Why many agile transformations fail

To stay relevant in tomorrow’s increasingly demanding marketplace, today’s businesses will need to work faster and deliver more value. Agile transformation promises exactly that. But while it has become the go-to strategy for many organizations, few achieve success. Here’s how to avoid their mistakes.

In this series of articles, we will explain to you which steps you can take to bring greater agility throughout the organization.

This article is an updated edition of an article we published in the summer of 2019. In the past two years, we have added numerous transformation experiences that we've used to improve our thinking and refresh our transformation approach. This updated edition reflects all those lessons learned.

In the first article of our agile transformation series, we'll dive deeper into the barriers to change and we set the overall roadmap to realize change and tackle these barriers. In the following three articles, we'll further explain each stage by sharing detailed activities, good practices, and lessons learned from our experiences.

Agile: A buzzword or a lifesaver?

What is agile? Agile is a way of working, an iterative approach toward software development and project management. The focus lies on using short sprints to continuously improve a project or product that will make it easier and quicker to respond to changing circumstances.

You're probably already aware of the great benefits of working agile as agile has a lot going for it. It will decrease your time-to-market, increase your efficiency and improve overall quality. You’ll see a return on investment faster and your customers will be happier, if for no other reason than the fact that you’re using their own input and feedback to boost your added value.

In fact, agile organizations have 16 percent long-term EBITDA growth compared with a mere six percent for non-agile organizations. With benefits like these, it makes perfect sense that so many companies are pursuing agile transformation. After all, who doesn’t want to work faster and deliver more value in this day and age?

But there’s a catch. You’ll only reap those rewards if your transformation is successful. And sadly, many transformations fail. In some cases, businesses take an overly mechanical approach to applying popular agile methodologies. They go through the motions without trying to understand why those methods work in the first place, which prevents them from achieving the outcomes they desire. In other cases, they ignore or overlook the fact that agile transformations require clear and consistent commitment from every level of the organization to be successful.

We advise you to set clear outcome goals, like increased time-to-market or improved product quality, as the north star for your agile transformation. This drives your organization toward effective changes that go beyond the cosmetic.

The definitive handbook for agile transformations

Fortunately, you don’t have to repeat their mistakes. We’ve put together the definitive handbook on agile transformation. Our years of experience guiding and supporting these processes have helped us identify the three essential stages:

1. Agile Teams
2. Agile Value Chains
3. Agile Organization

Depending on where you stand in your own transformation process, you can zoom in on a specific stage to discover which challenges await you or pull back for a more comprehensive reading. Either way, the insights provided here will go a long way to ensuring your success.

One of the hardest things you’ll ever do—and the most worthwhile

Talking about agile transformation, people love to toss around companies like Google, Facebook, Amazon, Netflix, and Spotify. Why? Because they make it look easy. They are inspiring high-tech juggernauts who build user experiences of the future on the razor’s edge of continuous delivery. And they even manage to make it look like a foregone conclusion; almost like a walk in the park.

But the reality is that it’s hard. That’s something you should be aware of going in. For most companies, it’s one of the hardest things you’ll ever do. And there are clear reasons for that, too.

Your current culture might not be prepared for it

Constant change is part and parcel of any true agile transformation. To complete the process, your organization will have to make small changes on a regular basis. On a human level, that’s not always easy. Change can be painful and intimidating, even when it’s relatively minor.

Paradoxically, businesses often feel more comfortable with grand, sweeping changes than consistent, incremental change over time. After all, a Big Bang only has to happen once. But getting into that constant groove is crucial.

Your organizational structure may resist agile transformation

Going agile means tearing down traditional silos and reorganizing your business into a value-oriented enterprise. But that won’t happen overnight, and those siloes will resist your efforts to demolish them. You will be working against your old organizational structure in some way or another throughout the entire transformation process, or at least until you’ve embraced agile methodologies to such a degree that you can leverage them in subsequent aspects of the change process.

Your existing IT landscape can hinder your efforts

For many companies, the specter of technical debt is all too real. Legacy IT systems and byzantine infrastructure can stand in the way of change, especially when the decision-making process is divided among many different stakeholders within the organization. Of course, it’s important to proceed with caution when changes – even necessary ones – affect many different domains throughout your business. But this will inevitably slow you down, limiting the pace of your agile transformation.

3 steps to success: The universal stages of agile transformation

If you want to successfully transform your business into an agile organization, you’ll need to take a comprehensive approach. Agile transformation is a company-wide endeavor. Everybody needs to be involved, from talent to leadership. And every aspect of the business needs to be reimagined, reworked, and re-inspired along agile lines.

But you can’t just change everything everywhere at once. You need to take a systematic approach, especially when it comes to changes that are as fundamental and far-reaching as these. And taking a systematic approach means knowing where to begin.

These are the universal stages of agile transformation, presented in order of priority. As you progress through each, you’ll encounter fundamental challenges that you will need to tackle conclusively. We provide clear solutions for each, along with an overview of all the beats you can’t afford to miss.

Stage 1: Agile transformation in teams

In the most basic sense, your teams are the bedrock on which your entire agile transformation is built. They’re your foundation. If that foundation is weak or incomplete, your chances of success will drop precipitously. But if it’s strong, your teams will become the engine that powers the rest of the process.

Challenge #1: Pursuing goals over milestones

Going agile means focusing on meaningful added value instead of mindless milestones. In our experience, that’s easier said than done. We often see teams remain very milestone-oriented, despite the fact that they’ve adopted Scrum, are working in sprints, and are pushing features every two weeks. The worst part of it is that they feel as though they’ve embraced agile, even though they really haven’t.

Challenge #2: Genuinely embracing agile retrospectives

As we pointed out earlier, agile transformation needs to be embedded in your organizational culture. It needs to become part of your mindset and your normal operating procedure. Agile retrospectives are essential to achieving this.

Unfortunately, many teams don’t invest enough time and energy in the improvements they identify. In some organizations, teams carry out retrospectives but fail to follow through with actual improvements. And then there are teams who abandon retrospectives entirely, robbing themselves of one of the most useful and important agile tools.

Challenge #3: Using servant leadership to support your agile transformation

Conventional leadership styles often revolve around telling talent what to do. In an agile environment, that does more harm than good. Instead, leaders should remove obstacles and help the team maintain focus on agile best practices.

Stage 2: Agile transformation across departments to achieve end-to-end value chains

Getting your teams involved in your transformation is an important first step. But even when they’ve truly adopted an agile way of working, their speed will still be limited by the environment in which they operate: siloed departments.

Traditionally speaking, organizations are split into multiple departments that each fulfill a specific role. Marketing, Sales, Fulfillment, IT, Finance, all are organized to bring the best in their field. However, this siloed specialization inevitably leads to sub-optimizations in the organization. End goals like satisfied customers that buy profitable products can get lost in sales targets that do not consider fulfillment limitations. In this stage, we focus on bringing end-to-end agility and ownership toward organizational goals.

Challenge #1: End-to-end drive to value

Aligning all departments towards the same end-to-end goals is the first step in improving agility beyond the team level. This sets a clear direction to unify the activities of all contributing departments. The most powerful approach is to engender shared ownership through a combination of holistic goals that represent the involved disciplines of all departments.

Challenge #2: Virtual organization to break the siloed mindset

It can be tempting to directly reorganize away from the traditional siloes to a product-based model. However, in our experience, this leads to multi-year programs that cause a lot of hardship, yield little benefits during that time, and are slow to deliver value after the reorganization.

A better strategy is to prepare the organization’s culture and way of working for end-to-end value before formalizing this through reorganization. Virtual collaborative structures are quick to implement and will start to deliver value after the first months.

Challenge #3: A data-driven, experimental mindset is key

Fostering an experimental mindset is a necessary component in agile transformation, as is adopting a data-driven outlook on the world. Continuous improvement requires creativity and a willingness to deviate from tried-and-tested approaches. At the same time, it requires robust, fact-based evidence to determine whether any improvement is actually taking place.

Stage 3: Agile transformation at the organizational scale

Once you’ve solved the challenges inherent in agile transformation at the team and department level, you’ll be ready to move forward to the final stage. Here, you will have to orient your entire organization toward clear goals. Every aspect of your business must be refocused on the products and services you deliver. This will allow you to make the right decisions regarding your added value, while also helping you increase the speed at which you deliver it.

Challenge #1: Transitioning to a product- or service-based organization

An agile business is concerned more with outcomes and added value than it is with milestones. Following this to its logical conclusion, you will need to reorder your organization, transitioning to a product- or service-based enterprise where teams are focused on delivering value to specific customer groups as quickly and effectively as possible.

Challenge #2: The importance of portfolio management

Once you reach a certain point in your agile transformation, you’ll need to move away from the inflexibility of traditional portfolio management and transition to an approach that allows your teams to make progress according to tangible business goals. By giving your talent and your teams a clear context in which their added value can unfold, you’ll be able to channel their work in the right direction.

Challenge #3: Decoupling technology

When the organization has completed the first stages towards agility, your technology becomes the bottleneck for greater speed and quality. A complex web of interfaces limits teams to work independently from each other. Traditional, non-cloud infrastructures inhibit the pace of new product development. Here, the aim of the game is to decouple and modernize as much as you can. Only then will you be able to respond to the needs of your clients at the pace at which those needs evolve.

Sharing new insights into agile transformation

At Accenture, we’re committed to offering your business the resources and support you need to navigate your agile transformation successfully. This handbook is part of that commitment. This overview is only the beginning. Over the coming months, we will be adding in-depth insights about each of the three stages of agile transformation. Once complete, the article will give you an exhaustive overview of all the crucial aspects of the transformation process.

That said, no two businesses are the same. Many of the challenges you face will be unique to your company. If you need advice, guidance, or expert assistance beyond the contents of the handbook, please reach out to our thought leaders. We will gladly assist you wherever we can.