The Australian corporate landscape is witnessing a rollback of the Agile at Scale transformation, once hailed as a revolutionary management method promising clearer accountabilities, faster decision-making, improved innovation, and quicker speed to market. However, the anticipated outcomes have often not materialized, prompting companies to reassess their approach. Adam Dixon, the Managing Partner of Kearney in Australia and New Zealand, delves into this subject, articulating the challenges and pitfalls encountered by large enterprises as they tried to adopt and implement Agile at Scale. Large organizations across the country are scrutinizing the effectiveness of this methodology as they struggle to achieve the expected benefits.
Origins and Evolution of Agile
At its core, the Agile methodology, initially outlined in the “Manifesto for Agile Software Development” in 2001 by 17 software engineers, emphasized values such as favoring individuals and interactions over processes and tools, prioritizing working software over comprehensive documentation, fostering customer collaboration over contract negotiation, and adapting to change rather than adhering rigidly to a plan. A significant milestone in Agile’s evolution came in 2012 when Henrik Kniberg and Anders Ivarsson released their influential paper, “Scaling Agile @ Spotify with Tribes, Squads, Chapters, and Guilds.” This document became a seminal reference for many organizations aiming to scale Agile principles across their operations.
Over the past decade, diverse sectors in Australia, from banking and telecommunications to retail, sought to emulate these principles within their large and often entrenched organizational frameworks. The principles of Agile, which encapsulate the concept of ‘Adhocracy’—a term coined by Warren Bennis in 1968 to describe a flexible, self-organizing organizational structure—have become increasingly popular. By itself, Agile is not a flawed concept. It promotes flexibility, empowerment, rapid iterative results, and is particularly effective in niche areas such as IT application and software development, new product development, and change programs.
The Flaws of Agile at Scale
However, Dixon posits that Agile at Scale is inherently flawed, especially when employed across large, legacy enterprises. Firstly, the majority of corporate functions are not suitable for Agile environments. Positions like an enterprise account leader, a finance department accountant, or a procurement category lead operate more efficiently under traditional structures rather than Agile methods that may enforce unnecessary overhead costs and organizational confusion. These roles require structured tasks and clear individual responsibilities rather than the presumably beneficial daily stand-ups or Scrum masters.
Secondly, Agile methods tend to be most effective in smaller, startup-like environments rather than expansive organizations with massive workforces. When Spotify introduced its Agile model, the company had just over 300 employees spread across three cities. Today, with nearly 10,000 employees, Spotify has shifted away from its original Agile at Scale process. This demonstrates the inherent challenges of maintaining Agile’s effectiveness when scaling up to large, complex organizations. Organizations hoping to mimic such models have found it increasingly challenging to scale these principles effectively in their larger and more complex environments.
Challenges with Ambiguity and Top-Down Implementation
Thirdly, Agile necessitates a comfort with high degrees of ambiguity—a requirement misaligned with the preference for structure among many workers. The promise of flexibility and innovation often clashes with employees’ need for clear guidelines and predictability in their tasks. Workers accustomed to traditional structures and clearly defined roles find themselves struggling within an Agile framework that promotes constant change and requires rapid adaptation. This incongruity has led to significant discomfort and inefficacy in implementing Agile practices at scale.
A key issue has been the heavy-handed deployment of Agile, with many CEOs initiating top-down programs heavily supported by HR departments and consultancies. These programs often adopt a stringent new language, relabeled roles, and new processes, emphasizing the Agile framework more than the results they are intended to achieve. Frequently, allegiance to Agile’s definitions and ceremonies has led to teams moving forward with incomplete ideas, leading to projects stalling or failing entirely. It often resulted in a paradox where projects labeled as “fail fast” were not promptly terminated despite evident inefficacy, continuing to consume resources and erode morale.
The Irony of Rigidity and Leadership Erosion
Ironically, while Agile emphasizes adaptability and responsiveness, implementing Agile at Scale has often led to rigidity within organizations. This is especially true for large, historical companies some of which are over a century old. A few notable effects of this flawed and forceful implementation include the undermining of leadership authority, confusion due to the new organizational jargon, and significant overhead costs due to new roles and frequent meetings. Empiricism, one of Agile’s core tenets, comes under threat as companies experience decision paralysis stemming from the awkward fit of Agile practices in large, rigid structures.
Empowering teams and decentralizing decision-making, theoretically positive traits, often backfired as leadership found their roles diminished not in service of better outcomes but compliance with Agile principles. This imbalance fostered scenarios where performance metrics focused more on adherence to Agile methods rather than business results. Restructuring large groups further complicated matters, as introducing new, often vague organizational terminologies confused employees and diluted morale. Unnecessary complexity and increased operating costs were becoming too prevalent.
Strategic Retrenchment and Tailored Approaches
In light of these challenges, companies are strategically retracing their steps. The first measure involves confining Agile practices to areas where they offer real benefits—IT, product development, and change initiatives—while eliminating them from less suitable functions. Organizations must tailor their structures to align with strategic goals rather than forcing strategies to conform to structure. Implementing Agile in a controlled manner guarantees that its principles are applied where they can genuinely add value while mitigating the risks associated with their misapplication.
Moreover, organizations must accept their inherent complexity and the extended time frames required to introduce and integrate innovative practices in comparison to startups. Large enterprises must recognize that eliminating traditional business units or functions entirely is impractical. Effective organizational design requires an understanding that all elements must ultimately align under unified leadership to maintain control over performance, especially within extensive corporate frameworks. By doing so, these organizations can strike a balance, ensuring that business performance and innovative practices coexist harmoniously.
A Balanced Approach for Future Success
The Australian corporate sector is observing a retreat from the Agile at Scale transformation, initially praised as a groundbreaking management technique that promised clearer accountabilities, faster decision-making, enhanced innovation, and accelerated market entry. Yet, the anticipated outcomes frequently did not come to fruition, causing companies to reconsider their strategies. Adam Dixon, the Managing Partner of Kearney in Australia and New Zealand, explores this topic, highlighting the obstacles and setbacks faced by large corporations attempting to adopt and implement Agile at Scale. Major organizations throughout the nation are examining the efficiency of this methodology as they endeavor to reach the projected benefits. Many have found that the hoped-for improvements in operation and project execution were not realized, leading to skepticism and a re-evaluation of this approach. As industries analyze the actual versus expected results, they are increasingly critical of whether Agile at Scale delivers on its promises.
