1. What Is Agile?
2. Why Is Agile Transformation Worth It?
3. Why Not Agile?
4. The Agile Transformation Plan
5. A Template For An Agile Roadmap?

Summary

• Agile philosophy is built on four principles/themes: people over process, product over process, customer input and embracing constant changeThe reason why many tech and non-tech companies go for transform to agile, is that it helps to build better products and better culture
• There is an argument that agile does not suit every situation. However, it is always useful to think whether philosophy still applies, though not all tools of agile.
• We have looked at how agile was introduced and developed in three contexts: digital businesses, large companies needing to drive tech innovation and a consumer goods company driving change through an agency relationship
• The key to a successful agile transformation is to test that all elements of the influence model are addressed: role modelling by executive team, compelling story of why do it, supporting staff through training and structural changes to process and incentives

What Is Agile?

Now when you hear agile, you think of the way of working more generally, though the origins of agile go to redefining a software development process. In 2001, seventeen leading US developers got together and verbalised for the first time what Agile meant in the Agile Manifesto.

An easy way to get your head around Agile is to start with its four values.    

1. Individuals and interactions over processes and tools: this is not to be confused with no process at all. While there is definitely an agile process, it is very fluid and is driven by individuals who form the team delivering a product.
2. Working software over documentation: getting to the working product first at the expense of documenting and explaining how you got there, or getting everyone on board with how the best way to get there. The idea of MVP (minimal viable product) or prototype is a similar concept in the product world: get a working version to a customer as soon as possible to learn and refine.
3. Customer collaboration over contract: the concept of putting the customer first is not new. It has existed in marketing and traditional product development for decades. Agile, however, was the first theory to explicitly put the customer in the middle of the software development process. A combination of these two values - working product and continuous customer input means that a much better version of a product is created via multiple iterations.
4. Responding to change over following a plan: in agile where you start with your product idea is not where you will finish. Given that customer feedback and continuous learning guides the process, the outcome is bound to change. The change is not only internal or customer driven. Sometimes market situations change or projects have more or less time or money available.

In the tech world of Silicon Valley, agile has graduated to dual track development process. It guides both software development and product development. In dual track an effective digital product team has two processes running alongside:  

• Discovery: finding the best way to solve a customer problem through constant MVP validation
• Delivery: building and iterating on the validated MVP

The main goal of discovery is to validate as many feasible ideas as possible before they get to delivery. Delivery is a very expensive resource: good software development teams are expensive and good products do take time to build. Dual track embraces the four values of agile. It also helps to clarify roles between product leaders and engineers while maintaining co-creation and collaboration. Four values are one component of agile philosophy. Another big part of agile is its process and tools. Agile tools, such as Kanban boards, stand up meetings, retrospectives, are well documented and explained elsewhere. We will focus on why and when to go for agile, and go through a few cases

Why Is Agile Transformation Worth It?

  The best argument for using Agile is that it has a fairly proven track record. The largest global agile survey reports that 98% of companies said that their organisation has realised success from agile development practice. It is also no wonder that the largest and fastest growing companies in the world - Google, Apple, Uber, AirBnB - epitomise agile values at scale.  

While agile was born in tech, non-tech companies are widely embracing these concepts and seeing measurable results as well. For instance, NPR used Agile to reduce programming costs by up to 66%. REI is using agile principles in its marketing to drive higher ROI on their marketing spend. The value of using Agile can be narrowed down to two things: better product and a better culture. Adobe had an interesting experiment in 2012 of splitting its 26 teams into agile/ scrum and non-agile driven. They measured results by asking teams how they felt in relation to building better products and culture. They found significant improvements for agile teams.

Case study: Adobe moving to Scrum

Why Not Agile?

While the value of agile is widely accepted, there are still arguments that agile should in some cases be considered with caution. HBR and Bain have defined five conditions where agile is not going to be set up for success. Personally, I struggle to find many examples of valid situations where at least the four values of agile do not hold true. Are challenges that require no innovation, no customer input and are not worth the learning gained from mistakes really worth overcoming? However, there may be cases where elements ofthe agile process and its tools may not be the most effective way of managing the process. For instance, large projects with hundreds of people involved in them may need a bit more than just a scrum board to communicate the team's progress towards the goal for stakeholders funding the process.

The Agile Transformation Plan

  To understand the recipe for a successful agile transformation and implementation, we will look into three different contexts:  

• Agile values or process have been put in place early on: it is very often the case with digital business. We will look into Redbubble & Seek for insight
• Agile had to be introduced as a disruption to more traditional project management and culture. Both Telstra, and AusPost had to do it, though used quite different ways of getting there
• Agile was introduced through agent relationship and adopted gradually, in the example of Cadbury in Australia

  We also need to note that the concept of agile is used loosely here to expand from purely a software development process to agile transformation strategy and product development, and leading innovation more generally.

1. Early adopters - Seek and Redbubble

It is always much easier if some of the agile values have been a part of the company philosophy to begin with. Seek, one of the leading jobs marketplace in the world, has always been a customer centric company. Therefore, agile philosophy was easy to adopt. In the early days of the company’s life, not all practices were agile. Kanbans, daily stand ups and retros really became an everyday life for Seek in the last 5-7 years. Redbubble, the world's largest marketplace of independent art printed on demand, was also started with agile values at its heart. Martin Hoskin, the founder, by that time, had already started two successful digital businesses. The other co-founders were also living and breathing human centric design and lean start-up values. As the company grew these values translated into more formalised and universally accepted agile processes. Now every tech team and most of the non-tech teams in Redbubble run Trello boards, do daily stand-ups and bi-weekly retrospectives. A few practices make both of these companies successful in running agile driven businesses.  

Agile Values Are Company Values

For both Seek and Redbubble, customer first mentality is reflected in their values. Seek simply expresses it as Customer comes first. For Redbubble, the notion of a customer is slightly more complex. All three of its agents - artists, consumers and suppliers can be interpreted as customers. Redbubbles expresses the customer first mentality as only doing things that benefit the marketplace ecosystem - so all customers of the marketplaces are gaining value. Another agile value - individuals over processes - is also explicitly expressed in both companies. One of the three Seek principles guiding performance reviews is collaboration and quality of solving the problem, not just getting to a solution in an individual fashion. Lastly, both companies embrace change and making mistakes mentality. Andrew Bassett, Seek’s founder, lamented the gutlessness of modern CEOs: “It seems if CEOs make a mistake now, for the most part, they lose their job. It seems to be easier for them just to do nothing,"  

Rolemodeling by Leadership

It is not enough to put agile values on a piece of paper and hope that people in the company will adopt them at some point. One of the most effective ways of encouraging and embedding agile values is for the top leaders in the company to be living and breathing these. For instance, Redbubble COO Barry Newstead would often be seen wearing variations of different shirts with “Always make mistakes”. Michael Ilczynski, Head of ANZ for Seek, is almost guaranteed to ask a question of “What customer problem are we solving here?”, if the proposed project does not clearly articulate it.  

Best Practice Sharing & Coaching

One last thing to note is that both companies invest in spreading the learnings of how to use agile tools best. Seek does it in a more formal way by making sure that every team goes through Agile induction. Seek also has an agile coach that helps teams to set up those practices and facilitates best practice sharing. Redbubble has a more organic way of sharing what works best. Teams often invite ‘outsider’ team leaders to run their retrospectives. This helps team members see a new way of running the process but also get insight into how to solve specific challenges differently.

2. Self-disrupting giants - Telstra and AusPost

  Not everyone has been set up with an agile philosophy at its core. In fact, the majority of Australian large companies acknowledge that their cultures have been formed by a very different set of values. However, the strategic importance of agile to innovation and market leadership makes the case for change. Telstra, one of the top 10 most valuable companies in Australia by market cap, has been on the journey to innovation for a while. Its ex-CEO David Thodey has been an active role model of the value of customer centricity and taking risks. In the last 5 years, Telstra has actively experimented with running its product innovation through a number of options - venture fund, JVs, incubators or self-disrupting start-ups. AusPost is one of the oldest companies in Australia, an employer of over 40,000 people and is owned by the government. You could not imagine a more challenging context for agile transformation. However, under the leadership of its ex-CEO Ahmed Fahour and the team he hired, AusPost has made an impressive leap and is currently leading a number of cutting edge innovations, including a competitor product to Amazon Prime. Not dissimilar to Telstra, AusPost is doing that structurally by introducing customer innovation focused business units. Telstra and AusPost set up their innovation units in quite different ways. Telstra has had more success with a start-up/venture funded model with a range of forms:  

• Telstra Ventures was set up in 2011 and since then invested in 40 tech companies, a lot of which became closely integrated into Telstra. Telstra Ventrues is also a top 20 global corporate VC fund.
• Telstra JVs with other companies to create disruption. Proquo, a JV with NAB, is a marketplace for small businesses to trade services with each other.
• They have set up an accelerator programme - Muru-D, to which all Telstra employees have frequent access to observe how small businesses innovate.
• Telstra more directly instils the agile practices by forming a JV with a software development company Pivotal to bring up Telstra to start-up speeds of product development.

AusPost has driven innovation and the move to agile philosophy in a more integrated way. They have set up a Digital Identity and Delivery Center in 2012 to explicitly drive agile and innovation. It has taken four years but early results are starting to show. Most of us are now able to experience daily updates on parcel delivery vs none at all in the past. Three key success factors stand out despite the difference in the form: support from executives, instilling a start-up environment and bringing in new leadership.  

Executive Support

The drive for agile and customer centric innovation comes from the very top. Both Telstra and Auspost CEOs have been personally behind each of the projects - whether it was Telstra Ventures or AusPost Digital Delivery Center. They have dedicated time, financial resources and focus of their leadership to have this topic as a priority on their top team agenda. In words of Amelia Crook, an experienced product leader with Seek, Martha Stewart, Redbubble and Flippa experiences behind her, “a successful agile transformation has to have executive support, it’s a whole business transformation, not just a delivery team. Trust becomes super important when old systems of reporting (which gave the illusion of certainty) are replaced with agile teams working around challenges rather than solutions”.

Run it as a Startup

All of the divisions have initiatives aiming to drive agile culture and innovation had to be established and run like start-ups. It is not enough to isolate them structurally. While they needed to have executive support to make them happen, they also needed to succeed or fail in their own right. In the case of AusPost, it was more a clear expectation that the Digital Delivery Center achieves measurable results - specifically speed of development. In the case of Telstra, the companies were literally shut down if they did not perform. Writing off a $330 million investment in a video platform Ooyala is just one of the examples.  

Bring New Leadership

Even though the change was led by the existing CEOs and executives, the actual team to run these initiatives was very often brought in externally. AusPost has been a hiring powerhouse for ex-strategy consultants, digital leaders and start-up founders for the last 3-4 years. Telstra often acqui-hired start-up talent like in the case of Pivotal. In the case of Telstra, the relationship was set up with this new breed of leaders to give them an opportunity to be successful. While like a start-up founder they were left to succeed or fail, they were also given considerable protection from corporate politics or bureaucracy.

3. Agent of change - Cadbury

  Sometimes the best introduction of agile is more gentle than setting up a new ‘agile’ division or JV. In the case of Cadbury in Australia, it was a relationship with its digital agencies that let its technology teams get a flavour of what agile practices were like and their benefits. Alick Hyde, currently heading Digital for Total Tools, a $350m franchise of tool stores across Australia, used to be a project lead for Cadbury. His first project with them was something not very core to the business - their fundraiser site. The agency team worked with Cadbury tech teams for 9 months. Icon Inc, the agency that Alick was part of, ran all of its client projects as agile and already had experience educating the clients on what to expect. At the end of the project, Cadbury has referred to the experience as extremely positive and rewarding.

“They loved the fact that we were able to change things around and adjust requirements that would benefit the end customer. They saw so much value in running things slightly differently”, Alick reflected.

The Template For A Successful Agile Transformation

 Amazingly a lot of people still approach a move to agile in a ‘waterfall way’.  Agile transformation roadmap is the most searched term on google on agile transformation. Despite the idea of a fixed roadmap in its classic sense is anti-agile. To get started on an agile transformation journey, it is important to understand what are the necessary elements to drive is. The influence model introduced by McKinsey in 2003 stands the test of time as a leading framework to manage any change.   

McKinsey Influence model:

• Role modelling - through all the case examples discussed in this article, CEO and executive support were key to driving agile transformations. Support behind the scenes is not enough. Leaders have to be seen living and breathing the values daily. Any inconsistency or contradiction undermines the credibility of the entire effort.
• Fostering understanding - telling a compelling story of why that makes sense to everyone is important. For companies like Redbubble and Seek, it was about embedding agile values into their company values from the get go. For, Telstra and AusPost it was about the urgency of the case for change and showing what good could look like through acquisitions, JVs or new people brought in. Understanding of why agile works can come from external sources in a less intrusive way like it did in case of Cadbury.
• Developing skills and talent - making sure that the teams are set up for success is key. The solution could be more organic and light touch like in Redbubble, where teams were encouraged to share what already worked. It can be more guided with agile workshops and coaches like in Seek. It can be immersive: Telstra's Muru-D incubator was set up to help those completely new to agile see the way it works for small businesses.
• Reinforcing formal mechanisms - helping to institutionalise and encourage desired behaviours through either formal structures or incentives:

Such structures can be quite explicit - new entities set up as in case of Telstra Ventures and AusPost’s Digital Delivery.

• Agile values can be ingrained in performance reviews - Seek’s collaborative value as one of the key three.
• The way the company runs its core processes can also be supportive of agile transformation - for Redbubble replacing a classic top-down annual planning process with more collaborative bottom-up vision & key results-driven planning.

Whether the company is living and breathing agile values or is just starting the journey, the principles are the same. It is about finding which of the four elements and in what form will be most effective.