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Synopsis

Does your company suffer from an innovation crisis? Apply agile methodologies within your organization with our Agile Organization Model presentation framework and transform your organization from a static innovation-less team to a dynamic and matrixed innovation-focused team. Also, learn how Lego Group has applied agile methods to pass decision making power to the company's development departments to solve problems as they arise.

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Questions and answers
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The Agile Organization Model has several practical applications in the tech industry. It can be used to foster a culture of continuous improvement and innovation. Tech companies can use this model to quickly adapt to changes in the market, customer needs, or technology trends. It also promotes a collaborative environment where decision-making power is distributed across the team, allowing for quick problem-solving and decision-making. Examples of this can be seen in companies like Lego Group, where agile methods have been applied to pass decision-making power to the development departments to solve problems as they arise.

The Agile Organization Model differs from traditional business frameworks in several ways. Firstly, it emphasizes flexibility and adaptability, allowing businesses to respond quickly to changes in the market. Secondly, it promotes a culture of continuous learning and improvement, with teams regularly reflecting on how to become more effective. Thirdly, decision-making power is often decentralized, enabling teams to solve problems as they arise. Lastly, it encourages a customer-focused approach, with teams working closely with customers to understand their needs and deliver value.

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Slide highlights

Moving to the new agile organization structure is tough. Utilize this slide to lay out and analyze all the components that will undergo the change. Agile methods, such as Scrum Process, Kanban Methodology and the Lean Project Model will come handy.

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With this slide, draw your tribe map. In a nutshell, a tribe map reflects how teams get work done and perform, and provides an organization chart that demonstrates the capability axis and shows which shared skills are owned and controlled.

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List the dos and don'ts of the transformation process. The dos may include working on key ingredients and following the rules and don'ts may include being afraid of failure and keeping your stakeholders in the dark.

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Yes, there are numerous case studies that demonstrate the effectiveness of the Agile Organization Model in organizational transformation. Companies like IBM, Microsoft, and Spotify have successfully implemented Agile methodologies and have seen significant improvements in productivity, customer satisfaction, and employee engagement. However, it's important to note that the success of Agile transformation depends on various factors such as the organization's culture, leadership commitment, and the ability to adapt to change.

A company that could benefit from the Agile Organization Model is Amazon. Amazon's vast and diverse operations could be streamlined with the Agile model. This model would allow Amazon to quickly adapt to changes in the market, customer preferences, and technology. It would also foster a culture of continuous improvement and innovation. The Agile model's emphasis on cross-functional teams could enhance collaboration and efficiency within Amazon, breaking down silos and fostering a more cohesive and effective organizational structure.

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Overview

According to management consulting firm, McKinsey & Co, the difference between traditional and agile organizations lays in the fact that traditional organizations revolve around a static structural hierarchy when agile organizations are more of a network of teams operating in rapid learning and decision-making cycles. In other words, the agile approach looks at organizations as living organisms, while the traditional approach looks at organizations as machines.

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Questions and answers
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The Agile Organization Model views organizations differently from traditional models in that it sees organizations as living organisms rather than machines. Traditional models revolve around a static structural hierarchy, whereas agile organizations are seen as a network of teams operating in rapid learning and decision-making cycles. This approach allows for more flexibility and adaptability in response to changes.

The Agile Organization Model differs from traditional business frameworks in several ways. Traditional business models often revolve around a static structural hierarchy, while the Agile model is more of a network of teams operating in rapid learning and decision-making cycles. This means that Agile organizations are more adaptable and can respond more quickly to changes in the business environment. In contrast, traditional models can be slower to adapt due to their hierarchical structure. Additionally, the Agile model views organizations as living organisms, while traditional models often view organizations as machines. This difference in perspective can lead to different approaches in how the organization is managed and how decisions are made.

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"Traditional organizations place their governance bodies at their apex, and decision rights flow down the hierarchy; conversely, agile organizations instill a common purpose and use new data to give decision rights to the teams closest to the information. An agile organization can ideally combine velocity and adaptability with stability and efficiency," McKinsey writes on its website.

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The Agile Organization Model enhances productivity through several practical applications. Firstly, it decentralizes decision-making, allowing teams closest to the information to make informed decisions quickly. This increases the speed of decision-making and reduces bottlenecks. Secondly, it promotes adaptability, enabling organizations to respond swiftly to changes in the business environment. Lastly, it combines velocity and stability, ensuring that while the organization is quick to adapt, it also maintains efficiency in its operations.

Common challenges in adopting the Agile Organization Model include resistance to change, lack of understanding of the agile principles, and difficulty in shifting from a traditional hierarchical structure to a more flexible, team-based one. These challenges can be overcome by providing comprehensive training, fostering a culture of openness and collaboration, and gradually implementing changes while providing support and guidance.

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Anatomy

Per McKinsey, the anatomy of a successful agile organization consists of five main components:

  1. Strategy, which includes shared purpose and vision; sensing and seizing opportunities; flexible resource allocation and actionable strategic guidance.
  2. Structure, which includes clear, flat structure and accountable roles; hands-on governance; robust communities of practice; active partnerships and ecosystem; open physical and virtual environment and fit-for-purpose accountable cells.
  3. Process, which includes rapid iteration and experimentation; standardized ways of working; performance orientation; information transparency; continuous learning and action-oriented decision making.
  4. Teams, which includes cohesive community; shared and servant leadership; entrepreneurial drive and role mobility.
  5. Technology, which includes evolving tech architecture, systems and tools, as well as next-generation tech development and delivery practices.
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Questions and answers
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The Agile Organization Model can significantly contribute to a company's digital transformation initiatives in several ways. Firstly, it promotes a shared purpose and vision, which is crucial for aligning digital transformation goals across the organization. Secondly, it encourages sensing and seizing opportunities, which can help in identifying and leveraging digital trends. Thirdly, it supports flexible resource allocation and actionable strategic guidance, which can ensure efficient use of resources and effective decision-making in digital initiatives. Moreover, the model's emphasis on rapid iteration, experimentation, information transparency, and continuous learning can foster a culture of innovation and adaptability, which is key to digital transformation. Lastly, the model's focus on evolving tech architecture, systems, and tools can facilitate the adoption and integration of new digital technologies.

In the Agile Organization Model, technology plays a crucial role. It involves evolving tech architecture, systems, and tools, as well as next-generation tech development and delivery practices. This means that technology is not static but continuously evolving to meet the needs of the organization. It also implies that the organization is always on the lookout for new technologies that can improve their processes and deliver better results. Furthermore, the use of next-generation tech development and delivery practices ensures that the organization is always at the forefront of technological advancements, giving it a competitive edge.

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Application

In his article for Forbes, Maureen Metcalf, CEO of Metcalf & Associates, covers four elements that leaders must master on the way to creating an agile organization.

Strategist leadership mindset

According to Metcalf, decision-makers of agile organizations must think about their ventures differently and regularly update their leadership approach and behavior, not just their processes. "[Leaders] need to be willing and able to change what they do and how they do it, and they need to be intellectually versatile and reflective," Metcalf writes.

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The Agile Organization Model aligns with digital transformation initiatives by promoting adaptability and flexibility in processes and decision-making. This model encourages leaders to regularly update their approach and behavior, not just their processes. It fosters intellectual versatility and reflection, which are crucial for navigating the rapid changes brought about by digital transformation. The Agile model's emphasis on willingness to change aligns with the core principle of digital transformation, which is to continually evolve and adapt to leverage digital technologies effectively.

Adopting the Agile Organization Model can present several challenges. These can include resistance to change, lack of understanding of the agile principles, and difficulty in shifting from traditional hierarchical structures to more flexible and collaborative ones. Overcoming these challenges requires strong leadership, effective communication, and ongoing training. Leaders must be willing to change their approach and behavior, not just their processes. They need to be intellectually versatile and reflective, and regularly update their leadership approach. It's also important to foster a culture that embraces change and values continuous learning and improvement.

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Nimble culture

Company culture and underlying agreements and values should always reflect the organization. Underlying agreements could revolve around the following topics: customer-centric approach, transparency, etc.

Lean principles

Employing lean principles means constantly boosting efficiency, eliminating waste and enhancing the value delivered to customers. The agile approach also requires ongoing analysis of company practices and processes.

Agile methods

The fourth element of an agile company is the actual agile development methodology based on the Agile Manifesto.

The Agile Manifesto, written by software engineers and developers, Kent Beck, Jeff Sutherland, Martin Fowler, Ken Schwaber, states:

"We are uncovering better ways of developing software by doing it and helping others do it. Through this work we have come to value:

  • Individuals and interactions over processes and tools
  • Working software over comprehensive documentation
  • Customer collaboration over contract negotiation
  • Responding to change over following a plan

That is, while there is value in the items on the right, we value the items on the left more."

Case studies

The lego group

At the end of 2014, a Danish toy producer Lego was suffering from poor:

  • Cross-team alignment
  • Client collaboration
  • Release planning
  • Platform development

To solve these ongoing issues, in January 2015 the company morphed its entire DS games organization into a team-of-teams, introduced a shared sprint cadence, decentralized synchronization and dependency management and big-room planning events every eight weeks. At the end, the agile experiment had a lot of positive effects, not only on DS but also on other departments that collaborate with it.

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Questions and answers
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The Agile Organization Model had a significant positive impact on the DS games organization and its collaborating departments. The transformation into a team-of-teams structure, introduction of a shared sprint cadence, and decentralization of synchronization and dependency management improved efficiency and productivity. Additionally, big-room planning events every eight weeks facilitated better communication and coordination. The agile experiment not only benefited the DS games organization but also positively influenced other departments that collaborated with it.

The Agile Organization Model differs from traditional business models in several ways. Firstly, it emphasizes flexibility and adaptability, allowing for quick responses to changes in the business environment. This is in contrast to more rigid models that follow a set plan. Secondly, the Agile model promotes a culture of collaboration and shared responsibility, where teams work together to achieve common goals. This is different from hierarchical models where decision-making is centralized. Lastly, the Agile model encourages continuous learning and improvement, unlike static models that do not adapt to new information or changes in the market.

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Switching to the agile model for Lego resulted in:

  • Less duplicated work. Teams are more in tune with each other, so they waste less time on redundant work.
  • Fewer dependency problems. Teams waste less time waiting for each other. They also interact smoothly with other departments and stakeholders.
  • Managers can update priorities and resolve impediments faster because they have a better idea of what is actually going on.
  • Client trust has improved due to transparency, as customers understand the processes and intents of the teams better
  • Planning is easier and commitments are met more often
  • Planners have a better sense of overall workload and capacity.
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Questions and answers
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Common challenges in applying the Agile Organization Model include resistance to change, lack of understanding of the agile principles, and difficulty in shifting from traditional hierarchical structures to self-organizing teams. These challenges can be overcome by providing comprehensive training, fostering a culture of continuous learning and improvement, and ensuring top-down support for the agile transformation.

Amazon could greatly benefit from the Agile Organization Model. With its vast and diverse operations, Agile would allow Amazon to adapt quickly to changes in the market and customer demands. It would reduce duplicated work and dependency problems, as teams would be more in sync and waste less time waiting for each other. Managers could update priorities and resolve issues faster, improving overall efficiency. Additionally, the transparency of Agile could enhance customer trust, as they would have a better understanding of Amazon's processes and intentions.

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Agile consultants who led the experiment, Henrik Kniberg and Eik Thyrsted Brandsgård, said: "[...] This has improved the motivation of the team members. Going to work is more fun when there's less confusion and less waste. And motivated people do better work, so it's a positive cycle! Another impact we've seen is that other parts of LEGO visit the meeting, get super inspired, and start exploring how to implement some of these principles and practices in their own department. In fact, agile is spreading like a virus within the company, and the highly visible nature of the PI planning event is like a catalyst."

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Questions and answers
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The main components of the Agile Organization Model typically include: Agile teams, Agile leadership, Agile culture, and Agile practices. Agile teams are cross-functional groups that work together on projects in an iterative manner. Agile leadership involves leaders who promote agility by being adaptable, flexible, and open to change. Agile culture is a work environment that encourages collaboration, flexibility, and customer-centricity. Agile practices are methods and techniques used to implement agility, such as Scrum, Kanban, and Lean.

The Agile Organization Model aligns with digital transformation initiatives by promoting adaptability, flexibility, and quick response to changes. This model encourages continuous improvement and innovation, which are key aspects of digital transformation. It allows organizations to rapidly adapt to new technologies and market changes, thereby ensuring they stay competitive in the digital age. Moreover, the Agile model fosters a culture of collaboration and cross-functional teamwork, which is crucial for implementing digital transformation initiatives successfully.

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