Business Agility with Evan Leybourn

Alright I love the comment you made that if we pulled a lever today Something happens. We pull that same lever tomorrow. Something different happens. If we document a process, we inherently change it.

I love the fact that this is based on behaviors, because once you observe behaviors, you can measure them. Once you measure them, you can model them. Once you model them, you can decide if you want to change them. What behavior do we need to change? How do we observe it happened? How do we measure it happened?

And I love the fact because you are a research organization, not a consulting organization that when I read your case studies, there is a shit ton of links that show where the data came from.

And then I go back to that key thing you keep saying, you can have change at any speed you want, but that organization’s process will come back and it will hunt you down, it will stop you hiring people, it will get rid of the people you’ve hired that are good.

Read along you will

Shane: Welcome to the No Nonsense Agile podcast. I’m Shane Gibson

Murray: and I’m Murray Robinson.

Evan: And I’m Evan Laybourn

Murray: hi Evan thanks for coming on today.

Evan: Looking forward to the conversation.

Murray: We want to talk about business agility with you today. Why don’t you tell the audience a bit about who you are, what your background and experience is.

Evan: All right. I started my career in data science, data warehousing. In about 2008, I became a director of business intelligence. I went into management consulting, and then in 2017 co founded, the Business Agility Institute as a advocacy and research organization.

Our focus is to create a world where individuals and leaders in those organizations have the information, the insights and the tools they need to be effective and productive in an ever changing, ambiguous and uncertain world.

Murray: Can you define business agility? What is it?

Evan: Business agility is a set of capabilities, behaviors, and ways of working that gives an organization the flexibility and resilience to achieve its purpose. No matter what the future brings.

Murray: How do we know that our business is agile? How do we measure it?

Evan: So there are five domains. The first one being around an engaged culture. And so these are the capabilities and behaviors around psychological safety, creating a learning organization, collaboration and the ability to act as one.

The second domain is around customer centricity. An agile organization is one that actually understands and can respond to their customers. So we’ve got fiercely champion the customer. Then we have customer centricity. And then the last one being the ability to integrate diverse ideas.

Next one is leadership. And for this, what we’re looking for is the ability for leaders to create authentic relationships rather than transactional relationships. We’re looking for leaders to empower with accountability. And then the third one there is the ability to realize people’s potential.

The next one after that is flexible operations. Now this is the ability to move funds and people around the organization to where they need to be when they need to be there.

And then the last one is the ability to balance governance and risk. Most organizations aren’t good at governance. Someone made a mistake 20 years ago and a leader said that can never happen again. And so a policy was created. And over the 20 years, the cost of compliance with that policy is three to seven times the actual risk of that thing occurring again. And we’re seeing more agile organizations shifting to things like audit based governance over approval based governance, where approval based governance is stop until I tell you to continue, whereas audit based governance is continue unless I tell you to stop. Much more dynamic, much more agile.

The two principles that I just want to very quickly touch on is first business agility is a continuum, not a state. There’s no point where you can say, aha, we’re agile. And the second principle being that there’s a range of agility inside an organization simultaneously. There’s going to be some teams that are good at some behaviors and other teams that are good at different behaviors. And that same team is going to be good at some things and worse at others.

Murray: So what I’m hearing is that you do a staff survey where people rate the organization. And you go in and ask a lot of questions based around these criteria.

Evan: Yes, so when we measure companies, we look from two perspectives. One is from the behavioral perspective and that’s the interviews or surveys. The second is a governance review. So we actually review policies and procedures of an organization to understand how effectively their systems support or detract from agility. So organizations will say things like, we’re a risk taking organization. Do you actually fund people to run experiments? Or do you expect them to just experiment in their spare time?

Murray: Can you see a connection between scores on those assessments and financial performance.

Evan: Yes. We see that organizations that are using these mindsets, these principles, and these behaviors can bring products to market 20 to 30 percent quicker. We found that 17 percent of organizations directly attributed business agility to their financial growth and profitability through the pandemic. An additional 43 percent of organizations said that business agility was a contributor to their success through the pandemic and only 17 percent said that there was no relationship.

In fact, here’s a stat mature business agility equals 24 percent higher Glassdoor scores. So employee satisfaction, employee engagement increases by on average, 24 percent when you have leaders and operations that work in this particular way,

Murray: What are some examples of organizations that are really agile, according to your research?

Evan: If we want to look at, say, financial services DBS Bank in Singapore has been investing in business agility for 10 plus years now. They’re probably one of the most advanced financial services organizations that we have seen. So they have adaptive funding, adaptive strategy, innovation across large parts of the organization from marketing to operations to of course, technology.

DBS went from customer satisfaction scores of just over 67 in 2008 by 2010, that had dropped even further to customer satisfaction stores around 65. And this is when they started really focusing on the customer journey. And they jumped from being the lowest ranked Asian bank in the Singapore, Southeast Asian market to the highest, with a jump from 65 to 71 in one year. So a 10 percent increase in customer satisfaction. In a year, because they just started going, how do our customers want to engage with us? And just by focusing on how leaders support their teams to support the customers.

Outside of financial services, Target Us has been putting a lot of work into their delivery capabilities and value based delivery. Now their dojos are world famous at this point and being adopted by 50, 60 organizations around the world.

Beyond that, we can go into all sorts of other organizations, one of my favorites, is the depository trust clearing center commission. The American organization that handles all stock trades. They are not allowed to go down. If they go down, trillions of dollars will disappear from the stock market in an instant. And so their adoption of business agility has been one around moving from slow and steady to adaptive and responsive and steady.

Murray: What about in our area of the world? Australia and New Zealand. How are we going?

Evan: Asia Pacific is rated fairly low in terms of business agility. There have been attempts and progress made with some organizations. We’ve actually studied Telstra. What is public knowledge is that they’ve actually made some substantial progress in numerous areas. But at the same time, they carry the complexity and constraints that any large organization does.

What Asia Pacific does well is the smaller organizations.

Shane: But the key question Evan is, do you have a large A3 piece of paper with lots of boxes and lots of lines to tell me exactly how to make my business agile?

Evan: No, that’s actually not even possible. An organization is a complex adaptive system. And because it’s a complex adaptive system, cause and effect are pretty much unpredictable and unknowable. You pull a lever today, something happens. You pull the same lever tomorrow, something completely different happens. Now, because of that, we can learn from other organizations. We can be inspired by what other organizations are doing, but we cannot copy them.

Shane: I think organizations that were created before 2000 seem to be more hierarchical, seem to have trouble bringing agility or the, speed of change to the organization. And ones after 2000 seem to be able to make those changes quicker.

And what’s interesting is in the research you’ve found that companies that were created in less than 10 years ago they’re less agile than organizations that are between 10 and 40 years old. Why was that?

Evan: This was a surprise to us. Those younger organizations were demonstrating no greater agility than a hundred year old organization. And size didn’t actually really matter. Now, when we actually dug into this, we would talk to startup founders and we’d ask what was their idea of a good business? And they would describe a hierarchical organization with functional silos. It was actually really disheartening to hear all of these emerging business leaders describe a 1980s management model that didn’t work then and barely works now.

Now obviously, there were hugely innovative, highly agile young organizations, but there were just as many that were falling into the trap of more authoritarian leadership, and that’s actually, one of the trends that we’ve seen in the last couple of years is this counterculture away from agility towards more authoritarian leadership. And you just need to look at Elon Musk as the poster child for this kind of behavior to see where people are being inspired in the wrong way

Murray: But wouldn’t you say Tesla and SpaceX are actually very agile though,

Evan: Yeah, I would. There’s a range of agility across the organization. So let’s take another example. Like Amazon. From what is public knowledge about Amazon I would probably rate their customer centricity as world class. They are listening to customers to a scary degree, and they may be listening to customers a bit too much from a privacy standpoint, but when it comes to putting what you need as a customer in front of you so that you make a sale, they’re very good at that. Do they have an engaged culture? No. It’s a toxic workforce that people have to go to toilet in bottles.

So this is where you get this sometimes contradiction between parts of the culture, parts of the organization have great levels of business agility. Whereas others do not.

Shane: Do you think it’s part of their strategy?

Evan: Yes, organizations do focus, and they should. Where it goes wrong is where organizations hyper focus on one area for too long, and what Amazon is. That’s not a strategic decision of focusing on one area and then shifting strategically to another area of business agility. That’s a cultural decision of this is the kind of organization that we want. We want to keep prices low for customers and so they have chosen to do so at the expense of employee welfare.

Murray: I’ve worked with a lot of different organizations in Australia usually in delivery project program management, sometimes agile coaching roles. And what I see is the big service providers go around talking about how agile they are But They’re not, they’re just doing waterfall in silos with sprints for the dev team and the test team. And the big clients are all doing it as well. Even innovative companies are still doing waterfall with sprints in the dev and test silos.

Evan: So agile as a concept has been highly commoditized. This is the cost of winning, the cost of becoming the de facto dominant approach to work, no matter how good or bad a team does it.

What’s been interesting is that a lot of the management consultants are actually really struggling right now because organizations don’t need an agile consultant to tell them how to be agile. They’re just going we’ve been doing it for 20 years. We assume everyone’s agile by now. We’re just going to make sure that when we hire someone, we’re going to look for agile acumen in the recruitment process.

We did a study with the Scrum Alliance late last year about skills, and we actually saw that there was a substantial decline demand for specialist agile roles, like an agile coach. But what was on the increase was the demand for what we classed agile acumen, the ability for anyone in any role to work with agility, to have that agile mindset.

Murray: I don’t agree that agile’s won, you can say that, agile is just the basics now. You’ve got to be agile. But they’re not. They’re just taking what they’re already doing, calling it agile and doing epics stories and sprints in some narrow areas.

Evan: Let’s distinguish here between agile the mindset and the implementations of agile. I would say that the dominant mental model in technology product development is around iterative delivery. Back when I was doing data warehousing in 2003, the average duration between releases was two years, that’s how long it took to get a new data warehouse with a series of data marts deployed. But I would say that the vast majority of organizations have recognized conceptually that you need to create value iteratively through inspection and adaption.

Now, does that mean that these same organizations are using scrum effectively? Hell no. Are they doing waterfall in sprints? Absolutely. A lot of them are. But they have accepted the need for iterative, incremental delivery of value.

Murray: I’m going to say that they haven’t, that it’s all theatre. There’s a lot of agile theatre out there. Now, I’ve definitely worked with some organisations that have accepted what you’re saying, and they are nearly always ones that have an in house team. They’ve invested in their capability, and they’ve gone on a learning journey .

There’s a spattering of DevOps around that can be pretty good. And there are some organizations that do incremental and iterative development of products, but I’m still seeing big organizations that do big bang releases every one to two years as common.

This is why Safe is quite popular because at least with Safe. You can release something every three months, it’s got a six month pipeline But delivering something quarterly is much better than what most organizations in Australia who claim to be agile are able to do because it’s all just words.

Evan: So that may well be an Australian thing. We’re a global research organization. We don’t have a lot of case studies or references here from Australia. I would say that we are in the late majority in the adoption curve perhaps even now towards the laggards of those who haven’t done it yet .

DevOps early majority. It’s still got a lot of room to grow in terms of organizations, adoption of DevOps approaches, tooling, capabilities, mindsets. Business agility hasn’t crossed the chasm yet. Business agility is still very much early adopters and innovators.

Murray: Now I think you and I are going to have to agree to disagree in terms of some of these things. So if an organization is delivering value to their customers when their customers need it then that’s all they need to do. Whether they want to do scrum badly or water scrum full, doesn’t matter. They’re delivering value to their customers as they need it. I’m not stuck on scrum and i’m not just talking about technology. I’m talking about product. The people I know who are doing this sort of thing are startup technology teams scale up teams, people like Real Estate Australia, Seek and Xero. I was doing Agile with Seek back in, 2003. So those sort of digital native scale ups I think are doing it, but the rest are just, lying about it because it’s popular.

Evan: There’s definitely that happening. Now seek we’ve got one case study from them in our library. Thing with organizations like Seek is part of their strength is what we would class strategic agility, their ability to adapt their strategy, product investments and product direction based on changes in the marketplace and changing demands and changing expectations. And that sort of strategic agility sitting alongside the product agility the technology agility that they naturally get from being a digital native organization is a very strong combination.

So let me take what you’re describing and split into two. When we look at organizations who are doing this badly. We see an issue of organizational systems and governance. So there’s a saying that a bad system will beat a good manager every time.

You have teams that are desperately trying to be agile, but you’ve got policies and procedures, organizational systems and structures that are dragging them back towards the 1980s.

Murray: Yeah. And often I see a culture of fear and shooting the messenger in these organizations . So senior management operate in a world that’s quite detached from reality, because there’s a whole series of people in between the people doing the work and the senior managers who are all making the message sound better each time it goes through. So their mental model of what’s happening in their organization is really out of touch, although they don’t believe it is.

Evan: So politics is the currency of human systems. And there is a political cost to change. So let’s say we’ll make things quicker and more efficient and so forth, but unless you reduce the political cost, change never happens.

Now, when we study organizations we will often interview the top executives. And what’s really interesting is that you will interview a CEO or a CHRO or a CFO and they will talk about how frustrated they are with their lack of power, their lack of ability to influence the organization to be what they want it to be, the kind of agility that they want.

There’s not a single CEO on the planet that doesn’t want agility across their organization. You get this frozen middle, these middle managers who are afraid for their jobs. And these people are using these politics as a way of protecting what they’ve got

Murray: Ron Westrom, who’s a sociologist, has this really great culture model that they talk about a lot in DevOps, which is that there’s three types of leader and organizations come from it. So there’s the pathological leader, this is the leader who shoots the messenger because they are controlling the message. There’s the bureaucratic leader. This is the one who is completely focused on maintaining policies and processes and their department’s power and influence . So they tend to ignore the messenger or deal with the message very slowly.

And then there’s the generative Agile creative leaders. These are the people who are really in touch with the information that’s going on in this organization. Somebody brings them bad news. They reward them so that everybody knows that the most important thing is to find the bad news and deal with it straight away.

He specializes in the area of safety, and he says it’s always the case that lots of people know that there’s a problem. It’s just that the information doesn’t get to the people who need it, or the people who get the information don’t do anything with it. So there’s a culture thing which depends on Leadership, which he feels drives everything. I found that quite persuasive.

Evan: He’s entirely correct. And we have a case study in our library about the changes that happened to the airline industry after a series of accidents in the 1980s. And there’s a very famous one where the co pilot knew what was happening, but was afraid to speak up to the pilot and it ended in a plane crash and the loss of all lives and that actually shifted a lot of the cultures. Like the copilot is now accountable for challenging the pilot. And there is some really great things to be learned from that industry.

Now, a lot of change programs, agile transformations or business agility transformations assume that all leaders are generative, to use this model. Any change program that doesn’t pay the political cost of change will not change the organization. And so saying that there are these pathological and bureaucratic leaders is half the story. Knowing how to influence them into the direction that you need them. That’s the only way that these kinds of change programs actually take place. The challenge is that can’t be done from outside the organization. You can’t bring in a big four consulting firm to do that kind of cultural political change. That happens when you have those change programs being led and influenced from inside and from the top.

Shane: There must be shapes of companies that you can see come out.

Evan: There are definitely organizational shapes. The one that we see reasonably often is this U shape in terms of agility in the organization. Those are very stressful organizations because these two parts are pulling at each other, dragging the organization in two different directions. You can’t have two cultural sort of behaviors in an organization at once because it will tear the organization apart.

Murray: Shane, we’d better go to summaries. I think,

Shane: Alright I love the comment you made that if we pulled a lever today Something happens. We pull that same lever tomorrow. Something different happens. If we document a process, we inherently change it.

I love the fact that this is based on behaviors, because once you observe behaviors, you can measure them. Once you measure them, you can model them. Once you model them, you can decide if you want to change them. What behavior do we need to change? How do we observe it happened? How do we measure it happened?

And I love the fact because you are a research organization, not a consulting organization that when I read your case studies, there is a shit ton of links that show where the data came from.

And then I go back to that key thing you keep saying, you can have change at any speed you want, but that organization’s process will come back and it will hunt you down, it will stop you hiring people, it will get rid of the people you’ve hired that are good. over to you, Murray.

Murray: Yeah, I think that your model of a agile organization is something that we believe in as well. That you have an engaged culture. You’re responsive to customer needs, have people first leadership, flexible operations, and value based delivery. That’s the same broad definition of agility as we have. And, I guess a lot of the more experienced agile people have., it’s not about scrum and whether you stand up should be 15 minutes or 20 minutes or whether your JIRA ticket should have time allocated to it .

I don’t know whether it’s Australia or because I’ve been working in the delivery areas, you are far more optimistic than I am about the state of agile in companies. I don’t see much of it. I’d say 90 percent of organizations that I know are doing agile , really badly. Using the words, not getting much result. They’ve actually taken what they were doing before and they’ve just dressed it up and changed the slippers, as Shane likes to say. The ones who are doing it well are the ones who have an in house capability and have built it up. And I’m not just talking about technology. I’m talking about product, digital all those areas.

There’s a great deal of negativity about Agile at the moment in the community. A lot of people been saying Agile’s dead. A lot of Agile coaches and scrum masters being let go. But a lot of organizations are still very bureaucratic. You don’t learn this stuff in an MBA, you learn it by being mentored that this is how you do things. You’ve got to be authoritarian. You’ve got to spend all your time producing 80 page documents. Failure is not an option and we always outsource everything to India cause that’s cheaper. And at least in Australia, I think most of them learnt all of the right words to say, it’s just that they don’t do it.

So I dunno, maybe there’s laggards here. People who’ve worked at the FANG companies all say the right things and they’ve got lots of examples. So look, internationally, I think there’s quite a lot of companies that are doing it really well, and if you can help with all your research. That’s great. But I’m nowhere near as optimistic as you are about the current state.

Evan: So thank you for the opportunity for this conversation, and it’s been very robust and I’ve enjoyed that. Three quick things, maybe just to add to your comments. The 1st is, and this is where I’m optimistic. I do not believe agile is dead. I believe agile has been commoditized as a cost of winning.

I will say, however, that the Agile industry, the business models around capital A Agile are not going to be around for much longer. The need for some of these specialist roles is disappearing, but the need for agility and the expectation of agility is continuing to increase.

Second thing, offshoring has had a lot of negative consequences in a lot of organizations especially when it’s used as a price driver. Oh, we can get testers cheaper in another country. That does not lead to strong levels of agility. I have seen offshoring work when it’s about capacity building where those teams are integrated into the flow of value, not as a silo, but their own holder of value creation. Sadly, I would say that’s probably only 20 percent of organizations that offshore.

And then last point around the profile. We do commissioned research, which is broad studies on deep topics. We do industry trends. Which is things like the business agility report or the skills in the new world of work, or we do behavioral studies of individual organizations and that, is what we’re talking about in terms of the business agility profile where we will literally profile the behaviors of an organization through that survey, through those interviews, through that governance review to identify where those organizations need to focus. If anyone wants to have a chat about the profiles, always happy to have a chat about them.

It’s our bread and butter.

Murray: Okay.

So how can people reach you, find out more about the Business Agility institute?

Evan: if you want to reach out to me, please connect with me via LinkedIn. If you want to know more about the Institute and the sort of work that we do you can send us an email, hello at businessagility institute. Or just reach out to me and I’ll put you in contact with the right people.

Murray: Okay, great. Thanks. for coming on, Evan. We appreciate it.

Evan: The pleasure is mine. Thank you to the both of you. It’s been a great conversation.