Agile Transformation: Definition, Process and Benefits

47% of agile transformations end in failure, or worse – bankruptcy and takeovers. That’s why having a well-informed transformation strategy benefits organizations in transitioning to agile.

This guide defines agile transformation, explores what the process looks like, its benefits, as well as how to overcome its challenges.

What is Agile Transformation?

Agile transformation is the process of transitioning a traditional organization to an agile approach. It requires the organization to fully embrace agile values and principles outlined in the Agile manifesto.

To embrace an agile transformation means to completely reconstruct the current business model, since agile changes the way organizations work by implementing an iterative and incremental framework. This is significantly different from the traditional waterfall approach and may require a change in the foundations of the business.

How is Agile Transformation Different from Agile Adoption?

Agile transformation shifts a company’s operations to adhere to agile principles and values. Agile adoption, on the other hand, is a change in the process that is limited to a single product or project. It may refer to the product development team shifting from a traditional waterfall approach to adopting an agile framework such as Scrum, Kanban, or Scrumban.

Agile transformation and agile adoption are similar since they both require business owners to adopt an agile mindset. Also, when a company undergoes agile transformation, they are most likely to use an agile methodology to effectively deliver high-value products. Agile transformations are on a much broader scale; they make the whole organization agile rather than focusing on only a single department or project.

What are the Benefits of Agile Transformation?

An agile transformation has led to the success of many businesses – big and small – due to its many benefits.

Improve Communication

An agile transformation leads to increased transparency through an emphasis on cross-functional collaboration, sharing of ideas, and self-organizing teams. People have the freedom to work independently with a common mission which encourages them to communicate with other teams to discuss tactics and carry out the best plan of action to achieve their goal.

Maximize Productivity & Profitability

The main reason for undergoing an agile transformation is that it increases business efficiency. Due to shorter deadlines, incorporation of customer feedback, and lean principles, agile teams are likely to be more productive and provide the best customer value since products are built around customer needs.

Since agile projects provide high-value products to end-users, revenues increase. Combine this with the application of lean principles and the business would also enjoy lower costs which results in maximum profitability.

Reduce Delivery Time

Agile teams usually work in a short two-week sprint cycle and deliver a minimum viable product (MVP) at the end of each sprint. By breaking down large tasks into short sprints, iterating the process, and incrementing it in the next sprint, teams can ensure faster delivery times.

What are the Challenges of Agile Transformation?

The benefits of agile outweigh its negatives, but applying an agile transformation to an enterprise poses several challenges which could lead to frustration, delays, and even failure.

Time-Consuming

For most business owners, going through an agile transformation can be overwhelming. This is why many companies adopt a step-wise approach, to first test the agile potential of their teams. The company aligns the leadership team with agile values and principles, creates a detailed framework, runs agile pilots, transforms the backbone to enhance the team’s skills and capacities.

All this requires a major investment of time and money and some businesses just aren’t able to survive through the process. Consequently, some enterprises are also punished for rushing the process. Trying to quickly transform your company can leave gaps in your progress which will reveal flaws in the strategy and waste your efforts.

Resistance to Change

For the transformation to be a success, the leaders must fully embrace the idea of agile transformation and move towards it with dedication. The transformation is impossible without the top-level, C-suite management, but leaders may not be ready or convinced to accept that agile may provide a better way of working compared to the current model.

The current organizational culture also plays a role in this. Moving from a traditional, rigid structure based upon rules and strict quality checks to a flexible approach with transparent communication and an open process requires changes. 

A backbone transformation is a must for companies to move away from traditional practices to more modern ones, but without fully accepting this idea and hesitating to change the current core foundation, companies are inviting a transformation failure.

Difficult to Adapt

The transition from the traditional organizational structure to an agile one includes radical shifts in roles, responsibilities, skills, and mindsets. However, teams may be unclear on what their new role is, what’s expected of them, and how to practically apply agile processes.

Fortunately, unlike other challenges, this one can be avoided with proper planning and allocation of resources. To prevent this, companies need to provide the workforce with a proper understanding of the agile process, required skills, expected tasks to undertake, and the career paths that may assist them in this new endeavor.

What Does the Agile Transformation Process Look Like?

Many organizations follow a step-by-step process to transition to an agile enterprise. An enterprise-wide agile transformation needs to be detailed and iterative so that it touches every aspect of the business and allows room for adjustment along the way.

An agile transformation affects the entire organizational strategy including company structure, people, technology, and processes.

Structure

The organizational structure deals with the arrangement of workers, workspace location, roles and responsibilities, and corporate governance.

For a successful agile transformation, the structure needs to be rebuilt to simplify reporting, de-layer management, define new roles and responsibilities for team members, and streamline decision-making.

People

People are what make up the organization and are the core of getting things done. An agile transformation is difficult for your workforce because it requires employees to shift their mindset.

In an agile transformation, the entire company goes through major changes that challenge traditional beliefs and current organizational culture.

Leaders of an agile transformation would have to be hands-on – providing vision, direction, and inspiration to the team rather than issuing orders. Team members in an agile transformation are also taught to become more collaborative and to create an informal internal network while improving communication.

Technology

Enterprises need to have the proper tools, software, and resources in place to support agile practices. The IT department is especially affected since modern infrastructure and operations require a faster response to technological changes.

Business architecture must also evolve to incorporate the design and requirements of new processes. Finally, since the agile methodology is built upon an iterative process, the testing of products must also become automated to enable continuous delivery of working software.

Processes

In an agile transformation, companies must modernize team processes to enable people to work independently and free up time for value-generating activities. As agile puts a larger emphasis on providing value to customers, this shift is vital to ensure team members have the opportunity to innovate and adjust strategies to maximize value.

Agile processes also require a shift in the team’s approach to planning. It’s important to recognize that plans can and do fail which is why agile organizations create plans that are flexible and subject to change when required.Team performance is also measured differently because agile doesn’t focus on output but rather aims to improve outcomes. Agile teams’ performance is measured by agile metrics or agile KPIs (key performance indicators). Businesses may also express their long-term business goals not in traditional metrics but using OKRs (objectives and key results).

Defining the Agile Transformation Roadmap

The agile transformation roadmap should clearly outline the steps needed for a successful transformation. It consists of the company’s approach to roll out agile operations, familiarizing top-team executives with agile, the creation of an agile framework, and launching pilots.

There are three main ways an organization can implement agile operations: All-in, Step by Step, and Emergent.

  • The all-in approach refers to deploying agile cells across the entire organization that are dedicated to implementing the agile model as quickly as possible.
  • A step-by-step approach to agile transformation clearly distinguishes between the different phases of an agile transformation and allows companies to familiarize themselves with the foundation before moving on.
  • An emergent strategy is a bottom-up approach to agile transformation where it gradually unfolds as agile capabilities appear among team members

Most organizations plan step-wise and although the approach may vary by industry a successful transformation usually shares the same elements:

  • Familiarizing the top team with agile transformation
  • Creating an agile transformation framework
  • Launching agile pilots

These steps aren’t set in stone and are usually done in parallel rather than following a specific order.

Familiarize Top-team Executives with Agile Transformation

To get started, your top executives should aspire to be agile and familiarize themselves with it.

This can pose challenges to the current organization, but smart businesses don’t just focus on eliminating issues. When adopting agile, the organization’s strengths and challenges should also be noted and incorporated.This will increase the likelihood of success and help in making key decisions when transforming the company’s backbone.

To inspire your team to become truly agile and improve their understanding of the subject, conduct site visits to organizations that have experienced an agile transformation.

Create an Agile Transformation Framework

There are many changes that an organization may undergo during an agile transformation, and the role of an agile transformation framework is to pinpoint these changes. An agile transformation framework provides clear direction and a visualization of how the business will operate in its transformed state.

The framework outlines actionable steps to be implemented iteratively and includes the following:

  • Value
  • Structure
  • Agile teams
  • Backbone
  • Road map

Value

Understanding value and how it is generated within the company will help an agile team tailor its strategy to create high-value products that fulfill customer needs and stand out in the industry.

To ensure value generation, companies have to define end-to-end value streams and oversee elements that could be optimized with agile practices.

Structure

Company culture and structure must evolve and move past traditional management approaches. The framework should outline the overall structure of the business including reporting lines, organizational axes, and identifying relational departments, while grouping them based on added value.

Agile teams

After establishing the structure of the organization, teams are formed based on shared skills and capabilities to achieve a common goal. Barriers need to be broken down, collaboration should be encouraged and teams should work cross-functionally. The framework should outline how teams work together and the best plan of action to implement agile practices.

Teams may use different agile models including:

  • The Spotify model – arranging teams into squads and tribes
  • Self-managing, lean – teams follow lean principles and respond to changing requirements promptly
  • Flow-to-work – takes scarce resources and directs them to the highest-priority work

The working model should be clearly defined within the framework to ensure teams know what to do and who to work with.

Backbone

Agile transformation requires a major change in how businesses work. A complete agile transformation would require the organization to revise and refine its backbone which contains its core processes, principles, people, and technology.

Before making the changes, senior executives would need to identify opportunities for a cultural shift to agile values and achieve business agility.

Road map

A road map gives you a guiding light to implement the agile transformation strategy. This road map should be well-developed and comprehensive; clearly outlining the approach the business will take in its agile journey including the creation of a product backlog and putting urgent tasks on high priority.

Launch Agile Pilots

An agile pilot allows an organization to test its team’s capabilities to effectively implement agile practices. This gives business owners a test run to judge if their company is suited for agile.

As an agile pilot commences, it should highlight the end goal beforehand. These experiments may at first be limited to a selected department or a few members and gradually roll out, incorporating multiple teams to get realistic results at the enterprise level.

The purpose of the pilot is to test agile ways of working in coordination with organizational outcomes. It helps make well-informed decisions on segmenting teams, structure, workspace shifts, facilities, and resource allocation.

Adopting an Agile Mindset for Scaling Agile Transformation

Work is done differently in an agile organization than in a traditional one. Agile teams are typically arranged in individual cells united by a common goal.

Scaling agile transformation to implement it in the entire organization is where most businesses fail. Agile requires trial-and-error and embracing agile transformation means accepting the fact that not everything will go as planned.

The key to implementing an agile transformation successfully is to create a strong foundation based on agile principles, transforming the backbone, and enhancing the team’s skills and capabilities to reach agile maturity.

Moving from Agile Pilots to Cells

The first step to scaling agile is by deploying multiple agile cells (creating a scrum of scrums or implementing SAFe (Scaled Agile Framework)) across the organization. Moving from pilots to the adaptation of full-fledged agile operations doesn’t have to be a one-day feat and would be better implemented in a series of “waves”.

New agile cells need to be deployed and supported with agile coaching and workspace shifts. Companies can administer an all-in approach – enacting agile operations across the whole organization – or start (and end) with a single department, such as IT or HR.

The size of the waves depends on the context of the organization. These waves can be executed simultaneously to incorporate multiple departments or may be a lengthy process spanning many years. Resource availability is another factor. Without the proper resources and support, the agile transformation could face delays.

Backbone Transformation

Backbone transformation is an essential aspect of agile transformation. Without changing the core principles, processes, and beliefs of the current organization you cannot successfully transition to an agile enterprise.

The areas subject to change are:

  • Corporate governance and decision making
  • Business planning
  • Performance assessment
  • Defining roles & responsibilities
  • Workspace allocation
  • Technology

Agile simplifies the decision-making process, increases transparency, and aligns team members to promote cross-functional collaboration and effective risk management.

Team Enhancement

Most businesses are familiar with the fact that agile is a philosophy rather than a project management technique. Keeping that in mind, it should be noted that an agile transformation requires a shift in mindset along with skill building and behavioral changes.

To fully embrace agile transformation the enterprise must:

  • Identify the training needed and hire competent agile coaches
  • Define key roles and responsibilities
  • Enable continuous improvement to improve customer satisfaction

There is a systematic approach to managing these three steps. First, the organization may look for an agile coach, hire them, and then develop them to prevent obstacles from hindering the progress of the agile transformation.

Next, team members should be up-to-date with their new roles and responsibilities. The company should assign roles to the team including product owner, scrum master, tribe leads, and squad leads.

The organization can enable continuous learning and improvement through a digital transformation which will empower employees to take advantage of emerging technologies. They would also need a proper understanding of agile skills and their implications. Larger organizations may arrange training centers or academies to incorporate these changes and educate employees on agile practices.

Team enhancement is a necessary step in achieving agile maturity and ensuring your agile journey isn’t a short-lived one. Building your team’s capacities will help them tackle common challenges, adapt to rapidly changing requirements, and solve problems in a timely fashion. This, in the long term, allows the business to maintain momentum and establish a sustainable shift to enterprise agility.

Conclusion

Shifting to agile is not easy. The first step is to understanding the process and move forward with an agile mindset.

An agile transformation doesn’t just involve a shift in the product development  process, but is an enterprise-wide change that touches every aspect of the business including structure, people, technology, and processes.

A successful transformation would require a proper understanding of agile from leaders, creating an actionable framework, and deploying agile pilots. Businesses must take the leap and implement agile practices within the entire organization, transform the backbone, and build up their team.

This transformation requires time and effort. But if you trust the process and stay true to your strategy, you’ll be able to streamline business operations and enjoy the benefits of an agile enterprise.