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Why? asks the hapless new employee.

Because that is how we do it.  Retorts the long time loyal Manager.

It may as well be the infamous TPS Report from Office Space. Do you know why that bit about the TPS report is so funny? It is because we can all relate to it. We have all experienced it. Many organizations are built with the belief that the best way to improve the business is through the 3Cs:

• Conformance
• Coordination
• Control

These organizations are like old buildings that were constructed before earthquake codes. The buildings were built to resist earthquakes by being built rigid, “sturdy”. However, when an earthquake hits they cannot withstand the stock and they crumble. New buildings are built, not resist earthquakes, but to move with the earthquake and thus they survive. Old business structures built on the 3Cs cannot handle the dynamic, fast changing, innovative, and short lead time nature of new market realities and so, they crumble.

These 3Cs worked well enough for maximizing efficiency in the delivery of commodity products such as cars, silverware, and furniture. Since the pieces, steps and processes are well known, the better control and more coordination you have the more product you can create and the higher the quality will be.

Many businesses however are using the 3Cs approach, not because they believe their business benefits from it but because it was the de facto management approach since the 1900s. These businesses are being blindsided by new comers that aren’t using the 3Cs and are crushing the industry.

Nowhere is this more obvious than in the music industry. Musicians used to have one way of getting their music produced and that was through a music label:

• Sony Music Entertainment
• PolyGram Records
• Warner Music Group

If you didn’t have a contract with a label you likely weren’t going to make it. Along comes technology to disrupt that market. Napster, LimeWire and others changed the face of music.

The music industry shifted from selling whole albums for $15, to one where individual songs were chosen for $1.

Name a market and the same thing is happening there:

• Banking – Online banking services
• Insurance – e-surance, Progressive, etc…
• Travel – Expedia, Hotels.com, and more

What is it that characterizes those that successfully make the transition to the new fast pace of knowledge work in an age of complexity?

We find that these organizations value; Flexibility, Innovation, and Teamwork (FIT). You wouldn’t have a pet dog, if you didn’t value it. You wouldn’t have a Porsche, if you didn’t value it. Likewise you will not have flexibility, innovation and teamwork, if your business doesn’t value it. Let’s look at how these two worlds differ.

Conformance ► Flexibility: In a FIT organization you will never hear, “We do it that way, because that is how we have always done it.” They are open to new ways of working. To be flexible in the market FIT organizations think in small pieces. You won’t find huge projects with months or years until they deliver something. Smaller pieces are required because they limit risk to just that bit. Delivery of new products or services in an adaptable organization is split into very small pieces and executed in based on quickly delivering value to their customers. This takes us to our next element.

Coordination ► Innovation: FIT organizations know that no matter how much coordination and preparation they do their first shot will always miss so they take a quick shot then study what happened and adapt to the results…Ready, Fire, Aim. Far too much time is spent in many organizations in the Ready, Aim stages. In today’s economy it is better to learn first, fail fast and then adapt. Than to spend months trying to ‘get it right’ the first time. Face it, you will never get it right the first time. Take the time to get ready, point in the right direction and then just fire. ONLY then can you adjust your aim. Before the first shot, you are just guessing.

Eric Reis expands on this idea in The Lean Startup. These quick shots also must be targeted at the right audience. If the initial offering is far off the mark you don’t want to damage your reputation in the market. The first stages engage the Innovator sector of the market, as defined by Geoffery Moore (See figure 1). The innovator segment are those technology enthusiasts who love the latest new gadget and don’t mind paying a premium. They were the ones who had BlueRay Players when there weren’t many BlueRay movies available. They just had to have the latest new thing. Innovators are best for these first shots because they have a high tolerance for change and ambiguity. They like being the ones trying out a product that might not be done yet. They like being part of the shaping of a new product or market. Unlike the early adopters or the early majority who just like being early.

Control ►Teamwork: Most organizations have been built in hierarchical structures (Figure 2, Organization A) that are very similar to the military or to monarchies. These top down structures enforce conformity, minimize changes and variation but they are very poor at flexibility and innovation. They are also typically siloed in functional departments: Sales, Operations, IT, Support and so on. They are built upon the belief that the 3Cs will optimize the business. Unfortunately, decisions have to go through the entire chain of both silos before they can be agreed upon. Coordination and control that is optimized for the local silo, tends to de-optimize the rest of the organization.

Having fewer people making decisions optimizes this system for conformity and coordination. But what happens when the changes start rolling in hard and fast? When you really need to make quick decisions that cross functional boundaries? Contrast Organizations A and B. Organization A is a siloed hierarchy organization based on the 3Cs. When a new market opens up is it easy for this organization to take advantage of the new opportunities? No! Yet Organization B does not have as many layers of interpretation and control. It is an organization with cross functional teams. They can move quickly and take advantage of the new opportunity, dominating the market.

Changes to Leadership

The key to the success of these teams is equipping them with the information they need and giving them the power to make decisions locally. If every decision still has to be made by a small group of “key decision makers”, you will never scale. If, on the other hand, leadership really wants to get nimble. They will equip the team and trust them to do good work and get out of their way. Things might not get done exactly the way they would have done them but a lot more will get done.

Equipping and trusting the team to make decisions does not mean that these teams are without direction. Leaders still lead, they just don’t have to make every decision. The role of the leader is to set the vision and parameters. Great leaders have always lived this way. Martin Luther King Jr. didn’t tell the people of the Civil Rights Movement exactly how, when and where to protest. He did set the vision, and set parameters that’s all. The vision was that the country would;

…live out the true meaning of its creed: ‘We hold these truths to be self-evident: that all men are created equal.

Martin Luther King Jr. set parameters,

We must forever conduct our struggle on the high plane of dignity and discipline. We must not allow our creative protest to degenerate into physical violence. Again and again we must rise to the majestic heights of meeting physical force with soul force.

With vision and parameters MLK was able to align millions of people across the United States. The people had the vision and had the parameters that defined acceptable outcomes, then they were left to plan in their homes across the country. This is equipping this is trusting, and it changed a nation!

Trust and team empowerment like this takes boldness and courage from the leaders. It is much easier to believe that by tightening one’s grip, you can gain more efficiency and control. Cross team collaboration is frequently brought up at this point as a concern. With larger products and efforts multiple teams may be needed to deliver the product or service to market. This kind of cross team coordination is actually easier in cross-functional teams working in iteratively and incrementally for a couple of reasons;

• Team size
• Divergence time

To maximize the ability of a team to both communicate and to adapt, team sizes are kept relatively small. There is no hard and fast rule abut there are some commonly used generalizations. Teams anywhere from 5-12 are most common in organizations that are trying to maximize their agility. Direct communication between two people is the clearest and fastest way to conveying information. Every step away from that takes us down a notch in the clarity of communication. I think about my house right this very week. Two of my 3 daughters are away, one at church camp and the other at the grandparent’s house for the week. We are down to my wife, and our oldest daughter. The cacophony of the house is down to a dull murmur. There are only three lines of communication. As shown in this diagram. When my other girls come home the number doesn’t just simply go up to five. It jumps to (n*n-1)/2 communication paths. With 5 people that is 5*5-1/2 = 10. Ten Lines of communication! Take that number to 10 or 12 people and you have to keep track of between 45 and 66 lines of communication. That is a lot to keep in a person’s head. With small teams like these it is possible for each person to understand what the others are doing. This makes it possible to have larger cross team discussions in small groups as depicted in the following image. Each team sends a representative to the larger team as a liaison. This is not a new idea it is as old as any form of representative democracy. Small teams with representatives collaborating helps facilitate communication between the teams. Short Divergence Time helps keep this all in check.

Divergence Time is the time between a major sync between the teams. Teams come together in a major group to coordinate between them all and to identify where the potential dependencies and coordination requirements will lie over the next divergence period. By keeping these divergence periods short, we are able to minimize the number of potential coordination issues and the depth of divergence that can come up during a period. Every week or few weeks the whole team should come together and share their accomplishments from the last period and expected outcomes for the coming divergence period. This way they are able to see where they need to collaborate. No, they won’t catch every point of collaboration/dependency but they will get the vast majority and by keeping the periods short we limit the scope of issues that can come up from not identifying a coordination point.

Implications

So the question is, “How do I make this happen in MY organization?” Like the opening of Leo Tolstoy’s Anna Karenina which states,

Happy families are all alike; every unhappy family is unhappy in its own way.

We can say that;

Successful organizations are all alike; unsuccessful organizations are unsuccessful in their own way.

Every organization will have unique challenges on their path to being FIT. All of the elements have to be there for it to work. For example: flexibility and innovation without teamwork, won’t be sustainably successful. The FIT model will help you by being a kind of North Star to point you toward where you are going. But your journey needs to begin where you are today.

Taking a Big Bang approach to becoming FIT is just as foolish as taking a Big Bang approach to delivering large projects. There is far too much risk to go that way. Think of making these changes like the way an airplane’s autopilot works. Trying to hit the runway in Hawaii based on calculations made once in LA is impossible. Not virtually possible but not probable, it is impossible. Not only is there the need for extreme accuracy that would be required if you only take one reading, but there are all the variables of wind speed, direction, atmospheric pressure and others. With all these variables it is impossible to set course once. That is not how autopilot works. The auto pilot systems on airplanes are constantly taking readings against their destination and making small course corrections. So, you must keep your eye on FIT, make small efforts to move in that direction and then check to see if you are still on course. Chances are you will get off course at some time, but by making small jumps and then checking you will be able to get to the destination. 

Practically what can you do? I always like to start with teamwork because it is most often within the domain of authority of the team and team leaderships. Focus your efforts here. Even before I was exposed to agile practices and principles, I took an approach that trusted the team and the team members’ knowledge of the work. You can take the point of view that they know their work better than you ever could. Get the team involved in all levels of planning. It is their work, they should decide how, when and in what order it should be done.

It also takes engagement and buy in from the top of the organization to the bottom. It takes commitment and patience. Start working with your managers and executive sponsors. Expose them to these ideas. Above all it takes courage because these are significant changes to culture and leadership in an organization. To be competitive you need an organizational structure and culture that is nimble, flexible and not only allows for change, but capitalizes upon it. By shifting toward the FIT model your organization can take advantage of new opportunities and dominate new markets. Good Luck!

About the Author

Joseph Flahiff is President and CEO of Whitewater Projects, Inc. and author of the forthcoming book “Being Agile in a Waterfall World: A guide for complex organizations.” He is focused on bringing hope and joy to people who work in difficult business contexts; making sense of seemingly conflicting approaches, methods and cultures.  Joseph has more than two decades of experience; executing, coaching, consulting and training in traditional and agile delivery across large scale complex enterprise IT organizations as well as smaller boutique agencies. Joseph’s provocative, engaging, and energetic courses and keynote presentations are in demand across the USA and in Europe. Joseph is currently serving on the PMI Agile Community of Practice Council as Lead of Community Engagement. For more information, please visit.