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How to succeed in transforming into an agile organization – an interview with kobaltblau

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The management consultancy kobaltblau helps their clients to bring together organisation and technology. At eight locations in Europe they secure and optimize the competitiveness of companies from different industries with a focus on IT as main success driver. As management consultants at kobaltblau Patrick Sonntag and Ivan Kovynyov have long-lasting experience in the work with digitalization, agile methods and innovation.

Hello Patrick, hello Ivan. You have an extensive track record in helping organisations on their way towards organisational agility. What do you think are the most important steps organisations have to take in order to become more agile?

We live in a world that is changing rapidly: digitalisation is obviously one of big trends, disrupting technologies are new, and novel entrepreneurial forms begin. So, looking how organisations are able to adjust and adapt to these changes, agility becomes a capability most of organisations will need today.

Over a course of years, we have helped several organisations on their way towards agility, and we have come to realise that agility rethinks multiple dimensions of modern organisations such as culture, values, structure, product, delivery, ways of working and architecture. Organisations use Scrum to make projects more agile, Kanban to be more focused in their daily work, Design Thinking and Customer Journeys to create viable digital business models, Management 3.0 practices and OKR to strengthen agile mindset and develop agile leadership styles within management teams, and Value Streams or Holacracy to adapt organisational structure to the changes in ways of working.

Primarily, the way organisations learn about agility is do-it-by-yourself: looking at the market, understanding what business opportunities are, understanding how organisations can take advantage of it and, finally, are they agile enough to take the change and go for it. We ultimately believe that the key element of agile working is risk taking: if we do something only when we are sure, we never more forward. Being agile is to take calculated risks and learn from it.

A true learning organisational culture allows organisations to be agile because this is not about one particular idea coming out from the R&D department. This is more about looking at the big picture, the entire ecosystem, thinking in opportunities, what ideas are out there, and that the organisation might need to go try and take advantage of those.

«We ultimately believe that the key element of agile working is risk taking: if we do something only when we are sure, we never more forward. Being agile is to take calculated risks and learn from it ».

Should every organisation seek more agility? Why (not)?

It has been a long discussion among scholars and practitioners whether agile methods can be of any value for simple and repetitive tasks. People have argued that agile methods suit best for complex task with a high proportion of uncertainty and unclear outcomes. Iterative approaches would help teams deal with this uncertainty, constantly adapt and learn. Given our experience in working with our clients, we have started to believe however that it is all about the environment around your organisation rather that what characteristics of your tasks.

There is a variety of business scenarios describing how organisations can win competition through organisational agility. However, organisations and their management teams have to gain clarity about the desirable course of action in the first place and, starting from that, determine which future capabilities they need along their way. Ultimately, managers should think how agile methods and practices can help along their way.

«It goes without saying that Scrum won’t be effective in your organisation without appropriate agile mindset and attitudes within your management team.»

What are key barriers to organisational agility and how organisations can overcome them?

It goes without saying that agile transformations are strategic initiatives with far reaching consequences across the organisation. Such initiatives impact multiple organisational dimensions such as culture, values, structure, product, delivery, ways of working and architecture. The big question is how to develop organisational agility organically? How to manage and balance tensions arising across single organisational dimensions along the agile journey?

For instance, it doesn’t make much sense to scale up your Scrum project, if the overall mindset and the organisational structure do not follow. Such actions would create tensions and decrease overall effectiveness of the organisation rather than help in increasing overall agility.

Consider another example: changes in organisational structure such as introduction of value streams won’t be of any value without developing appropriate mindset, norms and values among employees and in your management team, adjusting technical skills and capabilities of the organisation, and changing product development.

Ultimately, organisational agility is about how organisations grow and develop, how people collaborate across the organisation, what the best practices in terms of leadership. Developing organisational agility means addressing multiple dimensions of the organisation in a balanced manner. We therefore strongly recommend that organisations assess their current level of agility, determine tensions and imbalances and start moving from there. Along the way, organisation should constantly assess the level of agility and monitor arising tensions.

Scrum is obviously the most popular agile practice. Are there any other agile methods and practices you find useful?

Scrum is definitely the most popular agile technique out there. In our daily work, we have seen many organisations starting their agile journeys with Scrum. Scrum is an exceptionally useful tool to facilitate cross-functional collaboration, increase time-to-market and software quality; however, it does not necessarily address all facets of organisational agility. For instance, corporate goal setting and leadership styles are not directly addressed by Scrum.

Kanban is the second most popular agile technique. While Scrum is an incremental and iterative approach to product development, Kanban helps to increase the productivity of repetitive continuing tasks. Kanban builds upon the principle of limiting the amount of work in progress. Organisations use Kanban in various areas such as software maintenance, managing customer inquiries in call centres, ticket and issue tracking, case management, and processing of customer complaints.

On top of that, there is a number of agile methods and practices addressing the organisational structure, leadership and mindset. For instance, value streams, holacracy and virtual organisations are new approaches to grouping firm’s activities and tasks and therefore fall into category of organisational structure tools. Management 3.0 and OKRs address, for instance, agile mindset and leadership styles.

kobaltblau has helped a number of organizations on their ways towards organisational agility. How does the agile journey of a tech firm differ from the one of a non-tech organisation?

Tech firms are more advanced in terms of agility compared to traditional mature organisations. Product development and delivery are naturally very close to each other in tech firms, and therefore agility is definitely part of their DNA.

Ultimately, fast technological change can drive any tech firm out of the market within months. Tech firms are very well aware of it and understand the necessity to keep up the pace. Consider, a music streaming provider Spotify. The firm is well aware of the fact, that the switching cost to Apple Music or Amazon Music is very low and Spotify can lose the majority of its customers within the shortest period of time after a couple of failed software updates.

Consider now a traditional mature organisation such a large international insurance group. The management team of this organisation faces completely different challenges that a tech firm does. First of all, customers demand new digital products and insurers need to respond by bringing new digital solutions to the market. Customer touch points have changed dramatically over the last five to ten years. Being a non-tech organisation, insurers need to build digital capabilities and enter the digital economy by introducing new products and business models. Many organisations respond to it by developing a corresponding digital strategy.

Second of all, large organisations have a large number of employees, live within hierarchical organisational structures and have predominantly zero failure cultures. In order to become more agile, such organisations need to do a number of things: organisations need to learn how to take risks, change internal attitudes and norms. reinforce cross-functional collaboration and facilitate changes in the leadership style.

«Organisations can respond to uncertainty and change by introducing agile goals with short time horizons, and reviewing them on a regular basis. »

How should organisations formulate their objectives and goals in order to facilitate change in agile mindset and moving towards organisational agility?

The vast majority of organisations set their goals and objectives annually. Top management teams start with the definition of strategic goals and objectives. Then, goals and objectives spread in the organisation by “falling down” the organisational levels. Once formulated, goals and objectives usually remain unchanged throughout the year. We all know that such process is highly political, resource-intensive and many of us consider it to be a complete waste of time.

Goals and objectives are usually linked to the individual personal performance and financial awards. The link to financial rewards ultimately leads to the fact that managers set goals and objectives strategically to secure their bonuses. Finally, the entire organisation ends up in a strategic game rather than in a simple goal clarification.

OKR is definitely an option to address a number of problems arising from outdated and inflexible goal setting procedures. Shorter review cycles and time spans used in OKR help organisations to keep their goals and objectives up-to-date, and increase ultimately overall flexibility. OKR goals are not linked to personal remuneration and therefore are more neutral. In our recent client work, we implemented OKR in a large organisation and we could clearly see how it became more agile.

Do agile organisations have a distinct leadership style? Does agile leadership exist?

Speaking in terms of leadership styles, norms and values, agile organisations differ from the majority of large hierarchical organisations in a number of ways.

First of all, there is a widespread consensus that being agile ultimately help organisations to react to new market opportunities more swiftly and decisively. This means that today’s leaders must assess and continually react to new opportunities and challenges. They need to able to quickly reassess and implement their strategies rapidly, refocus their efforts when the environment changes. For this reason, leaders need to develop styles and behaviours helping them develop flexibility across their organisations.

Second of all, agile methods and tools redefine the interaction between managers and their subordinates. Traditional mature organisations usually work in separate functional silos following command-and-control management styles, while agile teams are predominantly self-organising and work in a cross-functional manner.

Finally, risk-averse culture is one of the biggest barriers towards organisational agility. The culture of caution will ultimately inhibit progress. Therefore, managers should adopt their leadership styles, encourage and facilitate experimentation and taking calculated risks.

About kobaltblau

kobaltblau is a young, fast growing management consulting firm that helps companies and businesses turn a digital challenge into a digital success. They bring a new perspective to strategy, innovation, consulting, digital transformation and technology, facilitate discussion and decision making, develop and implement new digital solutions.

kobaltblau combine long-lasting experience in management consulting with profound technological expertise to help their clients to face their biggest challenges. They advise leading organizations across various industries in digital strategy, innovation, IT organisation and HR, enterprise architecture, digital transformation, sourcing and more.

Since the founding in 2016, kobaltblau has grown rapidly. More than 50 consultants are currently working at kobaltblau in Zurich, Paris, Vienna, Munich, Hamburg, Frankfurt, Stuttgart and Dusseldorf. Recent clients range from medium-sized companies to leading international corporations across various industries, for example automotive, finance, insurance services, logistics and the public sector.

About Ivan Kovynyov

Ivan Kovynyov is management consultant at kobaltblau in Zurich, where he leads the organisation’s agility and digitalisation practice. He writes and speaks extensively on organisational agility, transformative scale, agile leadership, digital transformation, digital business models and is co-leading kobaltblau’s efforts to establish a presence in Switzerland. Ivan serves on the board of non-profit organisations, e.g. Imperial College Business School LGBTQ+ business club. He completed his master’s in economics and computer science of Karlsruhe Institute of Technology and is currently an MBA-candidate at Imperial College London.

About Patrick Sonntag

Patrick Sonntag is management consultant at kobaltblau in Stuttgart. He advises companies across various industries on digital transformation, organisational agility and digital strategy. Patrick completed his bachelor’s in computer science at DHBW Stuttgart and holds an MBA from RWTH Aachen University Business School.

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