3 Key Capabilities for Agile Leaders | AgileAmped Podcast

Clarity of purpose, control without controlling, and designing for flow – these are three capabilities that are essential for Agile leaders to possess, according to Agile trainer and coach, Phil Abernathy. “Empowered teams are more dangerous if there is no clarity…[and are] nothing more than powerful horses pulling in different directions,” says Abernathy. The difference between good companies and great companies is discipline – they are not chaotic. Complex structures will always result in complex processes and inefficient controls because leaders believe in the biggest lie – that multitasking is efficient and effective. The idea is to work on one or two things at the same time, maximum.

Accenture | SolutionsIQ’s Henrik Gruber hosts at the Business Agility Conference in Vienna, Austria.

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HENRIK GRUBER: Welcome to another edition of Agile Amped. I’m your host, Henrik Gruber and we are podcasting from the Business Agility conference in Vienna, Austria. Today, my guest is Phil Abernathy. Phil has over 35 years of business and leadership experience. And is a world renowned trainer, coach and consultant who has helped train and transform global companies like IBM, Honeywell, and Shell. Again, thanks for joining us. Now on to the conversation.

Thank you so much for taking the time with me to record today for this session. So your topic would be critical leadership capabilities for Agile transformations. What do you want to tell us about that topic?

PHIL ABERNATHY: Well, originally when we first started doing Agile transformations about 12 years ago, when it started coming into form around 2007, in Australia, where I was based, there was a lot of, let’s do the practices and let’s do Scrum. Let’s do some training and let’s do some coaching. And that’s it, you’re Agile. But, nothing changed.

And we found that, like we’re realizing today that this transformation has to be top down, and the leaders have to change and what does that mean? You know these leaders, like myself, have reached a certain level of success or capability or whatever, doing what they do.

So what do they need to change now, you know? And that was the question that I faced in some of these transformations. So we had to put it together in a package where the leaders would realize this. Now there’s a lot of training, talking about leadership mindsets and leadership values. And that’s like saying, well, you should be like Gandhi or you should be like Nelson Mandela and, you know, but there’s nothing telling them how.

HENRIK GRUBER: Okay and right and based on your experience, how would you do that?

PHIL ABERNATHY: Correct. So we have three key capabilities that I work with leaders on. The first one is Clarity of Purpose. The second one is Control Without Controlling. And the third one is Designing for Flow. These are different in different organizations, but they are actually different in execution mode in a natural setting. So they just have to learn how to do this. So let’s start with the first one, Clarity of Purpose. So one of the great tools to use here is John Doers technique called OKRs.

Cascaded OKRs where you bring the objectives and key results down from the top level. And the objective of the key result of the top level becomes the objective of the bottom, of the next level. And those have key results. Now I call them OsKRs, so I have extended it a little bit by adding an S in between the O and the KR.

So you have an objective, then you have a strategy for reaching your objective, and then you decide your key results. So this OsKR is what has to be cascaded down and leaders have to collaboratively develop that with your teams. Both the team one which is the boss, his or her peers, and their boss; and the team two which is the subordinates underneath. So every leader has two teams including the CEO because the board is their team one.

HENRIK GRUBER: And if you talk about that topic, Clarity of Purpose, can you take a bit into it in terms of what is changed. OKRs are not necessarily new.

PHIL ABERNATHY: That’s right. So there’s a couple of things that have changed. The first thing is the way you develop in Cascadia OKRs. So a lot of collaboration to get shared understanding as opposed to the leader, dishing it out saying here it is so and send out the PowerPoint. A second one, is that these OKRs are actually inbuilt into linking with the initiatives that you execute. So if you see a company having serious problems with prioritization, they are doing too many projects, there is work coming out from all over the place, they’re not delivering fast enough. The root cause is not prioritization, the root cause is the inability to prioritize which is the inability, which is the lack of clear strategy. And the lack of clear strategy and key results and focus is, invariably as I found from experience, the root cause of the prioritization issue.

HENRIK GRUBER: So it sounds very much like a typical Scrum and probably scaled in terms of you do have a vision, you do have a plan. How much do you think the leaders should really collaborate with their teams in terms of inspect and adapt?

PHIL ABERNATHY: Well, I wouldn’t call it very much like Scrum scaled, because Scrum scaled works- it’s a sort of concept where you go bottom up. I’m actually going to down, so you take the group level strategy and have them collaborate as a team, effectively, and develop their key results and then cascade it down to the business units. The business units cascade it down to the departments and the departments cascade it down then to the tribes and squads. So there’s about three or four levels above. Now when Scrum teams struggle and they go backwards to scale Scrum, it’s because the top down has not worked. So you can have QBRs. I’ve sitten in big room planning sessions for days, and you’ll see a mess, nothing is stopped because you can’t have big room planning and consensus driven decision making in a big room planning setting. It just doesn’t work. You get what is called the tyranny of the minority.

HENRIK GRUBER: Okay, and you mentioned Clarity of Purpose as the first topic of the three areas. Is that because you should really start with it?

PHIL ABERNATHY: Absolutely, because empowered teams are more dangerous if there’s no clarity. So if there’s no clarity in a command and control setting, you can get by because you just do what you’re told. Just shut up, don’t ask questions, do what you’re told. The minute you have empowered teams and there’s no clarity. It’s like powerful horses all pulling in different directions. Your carriage is not going anywhere.

HENRIK GRUBER: I didn’t start that area. I’m pretty sure we should talk a bit more about the first area because it’s one of the most important. Apart from that, the other two areas would you introduce them a bit more?

PHIL ABERNATHY: So the next one is Control Without Controlling. Now, this is the heart of the problem. Leaders today, I’m talking about C level leaders. So CEOs, CIOs, CFOs, see culture and collaboration and that sort of thing as a binary option to control, you can’t have that soft fuzzy culture thing and control, which is totally the problem. Yes, you can. And great companies have that. In fact, historically, maybe Agile has created its own problem in the sense that it is seen as something that’s a bit chaotic, you know, you go we’ll get together and you decide and it’s democracy and you all vote with dot points and sticky notes and the best option and there’s very little control, so leaders freak out when you talk about this, this is their problem.
Phil Abernathy: However, when you approach it from the other aspect, and you say agility actually gives you more control. It gives you better control, it gives you more timely control, it gives you more accurate control, and there’s more transparency, then they start getting a bit more confident to try it, to give it a shot.

HENRIK GRUBER: Are there any specific methods you would suggest?

PHIL ABERNATHY: Yes. So there are a couple of techniques to get that Control Without Controlling. The first of course, you have to have the clarity. If you don’t have the clarity, you can’t have the control. Yeah?

So as you have the clarity and you’ve got your KRs or your key results, measures, measures, measures. So you’re holding people accountable for outcomes, not output. For outcomes, not activities. And the other side of the empowered coin is the word accountability. And they go hand in hand, you can’t have empowerment without accountability. And very few Agilists talk about accountability. They talk about holding people, not teams, holding people accountable.

So that’s where the control aspect comes from. So that’s the first bit to get that absolute transparency using measures, measures, measures. And the third technique I use is actually not a new technique, just like all Agile practices they come from years before, is a technique that the Lean School calls Gemba. And the oldest school calls MBWA, which is Management by Walking Around. Managers and leaders need to get out of their cabins and go see the real thing. Just walk, just talk, look at the walls. And it’s amazing the amount of control you get, as you get into the teams and understand really what they’re doing as waiting for the watermelon PowerPoint, as I call it, which is green on the outside and red inside.

HENRIK GRUBER: The two kind of ideas how we control in terms of measures, I think if I understood correctly is either it is measures and additionally it’s kind of walking around. Is there anything which kind of says better in terms of management?

PHIL ABERNATHY: Well, I think in terms of getting a structure of measures in place, a lot of companies just lack the discipline, the success between great companies and good companies, the difference is discipline. If you look at the Amazons of this world or the Apples of the world, they are absolutely rigorous and disciplined. They are not chaotic. So while there are lots of KPIs and dashboards and things like this in almost any company, the actual control they have is not so much. Now the problem occurs because the structure underneath the processes is so complex. So there’s no single point of accountability. And therein lies the challenge.

HENRIK GRUBER: Regarding the third area, which is Design for Flow-

PHIL ABERNATHY: Correct.

HENRIK GRUBER: -is that still something you would suggest doing it top down?

PHIL ABERNATHY: So the third one is a good segue because you can’t have control and good measures if your structures not appropriate if you’ve got a maze, as opposed to a matrix organization and think that it’s really chaotic. So just to give you an example, there’s a company I worked with, they have in Europe they’ve got the head of a country, the Netherlands, they’ve got the head of the sector, in the Netherlands, we’ve got the head of the product, in the Netherlands. And they’ve got the head of the entire continent, the head of Europe, they’re all responsible for how Netherlands performs.

So the Netherlands was not doing well and they had a gross margin problem. So this is not enough profit on- the margin is not good. So what did they do? They appointed a VP of Gross Margin. Doesn’t that sound crazy so now who is responsible for the performance here? Yes they have statistics, but you know, the head of the country blames the head of the gross margin and gross margin blames the head of the Europe, Europe brings a product, the product doesn’t talk to the sector, you’ve got a structure that is just too complex. And this is Conway’s Law, complex structures will always result in complex processes and inefficient controls.

HENRIK GRUBER: And how do you convince leaders? And how’d you convince management to be more Lean? Cuz it sounds to me like less people would hurt more.

PHIL ABERNATHY: Yeah. So I use a simple technique called ORG BMI, or organizational body mass index, I call it bureaucracy mass index, which is a calculation of doers versus enablers as a ratio. Normally, you have 8 to 12 percent as a healthy BMI. But most organizations in the financial services, for example, are 35 plus. So they’re really fat middle management, and senior management as well as executive VP level. Because they feel that putting more managers is the best way to get more control.

And it’s a self-fulfilling prophecy, you get less control, and therefore you put more managers and you put less control and you put more managers and after a while, so leaders have to learn the capability of designing for optimum flop. You don’t design for utilization, you design for flow, and traditionally, we are all taught and learn how to design for utilization, hundred percent utilization, we have to drive it put in a project manager. So I worked with a company in Australia, a bank, and I went to there and they had roughly 110 developers, that want to go Agile. So I said okay, let’s do the BMI calculation. So how many project managers do you think they had? Let’s say 110, should be around what would you say, Henrik? What would be a good number of project managers for 110 developers?

HENRIK GRUBER: I’m pretty sure I know where your question is leading, I would think three to five.

PHIL ABERNATHY: Three to five. How about 98? 98 project managers! Because they have to run the maze and these people, these 110 people are working on 135 projects simultaneously!

HENRIK GRUBER: Can we just stop for a second? Because I think this is something people have to digest as well. Why are you saying this is wrong?

PHIL ABERNATHY: Because we all know that if you do- because the biggest lie today is that multitasking is effective and efficient. It isn’t where teams are concerned. So you should and lean- Toyota and the production system there has proven this -and you work on a couple of things and finish it for a fixed period of time, you will do more than working on 20 things at the same time and not finishing any.

HENRIK GRUBER: That sounds reasonable.

PHIL ABERNATHY: It’s an oxymoron. You know your brain has to wrap itself around this because it’s not a easily logically understood phenomenon.

HENRIK GRUBER: This directly leads me to my next question, based on your last experience, and you also we know you work as a trainer as well, is that something where trainings come in? Where people have to understand principles?

PHIL ABERNATHY: Yeah, so, these three leadership capabilities can be taught, the skills you can learn. So if senior leaders are open to learning, which is of course, a criteria that is difficult to find, in many cases. At the very senior boss, because they’ve got there, so they feel they have to know it. But the great leaders are continuous leaders, continuous learners. And the minute they see something like this, they go, now, I have experienced that you will not see a change straight away. So this has to set in, the seed has to set in, you have to give them some time to cook it, to work on it, to digest it. And then you see the mind shift. So I’ve seen many, many leaders actually shifting and the penny drops.

HENRIK GRUBER: Understood. And regarding training, is there anything you’d suggest how to- cause there is so many books out there, there’s so much material out there, there’s so many trainings out there. Still, people and especially leaders are kind of restricted in terms of the time they can invest. What is it they should start with?

PHIL ABERNATHY: You know, this is ironic, when Jack Welsh went into GE and GE was one of the worst companies performing at that time many, many years ago, he set up the, was then the Six Sigma Academy. And he spent 200 million building it when the company was crashing and burning. And everybody said, you’re crazy. He asked every leader to go on a six week training course for Six Sigma. Six weeks! And they did. And GE turned around and became one of the greatest companies. Now today for me to get one day of executive time, for learning, it’s not possible. Can you cut it down to four hours and four hours become three hours. And yeah, how about just doing it during our management meeting, I’ll give you a 15 minute slot. So that’s the commitment because they’re just so busy doing those 130 projects I talked about.

HENRIK GRUBER: And how important still is it to meet people in person, in comparison to massive open online courses?

PHIL ABERNATHY: So at the executive level, where I do a lot of the training and the leader level. They’re not training sessions in the traditional form, they’re small workshop sessions. So you normally workshop their problem with relevant data, which is their data, through with them. That’s the way they learn, and can’t bring examples of some other company because there’s always this, that doesn’t apply to me or whatever. And the best way to do it. So I work with leaders during their strategy sessions, and use the strategy sessions to pass the learnings as well as do the strategy all in one shot. So it’s a workshop for two days, which they find, ah okay, that works.

HENRIK GRUBER: Okay. So this is for opening them up for new topics and getting into that one.

PHIL ABERNATHY: Correct, learning the techniques of, you know, Clarity of Purpose, Control Without Controlling, and Design for Flow.

HENRIK GRUBER: Is there an experience you have in terms of how long does it take not just to flip the switch, but to really understand what they’re doing and what is necessary?

PHIL ABERNATHY: Well, that’s an interesting question, because I’ve seen leaders go back and start the next day. Of course, it’s crawling, and then they’re walking, then they’re running. And they adapted. And you know, within three months, you see absolute results in the area. But I’ve seen other leaders, of course, who just don’t, they take their time. So it’s a journey, there’s no sort of time limit you can put on it, each organization is different, and you need a, there’s no cookie cutter. The challenge here is that they have to develop the cookie cutter for them.

HENRIK GRUBER: We’ve been hearing this term journey a lot. And it takes a while. Are there any typical hurdles, you’d say they will come up, be aware, they will come up, but don’t stop.

PHIL ABERNATHY: So there’s only one hurdle for me that is the root cause of all the hurdles. And that is that team one don’t collaborate. So that means the senior most executive team is the most dysfunctional team can be. If you’ve got that scenario, that is the biggest hurdle. Because they’re very big egos at that level. They’re very fixed mindsets. And normally, if you take certain geographic cultures, so for example, in Asia, or certain parts of Asia, the CEO has a very laissez-faire style that you need total buy in rather than using a more directive approach. So if the CEO, the top leader is not able to facilitate that consensus, of strategy, or direct it, yeah? Then you have, let’s say, team that is not singing and hum, and Satya Nadella says this for a while, he says one inch of differences at the top is a mile of difference at the bottom.

HENRIK GRUBER: Shall we run through these three focus areas very quickly? Because what I would like to hear and what I’m interested in is, what are the main areas you have to learn and you have to understand when we start with Clarity of Purpose, you said OKRs?

PHIL ABERNATHY: Yeah, but it’s the cascade of the OsKRs. Because the OKRs by themselves are slightly misleading, you need an S in between. Teams need to specify what is their strategy, so, let’s say I’m planning to grow in Europe. That’s my objective: grow in Europe. So how are you going to do that? You can buy a company, you can do organic growth, you can, let’s say use partners, you can use a franchise model, what is your strategy, you can choose one or two, three things based on your strategy, your key results, or your SMART goals as some call it, will be derived. If you’re calling for an acquisition strategy, your key results will be different from if you’re going in for an organic growth strategy. And that is why you must have an OsKR as opposed to just an OKR. And that has to be cascaded down, that process is where the trouble starts. Very often, top teams have a clear strategy. The problem happens as you cascade it down.

HENRIK GRUBER: Okay, when we go to Control With[out] Controlling what is it you have to keep in mind very briefly?

PHIL ABERNATHY: So the first thing is the definition and agreement on what are these metrics. Now in many companies I’ve worked in one bank, they have each leader has roughly 35 to 40 metrics that they managed on. So where do you think the focus is? On nowhere? Yeah. So you need maximum three to five metrics. Now you have operational metrics underneath that, that’s fine. But those should be your key drivers. Determining that is very difficult, but they actually come from your key results, they’re the drivers that move the needle on your key results.

HENRIK GRUBER: And when we finally move to Design for Flow. What will be your suggestion?

PHIL ABERNATHY: Small cross functional teams, working pulling work from a single customer prioritized funnel, working on one or two things at the same time. That’s it.

HENRIK GRUBER: Thank you very much Phil.

PHIL ABERNATHY: Thank you!

HENRIK GRUBER: I appreciate your time with me today.

PHIL ABERNATHY: Yeah, I look forward to, you know, hearing from anybody who’s interested in knowing more. And yeah, happy transformations.

HENRIK GRUBER: Thanks again. Thanks again for listening to this edition as well of Agile Amped. If you learned something new, please tell a friend, co-worker or client about this podcast, and subscribe to hear more inspiring conversations.

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