Aug 21, 2018
Business Agility Institute founder Evan Leybourn shares results from the 2018 Business Agility report at Agile2018.
Connect with Evan on Twitter: @Eleybourn
Visit LitheSpeed.com to help your organization embrace Business Agility.
Evan Leybourn ‑ Agile2018
Announcer: The Agile Toolkit.
Bob Payne: I'm your host, Bob Payne. I'm here with Evan Leybourn from Australia. Evan, you're ahead of the Business Agility Institute, and you guys just released the Business Agility report today, you're at Agile 2018. I was leafing through it. There's a lot of great infographics and information behind those infographics.
Do you want to just talk about how you went about getting the report? Then, maybe we can talk about some of the interesting results.
Evan Leybourn: Thanks, Bob. It's great to talk to you again. I absolutely love being on this podcast. I think it's my third time now. [laughs]
Bob: Is it third already?
Evan: Third already.
Evan: Third already. We put together the reports over the last couple of months based on the feedback we had from our members. A lot of people were asking for evidence.
There's a lot of hearsay. There's a lot of anecdotes about business agility, and they wanted more proof. How does it work? Why does it work? Who does it work for?
We went out, and we started sourcing information. We put out a survey. We'll share the link with your listeners in the text below the podcast. We got some fantastic insights which, I'll be honest, not many surprises. Most of the anecdotes that we hear, the data has borne it out, so that's actually pretty fantastic.
Bob: If not surprising, what are some of the important insights that folks were questioning and that now has been borne out in the data?
Evan: [laughs] We can probably narrow it down. I'll give you the really simple ones. The larger the company is, the less agile it is. I don't think that's a surprise to anybody at all.
Evan: Now, we have the data to show just how much more agile a small company is. In fact, we're doing some additional research now in terms of company thresholds, the size of organizations, and the operating model that's required for agility at those sizes.
15 to 50, 50 to 150, how do those sizes interface with agility, the practices, and the principles behind that? We know that agile organizations work differently. We know there are benefits, but how does size...
If I'm 5‑person organization, then how I do agility is has to be different if I'm a 5,000‑person organization. We want to be able to outline that this generic information about X, Y, and Z, this is how it's specifically tailored to every size.
Industries' wise, financial services, information technology and consulting, the top three industries who are adopting business agility right now. Both in terms of the quantity of organizations doing it as well as the maturity or the fluency that those organizations have.
That's not really a surprise. We know from personal experience that banking and finance, every bank is trying to...
Bob: Huge competitive pressures with dust cycles.
Evan: FinTech eating their breakfast as they say. IT companies, Agile emerging technology and software. It's natural for these organizations to expand beyond the IT early, certainly earlier than other organizations.
Consulting was a bit of a surprise. I wasn't expecting them in the top three. In fact they're number one to be precise. Now, cynical Evan thinks that, "Well, maybe the consulting organizations are just sort of..."
Bob: Self‑reporting a little higher. [laughs]
Evan: Self‑reporting a little higher because they're trying to say, "Hey, look how great we are." Less cynical Evan actually there's some logic behind it because consultants do need to be at the bleeding edge of business.
If they're going to be transforming the client organizations, they've already got to be there. It does make sense that a lot of these consultancies are pushing the boundaries as much as they can. I think that's a natural behavior.
Bob: Did you get any breakout that was aggregated against those different industries? Were different moods of business agility?
Bob: Was it really customer pitted or service or...?
Evan: We did slice and dice. We had some data scientists look at this information for us. They're the ones who provide a lot of the insights. We wanted to make sure that we were doing it meaningfully, specifically meaningfully.
When we looked at the data, whether we sliced it at the company size, whether we sliced it by industry, not by industry, by company size or by high fluency, if we remove just the high fluency run the ones who are 9s and 10s, the outliers.
Even if we normalize for who's reporting, whether it's the CEO reporting or an individual contributor because there was a difference. Even after all the slicing, those three industry still came out as 1, 2 and 3 so no matter how we sliced the data. It was pretty consistent actually. In fact, I mentioned that contributors, that was one of the few surprises that we got.
Anecdotally, I assumed that the C‑Suite would over‑report and the individual contributors would under‑report maturity or fluency in business agility. We actually found that, because we had multiple respondents from the same company, in a single organization we thought they'd be different, but they were actually within 0.5 of a point from each other.
Bob: That's probably...
Evan: It's statistically...
Evan: ...insignificant. Now, there is a trend. Yes, the CEO is 0.5 higher than the individual contributors and line managers and senior leaders. Senior executives fall on that trend line, but it's quite negligible.
The big surprise was we invited external consultants to assess the maturity, the business agility, fluency of their client organizations. They were about 15 percent lower on average.
Bob: The client organizations.
Evan: Yes. When the external parties assessed them, they assessed them 15 points lower. 1.5 points lower, 15 percent lower than themselves.
Bob: That may make sense with your transformational model...
Evan: It could.
Bob: ...as well, because I can't really help unless I'm in some aspects better at it than the organization.
Evan: Yeah, it's interesting. We need to do some further investigation as to why that's the case. My gut feeling is that there's probably two main reasons. The first being the rose‑colored glasses that happen within an organization. You see the transformation, you see you're making change, and it looks a little bit better, but the people from the outside are comparing you against...
Bob: Other people.
Evan: ...other people who are better. As an outsider, what you rate as a five, I rate as a three, just because I'm seeing that's a five over there. The inverse is also true.
Bob: We probably have different north stars that we're measuring against.
Evan: That's it. Maybe someone who's outside doesn't see a lot of the good. They're dealing with the procurement processes, they're dealing with the contracting processes, which are painful in almost every organization.
They would underreport their client organization because the business agility hasn't hit procurement yet. It's just hit how employees are being engaged. Maybe they're underreporting for that reason as well.
Bob: Was the survey both public and private sector?
Evan: It was actually mostly private sector. We had a small number of respondents from the public sector, two or three percent. Though that data has mostly been excluded from the report just because there wasn't enough data points to meaningfully assess that information. We're hoping that version two of this report will be able to draw the public sector view.
Because we are doing the government's Agility Conference in November, I think it would be a good idea to actually maybe create a government version where we survey the government organizations before the conference and maybe put something together for them.
Bob: Even if we have some objectives out of the conference, what do we want people to take away, even if it's a simple survey of, before they attend the conference, after, how much more do they know about business agility, if they're not already executing in that way. I really see, and I know we've talked about this, on the committee calls...
Bob: ...the Government Business Agility Conference. It is just the early days in many, many government agencies on the delivery side, and without delivery, you can't turn the crank on the major business outcomes.
Evan: Spot on. I talk a lot about theory of constraints and the theory of...I've probably mentioned this in a previous podcast, but an organization can only be as agile as its least agile part.
In business, 30 years ago, that was software, so we invent Agile. 10 years ago, that was operations, so we invent DevOps. Today, in business, it's HR, it's finance...
Bob: [inaudible 10:00] .
Evan: ...but government is probably still where the business was 20 years ago. In many government organizations, they're only now getting the benefits of Agile, let alone DevOps and full‑on business agility which is even in the future.
That being said, we have some great stories, some great case studies in the government space around policy developments being done in using Agile, service delivery for social services being delivered using Agile mindsets and techniques around the creation of citizen‑centric approaches.
Everything from budget games being done in San Jose, I think it was San Jose. If you Google, you'll find out exactly where it's being run, where they crowdsource the budget from citizens using Agile game theory. It's absolutely fantastic.
Bob: I was just chatting with somebody from a government agency. We were actually talking about using the Colleague Letter of Understanding with the Morningstar as a way of creating a rather hierarchical structure, a mesh commitment structure, within that organization. There're little pockets of these ideas taking hold.
Evan: We have a video from the very first business agility conference in New York in 2017. The deputy CIO of the State of Washington had adopted holacracy in the state government. I used to be a public servant, this is 10 years ago. The thought of holacracy in government was mind‑blowing. I couldn't believe they could even do that. They did and a huge success.
Bob: It can get a little tricky. I don't know if the state governments are the same but federal sometimes gets tricky when you hit the unions.
Evan: Yes. In that scenario, in the institute, we're developing some position papers, some white papers on various complex topics. Incentives, motivation reward is a white paper that's being released tomorrow, in fact. By the time you listen to this, it'll already be released, and we'll share the link.
One of the next white papers that we're going to put out there is business agility in a unionized environments, because a lot of our members are in united environments that's complex.
Bob: We may often give entities like the bureaucratic...paint them with a bureaucratic brush, but actually another agency that we did some work in, they were partners in creating an open workspace environment for everybody.
Bob: Going back to the report, some of the key findings that we did come up with, market success is one of the highest benefits of business agility, which I would actually be surprised by. Not because I don't believe that business agility brings with it financial and market success measures, but I didn't think as a community that we were there yet.
I thought we had a while to go, that the benefits move on softer. Now, we have some great quotes, some great feedback from the survey respondents saying that now they have gained more customers, greater customer satisfaction, more repeat business through the adoption of business agility. The usual ones they are around, better way of working, and so forth.
Bob: Retention of clients.
Evan: Retention of clients, yeah.
Bob: Competitive advantage. I see better ways of working, came in at 16 percent, collaboration, communication, not shocking 14, and engagement up as well. That's what we see in the VersionOne survey on the IT delivery side, that engagement goes up a lot.
Evan: When we look at challenges, the top challenge, which should be of no surprise to anybody, is leadership. Leaders love them, but they can either make or break a transformation based on the culture that they help to instill in an organization. Buy‑in is number two or three in the challenges. What's the next one? That's embarrassing. I don't...
Bob: Just trying to find the page right now.
Bob: Leadership, lack of buy‑in, inappropriate organizational design.
Evan: Of course, old design. Sorry, I should remember that one. It's off my head. Basically, the value stream is broken.
Bob: The silos.
Evan: The silos. When work goes from team to team to team, every hand off adds complexity and delays. An agile organization is one where the value stream is as much as possible contained in a single cohesive team.
I don't mean a small team, those teams can be big, but the ownership, the accountability is held singly from ideation to customer delivery. Companies still struggle with that, but that's changing. We're seeing that change in companies although even in government organizations.
Bob: Even if you can get a decent alignment of the silos to create those, not solid line report, but dotted line to the value stream, that can go a long ways. In thinking about the market's success statistic, I actually think that makes sense because if we look at the...Again, I don't want to compare you guys, the VersionOne survey, but I'm...
Evan: ...is due. We've admired the VersionOne survey for years.
Bob: It has been a valuable tool.
Evan: It's one of the reasons we created this is to go [inaudible 15:53] .
Bob: Number one is better ability to manage change. What do markets want? They want responsive goods and services.
Evan: The market will evolve faster than the company. It's why startups can out‑compete a legacy large organization who's got hundred times the budget, a thousand times the market share.
They're dominated and overtaken by a tiny startup because the startup is able to adapt and provide a service that the customers want as opposed to what has been delivered for the last 20 or 30 years, which maybe what the customers wanted 30 years ago, but time moves on.
I know Uber and Airbnb and everything else. Those examples are trotted out every single time if someone talks about market agility or market entity.
Bob: [inaudible 16:48] .
Bob: [inaudible 16:50] is running in my head.
Evan: They're the obvious ones, but it doesn't matter what industry you're in. I spent the last four years living in Singapore, and every bank there had a decent revenue coming out of international remittance, sending money home.
Australians, Filipinos, Indians would send money back to their home countries through the banks. Within the space of two years, the FinTechs emerged. They had better, faster, cheaper services, and the banks lost a couple of percent of their top line overnight.
Bob: We get [inaudible 17:23] all the time. That's just one possible transactional character.
Evan: If you put yourself in the shoes of a bank, no one's going to take away the deposit account because that's not a...Maybe I could be lying but I don't think that's a disruptable service, partly because there's no money in a deposit account.
Banks make their money out of credit cards and all these transactions, and all these other things, so the FinTechs are coming in.
Bob: They can be in the right market if you've got some liquid cash that you're...
Evan: That's certainly not where the banks are making their profit.
Evan: The banks are looking at this going, all of the stuff they're doing that are high profit, the FinTechs can come in and do it better, faster, cheaper. All they're going to be left with is the slow, low‑profit services, like core banking. Now, they're desperately trying to become FinTechs themselves.
If I'd walk into a bank 10 years ago and let's say, "Let's create an agile bank," I would've been laughed out. Now, they're coming to us saying, "How do we become an agile bank?"
Bob: "How do we disrupt ourselves before someone else does?"
Evan: That's it. I use banking as an example. The same is true in utilities, the same is true in healthcare, engineering. Any industry which you think is undisruptable, I guarantee you, will be disrupted within five years.
Bob: We're seeing people fall off the Fortune 500 lists.
Evan: 57 percent of the 1983 Fortune 500 no longer exists.
Bob: Not even just off the list. Just out of existence.
Evan: Some have been acquired, some have gone through merges, some have gone through divestments. They're a fraction of what they were. Others have gone bankrupt. Some have come out of bankruptcy. They're still nothing.
Bob: We'll have the link to the report. Where can folks learn about the Business Agility Institute?
Evan: Thanks. We'll put the links below, businessagility.institute. I love the fact that .institute is a top‑level domain.
Evan: We bought that.
Evan: That's what I should be. Absolutely. Businessagility.institute, you'll find all the information. We're a membership organization. I do encourage all your listeners to join up as a member. Help support us, help support the community, and develop new and great research.
The inverse is true as well. It's not just a one‑way, we'll provide you things. We want you to share your stories with us. If you have a case study, if you would like us to create a white paper on a topic, ask us. We will do our best to actually build that for the community.
Bob: Thank you very much.
Evan: No, thank you very much, Bob. Until next time.
Bob: Until next time.
Evan: [laughs] Thank you.
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