Conference Video
Thanks, Evan, happy to be here. This question, of course, is a complicated one. If you read books on the subject, you’ll find 40 different versions. Craig Smith put together a marvelous slide illustrating this. If you tried to understand all 40 concepts, you’d be here for years. But we’re going to move a bit faster.
It’s clear that Agile consists of a large number of practices—at least 70 different ones. Even the Agile Manifesto itself has four values and twelve principles, which can be difficult for people to digest. We need something simpler.
Agile in 30 Seconds
Imagine you’re in an elevator and your CEO asks, "What on earth is this crazy thing called Agile?" How do you respond in 30 seconds? One response is three words: It’s a mindset.
This doesn’t answer all the questions, but it sets the tone—Agile is not just about tools and processes. It’s a fundamentally different way of thinking about the world. It’s not something you can document in an operational manual, circulate, and expect people to follow. It’s a new perspective on how the world works and how to succeed in it.
Why Agile? The Changing World
Let’s start with why. The world has changed—globalization, deregulation, knowledge work, and the Internet have fundamentally reshaped business. These changes have led to four main shifts:
- Greater competition
- A faster pace of change
- The digitization of everything
- The customer is now the boss
Most business articles focus on speed and complexity, but the most critical change is the last one: the customer is now in control. There has been a massive shift in power from the seller to the buyer, and this changes everything.
In the 20th century, a good-quality product or service at a reasonable price was enough for success. Today, customers expect instant, frictionless, intimate value at large scale—preferably free. Meeting this expectation is impossible within a top-down bureaucracy.
If a company is going to survive, it must be as nimble as the marketplace it operates in. Firms are dying faster than ever—the average lifespan of a company in the Fortune 500 is now just 10 years, down from 75 years. That’s a massive shift.
Performance statistics reinforce this: rates of return on assets for U.S. firms have been steadily declining over the past 50 years as organizations fail to adapt to these marketplace shifts.
It’s Not About Doing More Work—It’s About Working Smarter
Agility is not about doing more work in less time—it’s about working smarter. It’s about getting more value from less work, particularly more monetizable value.
Agile is a mindset, not just a technology, process, system, platform, or organizational structure. All of these are elements of Agile, but at its core, it’s a different way of thinking and acting.
Even Harvard Business Review, the "Vatican of Management," has now recognized Agile’s impact. It took them 15 years, but better late than never. This is the way management is evolving in the 21st century.
The Three Laws of Agile
To summarize this mindset, I’ve distilled it into three laws:
- The Law of the Small Team
- The Law of the Customer
- The Law of the Network
The Law of the Small Team
The idea is that, whenever possible, work should be done in small, autonomous, cross-functional teams. These teams work in short cycles, in small batches, and get continuous feedback from end users.
Big, complex projects are broken into tiny, manageable pieces so progress is visible and adjustments can be made continuously. We’ve always known that small teams are where the fun is—whether planning a barbecue or working on an office project, small teams communicate openly and think and act as one.
In contrast, 20th-century work environments were bureaucratic and frustrating. Employees reported to bosses, who reported to other bosses, in long, hierarchical chains. Only one in five people were fully engaged in their work, and nearly 20% actively undermined their organizations.
The Law of the Customer
The first principle of the Agile Manifesto states: "Our highest priority is to satisfy the customer." But in practice, for the first decade after the manifesto, more emphasis was placed on making teams function effectively.
By 2010, it became clear that Agile teams alone weren’t enough—we needed to focus on delighting the customer. Businesses in the 20th century often claimed to care about customer satisfaction, but only within the limits of bureaucracy.
This shift is akin to a Copernican revolution. In the past, businesses viewed customers as revolving around the firm. Today, the firm revolves around the customer.
Maximizing shareholder value has been the dominant business philosophy for decades. Jack Welch once called it "the dumbest idea in the world," yet it persists. In contrast, Agile organizations prioritize customer delight, leading to massive success—just look at Apple.
For Agile to succeed, companies must rethink their structure, coordination, values, and communication—everything must be aligned to the goal of customer delight.
The Law of the Network
Agile organizations don’t operate as rigid, top-down bureaucracies. Instead, they function as fluid, transparent networks collaborating towards the shared goal of delighting customers.
Some assume an Agile organization must be flat, but it’s not about the number of layers—it’s about how those layers operate. Even with multiple layers, Agile organizations facilitate direct communication between all levels.
Historically, firms attempted to plug Agile teams into bureaucracies, but this didn’t work. For Agile to succeed, the entire organization must operate as a network. Otherwise, bureaucracy will eventually crush Agile initiatives.
The Microsoft Example
Take Microsoft. In 2004, it was a bureaucratic giant. By 2015, it had transformed into a flotilla of speedboats, particularly in its developer division.
This transformation wasn’t about technology—they were digital in 2004. The real change was the adoption of an Agile mindset. It took seven years and progressed organically, from one team to several, to an entire division, and finally firm-wide.
Agile isn’t about giving up control—it’s about balancing control and autonomy. Too few rules lead to chaos. Too many rules create inefficiency, like a road with stop signs every 50 meters. The key is to strike the right balance.
The Choice Is Clear
So, those are the choices: a slow, ugly, painful death—or business agility.
Thanks very much.