The Point: We’re often asked at Tip of the Spear Ventures’ business transformation consultancy – The Zeroing Agency – “How as an operator can we set up our organizational transformations for success?” While there is no “magic” pill that allows business transformation organizational leaders to succeed, there are keys to agility that provide success insights. Different approaches to business transformation can illustrate how a company and market conditions can guide the structure of teams around work, and the rapid benefits that follow. So in this article, we’ll explore the case of two business transformations… Enjoy!
Business Transformation – What’s Holding Leaders Back?
While over 70% of businesses report they believe that agile business transformation is their top goal, we haven’t yet witnessed the level of adoption of agile by leaders which this kind of curiosity leading to success would suggest. It’s puzzling for us? After all, it’s been proven that businesses that are more agile will be 50% more likely to beat their competition in terms of financial performance. It is also known that agility can help operators win four of their primary fights: faster speed to market, greater satisfaction with customers, substantial productivity increases as well as a better employee experience — which improves attraction and retention.
So what’s holding operators back from achieving their business transformation goals?
We believe that a large part of the problem is a lack of understanding regarding the meaning of what “agility” really is and how it manifests in a particular business setting. The term is frequently employed to describe an undefined notion of being flexible. One executive explained the reason for his constant tardiness by saying that the reason was “deploying agility as being flexible with time.” Some are able to connect the word with the notion of software development or bean bag chairs and a variety of seating arrangements.
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Any of them are true. What exactly is the definition of agility?
Reminisce about a time or situation where you were a part of or were faced with a pressing and decisive difficult situation. Perhaps you were responding to an emergency within your local business operation, working as a project manager, or faced the impossible task at hand as the actual conduit of work. You brought together people from diverse backgrounds that were selected based on their skills and abilities, worked in a manner that was largely devoid of the structure of a hierarchy, and were determined to achieve a specific goal. These remarkable achievements are frequently described as “peak memories.”
Agile is, in essence the art of creating the components of the perfect experience for each employee — each day — without the need for a crisis to be present. The ability to scale agility embeds these elements within the foundation of how things are executed by providing the following:
- A clear and precise purpose that is anchored by positive significance
- A precise idea of how/what success means
- Teams with the capabilities required to achieve without relying on other teams
- A rhythm that encourages small spurts of tangible output as well as frequent celebration of results
This is the essence of business transformation agility- creating organizations that have hundreds of these fantastic groups. But, great teams on their own will result in chaos and a lack of scale. Another crucial element is a solid backbone which supports the teams by providing a shared mission, a unified organizational culture and standards. These in turn facilitate the systems and processes that hold the organization together.
Two Approaches to Business Transformation Agility
Through our interactions with a variety of technology firm operator, we’ve seen two effective approaches to agile business transformation emerge in the form of agile accelerators as well as enterprise-wide agility. We’ll examine examples of agile business transformation at work in two cases — Company A and Company B to show two new success models that can help teams organize around transformation work. Both operators have seen substantial benefits from their business transformation which includes the four main benefits mentioned above. They have also attracted interest in the process.
The decision between these two methods of agile business transformation is based on the way that agility can be used to maximize the potential of a business, the level of maturity within the company, as well as the high-level management team’s views on taking small steps versus implementing quick and massive changes. The common thread between both is the need for companies to be “all involved” regarding agility. Only the magnitude of initial changes is different.
The next step is to look at how these two methods performed at the geo-political Antipodes TDC as well as Spark.
Company A: ‘Digital First’ First
In the throws of the 2020 medical pandemic, the summer was a difficult time in the eyes of Company A’s leaders. A recent consolidation of their primary brand via mergers and acquisitions was initially seen as a major boost to its B2B strategy. The appointed director of the B2B division, had an extensive list of changes to implement within the new company structure. The digital capabilities of Company A were among the best of the best — Current State Interviews and SWOT analysis findings clearly suggested that the company did not meet the expectations of consumers for services offered nor delivered on.
After having witnessed the impact of digital business transformation in previous roles, Company A leadership set it as an absolute priority and asked other trusted leaders with extensive knowledge and relevant experience to help make this happen. These leaders soon realized using the traditional methods would not yield outcomes in the timeframe required. Company A had invested substantial sums in digital business transformation over the years, but the results were typically slower than expected, and by the time the pandemic had arrived, consumers’ needs were changing dramatically and frequently (Never a good moment, pandemic aside).
To accelerate the business transformation process, Company A decided to inject flexibility in its transformation — agile business transformation. The company first established one, and then 12 agile teams that were cross-functional (or squads) comprised of product owners with frontline expertise, commercial specialists and customers-experience designers, architects and developers – all with the skills needed to create, design and improve digital customer journeys in a rapid manner. Each team was placed under the structure of the concept of a “digital tribe” headed by a Business Transformation Leader (BTL). The teams were given full discretion to perform whatever it took to design seamless and memorable customer journeys in the areas of online sales and services and gradually creating an agile IT infrastructure.
Company A leaders were aware that in order to be successful in their digital business transformation, they needed to create a new culture and draw the best talent. A brief tour through their digital warehouse shows that they achieved this. In the building that is a renovated warehouse located next to headquarters, there is no longer separate discussions of IT and business, and no longer “facilitating” middle management no more through lengthy steering-committee meetings. Instead, there are teams with cross-functional capabilities empowered to bring about business transformation changes.
18 months after the change was initiated, Company A sees the benefits of its new method of working. The customer onboarding process for instance, was one of the most frustrating experiences for customers and a primary reason for the low customer experience scores. Following the change, Company A’s experience onboarding has been rated five stars from the majority of its customers. Call volume, which is among the biggest cost driving factors for Company A has decreased by over 40 percent since customers are able to efficiently manage their interactions and address their issues on the internet.
Online sales are another interesting illustration. Six months prior to the business transformation initiative starting, Company A formed a traditional project team that was charged with creating and implementing a digital sales experience for the principal products. However, with project team members were scattered in different parts of the company, and each was working their traditional waterfall model. However, the project team had not been able to launch anything before it was integrated to the online tribe. Once they were co-located and equipped with agile business transformation techniques — like minimum-viable-product (MVP) thinking — the group had not only built a new sales journey but already generated its first online sales within a few weeks. The initial MVP was not as broad as originally drafted, but it nevertheless created momentum and gained sponsorship which allowed the team the time to tackle the complex technical aspects of the automated solution that was introduced after a couple of months. Conversion rates increased dramatically. The agile business transformation approach worked.
Company B: ‘Be Agile to be Agile’
Company B has been going through a business transformation course due to the reorganization as a result of a turnaround effort. After the turnaround was successful — including changing its name and reengineering its IT — Company B was in good health and investors had one of the industry’s most lucrative total returns.
However, the management team at Company B was planning to aim even higher. They believed that the game wasn’t about beating out other companies, but rather being in a competitive market composed of disruptive digital-native businesses — Think Amazon, Netflix, and Spotify. Partnering with or competing with these firms requires an overhaul in mindset as well as speed of execution and time to market, something that the traditional model of their functional organization cannot provide — even with its successful business transformation.
With renewed vigor, Company B’s top leadership team visited over a dozen businesses across the globe to learn how agile business transformation has helped them and what it could mean for them. They visited agile companies that were startups, as well as companies at different stages of their journey to become agile.
Company B leaders came back with a single conclusion: When it comes to agility, they must roll-up their sleeves, get their hands dirty, and trust in the agile business transformation approach to help them through — “Be Agile to be Agile.” They were looking to avoid a lengthy period where a portion of the business had adopted agile methods of working while the remainder was operating under the traditional organization structure. Companies they visited that had fully adopted agile business transformation practices across their entire company were flourishing. Companies that only tried to do it halfway often ran into some — a lot of — challenges.
The leadership team set out an ambitious timetable to ensure that the transition phase was kept to an absolute minimum. To ensure a clear communication channel, they released a corporate-wide announcement regarding the forthcoming journey. It also designated leads to the initial three groups that it created. The following months saw the leaders of these three groups create their own organizations of around 10 teams with cross-functional roles within each. The other employees worked on the necessary changes to shift the entire company towards an agile organization.
In the process, Company B dedicated significant effort in change management and capability building. In the first quarter before any structural changes took place, thousands of employees participated in defining and taking action on an entirely new mission for the business. This new mission led to changes in the company’s values, goals, behaviors, and capabilities. They also stressed inclusion and diversity to ensure that employees were at ease bringing all of themselves to work and working in teams in order to achieve high-performance within their teams.
In one section of the organization, where employees who had experience in agile was difficult to come by, leadership selected 40 high-performing employees to train them as agile coaches through an academy that was just created. They also made sure that all employees underwent a two-day training course designed to create great teams who are well-versed in the fundamentals of agile business transformation.
In Q2, Company B announced the creation of 12 agile business transformation groups. The company then reorganized around 40% of employees into teams with cross-functional responsibilities comprising IT, networks marketing, products and digital employees. The rapid transformation for other business units–channels and corporate support functions and other divisions–started immediately following.
Company B’s agile model was developed by analyzing where and how value can be generated in every aspect of business. Because of the nature of their industry, leadership decided to place an emphasis in “business transformation groups.” These groups control the customer experience along with product management, as well as related systems for specific items such as IT or mobile that allow for full differentiation and quick improvement. Their focus on the acquisition of new customers, as well as expanding existing ones. Additionally, they provide the capabilities and services for other groups. Channels (such as billing, retail operations, B2B sales and support) as well as the support services (such as finance and HR) make use of a mixture of teams, self-managing teams and other configurations of teams that fit the specific nature of job.
The Implications of Agile Business Transformation: “Open Heart Surgery During a Marathon”
The operating model for business transformation at Company A and Company B demonstrates a high-degree of determination. They’ve described it as “open-heart surgery during a marathon” — being prepared to drastically alter the operating model of a business without sacrificing efficiency.
The surgeons (aka, leaders) will inform patients about the potential risks associated with an operation prior to performing the operation in the first place, and I’d like to end this article with a similar procedure, so that you’re aware of four risks of pursuing agile business transformation:
- The impact it has on the people you work with is significant. An agile structure is designed around teams of people who can do things with minimal overhead for management. Company A asked around 200 of its most senior managers to be agile team members while acknowledging that agile business transformation isn’t suitable for all. Many chose to walk away rather than join. In addition, you should invest in new abilities including agile coaching that did not exist in the organization prior to.
- It is time to overhaul your finance and governance procedures. Agile business transformation teams need regular guidance and priority setting to ensure that they are able to prioritize their work. Traditional business cases and plans for multi-years that provide comfort to management will not work. Company B leadership needed to become familiar with 90-day goals and funding groups, instead of individual projects. This requires leaders to stay up-to-date with the latest developments and work in a transparent manner and openly, which may require changes in their accompanying mindset.
- The model of the people and culture must change. Valuing and paying individuals based on their position in the organizational hierarchy isn’t a good idea in a high-speed, flat company. Motivators that are extrinsic like bonuses and job titles have to be reviewed to create intrinsic motivation for business transformation teams. The importance of culture is so crucial to the success of a business that nurturing and transforming it is likely to consume the majority of your efforts to invest in your transformation.
- The job for the leadership team members is different — Very different. Agile business transformation requires strong, connected leaders to be able to see the market and set the priorities, and then let teams determine how they can meet these. At Company A, the top team led the business transformation through the creation of a leadership group and implementing a routine of stand-ups and retrospectives and presentations that were similar to the ones used by the rest of the company. They focused their work on the creation of a high-quality structure that will allow teams from other departments to be successful together.
In this article, we’ve explore the case of two business transformations. If the review of these two cases and the above four realities do not scare you off from pursuing business transformation, the best method to begin the process is to establish solid alignment and a shared desire in your team’s top management. We’ve found going to those businesses who have successfully engaged in agile business transformation to be a stimulating and enlightening way to begin your journey. Hearing the stories of other management teams is more than just a discussion in order to build a common perception of what agile business transformation can do to help your business. Discovering what you would like and perhaps more importantly, do not want from an agile framework is key. Make clear targets and design guidelines to ensure you are clear about what you want to accomplish.
Sam Palazzolo, Managing Director @ Tip of the Spear Ventures