Turning agile thinking into agile structures and architecture
December 2, 2021
Once you’ve transformed your teams and oriented thinking and behavior around value creation, it’s time to take the final step of your agile transformation. In this last stage, organizations will restructure themselves to reflect the learnings of the transformation so far and optimize their ability to work autonomously towards collective goals.
Your virtual organization is a tool that helps achieve the end-to-end mindset that powers speed and adaptability. By connecting the dots between value creation through each department, teams are able to shift their mindset and behaviors without the hassle of reorganization. However, there will come a time where your virtual organization will no longer be enough to sustain agile growth. In order for teams to keep accelerating, they’ll need support from a value-based organization and agile architecture.
Growth in today’s world is based on the capacity to make strategic decisions. Realizing agility at enterprise scale requires organizations to take the final step to make virtual learnings a reality and restructure themselves to support an end-to-end way of working. Only when this agile framework is in place will organizations achieve the speed and focus necessary for continued growth.
In order for your transformation to take flight, business leaders need to be the catalyst for turning agile thinking into agile structures and architecture. The first two stages of your transformation focused on the most challenging aspects – changing your organizational behaviors and mindset. This stage focuses on cultivating these changes with a structural operating model and modern architecture that allows for optimization of the end-to-end value chain.
Completing this step requires leaders to not only commit to the change, but push the organization to take responsibility for end-to-end outputs when they notice virtual efforts plateauing. This involves letting go of silos and holding teams accountable for value-driven KPI’s and the joint end-to-end outcome of their efforts. A physical restructuring is necessary to ensure agility is the core of your organization and not dependent on company culture or individual mindsets.
In this phase, you will be challenged with restructuring the highest levels of your organization around end-to-end thinking. Overcoming these challenges will help you facilitate the practices that have already been put in place, allowing you to achieve enterprise-level agility.
As we’ve learned throughout this series, agility comes from delivering the highest value to customers in the most efficient way possible. In order to achieve this, your organizational structure must be anchored in the end-to-end lifecycle of your product or service. Up until now, your virtual organization has provided you with learnings on how to cultivate end-to-end thinking. It’s allowed you to:
Now, it’s time to put these learnings into practice and make your virtual setup a reality. Siloed department heads such as Marketing, Sales, Operations become Product Leaders – responsible for the entire lifecycle of their product. Teams are formed based not on expertise, but on contribution at each point of the value chain. As a result, your teams will become multidisciplinary powerhouses, capable of overseeing their product in its entirety.
The key to success is keeping your formerly siloed disciplines highly skilled and aligned, while realizing the freedom and speed of end-to-end management. Therefore, when implementing this change, leaders need to ensure that they:
The challenge is to combine the economy of scale with a high level of capability. Building on expertise is much easier in a large department, with a high concentration of knowledge and resources. A common method to nurture disciplinary expertise is to organize dedicated practice groups. A famous example of this is Spotify’s use of Squads, Tribes, Guilds and Chapters to define their team structure.
We’ve found that designating time for knowledge sharing is crucial to the success of this approach. While it’s tempting for Product Leads to have their best people working full-time on their product’s priorities, it risks the stagnation of important fields of expertise. Product Leads and Expertise Leads should agree on a fixed capacity of time for building expertise that aligns with overall strategic goals and roadmaps.
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Just as traditional departments have become obsolete in the fast-paced modern world, so has traditional portfolio management. Agile governance of investments requires organizations to apply the pillars of flexibility and value creation to their portfolio strategy. This means balancing short-term flexibility with a long-term vision and aligning investments with end-to-end product lines.
In order to achieve this, organizations must:
Enterprise leaders should set a coherent strategy that points all product lines in the same direction. If the overall strategy is to achieve market growth, having individual product lines focusing on cost control is counterproductive.
Owners within the end-to-end value chain must come together to define a clear roadmap for their product line. Thanks to your work so far in this transformation, these goals will be precise and value-driven with a flexible strategy to achieve them. These goals become your investment opportunities, rather than specific initiatives.
While perhaps slightly paradoxical, given that earlier we advocate for stable product-based organizations, the ability of Product Leads to change their available resources is key to ensuring enterprise strategy is optimally realized.
Not all product lines can contribute equally, effectively, and efficiently to the overall strategy. Keeping with the market growth example, product-based teams operating in less saturated markets may be given more resources to invest in their roadmaps, as the estimated value (i.e. contribution to growth) of their portfolio is higher than others. A key skill is to manage the shifting of capacity so that every product line maintains their organization and is given time to scale up.
We advise to set clear rules and limitations. Do not scale up or down all at once and allow a grace period between funding changes to let hiring and team building prepare to scale up or handover to scale down.
The idea is to mirror on a strategic level what you’ve already done at the team level. Let go of arbitrary milestones and focus on value-driven goals. Allow for flexibility in the path towards achieving these goals, using value to guide your progress.
Reflecting these ideals in your portfolio management will help combine the agile parts of your organization, allowing teams to take ownership of their product while uniting them in a unified strategic direction. By shifting responsibility down and working more end-to-end, your organization will begin to pick up speed. But only by unifying your core investment strategy with your end-to-end mindset can this speed can be cultivated into full organizational agility.
After the successful implementation of agility on team level, one of our clients struggled to align their teams to their overall strategy. While teams were optimizing their backlogs based on individual priorities, the board determined investments were too focused on cost reduction rather than their strategic priority of increasing productivity.
Moreover, the traditional structure of their portfolio, projects with dedicated ad hoc teams, resulted in inefficient redistribution of resources. To resolve both issues, we helped them transform their traditional portfolio management method into an agile approach.
Instead of distributing the budget among different projects, they reassigned it to product teams. Budget size was based around strategic objectives (Who can effectively create the most value?), rather than project size. This allowed the client to sustainably build high performing teams and increase the delivery rate of the portfolio.
To assess value, all portfolio items were linked to newly defined strategic objectives. Each objective included a metric and target, making balancing the portfolio a data-driven exercise. Though budget was no longer linked to projects, each portfolio item had an effort, timing, and cost estimation. This yielded key management information that helped define the most efficient portfolio.
After selecting for strategic priorities, teams that provided the most ‘bang for buck’ would inform if and how the delivery capacity would shift across the organization. This resulted in a portfolio that aligned to agile strategy and facilitated end-to-end practices by maintaining stability in teams.
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There will come a time after agile practices have taken hold amongst teams, that their success will be limited by their technological dependencies. For many businesses, end-to-end processes involve multiple systems whose interdependencies still require product teams to collaborate. You’ve broken through siloes organizationally, but the technological architecture of your enterprise still limits your ability to make nimble adjustments.
In this last phase of the transformation, organizations need to support their teams’ end-to-end efforts by modifying their technical architecture to fit within their agile enterprise structure. This involves rethinking how systems are built, linked and communicating to keep the changes in one from having ramifications on your entire workflow.
Cloud is a key enabler in for the autonomy of teams. Traditional IT infrastructure creates a bottleneck dependency that hinders those who are looking to deliver quickly on new ideas. Both organizationally and technically this infrastructure is slow to respond. Cloud wraps up all the technological complexities of servers, environments, and databases and neatly packages this into services to enable agile teams. This allows product lines to manage their IT resources independently and move at the speed they require.
In addition to decoupling the deep technology expertise from product-oriented teams, Cloud also allows practical and efficient methods to break down large systems into micro-services. In the past, most organizations had to build monolithic systems to support significant parts of their value chain. Making changes in these classic systems is complex due to their size. More importantly, they still require either centralized teams or large amount of overhead to manage dependencies and priorities for all the different business lines that build on the old architecture. By breaking down the monolith into smaller elements that support only specific parts of the value chain, change becomes much easier to affect and autonomy easier to maintain.
When restructuring your systems’ integration, follow the principle ‘smart endpoints with dumb pipes’. The more information systems try to communicate and calculate, the slower and more dependent they are on each other. Using APIs to connect platforms allows them to communicate only when and what is necessary and without being bogged down by processing or data storage. Smart endpoints receive this raw data memo and decide independently what action to take.
All intelligence remains in the systems, not in their communication with each other. This allows your platforms to become self-contained decision makers, freeing your organization from technical dependencies and allowing teams to accelerate their end-to-end processes with more flexibility and speed.
While some of these technological steps can be taken in the first phases of your transformation, we’ve found advantages to a more strategic pace. Realizing cloud-based, API-integrated microservices is a significant investment and requires a large change effort. Starting this transformation with teams that have fully adopted agility offers three benefits:
Centering your processes and operations around end-to-end value will be the core driver of your agile transformation. Throughout this process, your organization will shift its mindset, behaviors, and finally practices to support true value creation. Maintaining this focus will allow you to innovate and deliver products and services that are a better market fit.
To enable agile practices to fuel growth, organizations need to restructure in a way that allows them to chase what is valuable and continuously apply learnings. These changes start small within teams, and gradually can be scaled to affect the entire organization.
Restructuring your organization is relatively easy. However, true results come from a behavior change within those structures. In our experience, agility begins with a shift in mindset and continues by aligning all the agile parts of your organization towards optimization of your end-to-end outputs. This last step will ensure that your transformation is firmly anchored within your organization and will set the stage for your agile practices to fuel your growth.
Interested in learning more about applying agile practices to your organization? Contact one of the thought leaders.
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This article is part of a series about agile transformations. Missed the previous article? Find it here:
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