While some believe it’s just another buzzword in the international business world, others insist it’s a revolutionary new work-management methodology that’s here to stay. Either way, a growing number of organisations are switching to Agile practices in some form or other. So what is ‘Agile work’ exactly, and what is its impact on the traditional organisational model employed by companies – specifically their management structure?
The word ‘agile’ means flexible, nimble or dextrous, which gives you some idea as to what the Agile approach is all about: flexibility and adapting to changing circumstances. As part of the Agile philosophy, long-term development processes (including those relating to product development) are broken down into bite-sized chunks of between two and four weeks. These iterations are regarded as minor standalone projects also known as ‘sprints’. This way of working allows the project team to make quick changes to the project based on changed circumstances or client needs. In other words, Agile is all about embracing change. This sets it apart from traditional project-management methods, where changes in course further down the line are avoided as much as possible, both by recording all the specifications in detail and by setting up a formal iterative process whereby stage 2 begins only after stage 1 is completed, stage 3 must follow stage 2, and so on.
Contrary to popular belief, ‘Agile’ does not refer to one specific methodology, but is more of an umbrella term for a collection of principles and methods. Of these methods, ‘Scrum’ is easily the most widely known. The Scrum approach involves working with self-directed teams (called ‘squads’) in which employees from a variety of disciplines work closely on achieving a specific (short-term) objective. An example: ‘Basic functionality A for application X that’s currently under development will be delivered in two weeks’ time, including the design.’
Scrum teams operate virtually without overhead, with several team members essentially having ‘managing’ roles. The Product Owner, for example, is responsible for maximising the value of both the project and the project team (without holding the actual job title of ‘manager’). The Scrum Master, for their part, is tasked with correctly implementing the Scrum approach (which would normally also fall under project management). Scrum is also known for being able to generate rapid, clear insights and clear-cut expectations for all parties involved with regard to the required product – within the timeframe and budget set.
The popularity of the Agile approach can be explained by the fact that it tends to align far more closely with the needs of line management and basically eliminates the need for traditional support roles. The business benefits significantly from getting innovations implemented more quickly and being able to move away from hierarchical structures and a traditional process approach. But this advantage is also why switching to the methodology comes with its share of challenges. Adopting Agile practices will transform your business, but in order for that to happen, those involved in support processes first need to be persuaded to adjust management and pay structures (HR), make the work environment more team-oriented (FM) and no longer regard IT as a separate department but instead see it as part of the business teams – to name just a few examples.
And line management often has misgivings of its own. After all, the squads enjoy a high degree of independence, have end-to-end responsibility for specific business results, and decide themselves how they want to achieve their goals. In more traditional, hierarchical companies, this often raises questions such as: in an Agile organisation, who is ultimately in charge? And what does the role of the traditional manager entail in such an organisation?
The fact is that many organisations that have adopted Agile practices continue to struggle with these issues. As a result, a lot of the time the Agile operating model is only introduced in some departments (e.g. product development), while the traditional organisational structure remains in place elsewhere. In these types of hybrid structures, Product Owners remain accountable to a higher tier of management, even if there may only be relatively limited knowledge of the Agile approach at that level. This can lead to frustration among the Agile teams – and often among the management as well. The same applies to the support departments: HR needs to educate itself very quickly on the specific skills required in an Agile team and recruit and select staff on this basis, without the department having originally been set up to do so. This inevitably leads to some sort of breakdown.
Matrix structure According to Aaron De Smet, a senior partner at McKinsey Houston, an Agile approach can really only be a success if the entire management structure is realigned. Fully Agile companies, he says, have a dynamic matrix structure with two types of reporting lines: a capability line and a value-creation line. Within this matrix structure, he also distinguishes between ‘chapters’, ‘tribes’ and ‘squads’. The chapters are, by and large, similar to the old departments (including R&D) and are responsible for recruiting and developing talent, setting out career paths, evaluating and promoting employees as well as developing methods, processes and procedures. They ensure that the individual squads (i.e. Agile teams) are staffed with the talent required, based on expertise and proven competencies. But once this talent has been assigned to an Agile team, they are no longer concerned with the question of their duties and responsibilities, do not set priorities, do not allocate work, and do not supervise day-to-day operations.
‘Tribes’, meanwhile, can be compared to business units or product lines in traditional organisations. They focus on generating revenue and delivering value to customers. While the chapters are responsible for the ‘how’, the tribes are in charge of the ‘what’. They set priorities and objectives and decide what functional tools are to be deployed for what purposes. The squads, finally, are the smallest functional units – they are the ones that do the nitty-gritty work.
De Smet says that management roles in organisations structured along these lines are also likely to change. A chapter leader will need to be especially adept at HR-related duties (finding, retaining and engaging talent), whereas a tribe leader will need to develop a strategic perspective on the company and its customers, be aware of the core capacities required, and allocate these to the various squads. But they also need to make sure they don’t get bogged down in the direct supervision of these squads – after all, the tribe leader is not involved in the squads’ day-to-day work but rather acts on the basis of feedback received from the independently operating teams.
According to De Smet, out of all the management roles in an Agile organisation, squad leaders are the most similar to ‘real’ general managers – they serve as mini-CEOs, if you will, who are focused on value creation, growth and customer service. They need to develop the right strategies and tactics to deliver the business results needed, and determine what needs to be done to achieve this and what priorities must be set. You could say that in a way, an Agile organisation is the inverse of the traditional management pyramid: the ‘lower’ you end up in the organisation, the greater your responsibility (although it’s preferable to think in terms of functionality rather than ‘high’ and ‘low’).
According to McKinsey, it’s too soon to say at this stage what impact Agile practices will ultimately have on organisations. The fact is that the idea of working in independent teams is hardly new; it has been around for several decades. The concept of self-directed teams, headed up by an informal team leader who wasn’t officially the one in charge, formed the foundation of the ‘continuous improvement’ trend which first emerged in the manufacturing industry half a century ago. And some of today’s leading companies (including Haier, the Chinese-based manufacturer of household appliances and consumer electronics) rely to a large extent on this principle – without using the term ‘Agile’.
McKinsey believes we are more than likely to see a transformation of the traditional management field over the next few decades, if only because Agile companies already appear to have jumped ahead of businesses with more traditional organisational structures. This is because they enjoy the best of both worlds: the benefits of the economies of scale found in large organisations and the advantages of speed and flexibility that are currently still typical of smaller organisations.
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