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2018-07-10 10:48:11
Executives need to be a cross between Spider-Man and Simone Biles
AGILITY is such a modish word in modern management theory that it can seem as
if the ideal corporate executive would be a combination of Spider-Man and
Simone Biles, a gymnast. The concept has its roots in the idea of lean
management , developed by Toyota in car manufacturing, and in the Agile
manifesto drawn up by a group of software developers back in 2001.
Big software-development projects were (and are) notorious for producing
costly, late and cumbersome results. The idea of agility was to focus on small,
innovative and multi-disciplinary teams. Among the manifesto s principles were
that individuals and interactions were more important than processes and
tools , and that responding to change was better than sticking to the plan.
Somehow, the teams concept acquired the name scrum . This moniker was clearly
bestowed by someone who had never seen a real rugby game. An actual scrum
involves 16 people pushing hard, getting nowhere and usually ending up
collapsing or being penalised by the referee for foul play.
Management scrums aim to be a bit more mobile than that. In his recent book,
The Age of Agile , Stephen Denning recounts how a team at Spotify, a
music-streaming provider, developed the Discover Weekly service, which
suggests new songs to users. The team pulled together a prototype within a
couple of weeks and tested it first on their fellow-employees and then on very
active users. All Spotify customers were offered the Discover service within
just four months of the concept being created.
Another author, Simon Hayward, writes in his book, The Agile Leader , that the
aim of agility is to bring the company as close to the customer as possible.
Ideas can be tested on a small scale and abandoned if they fail to work.
Feedback from the customer is essential at every stage. Teams work on small
tasks in short cycles, achieving their immediate goal and quickly moving on to
the next.
This way of thinking seems sensible enough for specific projects. But companies
are now starting to test whether an entire business can become agile corporate
versions of the Chinese state circus. A recent article for the Harvard Business
Review (HBR)* describes companies that have adopted an agile approach,
including Bosch, a German electronics and engineering firm, USAA, an American
financial-services company, and the health-information systems division of 3M,
a multinational. Perhaps the most striking example is Saab, Sweden s defence
firm, which created more than 100 agile teams, covering software, hardware and
the fuselage, to build its Gripen fighter jet.
These firms have helped show that transforming groups into agile companies is
possible. But it is not easy, says Darrell Rigby of Bain, a consultancy, one of
the HBR authors. Just creating teams is not enough; the leadership and culture
of the whole company must change. Items such as budgets and employee pay have
to be altered to reflect the much shorter timeframes of team operations.
A much bigger agenda lies behind the emphasis on agility. Some argue that the
old, top-down corporate model, associated with Alfred Sloan at General Motors
in the second quarter of the 20th century, is no longer relevant. Instead,
companies need to adapt to a world that is VUCA (volatile, uncertain, complex
and ambiguous) and which requires continuous innovation in order to keep up.
Agile teams are the equivalent of in-house startups.
It is worth remembering, however, that many startups fail to gain traction.
There is a danger that, while a firm s best talent is off pursuing new ideas,
the core revenue-generating business deteriorates due to neglect. Permanent
revolution may sound an enthralling idea in theory but may lead to chaos in
practice.
And what is the role of the chief executive at a big company in an agile world?
Most of the innovation and big decisions will have been delegated down to the
level of the team. The boss will of course still have an important role in
allocating capital to the various teams. But will that role really justify the
$10m-plus salaries that chief executives often enjoy? Indeed, if agility is
really the characteristic of business success, then perhaps the very structure
of a public corporation is not the most appropriate one. Small businesses, by
their nature, are more likely to be agile. The best gymnasts, after all, don t
tend to be built like rugby forwards.
May-June 2018
This article appeared in the Business section of the print edition under the
headline "The A teams"