HUMAN VIEW

Is the future agile?

How are platform companies’ workforces organised? And will their way of working successfully transfer to the rest of the corporate world?

We’re all familiar with the stereotypical start-up or internet company working environment – it’s been satirised numerous times. Bean bags, table football and a general air of unconventionality tend to feature prominently: it can be easy to mock this new workplace culture. However, for skilled young people, technology companies have displaced the financial sector as dream employers: clearly companies with innovative business models are doing something right.

At a superficial level, these young companies’ nonconformity appeals. Who wouldn’t rather come to work in skinny jeans and trainers rather than a suit and tie? Moreover, the relaxed atmosphere of many of these ‘new’ companies may appeal more to graduates than the perceived stuffiness of a traditional firm. Then there’s the combination of idealism and naked greed that drives many platform companies: many aim to change the world –andget extremely rich doing so.

But beyond the clichés, platform companies are often defined as much by how they organise their workforce as by their business models. One common feature of many of today’s internet giants is agile, a set of principles originally created in 2001 for use in software development that emphasises collaboration and an evolutionary approach to change. It has subsequently evolved to form the basis of a broader business management approach that champions innovation and breaks down silos within companies to make them better able to serve customers and generate growth.

Despite the diverse business models of Facebook, Google, Netflix, Spotify, and Uber, they have a similar appeal for young people because of agile’s “particular way of working and distinctive people culture,” explains Peter Jacobs, chief information officer at ING, who assessed how technology companies have implemented agile in preparation for the reorganisation of the bank’s domestic business. “They work in small teams that are united in a common purpose, follow an agile manifesto, interact closely with customers, and are constantly able to reshape what they are working on.”

How does agile work?

Agile is about organising the workplace differently to achieve greater flexibility and encourage more creative thinking. While there have been numerous models, one of the most influential was adopted by Spotify where workers are part of squads, which are responsible for a single feature. These teams are largely autonomous: they have “everything they need to implement anything related to their feature,” according to Kevin Goldsmith, CTO at online legal services marketplace Avvo and a former VP of engineering at Spotify. Spotify likens squads to “mini start-up”.

The next level of organisation, which contains multiple squads in the same business area, is called a tribe: it is described by Spotify as acting as an incubator for mini start-ups. “Each tribe is responsible for a set of related features or engineering functions,” explains Goldsmith. “Each tribe is set up so that it can work as independently as possible. This helps remove decision-making bottlenecks and unnecessary dependencies, which improves velocity,” says Goldsmith. Spotify has shared lounges to create inter-squad interaction, and regular informal team events where the squads share their experiences.

As squads are made up of individuals with different roles, they don’t have a single leader who everyone on the team reports to: decisions are made collectively. Instead of management hierarchies that follow organisational ones, first level managers are instead responsible for technical functional areas across multiple squads: these reporting and functional groupings are called chapters. There are also guilds that bring together people who want to share specific knowledge.

Applying agile outside tech

Understanding the complexities of agile can be challenging – not least because it comes in many different forms, according to Michael Cusumano of MIT Sloan School of Management. Nevertheless, as a concept centred on adapting to – and anticipating – change, it has caught the zeitgeist. There are a small, though growing, number of companies outside the technology sector (or sectors that rely primarily on technology to provide their offering) adopting agile.

When ING in the Netherlands wanted to respond to changing consumer behaviour – customers now use a mix of online, mobile and branch banking – it honed in on agile as a solution. Having observed agile in action at technology companies, ING adapted it for a banking environment – albeit one where the goal is to think more like a technology company than a traditional bank.

ING has created multi-disciplinary squads that comprise a mix of marketing specialists, product and commercial specialists, user-experience designers, data analysts, and IT engineers, all of whom are focused on meeting clients’ needs.

“Today, our IT and commercial colleagues sit together in the same buildings, divided into squads, constantly testing what they might offer our customers, in an environment where there are no managers controlling the handovers and slowing down collaboration,” says Jacobs. “As long as you continue to have different departments, steering committees, project managers, and project directors, you will continue to have silos – and that hinders agility.”

A workplace panacea?

Despite its success in a variety of environments, agile may not work in every situation. “Not all organisations suit agile working. It depends on the culture of the organisation and the nature of work,” notes Ksenia Zheltoukhova, research advisor for the Chartered Institute of Personnel and Development. Anecdotal evidence suggests that the characteristics of countries or regions are also important. For example, people in Northern Europe and the US may adapt more readily to agile than Asian or Southern European cultures where a hierarchical management style may be more engrained.

Equally, it is naïve to assume that all individuals are motivated by the same things and will therefore respond to agile positively: working as part of a small team can be claustrophobic for some people – personality clashes can assume much greater significance than they might in a broader, more traditional working environment, for example. Agile originated an IT environment where it is relatively straightforward to create a team with an end-to-end scope. This can be harder to achieve in other environments, where multiple functions are linked in a number of complex ways.

Moreover, agile can easily go wrong during implementation. As one observer from the software world notes, “work gets atomised into ‘user stories’ and ‘iterations’ that often strip a sense of accomplishment from the work, as well as any hope of setting a long-term vision for where things are going.” Avoiding this problem can be challenging – though it is not impossible. Jacobs at ING says that to avoid people going in “different directions”, squads need to be aligned every quarter or six months: “You have to organise in such a way that teams are aligned and mindful of the company’s strategic priorities.”

The adoption of agile also tends to be accompanied by a number of other workplace trends, not all of which are welcomed by all employees. A report by the Royal Society of Chartered Accountants notes that “the savings on property cost from implementing an agile working programme and reducing the office space needed are significant.” Unsurprisingly, many companies want to monetise the fact that private offices are unoccupied 77% of the time, for example. But while open plan spaces, hot-desking and home working can be attractive to employees, they also have the potential to alienate workers and reduce the cohesion that agile is intended to create.

Ultimately, however, agile may have potential benefits both for many companies and their employees. As a report by Ernst & Young notes, agile is the art of making hard things easy and creating new viable business offerings faster – benefiting companies’ bottom line. At the same time, by increasing autonomy and giving individuals greater responsibility for their work, agile has the potential to empower people and increase their enjoyment of work. At the least, by encouraging companies to think afresh about how to get the most from their employees, agile has a role to play in improving the workplace environment.

Sources

  • http://www.mckinsey.com/industries/financial-services/our-insights/ings-agile-transformation
  • http://blog.kevingoldsmith.com/2014/03/14/thoughts-on-emulating-spotifys-matrix-organization-in-other-companies/
  • http://sloanreview.mit.edu/article/how-to-innovate-when-platforms-wont-stop-moving/
  • https://www.forbes.com/sites/karenhigginbottom/2017/03/14/cultural-barriers-to-agile-working/#364baa514008
  • https://michaelochurch.wordpress.com/2015/06/06/why-agile-and-especially-scrum-are-terrible/
  • http://www.rics.org/Global/property_economy_2009_agile_working_dwl_pt.pdf
  • https://www.forrester.com/report/IoT+Smart+Building+Solutions+Transform+The+Workplace/-/E-RES132901

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The View is the online magazine of ING Wholesale Banking