Why Agile Transformation Fail

While most of the world’s largest companies are attempting an Agile transformation in one way or another, not all are succeeding. Only 4% of all respondents to a recent McKinsey & Company survey say their companies have completed an Agile transformation, though another 37% say company-wide transformations are in progress.

There are several structural and cultural factors likely responsible for this lack of confidence. The inherent complexity of enterprises (compared to the small, scrappy startups disrupting them) could be to blame.

The reason many organizations fail with Lean and Agile is the same reason many are successful: Because it requires a fundamental evolution in mindset, not just practices and processes. Leaders might preach continuous improvement but discourage using working hours to practice it. They might allow teams to self-organize but refuse to adjust funding and planning practices to allow for true autonomy. They might rely heavily on terms, roles, tools, and rules of scaling practices without a deeper understanding of the principles behind them.

The four most common reasons why Agile transformations fail:

1. The underlying psychology doesn’t change enough to give the transformation momentum

2. A lack of executive sponsorship prevents the transformation from taking root

3. Traditional planning and budgeting practices cripple Agile transformation efforts

?4. The organization is unable to align around shared objectives

Underlying Psychology Doesn’t Change

Traditional business structures weren’t designed for the challenges of today. Hierarchical, top[1]down organizational structures were designed to maintain control over workers, during a time when organizations were facing two challenges:

?1. Getting semi-skilled employees to perform repetitive activities competently and efficiently

2. Coordinating those efforts so that products could be produced in large quantities However, the challenges facing businesses today are far different:

?? Power has shifted from seller to buyer, demanding a deliberately customer-centric approach

? Continuous innovation is required to compete with a global economy demanding products and services to be better, cheaper, faster, smaller, more personalized, and more convenient

? Skilled knowledge workers demand more from their employers and their working environments

Leadership Isn’t Bought In

Because Agile includes a culture shift and a mindset change, as well as funding, you need executives to truly buy into the approach.

The only problem may be that you’re getting little engagement from senior management, and they hold the keys to driving positive and enduring change in the organization.

?Senior leaders are a significant driver in the success rate of an Agile transformation.

Traditional Budgeting and Planning Cycles Cripple Agile Efforts

if your Agile teams are still operating under annual planning and budgeting, then you can’t be truly nimble – and you are preventing your organization from achieving true agility.

Traditional budgeting and planning practices have two fatal flaws when it comes to Agile transformation:

1. Work is budgeted and planned in annual cycles, a practice which is philosophically and practically at odds with the concept of business agility.

2. Work is budgeted and planned to use a work breakdown structure, which is oriented around deliverables instead of value.

?Objectives Haven’t Been Established and Shared

Our final culprit for why Agile transformations fail is that organizations don’t have a sustainable, shared way to visualize and track progress towards objectives.

Measuring progress serves two purposes for Agile organizations: It indicates if you are headed in the right direction and radiates a shared understanding of what you want to change. Without a way to establish, but also continuously align around these objectives, an Agile transformation can start to unravel

This is based on the case study of McKinsey & Company?