But these approaches alone cut it in the long run. Fact is, that any digital transformation requires a change of the entire corporate structure toward an agile and learning organization. Enter Mark Bregenzer who knows how to do this: as an Agile Coach at Valtech he is currently working on projects for several DAX corporations. Here he lists ten essential success factors relevant for any digital transformation.
Mark, right now you are conducting a lot of agile trainings, bringing Large Scale Scrums (LeSS) up and running at many DAX corporations. In your view, what are the biggest challenges for large organizations in the process of digitalization?
Mark Bregenzer: Even as we speak the process of digitalization is shaking up companies pretty good! They need to speed up their processes - take product development for example - and make them more flexible; often the entire organization is put to the test. In particular, organizations with a rather rigid hierarchy that are still very successful have the hardest time with this. Introducing Scrum at a large scale entails disruptive changes and impacts the work culture immensely. Many companies and employees are not prepared for this, since there is no generally accepted blueprint to fall back on for such changes. Especially mid-level management is facing a big challenge, as many mindsets so successful in the past are suddenly questioned. In addition, employees and executive managers are realizing that the digitalization of companies is here to stay and not a short-lived fad that you can wait out.
Why is this radical change in the market happening just now?
Mark Bregenzer: Many new players have arrived on the scene, providing solutions that address customers’ needs and bring new products and features to the market at much shorter intervals. Due to globalization, there are more relevant players and the pace of change is speeding up dramatically. Case in point: the automotive industry. Here, the big league car-makers do not fear the competition of the other top players; it’s the newcomers, such as Tesla, Google and Apple, that are turning the market upside down with their new products and ideas. Many companies run into huge problems when responding to this dramatic change by applying their old methods of doing business.
The numbers paint a different picture, however. According to Scrum Alliance, there are more and more Scrum trainers in Germany. At a lot of conferences and trade shows digital transformation is the talk of the town, apparently companies implement agile methods more and more frequently. So, where is the problem then?
Mark Bregenzer: with the holistic approach. We can make out different developments. Sure, more and more departments, teams and individual projects are implementing agile methods such as Scrum now. But this alone won’t do; to a large extent, these are only local improvements that might even compromise the overall system. Our business world is still running on Taylor’s tenet of the division of labour. This creates organizational complexity with numerous interfaces and time-consuming transfer processes. Therefore, any digital transformation requires an agile transformation first; and exactly here many companies are still at the beginning. To create an agile culture demands above all other things a change in the thinking of a company’s employees – and that alone can take years.
What are the problems in detail?
Mark Bregenzer: For example, the waterfall method is still common practice when developing software and products, with their annual planning and release cycles, for example. That makes it hard to respond fast to changes in the market place. Plus, in companies with a hierarchical structure, the belief of “knowledge is power” still rules supreme. Here, management structures have developed that pass on information only on a need-to-know basis to their employees to allow them to work in a given context. Today, the market’s dynamic and increasing complexity, however, demands quick and decentralized decision–making processes from companies. Employees „on site“ are supposed to make the right decisions, fast and efficient. Here, self-organization and self-managed teams is the key to success. Employees, however, can only be as successful as they are provided with pertinent information. Often enough management enjoys the new transparency that comes with agile methods but shows little interest in acting in a transparent fashion itself. Here, the fear of change, of losing power and control, is still very pronounced. And this is exactly what increases the chances of bad decisions made at the operative level due to a lack of important information for decision-making.
Beyond that, agile transformation always poses an immense challenge to companies. Agile transformation almost always starts at the IT or Development department. Here again, we find very distinct work cultures and philosophies to deal with. That creates a conflict with the existing values since companies normally strive for Corporate Identity or Compliance. These conflicts open up room for power struggles that might hamstring any progress in agile transformation. Employees who are very much engaged in agile transformation are often worn down, feel frustrated and then give up. Many even leave the company. Apart from that, again and again the focus remains on internal processes and technologies and not on the customer.
What other hurdles are there to be taken?
Mark Bregenzer: Another aspect is the technical competence necessary for agile Software Development. Continuous Integration (CI), Continuous Delivery (CD) are the all-important key terms. The foundation for this is a high degree of test automation, clear and modular code structures for fast feedback cycles. This is normally not the case with software products developed in the traditional fashion, since the waterfall model offers only one test at the end of the project. Establishing a meaningful test automation including CI/CD takes time and many employees do not rise to the required skill levels and lack the necessary techniques it takes to do the jobs. This is why organizations embarking on agile transformation should invest in IT structures and training of their employees. This results in sustainability and employee satisfaction. Unfortunately, many companies shy away from these investments into the future, in particular project leaders who are only measured by the short-term success of their current projects.
How then should companies proceed to get the entire organization ready for digitalization?
Mark Bregenzer: Unfortunately, there is no standard process that can be implemented by all companies. Every organization has to find its own way to agility, suggesting cookie-cutter approaches or general instructions is too rigid and thus does not make any sense. Every organization has to figure out where to start. In the final analysis, it is all about learning organizations and collective intelligence within companies. Intelligence needs the awareness of a problem to be solved, networking to generate a host of solutions and a value system to identify those solutions that are relevant and right for the company and its customers – in short, agile digital transformation needs: awareness, networking and a common value system. This stimulates an agile culture across the entire company, since without such a culture, things won’t work out - at least not sustainably!
This is what companies should bear in mind in the digital transformation process – I see ten success factors:
- If a company wants to bring about the digital transformation, management needs to raise awareness among its employees because a flexible and agile approach is an essential prerequisite.
- Structures have to be established that allow employees to network on a regular basis to best channel and utilize the entire knowledge base within the company.
- In order for employees to find the proper solutions for the company and its customers, an adequate value system has to be put into place. This value system is to be indentified and established via a continuous exchange and consulting process. This system provides orientation in the long run.
- Management must be able to both lead and network. Here, networking always means losing some control over the flow of information.
- It is important not to limit the agile transformation to the IT department; other special departments have to be integrated into the transformation process as well. This requires additional investments into IT infrastructures and employee training.
- It is all about injecting the agile culture into the entire organization. This asks for consistency, discipline and stamina, since this process might take years or even decades. LeSS (Large Scale Scrum) offers the necessary structures and mechanisms to stimulate such a cultural change.
- Digital transformation needs agile transformation. Agile transformation needs a culture of change. You cannot force change, it has to happen step by step. You have to help employees in approaching change, allow them to have a say in it and have their fears taken seriously.
- The entire product development has to be re-structured in all its processes. Since this might take quite some time, companies should start as early as possible.
- Above all, it is important to get going and initiate the first steps. A so-called Agile Inception would be a good start, for example. Here, you create a rough outline of the goals to be attained or lay out the vision to be pursued.
- Acquisitions of a start-up could be a smart first step to provide a new impulse to a company of the more classic type. In the long run, it is about incorporating the start-up idea into one’s own organization. Methods such as “Lean Start-up” can exactly achieve that.
You are an expert and at the moment the only German-speaking certified trainer for LeSS – Large Scale Scrum. Can you explain in some more detail why?
In the course of digital transformation, agile methods in large organizations and cross-functional projects gain more and more importance.
- Large Scale Scrum (LeSS) is a framework already put into place successfully in many corporations for product development in a scaled environment, a large organization that is. The LeSS-Framework was developed over many years and tested in the real world by Craig Larman, one of the Thought-Leaders of the Agile Community, and his co-authors Bas Vodde.
- LeSS is Scrum. What that means is that all roles, such as Scrum Master, Product Owner and Scrum Developer remain good. Apart from that, there are no other assigned roles, since LeSS is supposed to remain light and easy to handle, just along the lines of Ken Schwaber’s original idea of Scrum.
- In LeSS, the entire organization does Scrum, not just an individual team. Not every team will have its own Product Owner, but there will be a Product Owner for every product or even for a single Product Backlog.
- LeSS always puts the focus on the entire project to generate customer value and aims at an integrated solution. You always consider the entire system consisting of product and organization. In LeSS we call that “System Thinking“ and “Whole Product Focus“, meaning, we look at the entire picture not only the partial aspects of a complex system. You have to assess all aspects, you cannot separate business processes, products and human behavior from each other.
- The product definition within a company is an extremely crucial and exciting question. Because, from the viewpoint of software, what is the product of an insurance company or of an e-commerce web shop? In LeSS, the definition of what a product is plays an essential role and is continuously up for discussion. The fact is that the definition of a product is a tool in any organizational development, i.e. over time the product definition of a company will change.
- LeSS creates a framework in which context-specific optimal solutions can be developed, LeSS provides Scrum with a context to implement Scrum in a scaled environment.
- Central idea of Scrum is “inspect & adapt“ with fast feedback cycles. There is no learning without feedback. LeSS provides the foundation for a learning organization.
- LeSS is easy-to-use and light, adaptable and still sustainable – here, for example, I see a distinct difference to other methods such as “SAFe“.
Why is LeSS so helpful in the digital transformation process?
LeSS creates structures to successfully bring about the digital transformation because the rule book is not bloated with complicated administrative roles but is based on the principles and practices of the Agile Manifesto and Scrum. LeSS might be a framework to use Scrum in a scaled environment, but it is mainly a “de-scaling” framework that counteracts ever growing organizations with their runaway complexity. The organization remains lean, flexible and formidably effective. This helps the company to learn and develop continuously.
What exactly is your task, your role or Valtech’s role?
In many companies management has first to raise awareness for necessary organizational changes. Together with our team I coach management so they can establish “Lean Thinking“ in their organization and include all employees. Our role then is to encourage and create conditions that to begin with allowing more extensive networking and a change in culture. You cannot force change and the creation of a new culture. You can only create structures where all employees have the opportunity to create a new culture.
What exactly does that mean?
It is about fostering a work environment conducive to employees‘ motivation and creativity focusing on the entire system. Compartmentalizing a problem does not help, but “System Thinking” provides an overview and reveals a system’s dynamic relationships. Partial solutions do not create sustainable business value and thus no value for the customer. We are convinced that only end-to-end solutions offer any additional value. This is why companies should shift their focus on their digital transformation process. LeSS demonstrates with its concept of Feature Teams how companies can position themselves to better serve their customers.
That sounds sensible if also a little time-consuming and difficult. Are there any cases that already could testify to the success of such a framework?
Yes, approx. 20 comprehensive case studies in various industries are already available. One of them even documents a timeframe of over ten years.
And can you start small or do you really have to turn your company inside out right away?
No, you can start small. A Big Bang approach would not be agile, would it? For example, we used LeSS in the introduction of agile methods at BMW. Actually, it was about the development of the BMW i-Directsale Platform. In this project, we were able to prove that you can work successfully with Scrum even in a multi-team project that is still embedded in a traditional, phase-driven program environment.
Here, we relied right from the beginning on Continuous Integration and a high degree of test automation. We started development with approx. ten project members and subsequently expanded team by team till we had about 100 project members. External service providers accounted for approx. 80% of the project staff. Integrating external companies also posed a challenge to the project. All parties involved, however, showed great dedication and put overall optimization before individual interests. First, the teams put their focus on partial aspects of the Direct-Sales-Platform. That was owed to time pressure in the project and we could also limit the extent of special knowledge needed to be acquired by the teams. One team was tasked with product data only, a second team with customer management and the integration into the system, and a third one with the sales process. However, they all worked across teams, i.e. analysis, design, implementation and integration tests were carried out as a team and in Sprint. After two years we ran a self-designing workshop where more than 80 project members formed genuine Feature Teams independently. The project delivered outstanding quality in “Time & Budget”. While traditional partial projects worked through an almost six-month long integration phase, this project delivered weekly new features and “last minute request” into the integration environment as late as two weeks before the technical “Go Live”. We published a case study on that on the webpage LeSS.works .