Working towards being a lean, mean, agile machine
Increasingly, global enterprises are relying on small, self-managing teams to run their businesses
Grab buys Uber. Takeda Pharmaceutical buys Shire.
Around the world, the news these days seems to be all about industry consolidation - the big getting bigger.
But more and more companies are relying on small, entrepreneurial, self-managing teams to run their businesses.
They are adopting the philosophy and tool sets known as agile.
In the past, agile was pretty much confined to IT departments, where it was used in software development.Today, leading companies are scaling agile up and using it to manage big chunks of their operations.
Saab's aeronautics business runs its entire Gripen fighter-jet programme with 100 agile teams. SAP has rolled out agile to more than 80 per cent of its development organisations, creating over 2,000 teams. Spotify and Netflix run most of their business with agile.
How is it even possible to manage a large global enterprise with a philosophy based on small self-managing units?
To answer that question, we studied the scaling of agile at hundreds of companies, including Spotify and recent converts such as Bosch.
Not everything we found was positive. For example, one prominent industrial company tried for five years to operate like a "lean start-up" using agile techniques. The effort failed to generate the financial results sought by the board, and several senior executives resigned.
But when agile works, it can lead to remarkable results.
Saab coordinates production through daily get-togethers known as stand-ups.
At 7.30am, each frontline team holds a 15-minute meeting to resolve impediments and flag those that require coordination at a higher level.
At 7.45am, impediments in the latter group are escalated to a team of teams, where leaders work to either settle or further escalate issues.
PROJECT MASTER PLAN
This approach continues, and by 8.45am, the executive action team has a list of the critical issues that it must resolve to keep progress on track.
The company also coordinates its teams through a common rhythm of three-week "sprints", a project master plan that is treated as a living document, and the co-location of traditionally disparate parts of the organisation - all hallmarks of the agile approach.
The results are dramatic: The Gripen has been deemed the world's most cost-effective military aircraft by IHS Jane's.
Successful scalers of agile have learnt several lessons about how to make it work.
The first, inevitably, is that everyone in the organisation has to learn the values and principles of agile, even if some units still operate according to traditional bureaucratic precepts.
A second lesson: though agile may sound loosey-goosey, in fact it entails rigorous accountability.
USAA, the American financial services company that focuses on a military clientele, has several hundred agile teams up and running.
A third lesson is that many different elements of the organisation must change their ways of working to accommodate the agile approach.
But agile doesn't work everywhere. It is best suited for situations where problems are complex, solutions are at first unclear, requirements are likely to change, and close collaboration with end users is feasible.
Today, however, those conditions describe more and more of the marketplace - which may be why so many leading companies are learning to scale up such a transformative approach.
Darrell Rigby and Andrew Noble are partners with Bain & Company based in Boston, and Tony May and Alessandro Cannarsi are Bain partners based in Singapore.
This is an edited version of an articlethat appeared in The Business Times yesterday.
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