Agile transformation: No formula, but common success factors

by Gayatri Shenai

One of the reasons that doing agile transformations is difficult is that there is no one formula for how to do it. The starting point and context for each organization’s journey toward agility is different.

Our cross-functional agile tribe recently brought together executives of more than 50 organizations from across financial services, healthcare, software, retail, chemicals, industrials, advertising, manufacturing, and advanced industries for our inaugural Agile Day in New York. The event included multiple speakers who shared their companies’ experiences, a panel discussion on the pitfalls of agile, and breakout how-to sessions aimed at helping companies drive agile at scale. What we heard is that although every organization’s story is different, five common factors seem to underpin all successful agile journeys:

  1. Bold vision and clear commitment communicated from the top. This may sound obvious, but it’s critical to success. In almost every journey we heard about, leaders said they invested most of the first months of their programs in helping the organization’s biggest influencers understand the vision. Everyone has to see that there is no going back to the old way of working.
  2. “People need to know what’s in it for them, and they need their questions answered,” said the CEO of a British financial-services firm. That’s when you can also point out the downside of the status quo. Building trust this way is key. “You can’t hide behind slides—you have to be real with people,” he said.

  3. Use agile to implement agile. Healthy agile teams continuously learn and challenge themselves to be more mature. “Don’t be afraid to fail, don’t punish failure, and don’t even think of it as failure,” advised the CIO of a US insurance company. Teams should not expect to get to the end in one step. Rather they should celebrate their experimentation, and that includes celebrating the bumps in the road.
  4. Go beyond technology. Successful agile transformations address every aspect of the organization. As the chief digital officer of a Latin American bank described it, “You can’t do just one thing.” You can start with technology, if that’s preferable, but eventually an agile transformation has to touch all parts of an organization, including HR and marketing and finance. End-to-end, the entire organization has to embrace agility.
  5. Engage your leaders. You need them to champion the cause of agile transformation, Agile Day speakers said. Part of doing that is for leaders to move away from giving directions and instead ask, “What do you think?” As the CIO of a multinational bank put it, “You have to arrive at answers by asking questions.” It’s a collaborative method of problem-solving that has to be reinforced with role modeling and the right performance assessments. Agility is about empowering and trusting in a self-leading team to figure it out, speakers at Agile Day said. This means top leadership needs to look for opportunities to strengthen teams, remove roadblocks facing them, and improve their performance.
  6. People first. This also may seem obvious, but getting the best talent is truly a delicate balancing act. You have to move quickly or you’ll lose the right candidates to other employers. At the same time you need to be especially sure that any person you hire is truly the right fit for your culture. “You may have to adapt policies,” said the chief product officer at an HR solutions company that allowed its agile team to make offers in less than 24 hours, rather than the company’s usual six weeks.

It’s not easy, but agile transformation is worth it, as we heard from the success stories recounted at our Agile Day. It can lead to all sorts of improvements: faster time to market, significant cost reductions, customer-centricity across all functions, reduced waste, and a generally healthier and more successful culture.

Gayatri Shenai is a partner in McKinsey’s Atlanta office.

The author would like to acknowledge Somesh Khanna, Marcus Sieberer, Aaron De Smet and Krish Krishnakanthan for their contributions to Agile Day and this post.