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Q: How do we know how Agile we need to be?

Author Darrell Rigby responds: Great question. As we describe in the book, Agile has great benefits, but it also has costs. Getting the balance right is key.

Benefits often include greater revenue growth because of better and faster new product introductions, higher customer lifetime values, and other things; benefits also include lower costs because of more efficient innovation, lower employee turnover and other factors. Agile can also require fewer assets thanks to lower work in process and inventory levels.

The potential costs vary widely, but they can include transition costs such as investment in new technologies, training and coaching. Lower capacity utilization (to speed up response times) and decreased economies of scale can reduce efficiency. Errors may result from less oversight of individuals with lower skills and capabilities, and there are risks of greater variation around forecasts. Organizational costs can include coordinating across teams and frequent changes in assignments, among other things.

Being upfront about these trade-offs helps to set realistic expectations. There is an optimal range of agility for every business and every activity within it that is nearly impossible to predict, so use Agile methods to manage Agile transitions. Adapt to empirical feedback. Set a challenging but sustainable pace. Be patient, and take a long-term perspective.