Agile is a systematic way to meet the practical, day-to-day needs of a business, while still preserving some “impractical” time to explore new opportunities and experiment. The pendulum constantly swings between innovation (coming up with new ideas and trying novel solutions) and marketing (figure out what job customers need you to do for them).

We Don’t Have Time For That!

Let’s be honest. Whether it’s due to real or cultural constraints, most businesses feel they don’t have the time or the money to experiment–and probably never will. But without experimentation, status quo businesses eventually lose out to disruptive businesses. Not experimenting based on new business opportunities is like saying you’re too busy making a living to learn, grow, and change in your personal life.

This common dilemma begs the question: how can your company capitalize on today’s rapid-fire strategic challenges while still meeting short-term and long-term financial numbers?

I believe the answer is to use agile practices, which involve many small, measured, exploratory steps—not one large, expensive, chiseled-in-stone strategy. In other words, agile is the anti-Mad Men approach.

Agile provides the opportunity to explore unknown ideas within a stable process that provides innovation with reliable levels of efficiency. It’s a way to try new things and still make your numbers. One major obstacle to innovation is that the traditional company hierarchy structure excludes many of the most innovative employees by work role definitions, by politics, and by overbearing aversion to risk.

Today’s Challenge

Altogether this creates what author Walter Kiechel III points to in The Management Century as the major innovation challenge looming over 21st-century business: finding ways to free the spark of creativity from your organization’s tidal-pull style habit of doing the same old things.

This is especially challenging for those businesses who have dismissed innovative thinkers and retained those more prone to following the company line, which has on the one hand created stability and authority, but on the other created a kind of homogenous inertia.

For all its positives, 100 years of business management history has succeeded at efficiencies of scale and increasing shareholder value, but those gains have come at the expense of innovation, missed opportunities, and decreasing returns.

Can’t the Two Worlds of Agile and Hierarchy Coexist?

John P. Kotter, Professor of Leadership Emeritus at Harvard Business School, say yes they can, and, for the future of business, the hierarchy must allow more agile approaches to develop.

Most companies that mature beyond the startup phase get optimized for efficiency, not the ability to capitalize on opportunities and dodge threats, an ability Kotter calls, “strategic agility.” For these mature companies, failure almost always comes in the same form: the organization faces a threat or opportunity, and they try to cram for a transformation using a process that worked in the past.

Only, the process they use is not agile.

The Good and Bad of the Hierarchy

Traditional management processes work well for the day-to-day business operations of planning, budgeting, defining jobs, hiring and firing, and measuring results. What they are very poor at doing, however, is identifying threats and opportunities early enough to act on strategic initiatives. They tend to cling to habits, fear loss of power and stature, crave stability and default to what they know best: the hierarchy.

Two Parallel Systems Required

The solution to this self-reinforcing, hierarchical cycle is to develop a complementary agile management practice alongside it–or, as Kotter calls it, two systems operating in concert:

  1. A Structural System: run by the traditional hierarchy, managing daily demands, doing the things that are necessary to keep the lights on.
  2. An Exploratory System: run as a connection of networks, agile in its experimentation, continually questioning the business, the industry, and the organization.

These two systems operate in the same house. They don’t oppose each other. They aren’t either/or, but rather both/and. They are complementary opposites.

Businesses Have to Operate Like a Brain, Not a Machine

In his book, Thinking Fast and Slow, Nobel laureate Daniel Kahneman presents evidence that shows our brains work as two coordinated systems—one rational, one emotional. Recognizing threats and opportunities is as much an emotional matter as a rational one, and businesses that only use rational approaches will miss many things that a concentration on emotional intelligence would help them act upon.

In the book Switch, Chip and Dan Heath compare this kind of dual operating system to the elephant and a rider problem. In their analogy, the rider is the rational mind. The rider decides where he wants to go and presents a logical, reasonable idea about how and why to get there.

But the elephant is emotional and doesn’t respond to well-reasoned arguments. The elephant wants an emotional reason to charge, but the rational rider can’t seem to give him one. The rider treats the elephant like a machine, and the elephant isn’t a machine.

So what happens? The rider gets frustrated, the elephant doesn’t move—and the rider is tiny compared to that big ol’ elephant.

That’s the imbalance that occurs when the reasonable, hierarchical side of the business dominates the need to explore, question, test and try new things. Rationality crushes the emotional verve, and thus, when important opportunities and threats pop up in business, the riders are powerless to get the elephants to act.

8 Steps For Establishing An Agile Component in a Hierarchical Business

Kotter lists the eight necessary elements required for traditional business to begin to develop an exploratory culture from within. These are the same elements required to develop agile practices, I believe.

  1. Urgency is critical.
    The business opportunity or threat must be urgent enough to prompt action. Remember the elephant. He runs on emotion. Find a threat he can get into.
  2. Establish a guiding coalition.
    For those who want to be part of the new agile network, they must come from various departments and have broad levels of responsibility and authority within the hierarchy. And, perhaps most importantly, members of the coalition should be volunteers to the agile network. This is a want to group of people, not a have to group.
  3. Have a vision through the development of initiatives, questions to find answers to, tests to try.
    Whatever the business opportunity, develop an idea of what you expect you explorations might turn up. Even if they are wrong, they should serve to motivate the natural urge to know. The vision should pique interests and curiosity.
  4. Communicate the vision for buy-in from the rest of the agile group and the company as a whole.
    State your hypotheses clearly. They don’t have to spot on, but they do have to be interesting. Give everyone an idea of why you chose some initiative to explore and choose a good writer who can express it in plain, simple language.
  5. Empower broad-based action.
    The power of the hierarchy is also its biggest weakness. All the decision making is relegated to the top. In the agile network, ideas and expertise can come from anyone. Although there is a guiding coalition, the object is to remove barriers, not maintain a chain of command. That impulse is the hierarchy trying to regain control.
  6. Celebrate small, visible, short-term wins.
    Your agile network won’t last long unless you show value fairly quickly. Hierarchy skeptics will be quick to crush your efforts, so don’t go big right away. Do something small. Pick an attainable initiative. Do it well. Practice the agile process. That will build momentum.
  7. Don’t let up.
    At the same time that you need a victory, don’t declare too much of a victory too soon. Agile is about learning from mistakes and readjusting. Keep pushing forward, because when you take your foot off the gas, that’s when cultural and political resistance will arise. Make time for your network initiatives. Stick to it, no matter how much routine, busy work pops up.
  8. Incorporate the changes and the lessons learned into the culture of the business as a whole.
    This is how the agile network can inform the hierarchy. When you find better ways to do something or new opportunities to pursue, work them into the “other” side.

Three Guiding Things to Keep in Mind

Not only are those Kotter’s eight steps key to success, but he gives three guiding principles to keep in mind.

1. The eight steps are non-sequential.

Just as I stated in an earlier post about the stages of customer purchase, these steps are a model, not a process or procedure—a shape, not an orderly progression. They should all happen, but they don’t have to happen in any particular order. Don’t lose steam worrying too much about order.

2. The agile network must be made up of a volunteer army.

About 10% of the workforce will suffice, as long as the people in the network want to be there. Don’t be exclusive or closed to participation, but also don’t try to recruit people who are 100% structurally minded, because they won’t enjoy being there and they won’t see the value of it. As Kotter says, “The volunteer army is not a bunch of grunts carrying out orders from the brass. Its members are change leaders who bring energy, commitment, and enthusiasm.”

3. This agile group must function with people who work within the hierarchy, but must maintain a network for flexibility and agility.

The network is like a solar system with a guiding coalition at the center and initiatives and sub-initiatives that come together and disband as needed. The network cannot be viewed as a “rogue operation” or the hierarchy will inevitably crush it.

Agile is About Leadership, Not More Management

Agile is a game of retraining the modern workplace for better vision, opportunity, response, inquiry, curiosity, inspired action and celebration. It’s NOT project management, budget reviews, reporting, chains of command, compensation or accountability to a Mad Men all-in strategy. It’s two systems in ONE organization that complement–not duplicate–each other. Ideally, workers who thrive in the agile network can bring that newfound energy to the hierarchy, too.

What Starts as Eye Rolling Can Become Eye Opening–if You Let it

The new agile network may at first feel like one big, soft, squishy, employee engagement exercise. That’s fine! It evolves. It’s not a sudden or dramatic change. Like team building exercises, it takes a certain level of comfort and trust developed over time.

Keep going. Keep the steps small. Communicate the victories from the start. Get your feet underneath you while you sell the agile network to the existing hierarchy. If you do all this, the business value will emerge before the hierarchy can dismiss it as silly, different, a waste of time, or whatever other pejorative usually comes out of the 90% to castigate the 10%.

Today’s “waste of time” leads to tomorrow’s great idea. Agile work—like creativity itself—is not a game of 95%-or-better success rates. If it were, then everyone would be doing it.

And there would be no opportunity, if everyone were doing it.

SWOT Analysis

A SWOT analysis involves looking critically at your business as situated between four forces: two internal forces (your strengths and your weaknesses) and two external forces (opportunities for your business and threats against your business).

It’s not rocket science. It’s a simple, formal way to begin thinking about where you stand today and what decisions you need to make for tomorrow.

Think in terms of your backlog, capabilities, suppliers, and priorities, not just resources.