Q&A on the Book The Age of Surge

In the book The Age of Surge, Brad Murphy and Carol Mase explore a human-centered approach to scaling agility and transforming companies for digital. The book describes the Digital Wave Model which companies can use to disrupt organizational structures and business functions and re-create them to fit the digital landscape.

InfoQ readers can download a sample from The Age of Surge.

InfoQ interviewed Murphy and Mase about the digital wave model, how digital transformations impact the role of middle management, the advantages that self-management brings, the conditions or structures that leaders must employ if their goal is to promote increased self-organization and self-management across the organization, what makes platforms and ecosystems so important for digital products, what organizations should focus on if they wants their digital transformation to be successful, and their advice for organizations that want to start a digital transformation journey or energize an ongoing transformation.

InfoQ: Why did you write a book about digital transformation?

Brad Murphy: We’ve spent nearly two decades helping large companies adopt and nurture agile principles and software development practices. In that time, it has become increasingly obvious that lack of agility is not merely an IT or software development problem— it’s fundamentally an organizational challenge. The organizational challenge is made even more difficult because smaller firms are now exploiting the advantage of speed and cloud computing to disrupt and reinvent whole industries. No amount of agile mastery or DevOps tooling is good enough to defend against those whose sole purpose is to disrupt and redefine entire industries. In this new marketplace reality, the threat to traditional firms is not merely a lack of agility or modern software development capabilities; it’s the unrelenting uncertainty and change these firms must now navigate because of digital. Our experimental work around human-centered change models built on the foundations of emerging understandings in social science and neuroscience has revealed a more powerful and sustainable way for companies to adapt and reshape themselves for digital—and to continually adapt as circumstances demand it. We wrote our book because we want every leader, manager, and team to know how they can learn to use these powerful tools of transformation to disrupt and reshape their companies from the inside out.

Carol Mase: Organizational transformation has been a challenge for traditional companies for decades; it’s arguably one of the most researched topics in the business literature. But there is still about a 70% failure rate for organizational change of any kind. Given what traditional corporations are facing as digital technologies, new business models, and shifting customer expectations disrupt whole industries and markets, these companies have to explore new ways of transformation. We have been transforming traditional enterprises since the 1990s, and we’ve had some remarkable successes, using techniques that are available to anyone combined in new ways. We saw how to connect the dots, and then we took that knowledge and honed it through experimentation in real-world situations.

Digital transformation was also of interest to us because it involves the whole organization, not just technology. Agile is sweeping technology development, but that does not necessarily mean it is going to reach over into the business side, sales, marketing, finance, call centers, you name it. And it probably won't look the same on that side of things. But digital is definitely going to affect all parts of the company. So that is where leadership needs to focus efforts, using the practices of agile and other methodologies (technical and nontechnical).

InfoQ: Who is this book intended for?

Mase: I would say it is for anyone interested in helping enterprise firms evolve rapidly in the face of the disruptive digital waves hitting every industry. Large, old, multinational companies are not the same as small startups that have grown large and multinational (like Google, Amazon, and others). These traditional companies face unique challenges in transitioning their technologies to agile and their workforce to what I’ll call “digital.” A small, co-located agile team working on a specific, granular backlog of user stories faces different challenges than a multidisciplinary, cross-organizational product team that may be distributed across the globe working to innovate in a turbulent marketplace. We wrote the book for both of these situations, and for the managers and leaders supporting corporations transforming in the digital environment.

Murphy: We wrote this book for executives, managers, transformation practitioners, and employees who have an interest in provoking change to position a company for greater digital success. We illustrate in our book how each of these roles has the opportunity to initiate and scale transformation in ways that avoid the cut-and-paste Agile scaling nonsense happening today. Because our approach is built on social science and neuroscience, anyone, anywhere in the organization can step into the role of disrupter.

InfoQ: Can you describe the Digital Wave Model?

Murphy: Our Digital Wave Model was born out of a fundamental need to help leaders recognize and avoid the dangers of treating agile as a destination—or worse, thinking that scaling agile somehow assures a company’s future success. The model lays out the current waves of disruption and illustrates two key points:

First, there is always another wave headed your way, so moving to a new wave and staying there isn’t the goal. The goal is to move through the waves quickly and, in doing so, position your company to exploit the next wave. 

Second, every new wave comes with huge implications for organizational design. Building software monoliths, for example, (typical of Wave 0 or Wave 1 companies) requires a very different organizational structure from what is needed by companies operating in Wave 3, where digital products are rapidly assembled from a rich ecosystem of autonomous microservices. Waves 4 and beyond exploit the emergent power of augmented and artificial intelligence. Each of these waves illustrates how companies must provoke human and structural change that amplifies the opportunities afforded by the new technologies.

When we frame digital disruption in this way, leaders immediately see why today’s trend to link up large numbers of agile software teams in the quest for “scaling” is a fool’s errand. As you move through the waves, the challenge is more about scaling down, modularizing the company into increasingly small, autonomous teams built around business value. It’s the very opposite of today’s scaling fad.

Mase: To build on Brad’s comment, because there is no final destination when it comes to adopting lean and agile methodologies you are actually transforming your whole company to compete in the digital marketplace. Every wave requires that organizational structures and business functions (internal and external) be disrupted and re-created to fit the digital landscape emerging within the enterprise. This is why there is a need for human-centered design. From a corporate systems perspective, human systems contain both the seeds of their destruction and the seeds for their renewal. The Digital Wave Model helps us know where to look and what to do when we find these seeds.

InfoQ: How do digital transformations impact the role of middle management?

Murphy:  The rapidly shifting role of middle management is a great example of why agile transformations typically do little more than optimize software development. Larger firms are living, breathing ecosystems made up of thousands of people. In all large companies, there are those who shape and execute strategy, those who orchestrate and coordinate the work of larger initiatives (traditionally middle managers), and teams whose work is increasingly cross-disciplinary and cross-functional. As an organization fosters greater decision making at the team level, middle management’s work becomes more strategic. In our view, the more compelling future for middle managers shifts away from cascading orders and optimizing resources to work around three broad themes: amplifying learning and experiments, clarifying strategy for teams in a way that fosters improved team decision making, and last but not least, taking responsibility for continuous transformation. In other words, as organizations scale decision making down to teams, middle managers will have the cross-organizational visibility and the bandwidth (because they’re no longer micromanaging teams) to engage in the ongoing work of reshaping structures, policies, and processes to advance the company through each digital wave it encounters. This does mean fewer middle managers over time, but it also means the role is more crucial than ever—it just looks very different from today’s typical middle manager assignment. 

Mase: Middle managers are the most threatened by agile; the recommendation is often that you get rid of them. But large enterprises need this layer not only to coordinate, but also to innovate. We see middle managers as a long-term investment the corporation has made in people, knowledge, and skills. Eliminating them does not buy agility. Agile wants a flat organizational structure. Rather than flat, we argue, companies should be aiming for a horizontal structure. Middle managers are the means by which large corporations link people, silos, functions, divisions, and businesses to create a horizontal company. These managers have the relationships and credibility to design and drive digital transformation. That does not mean that those tied to the past remain valuable, but I suspect that those individuals who can’t make the shift will walk away on their own when the corporate structure and management function change.

InfoQ: What advantages does self-management bring?

Murphy: Before describing the benefits of self-management, let’s first clarify what we mean by the term. In our view, self-management is fundamentally a question of where and how decisions get made. Those who’ve spent any time in large companies are well acquainted with the dysfunctions of micromanagement, and top-down decision making. Self-management is merely the shift from remote decision making to local decision making. In other words, those who are in possession of the greatest knowledge, understanding, and skill are not just empowered to make local decisions, they’re required to do so. This kind of empowerment comes with responsibility and accountability.

The benefits of this kind of self-management fall broadly into two categories. The first is speed. Speed of decision making is an obvious benefit, but speed of learning and speed of adaptation are equally essential because learning and adaptation are the behaviors required to achieve business outcomes. The second category of benefit is the huge leap in creativity that comes from pushing decision making to the local level.

Like all organizational design changes, however, pushing decision making down to the local level comes with dangers as well. Self-management demands a new framework for ensuring every team and employee is crystal clear about both the business’s strategy and the company-wide outcomes essential to realizing that strategy. In a way, you might think of this as the backlog for the entire company, only the contents of that backlog are not epics and features, but mission, company values, business strategy, and outcome roadmaps— it’s governing globally so that decision making can be done locally. We talk about this process in the book when we introduce readers to the Strive agile performance management system we’ve designed to orchestrate empowered decision making throughout a large company. 

Mase: Self-management is the first step toward organizational self-governance and self-organization, both of which are required to get to micro-businesses and Wave 3. Self-management has been around for a long time, and it hasn’t always worked in corporate situations. That happens when accountability is missing. Self-managing teams need purpose, autonomy, and mastery—and to be held accountable for their actions, behaviors, decisions, and performance. These elements are largely absent in most agile teams we work with, usually because team members have not been taught these skills and management is too quick to jump in when that lack of training and experience becomes evident. In other words, managers resort to command-and-control leadership rather than trying to teach teams to self-manage. But teaching teams to self-manage is the only way you get out of Wave 1 and really set sail. Self-management is what successful startups and entrepreneurial companies do exceptionally well. For corporate management and HR, this is a huge opportunity, one that provides bottom-line impact as well as “softer” benefits, like boosting employee engagement and customer satisfaction.

InfoQ: What conditions or structures must leaders employ if their goal is to promote increased self-organization and self-management across the organization?

Murphy: The holy grail of the agile movement has for years been the elimination of command-and-control management. The reason (in part) command-and-control is still so thoroughly entrenched in larger companies is that it’s not enough to call out why it is broken or ineffective for digital—you also have to invent an entirely new system to replace it. Our Strive agile performance management framework provides that system. This framework evolved out of a variety of experiments we’ve been running, where we intentionally blended a new OKR alignment system we’ve designed with new learning and productivity ceremonies that unleash the kind of social norming pressure and cognitive learning needed to enable teams to step into greater ownership of business outcomes, not just technical deliverables.

In our view, it’s essential that companies experiment with new frameworks like these to foster greater engagement and clarity around the WHY of decision making and equally important, hold employees and teams accountable. In this new way of fostering systemic agility at scale, accountability is reinforced through hypertransparency, another attribute often lacking in larger firms. When you combine clarity of strategy, social accountability, hypertransparency, and empirically defined short- and intermediate-term business outcome targets, you have a recipe for unleashing the kind of self-management and self-organization behaviors we all want to see emerge in corporate life. 

One last thought.  When companies fail to utilize these emerging management practices, they undermine authentic transformation by valuing speed and raw production over learning and insight. What’s remarkable about moving away from a focus on raw deliverables and toward one that imposes accountability for outcomes is the way that this kind of approach unleashes creativity and innovation that are actually already present in companies. 

InfoQ: What makes platforms and ecosystems so important for digital products?

Murphy: Without digital platforms and ecosystems there would be no digital-native companies; that’s how fundamental these constructs are to those digital companies we admire most (Netflix, Amazon, AirBNB, to name a few). In this brave new world, companies intentionally stop short of building out every conceivable service or product and instead allow others, sometimes even direct competitors, to build on top of a core set of capabilities. It is the cooperative nature of platform builders and ecosystem participants that allows digital-native companies to innovate so quickly. Building platforms does require a radically different mindset and a new model for monetizing value creation, and it represents yet another wave of disruption that some traditional companies will want to explore. In the book, we highlight how GE is betting its entire future on creating such a platform for the Internet of Things; they’re calling it Predix. While it’s still too early for us to declare Predix a success, if GE does establish dominance in this exciting new space, the value they capture will exceed the company’s total market cap today by several multiples.

Mase: First, think about platforms and ecosystems as two sides of a coin; they are both ways that diverse groups of stakeholders can form a community capable of creating value in the marketplace. Platforms, which can be technical or social (teams, product development units, etc.), provide the structure for participants to collectively build products and services that create value. Ecosystems are the dynamic relationships between participants of the platform (or company) that provide structure for trust, collaboration/cooperation, knowledge transfer, innovation, and personal growth. Although you might think of digital products and services as low touch when the customer uses them—customers are often using them in ways the company didn’t imagine—their creation is extremely high touch. Companies often work with customers or prospective users to create a new product. This kind of co-creation, which occurs on a platform and in an ecosystem, is uniquely human; machines can’t co-create, they can only be plugged into another machine in the system. Finally, platforms can be built inside a large corporation as well as in a marketplace. This reduces redundancy and overhead that cooperation often generates.

InfoQ: What should an organization focus on if it wants its digital transformation to be successful?

Murphy: While there are many ways to think about and measure the progress of digital transformation, the hard truth is that success is not a destination nor is it long lived. Digital requires continuous and ongoing transformation, making it impossible for companies to linger long at any particular destination or waypoint. The hallmark of successful digital transformation is a systemic change in how companies learn, which enables them to move from thinking about their products as “stuff we sell” to thinking about “experiences we craft for customers and partners.” 

Mase: Let me pick up that thread. Success needs to be measured by how the organization functions and can structurally adapt to take advantage of new technologies, not by the technologies themselves. People must be growing and opening themselves to not one but multiple methodologies, tools, and techniques that are appropriate for their market and product development situation. Don’t force uniformity; seek rational diversity—encourage uniformity within product teams but allow different methodologies across independent product groups. This diversity enables each group to move through the waves at its own pace, a pace that is aligned with the rate of change (technical and product advances) in its markets.

For organizational leaders, it is always tempting to try and move the whole organization from one methodology to another. For example, having everyone adopt one agile scaling method sounds logical. But is it? Does that uniformity make the organization more adaptive, or does it mean you’ll have to move everyone to another methodology when the first one becomes a straitjacket? We’re already seeing this in companies that have mandated one way of scaling agile and then gotten stuck in Wave 1. Companies are complex ecosystems, contextually rich, tapestries of relationships and market interactions. Let those connections and relationships drive the creation of a palette of methodological options that leaders can choose from as business and technology become integrated and products encompass the end-to-end user experience.

InfoQ: What's your advice for organizations that want to start a digital transformation journey or energize an ongoing transformation?

Murphy: It’s sounds cliché, but make your transformation about something much bigger than simply making money, speeding up software development, or taking market share from competitors. In fact, don’t make it about your company at all. Build a narrative that is authentic to your organization and compels it to serve others in ways that not only inspire loyalty from customers, but also challenge employees to question everything about what you do and how you do it. What companies need today even more than agile, automation, or cloud computing is a way to become more human while operating at the scale of digital. For us, this is the greatest disruption of all.

About the Authors

Brad Murphy is a serial entrepreneur, speaker and author focused on pioneering innovations in product, service, and software development.  Murphy is also founder and CEO of Gear Stream, a business and software agility transformation firm helping transform legacy Enterprise Business & IT into a modern digital product development operating model.   Murphy can be reached at: brad.murphy@gearstream.com

Dr. Carol Mase is a speaker, author, biologist, drug inventor, social anthropologist, and global product innovation executive. For more than 30 years Mase has pioneered the use of social ecology, cognitive science, and human networks to foster emergent behavior that fuels corporate growth, innovation and systemic transformation. Contact: carol.mase@gearstream.com