Agile Organization Model

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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.

Questions and answers

What are some practical applications of the Agile Organization Model in the tech industry?

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.

How does the Agile Organization Model compare to other business frameworks?

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.

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.

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.

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.

Questions and answers

How does the Agile Organization Model view organizations differently from traditional models?

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.

Can you compare the Agile Organization Model with other business frameworks?

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.

Questions and answers

What are the practical applications of the Agile Organization Model in enhancing productivity?

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.

What are common challenges in adopting the Agile Organization Model and how can they be overcome?

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:

Strategy, which includes shared purpose and vision; sensing and seizing opportunities; flexible resource allocation and actionable strategic guidance.
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.
Process, which includes rapid iteration and experimentation; standardized ways of working; performance orientation; information transparency; continuous learning and action-oriented decision making.
Teams, which includes cohesive community; shared and servant leadership; entrepreneurial drive and role mobility.
Technology, which includes evolving tech architecture, systems and tools, as well as next-generation tech development and delivery practices.

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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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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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.

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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