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Enterprise Misalignment: The #1 Threat to Long-Term Success with Agile

For years, I have been hearing that agile and Scrum have crossed the chasm—that agile has made the leap from being a new and unproven idea to more of an industry standard. I just don't think that's true when viewed broadly—and here's why.
 
Let me first say that based on my own experience and that of my colleagues I have no doubt that many IT and development groups in mainstream organizations are doing Scrum or other forms of agile development. If you attend a Scrum Gathering or an Agile 201X conference you can see the diversity of companies that are embracing agile development and in particular, Scrum.
 
The Scrum Alliance's 2015 State of Scrum Report, which surveyed 4,452 people, states that "Scrum practices are currently in place among 82% of respondents, and another 11% are piloting Scrum" (p. 2). Of the 93% of respondents that are using Scrum in some form (p. 12), 77% are using Scrum in software development and IT (p. 2). So, when combined with a breadth of other evidence we can conclude that, yes, inside development and IT groups, agile principles and practices are well on their way to becoming the de facto way of working.
 

Agile Is Not Standard Across the Enterprise

But what about the rest of the enterprise? What about enterprise agile? Outside of development and IT, agile principles and practices have not been widely adopted—and therein lies the problem.
 
To be clear, when I say “enterprise agile” I am not referring to doing agile at scale (with multiple teams) within development or IT. Rather, I am referring to embracing agile principles across the enterprise value chain—those groups within a company that collaborate to deliver on the value proposition of the company. And, by agile principles, I am referring to more than just the ones described in the Agile Manifesto, which by intention have a software-development focus to them. Instead, I am casting a wider net with the term “agile principles,” so that it also includes many principles that have historically been viewed as lean and some that have more recently been referred to as Lean Startup. To be specific, I am referring to the set of principles in Chapter 3 (“Agile Principles”) of my book Essential Scrum. They are summarized in the following image.
Agile Principles Mind Map

It is my opinion that to truly succeed in getting the business benefits expected from applying agile, these principles must be embraced across the enterprise value chain. My experience is that when development or IT uses agile and other groups in the enterprise are not aligned with similar principles, there is a large disconnect (that I will describe shortly), that can jeopardize business success.
 
So how is the adoption of agile principles and practices progressing across the entire enterprise value chain, including in such groups as Sales, Legal, HR, Finance, and more? Not too well. In fact, from working with many different companies, it is clear to me that, by and large, these groups do not embrace these principles. There are a few exceptions. Referring again to the 2015 State of Scrum Report, we see there is some adoption of Scrum outside of IT and development (p. 19).
 
SOS-Q24.jpg
 
But even these numbers do not show aggressive adoption. Outside of operations and R&D, few other groups across the enterprise value chain are using Scrum, or, as I would say, embracing agile principles.
 
Where there is no adoption of agile principles, the resulting misalignment between the IT and development groups on one hand and the rest of the organization on the other places enterprise agile in a precarious position. At best it puts limits on how successful the IT and development teams can be with agile.
 
Once again, the 2015 State of Scrum Report data supports my own observations. When respondents were asked about whether tension existed between the Scrum teams and the rest of the organization, 71 percent admitted that it did, at least to some extent (p. 13).

SOS-Q13.jpg
 

Misalignment Leads to Failure

When development and IT teams work with one set of principles and the various other groups across the value chain work according to other principles, we have the potential for a serious disconnect. Instead of the various groups using a consistent set of principles to work collaboratively towards achieving the overall business goal of creating products or services that delight customers, each group is likely using a set of principles focused on optimizing its own output with perhaps a secondary focus on how that might affect the overall corporate outcome. As a result, significant misalignments form in the work across the groups that can threaten the ability of companies to realize the business benefits they seek by adopting agile.
 
The following illustration highlights examples of the kinds of enterprise value-chain misalignment that I frequently see within the companies that I work with. Do any of the statements in this drawing sound familiar?
 
Enterprise Misalignment Value Chain
 
I bet they do! When the legal team still writes contracts that lock down date, scope, and budget, it constrains the organization’s ability to be agile. When HR wants to maintain an annual performance review that will ensure the company is in a legally defensible position should a personnel issue occur, it is poorly aligned with agile’s fast-feedback cadence. When finance groups require annual budgeting where every dollar is pre-allocated to specific projects up to 15 months in the future, I can hardly image a less agile-like way of working.
 
Marketing and sales are often out of step with agile, too. Marketing often has to plan their activities many months in advance. As such, they believe that they need to know the complete feature set and delivery date upfront—a time when teams have the least information and the most uncertainty on a project. And frequently salespeople are being pressured to close deals as fast as possible, often without regard to the capacity of the development teams, which can quickly overwhelm any work-in-process (WIP) limits that development teams put in place.
 
Similarly, if operations is deploying on its own schedule, one that may not align with the development cadence, how will the company deploy to customers and obtain business value from the small increments of customer-valuable work that the development and IT groups are producing? It would be difficult to claim the company is getting the desired value from using agile if it produces world-class software each iteration and has no ability to get the software into the hands of its customers in a timely way.
 
And speaking of customers, they can cause misalignment problems as well, especially when they make special requests for features, but do so expecting to lockdown date, budget, and scope. That brings us to the management group, who too often seem to be saying, “Hey, you guys in development and IT, go do agile but we will operate in the same way we have always operated in the past.” What customers and management both do not understand is that their actions increase overall corporate fragility and add significant risk to their ability to deliver superior value in a timely way to their customers.
 
With such misalignments running rampant within companies, the long-term successful use of agile is in jeopardy. I invite you to follow me on twitter and visit my blog, so that you read my upcoming blog series about these issues. I'll be addressing how various non-development groups across the company can embrace agile to better align the enterprise value-chain for the fast, flexible, flow of work.
 

Article Rating

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Hi Satish, thanks for the comment. Yes, enterprises are adopting agile processes in areas outside of development and IT. I spend most of my coaching time helping multiple companies do exactly this.

There is enough of a critical mass of companies doing it that I am considering pulling together a community of practice that involves representatives from each company so we can have more frequent inter-company exchanges on current approaches to using agile outside of development and IT. Anyone who is interested in participating should contact me.

Thanks,
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11/27/2015 10:29:29 AM

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Hi Ken,

Nice article! Do you think enterprises will adopt agile processes in other functions as well? Do you know any such enterprise that has already started embracing the agile/scrum processes in non IT functions?

Enjoyed the article. Keep up the good work. Awaiting your next article :)

Regards,
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11/27/2015 3:43:22 AM

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Hi Chris,

I appreciate the response. Not sure if you are implying that my posting was trying to “force” people into an agile mold. That was certainly not my intention.

I did read your blog posting that you referenced in your response and I have to admit that my experiences run contrary to many of the ones you offered up in that post. I think that you and I view differently how agile can and has been applied within companies doing successful agile. You have a much more narrow view of agile than I do.
11/9/2015 5:41:18 PM

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I thought this was a great post but I think we have to stop trying to force executives and business owners into the agile mold. I think ultimately traditional business and project management has to be dovetailed into agile.
11/6/2015 9:29:20 AM

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I thought this was a great post but I think we have to stop trying to force executives and business owners into the agile mold. I think ultimately traditional business and project management has to be dovetailed into agile. http://www.chrismccorkle.net/blog/2015/10/16/will-scrum-agile-replace-the-project-management-discipline
11/6/2015 9:26:42 AM

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Very nicely said Tomasz.
10/24/2015 10:02:38 AM

Tomasz Skowronek
Hi Ken,

Thank you very much for a great article. I really enjoyed it and the healthy discussion around it. The company I work for has been struggling with exactly the same issues you described above. We have introduced Scrum five years ago but it has been limited to the IT and development teams only. We still need to provide the exact delivery date, budget and scope in the initial phase of the development cycle. There is no room for any adjustment which is really necessary for any type of projects, especially IT ones. Most of the companies do not understand Scrum or other agile methodologies. They believe using the agile terminology is enough to become agile and no other changes are required. This brings us back to the waterfall methodology which even its author Winston Royce described as a non-working model. I agree we live in the ecosystem full of rules and restrictions but it does not mean we shouldn’t challenge it. We can keep providing the exact budget to Finance, the exact delivery date to Sales and the exact scope to customers but what is the point of doing that if this is inaccurate in 80-90% cases. So the question is whether we should keep doing the things the way we are used to or try to change something. This is what agile is, about changing the way we work.

Cheers,
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10/24/2015 9:57:42 AM

Ken Rubin
Hi Chris, thanks for continuing the discussion. I have a company and it has a budget (of sorts) and goals. I would expect every company to do the same!

However, I don’t make the assumption that having a budget and goals means I should expect to precisely answer questions like “How much will it cost?” and “When can I get it?” Especially early on when we begin to work on a product/project and we have the least amount of information about what we are doing. At that time it is not likely that we can give a very precise answer to when and how much.

Of course, I am perfectly happy for management to tell me the delivery date and the budget as long as I have the ability to manipulate scope (in which case I will definitely meet that date and budget with the most valuable deliverable that I can)!

Just because we can’t give a precise answer up front doesn’t imply that I am unconcerned about either date or budget, because I certainly am. In agile we approach this issue by “not” assuming we know more than we do and aggressively learning important information in an economically sensible way. That newly acquired information helps us to better understand what we are doing and make necessary adjustments to meet date and budget (e.g., like varying scope). So, its not clear to me why agile needs to evolve in this specific case since I think core agile principles are already nicely focused on dealing with this issue.

The problem, per my blog post, is that groups outside of IT and Dev are not aligned on these same principles leading to behaviors like believing we can lock down date, scope, and budget on the first day and somehow magically expecting that to work – even though every (or at least most) previous data points would indicate we haven’t been successful at it.

Hope this explanation helps.
10/16/2015 1:09:11 PM

Chris M
I think the challenges here with alignment are very real and we see them in our company in the places we are doing agile but I understand where Ramesh is coming from here. All businesses operate off of budgets and goals. As long as they do executives are going to expect those of us doing projects to be able to answer the 2 fundamental questions - How much will I cost and when can I get it? It's doubtful that ecosystem and that need is going to change so the question then has to be I think. How can the methodology evolve to better answer those questions without sacrificing the great benefits it gives us in day to day execution of work?
10/16/2015 9:57:20 AM

Ken Rubin
Hi Jayarajkumar, thanks for your sharing your observations. I am not trying to suggest that every type of work should be handled in an agile-like way.

In Chapter 1 of my Essential Scrum book, I state the following: “Though Scrum is an excellent solution for many situations, it is not the proper solution in all circumstances. The Cynefin framework (Snowden and Boone 2007) is a sense-making framework that helps us understand the situation in which we have to operate and decide on a situation-appropriate approach.”

I go on to describe where and when agile could apply in the five different Cynefin domains: simple, complicated, chaotic, complex, and disorder. The examples that you gave would fall into the Simple domain. And, here is what I say about that:

“In a simple domain everyone can see cause and effect. Often the right answer is obvious and undisputed. This is the domain of legitimate best practices. There are known solutions. Once we assess the facts of our situation, we can determine the proper predefined solution to use. Scrum can be used for simple problems, but it may not be the most efficient tool for this type of problem. Using a process with a well-defined, repeatable set of steps that are known to solve the problem would be a better fit.”

The purpose of this blog post is not to conclude that the Simple domain work of various groups should be done using agile. Rather, I am making the point that if an organization has decided to use agile development as a competitive approach to delivering value, if other departments that have to interact with the development organization have not embraced core agile principles in an attempt to align with the development teams, there will be a misalignment that will likely erect impediments to the long-term successful use of agile to deliver on the desired business benefits.

To be clear, a non-development group can both embrace agile principles and use a defined process for some of its work. I would argue if you cast a wide net to encompass development/operations, we do the same thing.

For example, let’s say development needs a constant supply of new hardware. Assume that each new machine is configured in exactly the same way using exactly the same set of steps. I think we would all agree that we should have a very well defined process for how to configure those machines (from their arrival at the receiving dock to their placement in the server room or on someone’s desktop). All of this is happening inside an organization that has fundamentally embraced core agile principles.

Hope this helps clarify!
10/12/2015 2:22:05 PM

Jayarajkumar ayyappan
hi Ken,

Nice to read your article , If my understanding is right agile is more relavant IT products, where there are lot
of unknowns. There are lot of unknowns in the requirement and also in solution.

Do a milk man require to follow a agile ? or so legal/finance department or people who do reptitive task.

I feel agile more focussed on solving Adaptive problems rather than to do day to day work.

We have Standard Operating procedures and other frame work to take care of it.

For e.g , I want my pilot to follow a plan unless an emergency and my aircraft maintenane department but when i am
developing or designing a new aircraft , i would like to take the approach of Agile.
since ther are lot of unknowns , while developing a new product.

Moreover the other departments drive the.. IT to be agile for their convience of Core business because we IT folks take
some time to understand bussiness and business takes it own time to learn the IT.

Please guide.
10/11/2015 9:48:58 AM

Ken Rubin
Hi Ramesh, I appreciate your comment and the healthy skepticism that you are displaying. The best way I can address your concerns is through the series of blog postings I will be doing on the topic. The first of which has now been posted -- it deals with helping the finance group better understand how to properly account for costs when the organization uses agile development. You can read it here: http://bit.ly/1Ly5EUA. Also, if you are interested you can review the slides from my Agile 2015 presentation on this topic located at: http://bit.ly/1Olnc6K
10/7/2015 7:01:50 AM

Ken Rubin
Hi Jim, thanks for the comment. I will be posting a blog on "legal" in the near future. You can check out my blog on "finance" now at: http://bit.ly/1Ly5EUA
10/7/2015 6:53:10 AM

Ramesh Iyer
I am a bit intrigued about your article. You seem to be so full of Agile that you are forgetting an organization embraces clarity and also the external world works by rules, contracts et al. All of which are fixed. Are you trying to change the world or ecosystem, the foot or the whole body as it were to cut the shoe. It's Agile that has to be modify itself to suit the org and ecosystem needs and not the other way around.Please can you explain what I see as a strategic disconnect between the reality and your perception of how Agile is the center of the universe. Not skeptical but definitely intrigued.
10/6/2015 11:07:11 PM

Jim Kemp
Yes! This is the thing I always knew was missing but couldn't put my finger on. I'm looking forward to your recommendations on how to fix the "legal wants fixed cost and schedule" issue.
10/6/2015 7:36:30 AM

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