Is Management 3.0 the latest episode in the Business Agile Transformation?

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Why are we experiencing a Business Agile Transformation?

In the first part of the article it is depicted how technology is changing faster in the world and creating uncertainty on needs & requirements and hence a transformation to Business Agile organizations is necessary as they envision to modify dynamically the concepts and structure of the business itself:

Business Agility is the ability of an organization to:

  • Adapt quickly to market changes – internally and externally

  • Respond rapidly and flexibly to customer demands

  • Adapt and lead change in a productive and cost-effective way without compromising quality

  • Continuously be at a competitive advantage

Whereas, in the second part of the article different evolutions in management styles, from Management 1.0 & 2.0 to Management 3.0 are described: a Management style (Management 1.0) seen as being an obstruction – in a way that it reinforces the hierarchical models that are consistent with the mental maps of most managers;  where in Management 2.0 there is a move to a perfect engine for motivated self-organized teams; and finally Management 3.0 where the implementation of a Business Agile Transformation is key in achieving business goals.

The term “Business Agile” is not just a popular buzzword. It is a fast and efficient framework companies should adopt if they want to change their way of working and quickly respond to a changing world. An agile business model allows to work faster, think clearer and improve professional and personal agility, thanks to a variety of tools that help to get the essential skills and mindset of Agile. Therefore, an Agile methodology can help organizations to:

  • Get up to speed: learn about agile and how it can fit your organization

  • Stop wasting time: it will develop a smart way of thinking (become more flexible, react faster to changes)

  • Become more efficient: spot new opportunities earlier and easier

  • Become more result oriented: develop solutions with desired quality and proven value

The Framework for Business Agility

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Source: Business Agile Consortium

How does Business Agile differ from more traditional approaches?

Traditional approach: the next step cannot be launched before the current step is completed. In practice, a lot of time is wasted in each step aiming for perfection when actually an 80% solution fit would probably be sufficient to move on.

Business Agile:  the current step needs to be completed in only enough detail to allow the project to move to the next step with further details being dealt with in a subsequent iteration of development. The resulting solution is more likely to have a better fit with the true business needs and is easier to test and integrate into existing and emerging business processes. The development cost of most solutions is only a small part of the total lifecycle costs; therefore it makes sense to build simpler solutions that are both fit for purpose on the day of delivery and easier to maintain and modify thereafter.

How does Business Agile differ from other Agile approaches?

The first and most important difference is that Business Agile requires basic foundations for the project to be agreed at an early stage. This allows businesses to understand the scope and fundamental characteristics of the proposed solution, and the way it will be created, before development starts. Especially for larger corporate organizations or organizations with complex architectures and/or governance standards, agreeing to the foundations early in the project is crucial. Another important difference is that Business Agile describes a broader set of roles than most Agile approaches do. This allows a better fit with most corporate environments as it responds to more complex organization structures without undermining Agility.

How does Business Agile address key project problems?

Managing any business change or developing any solution is rarely a straightforward and simple task. Business Agile can help addressing the following key problems:

·       Ineffective communication

Poor or ineffective communication is often identified as a major fail on projects. Business Agile provides a lot of guidance to strengthen communication within projects and also provides practices that encourage visual and verbal communication as much as possible.  

A good example of visual communication used within Agile projects is the Kanban method.  This method allows work items to be visually presented on a Kanban board, so that each team member can visualize the state of each work item. A Kanban board can be physical (white board, sticky notes) or virtual (digital board, Kanban cards). Both physical and digital boards ensure a transparent communication in which blocking issues and dependencies are immediately identified and resolved.

·       Late delivery

The Business Agile approach is focused on delivering on time; it is preferred to deliver small deliverables frequently, that stand more chance to be delivered on time than big deliverables less frequently at a risk to be delivered too late.

·       The delivered solution does not meet the business needs

Another frustration arises when a solution is delivered that doesn’t meet the expectations of the business. Most importantly, Business Agile teams are encouraged to embrace change, allowing them to deal with problems and opportunities that occur, to encompass new ideas that appear and to build the solution based on a deeper understanding of the solution detail.

·       Building the right thing – the business changing their mind

Business Agile enables change through iterative development, with regular reviews as to make sure that what is being developed is what the business really needs. Changing requirements are a natural result towards a better understanding: therefore, in order to deliver the right solution, a good collaboration and communication between all parties (stakeholders, clients, team members) is important.  If all parties are in alignment, the developed solution will match the desired solution.

·       Lack of prioritization & unused features

To manage priorities and therefore keep deadlines the MoSCow prioritization technique is often used.  This technique allows to classify work items in the categories: ‘Must have’, ‘Should have’,  ‘Could have’ and ‘Won’t have this time’.  This classification provides an indication of each working item and the expectation for its completion.

·       Delayed or late Return on Investment (ROI)

Business Agile uses incremental delivery to get the most important and most valuable features released to the business as early as is practical to avoid reduction of ROI.

·       Over engineering (Gold plating)

Business Agile is a pragmatic approach which focuses on the real business need in order to dissuade a team from being tempted to add useless extras that are not useful to the end client.

·       Not a Fragile Agile

Business Agile does just enough work up front to ensure clarity of objectives and to provide a foundation for solution development. This foundation is agreed before breaking the project down into increments and within that to timeboxes, ensuring the appropriate elements of detailed analysis, design, build and test at each level. Active engagement of business roles in the detail of development ensures that the right solution evolves. This, in combination with the limited up-front work, creates a truly Agile way of delivering business benefits.

How can Management 3.0 help in the Agile business adoption

The business environment now is a lot more complicated than it was before. The rapid pace of innovation is pushing the business environment toward globalization and diversification of the workplace. The organizational challenge is creating a workplace that takes full advantage of employees’ leadership potential.  This is why most companies have to re-think their management styles and ways of doing business. Adopting an Agile management approach is needed to do so.

However, Agile adoption in organizations is not an easy task. There are some key barriers to successfully adopt Agile to take into account:

  • Inability to change organization culture

  • General resistance to change

  • Lack of management support

In the old organizational structure, both employees and managers have been trained to act in a certain way. Managers were seen as leaders who take decisions, while employees execute what has been decided. It is hard to replace these old habits with a new Agile way of working. Such transformation involves sometimes changing the DNA of the organization and getting everyone to share the same vision. In this regard Management 3.0 can be a catalyst to improve Agile management in the organization.

Differences between Management 1.0, Management 2.0 & Management 3.0?

 Management 1.0 is referring to a management style that was invented with the rise of the industrial revolution. In this management style employees are taking orders and simply execute with low freedom of management. In the framework Agile 1.0 hierarchy was very important; some people call it scientific management, whereas others call it command-and-control. But the basic idea is the same: An organization is designed and managed in a top-down fashion, and power is in the hands of the few.

 In Management 2.0 employees are recognized as the most valuable asset in the organization but with strong and old fashioned top down hierarchy structures. Some people realized that Management 1.0 doesn’t work well out-of-the-box, so they created numerous add-on models and services with a semi-scientific status, like the Balanced Scorecard, Six Sigma, and Total Quality Management. Being add-ons to Management 1.0, these models assume that organizations are managed from the top, and they help those at the top to better “design” their organizations. Sometimes it works; sometimes it doesn’t. In the meantime other models and services focus on the craft and art of management. Agile 2.0 is just Agile 1.0 with a great number of addons to ease the problems of an old system. But the architecture of Agile 2.0 is still the same outdated hierarchy.

Management 3.0 consists of a set of recommendations that provides guidance on Agile management. The model has been developed by Jurgen Appelo who addresses a realistic approach to leading, managing and growing an Agile team or organization. In Management 3.0, management is a responsibility of everyone and leadership is redefined as a group responsibility. The ultimate goal is to find the most efficient way for an organization to achieve its goal while setting happiness of workers as a priority.

In Management 3.0 managers have an important role to play in creating an environment where management tasks (such as planning, estimating, leading etc..) are not limited to managers and therefore evolving towards a self-organizing team or organization. But does a self-organizing team or organization mean that management life is over? Definitely not. Management 3.0 has defined 6 areas for the Agile manager to focus on:

 1)     Energize people: An Agile manager has to make sure people are energized enough and motivated at work. It is impossible to oblige people to be motivated and happy, this has to be strongly ‘induced’ by the manager via team building to allow for creative staff ideas. It is therefore the responsibility of the manager to create and sustain an environment where people feel motivated and free to work.

2)     Empower team: Teams are self-organizing and therefore they should decide themselves about where they want to work (for instance office or home), tools they want to use etc. However, the decision of how things should be remains to the manager to implement.

 3)     Align constraint: An Agile manager has to make sure the team has a vision and involves them in the definition of it. The agile manager should not command and control, and therefore should not tell the team what the vision is.

 4)     Develop competence: An Agile manager should create an environment where people are challenged and incentivized to learn. People will start learning themselves only if they are subject to an intrinsic motivation. In addition, the agile manager has to figure out which knowledge and competences his/her team needs.

 5)     Grow structure: An Agile manager has to find good team members. It is sometimes challenging to find the good person, that is why Agile managers should not hesitate to search worldwide. An efficient communication structure should then be set up to maintain a safe environment.

6)     Improve environment: An Agile manager has to create a culture of continuous improvement in order to respond to the changing business environment. This means that the agile manager has to think about the change management technique(s) to use to implement improvements. 

Conclusion

In conclusion, the last few decades saw the birth and rise of complexity theory, first applied to mathematics and biology and later to economics and sociology. It was a major breakthrough.

One important insight is that all organizations are networks. People may draw their organizations as hierarchies, but that doesn’t change that they are actually networks. Second, social complexity shows us that management is primarily about people and their relationships, not about departments and profits. Many of us already knew that “leadership” is just a trendy name for managers doing the right thing and doing things right. But complexity thinking adds a new dimension to our existing vocabulary. It makes us realize that we should see our organizations as living systems, not as machines. It is nice to have a new name. Names can be powerful. The “3.0” version indicates that management needs changing. It usually takes Microsoft three major releases of a product to get things right. I believe that management has, in its third incarnation, finally found a solid scientific foundation. The earlier add-ons of Management 2.0 are still valuable. But we have to replace assumptions of hierarchies with networks, because the 21st century is the Age of Complexity. Good management has always been an important piece in helping their people to be productive.  By focusing on the management aspect, Management 3.0 model aims to create organizations where people are motivated and happy and thus leading to successful organizations.

Sandy Everaerts & Gracia Mbombo Mbuyi

About the authors

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Gracia Mbombo Mbuyi, is an experienced consultant with relevant experience in the banking sector. Before joining Initio in 2017 she worked as business analyst in Asset management. Since then she acquired experience in change management and process analysis in leading Banking projects. She has also relevant certification in Scrum product Owner.

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Sandy Everaerts,  has 20 years of experience, and worked for leading companies in the Banking & Insurance sector. She has a background in both Business and IT as PMO, project manager & SCRUM Master. 4-lingual NL/ENG/FR/GER with a Master’s degree, relevant project management certifications Sandy joined Initio in 2017 as Senior Manager in charge of the Business Line Governance & Projects.