Why Agile Big Bang Transformations Are a Bad Idea
It’s tempting for managers, faced with urgent competitive threats and frustrated with their own company’s slow-moving actions, to pursue big bang, all-in-one, Agile transformations. The motivation is to avoid the long gestation periods that agile transformations of an entire organization can take, sometimes up to a decade.
The case of ING bank
The case of ING bank in the Netherlands is often cited as a successful example of such a big bang transition.
At ING Bank, when an agile working method was introduced in 2015, there was, according to the Chief Operating Officer, Bart Schlatmann, âno particular financial imperative, because the company was doing well and the rates of interest were still at a decent level. . However, customer behavior was changing rapidlyâ¦ We needed to stop thinking traditionally about product marketing and start understanding customer journeys in this new omnichannel environment.
Management decided to act aggressively. Like Darrell Rigby in his groundbreaking book, Doing well Agile (HBRP, 2020) explains, the leadership team “has dissolved the organizational structures of its most innovative functions, including IT development, product management, channel management and marketing, essentially abolishing individual work. . Then he created small, nimble âsquadsâ and asked nearly 3,500 employees to reapply for 2,500 redesigned positions in those squads. About 40% of the people in the positions had to learn new jobs and all had to change their mindset drastically. “
Experience suggests at least three central problems with this approach.
Â· It confuses and traumatizes the staff of the organization. People don’t know where to go or what to do. This assumes that thousands of individuals, most of whom have no experience or knowledge of agility, will suddenly understand and work according to its principles.
Â· Although the goal is to keep the âgood workersâ and abandon the âless goodâ, the âless goodâ workers are often well entrenched in the power structure and survive, while the âgood workersâ can be disgusted with the chaos and leave.
Â· With 3,500 employees applying for 2,500 positions, a key part of the not-so-hidden agenda is cost reduction and staff reduction, not more Agile management. There is therefore a great danger that Agile will become synonymous with cost reduction. This has long-term costs in terms of loss of confidence and acceptance of future changes.
Although those responsible for these abrupt changes often publicly tout success, Rigby concludes that âthe overall results have often failed to deliver on their unrealistic promises; share prices (including those of ING) have often fallen, sometimes by 30% or more. (See Figure 1)
Bart Schlatmann, the COO of ING at the time, commented on the experience in an interview: Were before. Of course, we lost a lot of people who had the right knowledge but didn’t have the right frame of mind; but the knowledge can be easily rediscovered if people have the inherent ability.
“He naturally puts a favorable gloss on the experience,” writes Rigby. âBut can you imagine the terror and trauma the initiative must have caused in the job market? Why start with such a risky and expensive move? Such an approach places more emphasis on cost savings than on innovation and growth. Fostering a new way of working with people who fear for their jobs – and 40% of whom are in new positions – starts the whole project off on a difficult footing. And that’s not to mention the fact that the leadership team simply modeled the exact opposite of agile values ââin doing so.
Remove process constraints before blaming employees
Big-bang Agile transformations often reflect a management mindset that sees the performance problem as âsomething out thereâ, namely the workers. It is a management mindset that is often blind to the constraints posed by the bureaucratic processes for which top management is responsible, such as budget, HR, as well as the limitations of resources and approvals necessary for innovation. . Management can quickly put in place a Darwinian process to eliminate staff, while being slow to remove processes and systems that prevent staff from doing what is necessary.
This is one of the lessons of ANZ bank, which also attempted a big-bang transformation, explicitly modeled on the ING model. Here, too, the bank asked employees to reapply for a smaller number of jobs. After a year, some 5,000 employees had left the organization.
While management found that while they had teams then – ostensibly agile and committed to new ways of leading and working – they had failed to change the funding of the work. Funding continued to be allocated once a year and per project. While the teams iterated the work, the funding model remained fixed and unable to adapt to the changes generated. It was “a collision between the new ways of working and the old ways of financing,” said Christian Venter, omnichannel general manager at ANZ Bank in 2019 and one of the key executives who led the agile transformation.
While executives point to numerous internal process metrics suggesting that within the bank some activities and processes are accelerating dramatically, the overall performance of the bank as seen by the stock market remains disappointing. . (see figure 2).
Big Bang transformations and the goal of agility
When weighing the wisdom of initiating big-bang transitions, it’s important for managers to keep in mind that the purpose of Agile is to benefit customers and workers as human beings. The reason businesses iterate is to learn as you go and to understand the interactions that take place. Big bang approaches are the very antithesis of this mindset.
The fact that managers have the power to set up Darwinian staff exclusion processes on the basis of an unproven assumption that large numbers of workers must be abruptly fired from their jobs shows how far we can become. prisoners of our own systems and creations. In this way, our own organizations can become Frankenstein monsters, functioning according to their own mechanical agendas. They end up crushing not only the human spirit. They also fail to meet their own financial goals.
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