As Carlos mentioned, we will be discussing scaling agile across business functions in order to deliver on the promise of business agility. That’s why we’re here: to think about business agility and how we can take not just the IT section of the business agile, but the entire business agile. I’ll cover a few things today, one being how we got to where we are, which will be very brief. Then we’ll dive into the challenges we face when scaling across business functions. Finally, I’ll give you three components to consider when scaling across these functions, which will be the main focus of our time together.
Let’s begin by looking at how we got here. Around the year 2000, we started to realize that value didn’t flow very well when it was confined within silos. For example, if we have separate groups doing operations, testing, and hardware, it becomes very hard to coordinate those activities. Political boundaries within an organization can also get in the way, especially when teams are located in different places. This made communication difficult, so we wanted to solve that problem, and we did so by developing agile. Agile helped us break down silos by creating cross-functional teams that focused on delivering the same value in priority order. These teams collaborated to deliver value more quickly, and we were able to receive fast feedback from both the customer and within the teams. We created a mindset of relentless improvement.
In the 20 years since agile emerged, we’ve figured out how to scale agile. Of course, we have frameworks like the Scaled Agile Framework (SAFe), but there are other frameworks out there as well. In the lower left-hand corner of this framework, you see agile teams—XP, Scrum, Kanban—which are incorporated into the Scaled Agile Framework. The framework then stitches those teams together to increase the value of agile within the organization. It also considers how to apply lean budgeting at the portfolio level to streamline operations across the entire portfolio. Eventually, the Scaled Agile Framework starts to focus on business agility. When we turn IT agile, we notice the bottleneck shifts—no longer is IT the bottleneck, but it might be marketing, legal, or finance. So, the focus must shift from agile IT to agile business as a whole. This is where business agility comes in.
Business agility requires both technical agility and a business-level commitment to product and value stream thinking, which we’ll talk about later. It also requires that everyone involved in delivering solutions use lean and agile practices. Many organizations are now driven by software applications, with companies like Nike employing over 10,000 software developers just to run their supply chain. We must ensure that all parts of the organization, not just IT, are involved so that we don’t continue to operate in silos. You’re already familiar with these concepts, as this is the Business Agility Institute Conference. So, what challenges do we face when scaling agile across these business functions?
What I often see in the marketplace is a focus on individual functions. For example, people may focus on agile HR, agile marketing, or agile legal. While these efforts are natural and necessary, we don’t want to create agile silos where one group can’t communicate with another. If the agile marketing group can’t talk to the agile sales group, and the agile sales group is waiting on the agile finance group, we have lost the essence of cross-functional teams working together to deliver value. That’s the focus of this presentation: how do we break these silos and connect people across the silos to make the entire organization agile?
There are also many individual agile manifestos—agile for finance, agile for HR—available if you search for them. I have no strong opinion on whether these manifestos are good or helpful, but they can be beneficial when you’re starting to introduce agile principles to a specific functional area. I also see frameworks like Agile Sherpas’ own scaling framework, which is helpful when thinking about specific functions but doesn’t necessarily address how to connect these different functions together.
Now, let’s talk about the three concepts to consider when scaling agile across business functions: lean agile leadership, organizing around value, and creating organizational agility. We’ll dive into each one of these.
1. Lean Agile Leadership
There are three key components for lean agile leadership. The first is mindset and principles. When we think about leading change and connecting silos, we face the same challenge we had when we first started to connect IT silos. There are political boundaries—people are proud of leading their specific silos (e.g., marketing or finance). We need to get the leaders on board because this will require a major organizational shift. Without the leaders’ buy-in, the shift won’t happen. First and foremost, we need our leaders to embrace a growth mindset. A growth mindset says, "Good ideas can come from anywhere, I’m open to new suggestions, and I may be wrong." I’ve personally had to make this shift, moving away from the fixed mindset I was taught in college, which says there’s one best way and the manager knows it.
Getting leaders to embrace this new mindset can be difficult, especially when they’ve been successful with a fixed mindset. They might feel risk-averse about embracing a new way of working. If you’re trying to convince leaders to embrace change, recognize the risks they face and give them space to share their concerns. Create a platform where leaders from various areas of the organization can meet, align on their problems, and prioritize them. Your role as the change agent is not to force a solution on the leadership team but to guide them to see agile as a natural extension of the solutions they’ve already come up with. The leaders must own and lead the change.
2. Organizing Around Value
Next, we need to organize around value. This requires a shift from traditional organizational structures to organizing based on the value stream. Let’s take the example of a loan application. The trigger is a customer wanting a loan, and the process includes several steps: submitting information, evaluating the loan, granting it, and servicing it. All of these steps deliver value to the customer. Traditionally, different teams handle each step, but customers don’t care about these handoffs. They care about the whole process and expect value to be delivered smoothly. We must organize our teams around value streams to reflect how the customer experiences the process, rather than sticking to functional silos.
In a large organization, this may involve cutting across various departments like customer service, loan servicing, product management, and more. These teams must work together in a cross-functional way to deliver value to the customer. The first step is identifying these value streams and determining the systems and people involved in them. Leadership must buy into this idea of organizing around value, as it represents a significant shift in thinking.
3. Creating Organizational Agility
Lastly, creating organizational agility requires turning all functions—whether marketing, finance, legal, or customer support—into agile teams. The key is to ensure that these teams can still speak the same language even if they’re specialized. For example, marketing, finance, and legal might each need agile training to ensure they can work together smoothly in a cross-functional team. Even if they don’t join a cross-functional team directly, they can still apply lean principles to their operations. For instance, payroll might not be on a cross-functional team, but they can still eliminate waste in their operations by identifying and cutting out unnecessary reports or delays.
Ultimately, the goal is to build lean thinking and agile teams across the organization. This is a journey, and it requires time and experimentation. Start small, build on wins, and use metrics to track progress. As you continue to develop these capabilities, you’ll see that organizational agility starts to emerge, and you’ll be in a better position to handle the disruptions that come your way.
In conclusion, to achieve business agility, we need leadership commitment, an organization structured around value streams, and agile teams across all functions. By starting with small pilot initiatives, leaders can begin breaking down silos, embracing agile practices, and gradually building a more agile organization that can adapt to changing circumstances.