The principles and practices of the agile movement are quickly moving beyond the IT department and into how firms run their day-to-day business. This new way of organizing and running business gains further impetus by the headlong rush to use digital transformation to gain competitive advantage, which often requires changing a company’s operating model through many iterative steps known as a journey. Using the agile approach, they minimize risks and can validate that their efforts are meeting the desired outcome as they move forward on their journey. Unfortunately, many companies see these benefits of an agile approach, but they struggle to do that. What are they missing?
A key element that many firms miss is the necessity to change their corporate culture to support an agile environment. At the heart of this cultural change is the long-standing practice of penalizing failure. In traditional organizations, executives and managers are not allowed to fail. They are given targets, held accountable to those targets, and failure is not tolerated. This understanding is deeply ingrained in business psyche.
In an agile environment, we hear a lot of talk about failing fast and failing forward; however, organizations don’t allow failure in projects. True digital transformation can only be accomplished in an agile framework, so experimentation must be allowed.
One of the keys to navigating through the unknowns of the deep change that most digital transformation demands is the willingness to experiment to learn and test. Failures – doing things and finding they don’t work or don’t work as well as we had anticipated – is part of how we move into the unknown, and much of the details of a transformation journey are unknown and evolve on the journey. Failure, or at least some level of dissatisfaction with results, is often the norm.
The Danger Of Not Taking An Agile Approach
With the ambiguity of big business model change at the heart of most ambitious digital transformation efforts, the organization must build a foundation of learning to build the conviction that the change is worth the effort and that it will lead to the needed results. This foundation can only be built through an ongoing series of experiments that must risk failure to absorb the learnings.
Here’s an ironic fact – in companies with a culture focused on meeting objectives and never failing, executive often proclaim these experiments and pilots as victories even when the actual results were not a success. In effect, the organization lies to itself and builds its confidence and learnings on false facts and experiences. Often, executives question these assumptions, but they are intimidated or ignored. Once momentum builds behind well-funded projects that are backed by senior executives, it becomes politically untenable to be seen questioning or resisting them. The transformation initiatives then move forward on flawed foundations and incorrect learnings.
Consequently, companies build their digital transformation on a foundation of lies and over representations or misrepresentations. This is particularly troubling in digital transformation, where companies need tightly coupled components that could interact with each other seamlessly toward a great customer or employee experience.
Here’s a common example. Executives make promises are made, they conduct evaluations, undertake pilots, prepare specifications and spend millions of dollars promising initiatives that will be incorporated into programs. But often the organization exhausts itself on the effort and never achieves most if any of the promised objectives of the program. At every step of this process, the organization lies to itself about the success of the previous stages. By exaggerating their success or failing to create the learnings from their failures, they then move forward with flaws tightly integrated into their transformation, building an ever-compounding problem.
How To Resolve The Problem Of Not Having An Agile Environment
Resolving the issue and truly embracing the agile philosophy for transformation requires a mindset change from companies’ traditional view of failure not being allowed. Experimentation is an essential element. Companies need to celebrate the fact that they fail, that they do things to learn and test, rather than penalize failure.
Experimentation implies that not all activities will, in fact, release their intended value. In failing fast and failing forward, companies can do projects, understand whether they succeed or don’t succeed and then do another initiative to address the gaps. Because the transformation journey is broken down into short sprints, companies can quickly recognize when value isn’t being achieved or the business objectives are not being achieved and then adapt quickly to address those issues. The program is not allowed to change, but companies can objectively assess the impact of individual projects and recognize where those projects fail against their objectives.
We may need to change the corporate lexicon. We need to rename the term “failure” to something like “pilot to learnings,” rather than “failure.” Otherwise, it’s easy to confuse pilot or project failure with program failure. Clearly, companies cannot tolerate program failure. But if they can’t be brutally objective and honest about the success and learnings of the individual components, then they are doomed to build fatal flaws into their digital transformations.
The traditional approach and mindset are a waterfall type of process. Companies come up with a vision, build a business case for the vision, fund the business case and then work on a detailed two-year or 18-month plan to implement it. This approach has a very high proportion of transformation failures. In fact, it works against agile philosophies and processes.
The agile approach to transformation is a very different world than big, major projects with managers holding teams accountable for delivery of predefined work streams. In the agile approach, the company sets the goal but not the time or cost. Breaking the journey down into sprints or phases with goals for each sprint allows adjusting to get to the desired impact. Each goal aims to prove the viability of the change coming about because of the transformation.
Moreover, an agile, iterative structure – experimentation – for the journey enables identifying where new business value can be created and ways to delivery new value. That’s a success, not a failure!