Enabling your organization to become more agile is worth striving for. A recent McKinsey survey1 found that “Highly successful agile transformations typically delivered around 30 percent gains in efficiency, customer satisfaction, employee engagement, and operational performance; made the organization five to ten times faster; and turbocharged innovation.”

However, only 30 percent of agile transformations achieve such impressive improvements in business performance. According to the most recent State of Agile Report2, the key challenges have remained the same for the past several years: Organizational culture, resistance to change, lack of leadership support, and lack of skills.

The essence of an agile transformation, according to McKinsey, is reimagining the organization as a network of high-performing teams supported by an effective, stable backbone of strategy, structure, processes, people, and technology.

Most agile transformations, however, are not born as organizational transformations. Agile adoption typically starts in software development teams and may be viewed as an “IT thing,” which is far from “reimagining the organization as a network of high-performing teams.”

The results of highly successful agile transformations are achieved when the entire value chain is encompassed, which requires involvement beyond software development.

But how do you develop the leadership support you need to extend agile practices to the entire value chain and overcome resistance to change?

Value Stream Mapping can help you get there.

Maps visualize inefficiency and complexity

A value stream map visualizes the steps in getting a product or service from idea to value delivered to the end consumer. Value stream mapping is not new. It originates from Lean and has been used for decades.

Below is a simplified map of a software product value stream, starting with a new customer need being identified by the Sales team and finishing with the customer achieving the desired outcome.

The bottom boxes show the processes and people involved in the value creation workflow. The top boxes show how information flows through the supporting systems.

The map above is pretty simple. However, in a large organization, it often is not. Many organizations are organized functionally and have siloed views of how value is created, which results in unawareness of complexity and inefficiencies.

Creating a value stream map provides a visual overview that can facilitate discussions around inefficiencies or unnecessary complexity in the flow of work.

One example is the number of handovers. Are they all necessary? Where do delays occur? Whenever work transitions from one person to the next, information could be incomplete or lost in translation. Hence fewer handovers are better. If people are in different parts of the organization, a difference in culture or priorities could affect the workflow.

A simple visual overview helps shed light on the discussions to be had.

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Joint map creation builds leadership support

The basis of productive discussions is that everyone agrees the map represents the value stream accurately. Such agreement is best achieved by involving the leaders of all the organizational units participating in the value stream in creating the map.

The leaders accountable for the value creation have the power to make change happen. Involving them builds leadership support for making changes that accelerates agility. The shared overview helps get the leaders better aligned around what needs to get done.

The discussions necessary to make improvements are elevated from the individual function to the company level, where cross-functional changes must be discussed.

Improvements are easier to identify and prioritize

The objective of improving business agility is to enable the organization to respond faster to changing customer needs. When the processes making up the value stream are mapped, further data analysis can add insights making it easier to identify and prioritize improvements.

The total time it takes for a new request to go through the value stream and deliver value to customers is an expression of your agility. Reducing this time without sacrificing quality or employee engagement increases your agility.

Lead Time is the Lean expression for the time it takes to complete a process step. The Lead Time for each process step must be determined by consulting the people doing the work. In some cases, workflow tools have some of these numbers. Using a recent request can make it easier to get more precise estimates.

Three metrics provide insights that can be used to identify and prioritize improvements:

• Lead Time (LT) = The time from work is made available to it is completed and made available to the next in line

• Process Time (PT) = The time it takes to complete the work

• Percent Complete and Accurate (%C@A) = The percentage of time the work received from the previous process step can be processed without being corrected or amended - It reflects the quality of the work output.

The example in Figure 3 shows that the total Lead Time to deliver on a new customer need is 88 days. However, the time it takes to do the work is only 26 hours, which means the work is idle 98,8% of the time. The Activity Ratio is the percentage of time work is in an active state and is an expression of the value stream flow efficiency.

Numbers like these make the need for improvement very obvious, which should help reduce the resistance to change. The Lead Time and Percentage Complete and Accurate for each process step are helpful when prioritizing where to start. A larger difference between Lead Time and Process Time is an increased opportunity to reduce waste. A low Percent Complete and Accurate number indicates the need for improving the work quality in the previous process.

The value stream metrics provide a data-driven starting point for more detailed analysis, uncovering needed improvements.

Customer value becomes a shared motivating goal

Improving business agility is a continuous effort to help teams work better together utilizing modern practices and technology. Sending everyone off on agile training and adopting agile rituals is only a step on the way.

Taking a value stream view of your products and services, mapping how you work, and attaching the right metrics can guide the iterative process.

All leaders should be able to rally around achieving the results that highly successful agile transformations do. Making the journey inclusive and focused on meaningful changes can help reduce resistance, build leadership support, and ultimately change your culture.

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As I reflect on the challenges I have faced in the change projects I have driven as a business leader, most of them stem from not giving the people side of change enough priority. I focused on what needed to change to drive the desired business outcome and underestimated what it took to implement the behaviour change that delivered the outcome. 

Change happens due to people doing things differently, but changing behaviour is complex. As change leaders, we often assume that if the rationale for the change makes sense (to ourselves…), making the change itself is straightforward. However, it takes more to motivate the brain to make the change.

The metaphor of the Rider and Elephant to help simplify the understanding of how your brain influences your behaviour. The Rider represents the controlled/rational/conscious part of your brain. The Elephant represents the automatic/emotional/subconscious part of your brain. 

The Rider can think, or even fully believe, that we have a strong enough reason to change, but this is not enough for the whole brain to be motivated to make the change. The Elephant will do whatever it takes to resist using precious energy to make a change. We need to feel that the behaviour change is important, not just think it is!

The people side of change

Change happens at the individual level, which is essential to remember when planning your transformation project. Better addressing the people-side of change will increase the likelihood of success. 

This article describes how to better address the people side of change by making your change effort more brain-friendly. Making it more brain-friendly will make it easier for individuals to change behaviour and develop their change competency.

You can add brain-friendliness to your change model of choice. This article suggests how by relating the recommendations to the Prosci ADKAR Model‘s five goals/outcomes of an individual’s successful change journey:

1. Awareness of the business reasons for the change. 

2. Desire to engage and participate in the change. 

3. Knowledge about how to change. 

4. Ability to realise or implement the change at the required performance level.

5. Reinforcement to ensure change sticks. 

The Prosci ADKAR Model is a framework for understanding and managing individual change.

Create a sense of purpose

Awareness and Desire – the first two outcomes prescribed by the ADKAR Model – are achieved by creating a sense of purpose. However, that is much easier said than done!

Having a sense of purpose is related to having the intention to accomplish something meaningful to you and make a positive difference for others. 

Awareness of the reason for the change is essential, but it doesn’t necessarily create the desire to change. Communication that helps us rationally understand why change is needed satisfies the Rider. The most challenging part is creating the desire to change. Creating desire is difficult because what motivates us and what makes us resist change is very individual. 

Resistance comes from our perception of the change. Uncertainty/ambiguity, past negative experiences, or not satisfying our social needs such as sleep and recognition will trigger the Elephant to launch our fight/flight/freeze threat response. It happens automatically and unconsciously. When this response is triggered, fewer resources (like oxygen and glucose) are available to the Rider, which will reduce our ability to use our analytical thinking, creativity, focusing attention, self-control, planning and language. The effect is resistance to change. 

The desire to change comes from intrinsic motivation. For sustainable behaviour change, it is crucial to understand what will turn a “should do” into a “want to” or “love to”.

Hence engaging people at the individual level is necessary to ensure their fears and motivations are considered.

Help people learn how to change

Once people have the desire to change, they need to know how. As outlined in the ADKAR Model, the Knowledge outcome is achieved when people have the information, training and education necessary to understand how to change. Two aspects of learning how to change need to be addressed: Learning how to perform the new behaviour and learning how to change behaviour. 

In my experience, the emphasis is often placed on training on what to do differently, but less on how. The result is a gap between knowing and doing, which often hinders or slows change. 

Limit the amount of concurrent change

Obviously, the more significant the change, the harder it is to overcome. 

Practising new behaviour requires conscious effort, fully activating the Rider. The Rider consumes significant energy. If the change is too big, the Elephant will do all it can to resist it because it wants to conserve energy. Therefore it is better to limit the amount of behaviour change you are asking an individual to make at once. 

Instead, consider sequencing behaviour changes starting with the most critical behaviour first. You might see your change effort as a project with a start and an end date. But the reality is that change is constant. Hence, developing the individual’s competency to change as part of every change you implement will improve your organisation's agility.  

Once you have determined the new or changed behaviour, make it small and specific. This gap between knowing and doing can be closed by involving people very specifically specifying how they will perform the new behaviour. It is better to achieve a small win regularly, as this will help you build enough attention density to turn the new behaviour into a habit. 

Free up capacity for change

The ADKAR Model defines Ability as the ability to realise or implement the change at the required performance level. Implementing the change takes conscious effort, which means we need the Rider to have sufficient resources to give us the ability to change.

Scientific experiments show us that the different parts of our brain compete for its limited resources like oxygen and glucose. The Rider also has a limited, shared resource. For example, using effort on its self-control capability will limit the resources we have left for changing behaviour.

So if we want to maintain the capacity of the Rider to execute the capabilities required to change behaviour, we must implement enabling behaviours to meet our physical needs, such as sleep, recovery, and movement.  

Without our physical needs, our Rider cannot function optimally, and our elephant launches the threat response (defaulting behaviour to self-preservation, reactivity and heightened anger). When the elephant takes over, our ability to change is significantly hampered.

Our physical needs are often depleted without us being aware. However, our stress levels, sleep, recovery and movement can be measured and managed to give us a data-driven way of improving the effectiveness of our behaviour.  

Provide an enabling environment

The Rider’s ability to use its foundational capabilities is affected by our social and physical needs. In the context of organisational change, our social needs are influenced by the work environment. Hence we must create an enabling environment. In an enabling environment, people need to feel safe.

When the elephant detects a threat, his amygdala launches the fight/flight/freeze response. When this response is triggered, fewer resources (like oxygen and glucose) are available to the Rider. As soon as we enter a room with others or any form of group, our elephant senses whether we are safe or not.

For example, if we work in a zero failure work culture, we might not feel safe; a mistake could have serious consequences (losing our reputation, our manager’s respect or even the job). In such a culture, our elephant’s threat response is constantly being triggered, which will mean our brain’s performance will be sub-optimal, and so will our ability to change.

The final outcome of the ADKAR model – Reinforcement – is the measurement of adoption, corrective actions and recognition of successful change. If the change is not reinforced in a way that creates an enabling environment, it will have the opposite effect.

An enabling environment can be created by establishing a sense of belonging in the team, increasing the levels of autonomy (do people have accountability and enough decision-making power?), and providing genuine recognition. Creating an enabling environment is arguably our most important objective as leaders. The culture we create through our behaviours can make or break an enabling environment.

Consider it a new system of functioning

Don’t just view your transformation as a project. Transformation is ongoing, and the capability to change should be developed like a muscle.

Developing your change muscle will increase your personal and organisational agility and strengthen your ability to respond constructively to change. 

By making it more brain-friendly, addressing the people side of change creates the physiological conditions you need to make your transformation project successful.

Continuous change is the new norm driven by new digital capabilities. Maintaining business agility requires the organisation to continuously adapt its products and services in response to changes in the business environment. That is easier said than done. Proposed solutions are plentiful, but many focus on a single aspect of enabling business agility, implementing agile development methodologies, or perhaps deploying new technology.

However, while such solutions can contribute, increasing and maintaining business agility requires a systemic approach and the right culture to fuel it. As leaders responsible for sensing and responding to new customer demands, we need to understand the enabling systems of work and the mindsets and behaviours that make them successful.

Increasing business agility is one of the top drivers of digital transformation. Yet organisations are struggling to successfully do so. Wipro Digital recently surveyed 400 Executives in the US about digital transformation efforts in their companies. Increasing agility was identified as one of the top three drivers. Nevertheless, 37% of the same executives found increasing agility to be a missed investment in their digital transformation strategy. The same study shows that only 1 in 10 Executives believe they are more than 75% successful in executing their strategy. Resistance to new ways of working is identified as the top barrier.

In my previous role as a product leader at Microsoft, a large part of my job was to implement strategies for increasing the business agility of our group. I worked in a small product group (by Microsoft standards), organisationally located outside of the core engineering organisation. The group more or less encompasses all product development functions. Our organisational location allowed us to adapt our systems of work more rapidly. We worked on setting the organisation up to function like a startup for several years. The outcome was a significant increase in responsiveness to new customer demands.

Resistance to new ways of working was the top barrier for us, as well as I suspect it will be for most organisations. In large organisations, this barrier is amplified by the need to partner with teams outside your own. A shift in mindset and related behaviours were what enabled the successful outcome. Reflecting on the journey, a system of interdependent disciplines emerges as the engine that drives business agility. Had we as leaders been more aware of this system and what operates it from the start, it would have helped us accelerate our transformation.

In this article, I am sharing my experiences from the transformation we underwent at Microsoft. In the context of those experiences, I am advocating that conscious and active development of your culture is required to make your efforts to increase business agility successful.

Agility cannot be achieved by focusing on a single discipline

Discovering new or changed customer demands, and adapting your products or services in response, involves multiple disciplines. I have chosen to focus on disciplines instead of organisational units due to the variety in organisational structures and how things are named. In my experience, the following disciplines are at play - at a minimum:

• Customer Experience Management: Development, measurement and management of all the touchpoints that make up the customer experience.

• Innovation: Ideation, Development, Solution Validation

• Strategy Development: Target Market, Business Outcomes, Vision, Product/Service Strategy, Value Proposition

• Product (needs) Discovery: Foundational Research, Market Research

Strategy Development and Product Discovery focus on defining the problem space, and Innovation and Customer Experience Management are about the solution space.

The four disciplines are interdependent and cannot function effectively and efficiently on their own. Together they form a system that drives business agility. It is not a sequential process but a system in which each discipline depends on others. The figure below provides a simplified view of the disciplines and the interdependencies that makes them function efficiently.

The importance of Strategy Development seems to be underplayed in much of the current literature on building products. In my experience, making the system that enables business agility work is essential. The way the strategy is developed can either enable or hinder business agility. The strategy should be defined based on a longer-term vision for the product or service.

The vision should serve as the compass for your strategy, representing how the vision is attained. The vision should guide decision-making when prioritising the many strategic options you will be presented with. Will this decision move us closer to our vision? Is this the business we are in? 

In our case, the strategy became the "switchboard" connecting our work to Business priorities, Business outcomes; Product goals (customer needs); Target customers and Learning. This proved extremely valuable because it enabled us to re-prioritize faster in response to changing needs; communicate more efficiently about our work, and provide everyone on the team a line of sight of their work's impact.

The strategy should be developed based on a clear understanding of the problem space. Product Discovery contributes to this understanding by informing on what problems to solve/needs to address. Assumptions around customer needs must be validated through research by Product Discovery to reduce uncertainty. Product Discovery uses known facts coming from the measurement of customer behaviour. This helps identify the unknowns posing the highest risk and to focus the research resources on those.

Customer Experience Management informs Strategy Development on customer feedback and perception of the user experience through the measurement of touchpoint performance. These inputs must be weighed against the product vision and business priorities to form an effective strategy. The strategy needs to provide constraints that help focus Innovation efforts. However, it needs to do so without inhibiting the ability to innovate. That can be done by ensuring the strategy only focuses on describing the "what" and avoids describing the "how". When developing solutions, the temptation to tell developers what the solution should be is almost irresistible. Hence, many of the questions coming to Innovation describe the "how", which, if acted upon, will inhibit innovation.

Innovation takes direction on what to build from the strategy. In collaboration with Customer Experience Management, Innovation iterates from a Minimum Viable Product to a solution that serves the customer's need. Forming the Lean Startup Build, Measure, Learn cycle. When potential new customer needs are uncovered in the innovation process, they are passed on to Product Discovery to be prioritised for validation. Once validated, new customer needs are fed into Strategy Development, and the system continues.

Understanding the interdependencies between the disciplines involved in maintaining business agility will help leaders lead more effectively. The system depicted above can help provide an overview of which disciplines are involved and how they interact to drive business agility. With the system in mind, you can assess if your organisation is set up for the system to work? Are roles and responsibilities aligned? If the disciplines are in place, do they serve other disciplines in a way that makes them efficient? If they don't, are the issues related to the ability to sense new customer demands or respond to them? The system above provides an understanding of what is needed for the system to work and a way to pinpoint where to focus if it doesn't. 

Efficient collaboration is necessary

The disciplines outlined above span multiple functions across the organisation. You might even have multiple instances of the same function in large organisations. Enabling meaningful and fast responses to new customer demands is about speed. It requires efficient interaction between the disciplines. In a startup or a small company, that might be easy, but in a large organisation, it takes effort. Forming small cross-functional teams is the most effective way to achieve efficient collaboration. As stated by Jeff Gothelf & Josh Seiden in their excellent book Sense and Respond: "Sense and respond in practice is about small, autonomous teams experimenting and learning in pursuit of a vision or strategy". Unfortunately, that is not always a feasible option.

The figure below shows the many functions involved in the continuous development of products and services, using my previous group at Microsoft as an example. As mentioned earlier, several functions were internal to our group, but others were not. Having multiple functions in the same group gave us autonomy in those areas, while in others, we needed to find efficient ways of collaborating with our partner teams.

Autonomy enables a team to move quickly, but boundaries are required to keep it focused. The way we crafted our strategy helped us focus our innovation efforts AND work efficiently with our partner teams. The strategy was framed as a structure of business outcomes, product outcomes and initiatives. The business outcome represents how to measure internally focused business results. Each business outcome has one or more product outcomes representing the value attained from using the product. The product outcomes have associated initiatives for how we would deliver the product outcome.

The strategy should guide collaboration without inhibiting innovation. The strategy provided the team with a clear set of initiatives to work on. The initiatives were defined in the problem space, describing the "what" and refraining from going into the "how". Using the initiative descriptions and product outcomes, Engineering has the freedom to innovate on the solution without being restricted by opinions on what it should be. At the same time, the structure enabled us to focus most of our collaboration with partner teams on outcomes and initiatives. It helped us to keep the discussions in the problem space, which provided the freedom to innovate. Separating business and product outcomes helped ringfence the dialogues with different stakeholder groups to what was important to them. Think of it as a layered collaboration that allows other stakeholder groups to collaborate effectively, using a structure that keeps it all connected. 

The right culture is required to make the system work

Culture is the glue that ties it all together. Making this system work took time. And just like the products and services it produces, it needs to continuously evolve. The thing that made the "systems of work" we put in place work was the culture we managed to create.

The cultural change within our team was fuelled by the more significant cultural change that Microsoft was going through. Satya Nadella and other senior executives helped tremendously by instilling the importance of a Growth Mindset and the communication and behaviours to support it. However, how we as leaders made Growth Mindset specific to our work was important because it became part of our dialogue and how we did things.

In retrospect, specific mindsets made the system work. Your beliefs and attitude determine your behaviours. Hence, instilling the mindsets that suit the outcomes you want to achieve impacts your ability to succeed. In our transformation, we were not explicitly aware of the mindsets we needed from the start. However, they emerged as our learnings made us more mindful throughout the journey. The following figure shows the mindsets that drove our business agility. You can use different names for them, but at the end of the day, I believe these are the core mindsets needed to maintain business agility. The figures' mindsets are located next to the disciplines they mainly impact. 

Being Purpose Driven is about connecting the work of the team to the meaningful benefit of others. Having a sense of purpose in what we do at work is linked to believing that what we do makes a meaningful difference to others and potentially to the world around us. The vision and strategy need to express that purpose and enable someone contributing to developing or delivering the product or service to see how her work helps serve the purpose. Having a clear purpose helps lead to a sense of fulfilment.

Having an Outside-In mindset means being able to put yourself in the shoes of the customer. View the solution from the customer's perspective. Fully understand the need your product is addressing and build the best possible solution to serve that need.

Continuous Learning directly ties back to the Growth Mindset. Challenges and failures are an opportunity to learn and grow. Hence Learning from the work you do, is essential across all disciplines. Designing experiments that can help reduce uncertainty is a core part of that.

Trust Data, not Assumptions, is about encouraging a scientific approach to decision-making. It's about making it OK to challenge requests not founded in data, to reduce the risk of building something no one wants (except the person asking for it). 

Leadership behaviours shape the culture 

Performance in achieving the desired outcome is ultimately determined by your behaviours. Leadership behaviours are significant as they help shape the culture of the organisation. Our behaviours as leaders were what solidified our mindsets and helped instil them in others. In general, there are many ways to achieve a specific outcome. When it comes to defining the most effective behaviours for applying the mindsets above, it will be different from organisation to organisation. So, while I believe the above mindsets will help increase business agility in all organisations, the most effective related behaviours must be determined. I want to highlight some of the ones that were effective for us.  

Think Outside-In mindset - Very early on, we decided to invest in learning how to apply methods to increase our customer focus. Customer Journey Mapping was one such method. It proved valuable in assuming the customer's perspective and as a basis for researching and prioritizing product improvements. Later it was beneficial when working together with teams outside of our own that were part of delivering the customer experience. We put different feedback mechanisms in place and enforced responding to the feedback as part of our business rhythm. Mandating customer visits for everyone on the team was also important. Learning directly from the customer how products are used, and being required to report back on the learnings, is a great learning experience, especially for someone in a non-customer-facing role who is part of creating the customer experience.

Continuous Learning mindset - We invested in developing a research function. We integrated customer co-creation and experimentation into our agile development practice. The latter was kicked off by bringing Jeff Gothelf to run a Lean UX workshop. We set up a practice of running weekly research studies to keep us in the habit of continuous discovery and learning. The value of which is well described by Product Discovery expert Teresa Torres in her newsletter. We did retrospectives to continuously reflect on and improve how we worked. Retrospectives were done at multiple levels as part of our engineering practices and leadership team. Later we made learning part of the way we measured our performance. Learning is so fundamental to business agility. Business agility is really about adaptability. If you do not learn, you can only guess how best to adapt. Research by Lindsay McGregor and Neel Doshi shows that most organisations only measure tactical performance, whereas adaptive performance is needed for creativity, problem-solving and innovation. Setting learning goals prepares people to adapt (McGregor & Doshi, 2017). 

Trust Data, not Assumptions mindset - This mindset mostly expressed itself in behaviours around how we approached requirements for new work. Is this something you know or something you assume? Do you have data to back that up? Those were the questions we made okay for everyone to use to challenge work requests. This is easier when such requests come from outside your group but more problematic when combatting the Highest Paid Persons Opinion (HiPPO) syndrome in your own management chain. However, as leaders, we made it okay to challenge requests in those situations as well, hard as it may be.

Purpose Driven mindset - As a leadership team, we had a strong focus on understanding and communicating the outcomes of our work to our customers and the business. This was supported by a performance management system focused more on impact than activity. Coupled with how we created our strategy, it enabled everyone on the team to have a line of sight from their work to its effect. Having a line of sight positively affected team members at all levels to challenge the value of a piece of work: "What goal is that driving; How will we measure success; If we did X instead, I believe it would drive a better outcome". Those were some of the questions keeping us all on our toes in achieving our goals. 

Make the development of culture an explicit part of your digital transformation

I recommend making the development of culture an explicit part of your digital transformation. Resistance to new ways of working will not go away, but you can reduce the time it takes for your people to get through the Change Adoption Curve. Whether your transformation is about becoming more agile, as is the focus of this article, or it is about doing business differently, the enabling culture needs to be established. It should be done as part of your business transformation project and not as an afterthought.

As sexy as it is to speculate about new technologies such as AI, robots, and the internet of things (IoT), the focus on technology can steer the conversation in a dangerous direction. Because when it comes to digital transformation, digital is not the answer. Transformation is." (Westerman, 2017)

References:

A Crisis in Digital Transformation: https://www.slideshare.net/WiproDigital/digital-transformation-roi-survey-from-wipro-digital-76561582

Gothelf J., Seiden J. (2017). Sense and Respond: How Successful Organizations Listen to Customers and Create New Products Continuously. Harvard Business Review Press

McGregor L., Doshi N. (2017). There Are Two Types of Performance — but Most Organizations Only Focus on One. Hbr.org, https://hbr.org/2017/10/there-are-two-types-of-performance-but-most-organizations-only-focus-on-one

Ries E. (2017). The Startup Way: How Entrepreneurial Management Transforms Culture and Drives Growth. Portfolio Penguin

Torres T. (2017). This Keystone Habit Will Fuel the Rest of Your Continuous Discovery Habits. https://www.producttalk.org/2017/10/keystone-habit/

Westermann G. (2017). Your Company Doesn't Need a Digital Strategy. MIT Sloan Management Review: http://sloanreview.mit.edu/article/your-company-doesnt-need-a-digital-strategy/