How To Lead The Company of The Future in The Present?
Agile transformation brings chaos and makes the company impossible to control. The agile company is like a self-driving car: it makes the driver redundant. These are just some of the misconceptions about Agile that we want to dispel. We have presented the foundations of Agile, its extension to the entire company, and the structure of an agile organization with the example of NN Insurance. This time we will reveal how leadership roles change at an agile company.
If the new, agile corporate structure is coupled with new leadership roles and attitude, just the opposite of those misconceptions will come true in the agile organisation: it will become much clearer what the leadership functions are and what is expected from whom. That can greatly help collaboration between the teams and among the team members, supporting the company's success.
Before discussing the changes in managerial functions, we should point out that operating independently is not equal to lacking guidance. Which means that in agile we have the same functions and mechanisms that coordinate the otherwise autonomous squads' operations, and we will show those in detail. Changes in the managerial functions affect top and middle managers to a different extent thus we will address the challenges that may arise at each level.
What is the role of the CEO and the management in an agile transformation?
László Juhász: It is without question that autonomy is one of the cornerstones of Agile, that instead of following the classic top-down course of giving instructions, the teams take on much more autonomy and responsibility in planning and implementation. However, this does not mean that the management can lay back and let the squads go their own way. Management plays a crucial role in the transition to Agile and maintaining a successful Agile operation.
Without a strong commitment on the part of the company's top management, an Agile transformation cannot be implemented. As the flagship of change, management has a fundamental role to play already at the first steps - in driving the transition. In parallel, they need to give direction and vision for the transition - this so-called strategic alignment cannot be outsourced or delegated. The Chief Executive Officer and the members of the board set the strategic directions and frameworks, determine priorities, let it be transformation or the future of the business operation.
Imre Sztanó: The role of the CEO and the board remains decisive even after the launch of the transformation. They serve as a kind of compass in the organization. How a CEO behaves in a given situation has a much greater impact than anything we communicate towards our colleagues. Therefore, senior executives should support the transformation with their behavior, serving as an example every minute.
The key and the difficulty is, at the same time, that there isn't a single, specific thing that we can perform or master as a leader to ensure success. We have to figure out ourselves how we can help the organization and our colleagues perform and collaborate better. To do that, we have to give them direction first of all, and not micro-manage them. We should entrust them with responsibility and provide them space. We should motivate and inspire them.
How can the company's board of directors become agile in this respect?
I. Sz.: We at NN's management are in the habit of using a lot of agile practices and have worked a lot on ourselves as a team. As an example, we hold regular retrospectives, just like our squads, where we evaluate our own operation for a given period, so that we can continuously learn from these experiences. Furthermore, we have banished the classic, large conference table at these meetings, making the discussions more flexible.
We have also worked hard on giving more autonomy to middle managers. We went through what the top management has to deal with and what should be delegated to and part of the decision-making competency of the middle managers. All this has been a big change for us personally, which does not happen overnight.
How does the role of middle managers change in agile?
I. Sz.: Middle managers have a massive role in cementing Agile, so we need to pay special attention to supporting them. We should help them to successfully adapt to the changes and feel the benefits of the new operation in their everyday life.
L. J.: Here you have to see that in a traditionally-built, hierarchical company, a middle manager is the sole person responsible for everything: he creates strategy, assigns tasks, checks implementation, develops, hires and lays off people, rewards and appoints them, and, sometimes, actively takes part even in operational work. However, being able to perform all these roles is often an illusion and can exist only on paper.
Therefore, these functions are distributed among various roles in an Agile organisation. Under Agile, middle managers act as a product owner, a scrum master, or a chapter lead. That creates a much clearer focus and makes collaboration between the functions much easier. In terms of managers, this is mainly a technical change. Thus, the manager does not get caught up in the accumulation of his or her various functions, and there is no conflict within his or her role. Thus the different managers can co-operate with reinforcing one another. As a result of this move, middle managers will be the ones whose role will change the most. It is only natural that they will have the most concerns and question marks.
I. Sz.: As an example, the former Underwriting Department team, coordinated by one manager, used to be responsible for the developmental and operational tasks at the same time. Under the current, Agile scheme, one team member is working in a squad on improving further the efficiency of the underwriting processes, while the others are still conducting underwriting activities under the direct control of a chapter lead. They continuously integrate into their daily operation the process and IT developments delivered by the squad.
What guarantees that chaos does not ensue with this organisational rearrangement and the increased autonomy of the teams?
L. J.: It is a huge misconception that with Agile we create an organisation where there is no need for coordination, this is not true. In addition to clarifying leadership roles, we need to establish these roles' ways of working together. There are various coordination mechanisms to support this - these can be divided into two plus one branches.
The first is dry and boring, but it is the most basic part - the sorting out of the operational tasks. We should think here of the hundreds of small details, such as who approves a given colleague's vacation request, what duties a staffer may receive, and through what channel, etc. These regulations and job descriptions must be done, not only for legal compliance, but also to increase transparency, so that every colleague would become familiar with the processes and responsibilities from day one of the transition.
Second, when this foundation has been laid, we will need to implement the various coordination forums that are the pillars of the Agile methodology. We will discuss these in more detail in this series, but it is worth mentioning here the most important ones such as big-room planning, PO sync or community of practice, but they may also be specific to certain fields, such as the IT system sync meetings at NN.
I. Sz.: Naturally, putting these into practice is not easy. There was also feedback from some colleagues at NN that they need to participate in too many co-ordination meetings in addition to their regular tasks, so these meetings are reducing efficiency. Experience shows that the more the teams get the hang of this new kind of co-operation, the more the number of these meetings can be scaled down. But, at first, frequent discussions are essential because they help instill the new kind of collaborative schemes.
Finally, there is a certain "plus one" element, namely, that no matter how important the first two branches are, neither can replace the culture of cooperation. Without the culture of cooperation, no matter how sophisticated the new procedures are, we will again experience inadequate operation and the emergence of silos. Here we have to come back to the responsibility of the leaders: their behavior serves as an example for the employees, they are the ambassadors of the "being agile versus doing agile" approach.
Therefore, a manager is expected to care not only for his or her field, but also to strive for broader co-operation, adapting to each situation as flexibly as possible. It is no less important that a manager should be capable of raising employees' awareness - that they should not be looking for an all-encompassing solution but find and work on elements that are value-creating in themselves, and use those elements to establish, step by step, a full process.
Last but not least, there is the so often-mentioned issue of empowerment. Let's be realistic: nobody is able to hand over or live with complete autonomy overnight. This is a process that both the leader and the colleagues have to learn as they are developing mutual trust.
The fine-tuning of corporate culture is therefore at least as important for success as the technical changes in operation, but that will be the subject of our next chapter.
About the authors
- László Juhász, Senior Partner and Managing Director of Boston Consulting Group. László is a leading expert on agile, he has supported several agile transformation projects.
- Imre Sztanó, Chairman and CEO of NN Insurance Hungary since March 2016. Imre launched and sponsored the company's agile transformation.