum viable product, MVP. That's a draft that you can shed any early stage to collect and incorporate feedback. This is how you ensure alignment and an Agile organization but intuitively checking the broader environment and adjusting to the changes you see. What are the benefits of that? From working with clients that if implemented Agile scale, I see multiple benefits. Let me just name a few. For many iterations and constant feedback loops, the risk of taking the organization in the wrong direction decreases quickly. The focus on MVP is at every stage keeps high visibility on what value every team is creating. This allows for adjustments at any point in time. It also keeps the organization adaptive overtime. In case an unforeseen disrupt or new opportunity arises. And last but not least, business impact can be realised much earlier, with early releases and faster time to market. In fact our clients who have adopted an Agile organization increased their time to market by two to four times and work for productivity by 20 to 30 percent, and there's more. In the long run. Working in an Agile environment improves employee engagement and helps to attract and retain superior digital talent. After all you've heard, implementing Agile scale, that means transforming a whole organization sounds like a huge challenge and it's certainly is. Incorporating the Agile mindset and ways of working does not only mean having the I.T department running more feedback loops. It means changing all dimensions of a company's operating model in a multi-year journey. Unfortunately we don't have time to go into details here, but let me quickly give you an overview of the key components you need to build for such a transformation. You need a business purpose that gets the balance between alignment and autonomy. You need to translate it to governance and funding principles. Then you need to build supporting mechanisms based on three pillars, a new structure defining the squads, the tribes, the chapters. New processes less linear are more iterative, more empowering. And new behaviors, how you hire employees, how you want them, develop them, promote them. And last but not least, you need a measurement framework and technology platform that allow fast iteration, testing and measurement. Are you interested to hear more? Than check out a conversation with Martin Doneness Estell, who gives further insights and real ethic samples and how to change the company's operating model. But before that, let me quickly recap what we've discussed in this video. Agile scale as a way to balance alignment and autonomy for digital ready organizations by establishing new ways of working. It relies on autonomous multidisciplinary squads that drive end to end delivery of a product or service in an iterative fashion. Agile increases time to market, productivity and employee engagement. And last but not least, implementing Agile scale is a multi-year journey that requires a completely transformation of a company's operating model.
