Why most Agile transformations fail

2021-02-16 Ron Eringa

At the moment this blog is published, it is exactly 20 years ago that the Agile Manifesto was created. At first Agile was merely used in Software teams and IT departments, because traditional development approaches no longer worked in these complex software development environments. Over the last 10 years many organizations are experiencing a similar amount of complexity at organization scale. That is why more and more organizations started to see the benefits of adopting Agile at the organization level. On top of that they need to deliver faster, with higher quality and more value. In fact, it is very hard to find any organization that doesn’t claim to be adopting Agile nowadays.

You would expect a very mature status quo after 20 years of Agile experience, but reality is far from it: most Agile implementations are still immature (read more about Agile Maturity here). The main reason for these immature implementations:

Leaders fail to create the right culture for Agility to thrive

Typical problems

Worldwide Agile Maturity rates indicate an absence of focus on Agile culture development. Here’s a few of the typical cultural problems we encounter when implementing Agility:

  • Teams are not the foundation of the organization
  • Leaders provide the wrong boundary conditions for teams to grow
  • The wrong people drive the change
  • We focus on structure, but not on culture
  • We reward the wrong behaviour

Culture Problems

Teams are not the foundation

Agility is built on the foundation of self-managing teams: they decide ‘what work to do’, ‘how to do’ it and ‘when to do it’. Mature Agile teams know how to frequently deliver high value, because they are close to their customers.

All mature Agile teams we worked with have a few things in common:

  • They are grouped around the customer or a value chain
  • Their way of working is tuned into the needs of the customer, regardless of the organization culture & structure.
  • Customers and the organization trust them to do whatever is necessary to get the job done

Mature Agile teams can only grow in a culture that values:

  • collectiveness above individualism
  • customer-value above shareholder-value
  • collective development above personal development
  • trust above control

The picture below shows an atypical organization with a healthy and balanced Agile culture, ready to grow teams past Agile Maturity level 3.

  • Team values and organization values are very similar and therefore reinforce each other
  • Organization structures encourage the presence of team-based Agile values
  • Leadership has created a system with aligned structures and values that support team-based collaboration

These type of organizations are scarce and hard to find.

Balanced Agile Culture

The Culture Assessments we have used during Agile transformations reveal a different pattern. They show that most organizations are not yet ready for a culture that has teams at the foundation:

  • Reward systems primarily stimulate individualism
  • The decision making process is top-down
  • Management and the business are responsible for customer communication
  • Shareholder value drives decision-making
  • They value compliancy above trust

The picture below shows a typical organization with an unbalanced Agile culture, that is likely to get stuck at Agile Maturity level 3.

Unbalanced Agile Culture

Most organizations get stuck at Agile Maturity level 3, because their operating system is not designed for team-ownership.

If you really want to reap the benefits of Agility, you should be willing to gradually change the very basics that your organization is built upon

Wrong boundary conditions

Ownership and responsibility in a team creates trust and a drive to continuously improve and do what is good for customers. There is a tight relationship between the amount of ownership that a team can take and the environment it operates in. Without the right boundary conditions the change will slow down, stop or even move into the opposite direction. Giving teams carte blanche in an immature state can do as much damage as micro-managing a very mature team.

As a leader, ask yourself the question: “Did I create the right boundary conditions for the change?” or “Did I create enough room for a team to take more responsibility?”

The infographic below shows the relationship between the organization culture and the typical social structures it creates. The values displayed at the organization level typically lead to certain social structure inside teams.

Social Structures

Teams at different maturity levels, need different guidance:

  • Immature Agile teams typically operate from an orange, blue value (and even red) value system. They need structure, clear boundary conditions and room to learn
  • Average-mature teams are more open to the green value system. They need more involvement, responsibility, stimulation and confirmation that they’re on the right path
  • Mature teams have adopted a green value system and might be open for yellow. They need a large amount of trust and the leader to step aside. To gain trust, you have to give it first.

We cannot expect teams to take more responsibility without providing them with the right boundary conditions and leadership style. As a leader you need to be ready for a transfer of ownership, once your team starts maturing. If that doesn’t happen, there will be friction in the system and teams will get stuck.

The wrong people drive the change

We want teams to have an Agile mindset, so they will continuously do what is best for customers and the organization. Shifting to an Agile mindset does not happen overnight. We need to unlearn old behaviour first. Next, we need to discover how new values and behaviour contribute to faster delivery and more value creation. When put under pressure, people often fall back to the behaviour and values they’ve known for so long. It can easily take 2 to 3 years before a person is able to adopt a new set of values and behaviour.

As a leader you should ask yourself: “Who should lead my people towards that new mindset?” Organizations often hire external expertise to guide their Agile transformation. The problem with hiring external consultants is that at some point they will close the door behind them and leave. Here’s a few typical scenarios we see with the hiring of external consultants.

Typical Transformation

An Agile team culture can only grow when the crucial leadership roles (Scrum Masters, Product Owners and experienced developers) use an Agile Value System. A common mistake organizations make is underestimating the role of the Scrum Master in the transformation (or even skipping the role entirely). Worst case, we give people with a traditional role a new label (Agile Coach, Release Train Engineer, Agile Project Manager, etc). We often do this without wondering if people have the right Value System to have a positive influence towards an Agile culture. A persons Value System doesn’t change overnight by re-labelling roles. That is why Agile Leaders should focus on recruiting, recognising and growing an Agile Value System with those in crucial team-leadership positions.

Agile Leadership

No focus on Culture

Most Agile transformations primarily focus on changing hard structures in the organization. Hard structures are the easiest things to change and the most obvious to start with for immature Agile teams. Changing a team’s culture is much harder, because it requires insights in the individual value systems of each team member. Very often, organizations don’t even have the right skills and knowledge for engaging with people on this level.

Some examples of typical hard structures:

  • Training & certification
  • Implementing team structures such as the Scrum events
  • Defining new roles
  • Implementing a Product Backlog
  • Implementing tools & processes
  • Scaling frameworks

We often multiply these efforts in environments that rely on Scaled teams to develop products.

Most common unanswered culture-questions:

  • How do we identify and solve ‘value system’-conflicts?
  • What are the core values of a team?
  • How do individual team members contribute to the team culture?
  • What gaps do we see in the team culture to be able to efficiently collaborate with the rest of the organization?
  • How do the team goals (if there are any) contribute to the organization goals?

Although it is a good idea to provide Agile teams with a new and fresh environment that enables them to implement Agility, an over-dominant focus on hard structures will not help teams to move past level 3 maturity.

Agile does not scale and mature, if we focus only on hard structures

Changing culture is much harder, so you better start with it right away. When we want teams to mature, leaders need to spend more time on building expertise on culture development.

Rewarding the wrong behaviour

The majority of organizations use reward systems that stimulate individual growth with a typical yearly cycle. The Agile culture is built on teamwork, fast feedback-loops and continuous team-improvement. This is why reward systems often accomplish the exact opposite of what they are designed for. They stimulate individualism instead of team work. Mature Agile teams demand frequent feedback and fast personal growth, based on 360-degree feedback from team members and stakeholders.

MIT studies have proven that monetary rewards (and a fear of punishment):

  • only work when you don’t pay people enough
  • only work when work requires only basic, mechanical skills
  • leads to poorer performance when work involves cognitive skills, creativity and high-order thinking (which is definitely not the case in a complex product development environment)

Once we earn enough money to fulfil our basic needs, three other elements motivate us:

  • Autonomy (our desire to self-direct)
  • Mastery (our urge to develop our skills)
  • Purpose (our desire to contribute to something meaningful and important)

The infographic below show the typical motivation schemes for the various Value Systems we encounter:

Reward Systems

While many of us probably already knew that reward systems work that way, few organizations are actually willing to change their reward system. A reward system is often a direct reflection of the organization’s dominant Value System. This means that for the reward system to change, those in control would have to be prepared to delegate their control towards the teams (direct influence turns into indirect influence).

Another excuse that is often used to not change an organization’s reward system is that so many people are affected by such a change. If true Agility and customer Value optimisation is what you seek, ask yourself the following question: “How many people are affected by not changing the system as we speak?”

From many experiences we can conclude that paying people enough and getting rid of the reward system, immediately shifts our focus towards continuous improvement through Autonomy, Mastery and Purpose.

Conclusion

You can only design the change towards Agility in an empirical way if you start with measuring your culture. Too often, we see organizations spend a lot of money on Agile transformations without being able to predict the possible outcome. Measuring culture will not make your cultural problems disappear, but it will create more clarity on how to pursue the journey and prevent you from making classic mistakes.

A change towards Agile is too expensive, if you don’t start with measuring the impact on your culture.

More information

We can help you better design the change:

  • Our Organization Culture Design workshop provides a Culture Framework with 8 Value Systems to help you understand the cultural implications of an Agile transformation
  • Our Learning Journeys guide your professionals on their path to a higher Agile maturity
  • Our Individual, Team and Organization Assessments (contact us for more info) provide you with valuable input to better predict the outcome of the change
  • Our professionals (contact them here) guide you to a leadership culture that supports the value creation in your organization

, , ,

Ron Eringa

Ron’s mission is to create organizations where people love to work and create value to the world. As trainer for Scrum.org, writer and frequent speaker he is enthusiastic about leadership development. Ron has helped many organizations to develop learning journeys for their Agile Professionals. Founder of Agile Leadership School.

Leave a Reply

Your email address will not be published. Required fields are marked *