Founder's Mentality Blog
In a previous blog post, on the six design principles of a scale insurgent, we noted that aligning on your own set of design principles is a critical part of the micro-battles journey. We also said we’d follow up with a discussion on these questions: “As I start this journey toward becoming a scale insurgent, what are the hardest issues I’m going to face and how can I begin to address them?”
One of the toughest issues is just getting started. But since you’ve passed that hurdle and are now committed to the micro-battles journey, you and your management team have to start listing the challenges you’ll face on the road ahead. This blog presents our input to that discussion. We’ve listed the biggest common issues—and the most effective actions to address them—on a single slide. Versions of it occupy Wall 1 of learning centers around the world (see Figure 1).
Issue 1: Agile teams and the rest of the organization find it almost impossible to work together effectively on a sustained basis
As soon as you begin executing micro-battles successfully, you’ll encounter a common reality: Things get tough. You’re creating micro-battle teams that are working through Agile principles, with cross-functional teams deploying prototypes and adapting these quickly, based on customer feedback. But you’re also still running the core business, with highly functional expert teams executing against the firm’s core processes. Both are vital, but you’ll find there are fundamental tensions between them that can erode enthusiasm. So it’s essential to address the company’s organizational will to sustain its focus on micro-battles. A number of things may be working against it, sometimes all at once.
You may find that senior management loses interest or gets distracted by other crises. Given this perceived lack of commitment, the rest of the organization may see these early micro-battles as yesterday’s fad du jour and stop supporting them—no need to fight for a dying cause, after all.
Another common problem: Nobody works on the “bridges”; namely, all the enablers, new capabilities and investments required to make sure that the base business keeps ticking along, despite all the new demands that these experiments put on people.
Alternatively, while the micro-battles may be making small steps in the early days, these don’t substantially affect the firm, so folks see the whole effort as a distraction from focusing on the important financial outcomes. Or the opposite may be true: Some of the experiments may really start to pay off and get lots of attention, which leaves managers of the core business feeling disenfranchised. These people fund the experiments through their hard work, but those leading the experiments are getting all the glory.
Here are five effective actions you can take to surmount these issues:
Start at the top. Invest significant time to help senior management understand and commit to the journey. Yes, we know. We said senior management commitment was critical to even starting the journey. Well, now it’s far more critical. Everyone loves experiments until the lab explodes or smells of sulfur. So you need to double down here and make sure that all senior leaders understand their role in the change journey.
Train, train, train. Micro-battles demand new skills and behaviors, and you’ll need to give your people every chance to succeed. It’s not enough to experiment and create small solutions; the teams must also learn to scale these solutions across your customer base so they begin to materially improve your company. Behaviors matter throughout, and you must constantly remind folks to act like founders. One common lesson from this journey is that you need to foster an Agile mindset throughout the organization. Don’t train just those working directly on Agile teams, but also those who will interact with them.
Learn by doing and celebrate unsung heroes as you go. Understand from the outset that the act of taking small steps is potentially an act of division. It can drive a wedge between those experimenting and those holding the bag for the rest of the business. Everyone expects those holding the bag to (a) support the experiments directly, (b) scale whatever outcomes those experiments produce and (c) adjust everything else in the business to accommodate these new solutions. So it’s really a division between those experimenting with a halo over their heads and those slogging along with no glory and a new night job. You need to celebrate the successes of the Agile teams, but you also need to be generous in handing out the glory to others. Recognize that there are many unsung heroes in support functions that enabled the success of these experiments.
Create and stand by a “new deal” for talent to reward all participants. Recognition requires more than just clapping. It requires real rewards, especially when people have been burned before. Most organizations have a long legacy of experiments that didn’t go that well. They’ve tried lots of SWAT teams, special projects, labs, alternative investment models, new world partnerships, etc.—and they’ve left lots of scars. You deployed plenty of your best people in these experiments, and their reward was seeing their careers stall out as the firm lost interest in these bright, shiny objects. So if you’re serious this time, it’s important to sort out new incentives to reward the people who are working night and day on these teams (either directly or indirectly). How can you celebrate these people and give them long-term rewards?
You also need to anticipate resistance early on, especially from middle managers locked in the traditional hierarchies. Micro-battles both add to their work and threaten their roles—a toxic combination. These people need an opportunity to thrive under the new vision, and we’ve found that helping them become leaders of the scaling community is one solution (see below for more on scaling communities). There will be some managers who can’t or don’t want to make the transition, and eventually they’ll have to leave. But without a new reward system, it will be difficult to retain even those you really value. Assume from Day 1 that you’ll have to address a huge backlog of HR issues. Invest in clearing this backlog; it will pay off. Many teams postpone discussions of the new deal at their peril.
Revise the governance model to resolve trade-offs between these two systems, properly resourcing both. This is a big one. We’ve invested so much time in discussing the Leadership (Amplify) team because this journey demands that senior leadership constantly break down barriers between the two sides of the company—micro-battle teams and everyone else. There’s a group focused on innovation, experimentation and learning as they go. And there’s a group focused on developing expertise and executing existing playbooks. Without intervention from the top, these groups don’t talk. They need bridges across the divide, and in the early days, the senior team has to build the bridges. This requires understanding the resource constraints on both sides. It means negotiating between the goal of scaling new innovations and the goal of pursuing zero-defect, day-to-day execution. The effort of the Leadership team in this early phase is essential. They have to make the bridge thing happen.
Issue 2: The organization lacks the skills to win and scale. Leaders lack the skills to change their ways of working
So now you’ve survived the wobble phase when the organization was gut-checking you. You can answer in the affirmative when asked: “Do we really have the will to take this on, to sustain our course?” All good, except for one tiny thing. You discover you might not actually have all the skills (and in some cases the behaviors) needed to achieve full potential as a scale insurgent.
We’ve found three actions to be effective here:
Focus on building the three communities, accelerating the benefits of innovation and repeatability. In our previous discussion of the design principles of a scale insurgent, we talked about the need to build three communities that you can deploy flexibly to capture the benefits of innovation and repeatability. These are:
- The Agile/disruptive/innovator community that develops innovative solutions through Agile ways of working;
- The expert/execution community that executes core repeatable business processes, supports Agile teams, and shares learnings across the organization; and
- The scaling community that takes winning innovations and scales them across the organization, testing for repeatability, defining execution playbooks and aligning resource allocation.
Expert/execution talent is probably in ample supply. These are all the critical people working every day to sell and deliver existing solutions to customers. Most companies are good at creating experts and, while it’s obvious, let’s just say it: You have many people in your business with expertise in your business.
When it comes to the skills you are lacking, Agile expertise is likely an issue, but good training can develop these skills. The biggest issue will likely be scaling skills. Scaling the solutions created by Agile teams is complex and difficult, and you need folks who are adept at it. This often requires new talent, and as you try to ramp up, scaling can very quickly become the bottleneck skill. You are looking for folks who can:
- Scale solutions. These folks take a prototype and develop it to be transferable, repeatable, scalable and adaptable. They are obsessed with ensuring your Agile teams are producing solutions that can materially increase your company’s value.
- Make them happen. They must act as the bridge between the Agile teams and the expert/execution community to ensure that solutions actually get implemented. This demands integrated resource plans, creating common approaches across development and operations (please read The Phoenix Project), and appropriate feedback loops between the expert teams delivering the solution and the Agile teams adapting it over time.
- Focus on the entire ecosystem to scale innovation. They need to do more than scale innovation across the firm’s assets. They should excel at bringing an ecosystem perspective to innovation. This means asking, “How can we maximize the commercial returns for this innovation by engaging with partners and third parties outside of the firm?” As these people get better at engaging with external partners, they should also make sure your company is the partner of choice for the third-party firms that matter most to your customers. These are key themes in our work on The Firm of the Future.
Recruit new talent. This will take you out of your comfort zone. We’ve talked to several HR people who recently started this journey, and they highlight two immediate lessons:
- For direct hires, lower your yield expectations to 33%. With normal recruitment—putting great talent into known roles—HR directors often expect 50% to 70% of hires to be successful. But for people skilled in scaling up Agile solutions, you’re looking at much lower rates of success. One HR director noted, “I had to convince my CEO that if we were going to shake things up and bring in new skills, we were also going to have to take more risks. We set a 33% target for success. And that’s what we achieved. But the one in three who thrived were absolutely worth the heartache of having two-thirds not make it.”
- Use acquisitions to bring in new talent, which demands beefing up M&A due diligence. As one HR director noted: “We started to notice that with each acquisition of a small company, we were acquiring folks who had scaling skills. It took a while, but I finally convinced finance to bring my HR team into the due diligence phase. We were no longer just buying brands or market positions, we were buying the individuals who had scaled them up quickly and could help us shake up our own business.”
Pursue “shake-up” sessions with all leaders to reinforce new ways of working.Coaching the right leadership behaviors is as important as assembling the right talent, and we find that shake-up sessions can be very effective. They’re a great way to remind leadership that the skills agenda has to include profound behavior change at the top. As one HR director we interviewed noted:
Of course there’s entropy. We would start off with a bang and all commit to the idea of being a scale insurgent, but then the day-to-day grind takes over and we fall back into old habits. The only way we could deal with this was through what we called “shock treatment.” Twice a quarter, we would take a tour of a start-up, meet with founders, go see new technology labs or talk to some futurists. Anything to get us out of our industry, our company, our managerial training. This helped people bring new examples and analogies to bear as we talked about our issues.
Of course, part of this is the “will” issue we covered earlier. But we mention it here because one goal of these shake-up sessions is to constantly reinforce that achieving your objectives relies on being comfortable with bringing in new talent everywhere in the organization.
Issue 3: The organization has the will and skills, but lacks the resources to fund the full journey
Now you’re rocking and accelerating the impact of micro-battles throughout the organization. Will is strong. Skills are building. But here’s the next issue: You don’t have resources to (a) run all the micro-battles at full potential, (b) take action in other parts of the organization based on lessons learned from these battles and (c) run the rest of the business as usual. Something has to give, and that means you have to start simplifying the rest.
Let’s be clear here. In our experience, companies that move toward scale insurgency very often need fewer overall resources, not more. What gets in their way is that the resources they have aren’t deployed in the right places. Too many people and costs are trapped in the expert/execution community and too few in the experimentation and scaling communities. Because micro-battles and Agile ways of working are the newest things, they get starved for resources because the company fails to simplify in other areas to generate funds to fuel growth. This is a big issue. In fact, starving micro-battles or Agile teams of resources is one of the ways traditional organizations strike back.
This demands a combination of four solutions:
Recognize your real requirements at full potential. This is a great problem. You now have too many opportunities. Rather than slowing down the innovation coming from the organization, ask the following: “If we want to reach this company’s full potential, how much do we need? What will it truly take to beat competitors where it matters and restore our insurgent mission with our core customers?”
Celebrate the gap between resource demand and resource supply. Answering this question will create a gap between demand for resources and the supply. Celebrate this gap. What it means is that the organization is creating new investment opportunities everywhere. All hallway conversations will be about the gap. Bring these conversations into the learning center and talk about it.
Mobilize the three communities to close the gap, starting by simplifying the rest. Now it’s time to launch a new wave of micro-battles to free up resources. You can mobilize your three communities to do so; you need innovation, execution and scaling skills to pull this off. Your teams will begin to recognize that they need simplification to fuel growth, and if you give all three communities a major part in this new wave, they will find the resources. As mentioned above, don’t forget to celebrate the heroes who free up resources to fund growth alongside those who deploy the resources to grow.
And remember, it’s almost always about your people. We often refer to funding and funds, but a lot of the resource gap will involve your people. You’ll be demanding a lot from them. Simplification asks that you eliminate noncore activities, which will require “delayering” the organization to reduce the number of middle managers. But even if you eliminate roles, there should be great opportunities to redirect individuals to new growth tasks, including helping the company build those essential scaling skills. If you want to simplify to fuel growth, you have to build the capability to effectively train and shift people from execution roles to experimentation and scaling. Begin learning how to do this sooner rather than later. Your goal is to be an organization that requires fewer resources, redeployed in the right places, which means you’ll be making hard choices about some people. Recognize this and start on Day 1.
OK. We’ve now explored some critical questions. Earlier, we asked, “What will it feel like to be a scale insurgent?” and in this blog post we’ve asked, “With that as a destination, what are the three biggest challenges you’ll face and how can you overcome them?” Now, you need to get going.