Harvard Business Review
This article originally appeared in Harvard Business Review (subscription may be required).
By now most business leaders are familiar with agile innovation teams. These small, entrepreneurial groups are designed to stay close to customers and adapt quickly to changing conditions. When implemented correctly, they almost always result in higher team productivity and morale, faster time to market, better quality, and lower risk than traditional approaches can achieve.
Naturally, leaders who have experienced or heard about agile teams are asking some compelling questions. What if a company were to launch dozens, hundreds, or even thousands of agile teams throughout the organization? Could whole segments of the business learn to operate in this manner? Would scaling up agile improve corporate performance as much as agile methods improve individual team performance?
In today’s tumultuous markets, where established companies are furiously battling assaults from start-ups and other insurgent competitors, the prospect of a fast-moving, adaptive organization is highly appealing. But as enticing as such a vision is, turning it into a reality can be challenging. Companies often struggle to know which functions should be reorganized into multidisciplinary agile teams and which should not. And it’s not unusual to launch hundreds of new agile teams only to see them bottlenecked by slow-moving bureaucracies.
We have studied the scaling up of agile at hundreds of companies, including small firms that run the entire enterprise with agile methods; larger companies that, like Spotify and Netflix, were born agile and have become more so as they’ve grown; and companies that, like Amazon and USAA (the financial services company for the military community), are making the transition from traditional hierarchies to more-agile enterprises. Along with the many success stories are some disappointments. For example, one prominent industrial company’s attempts over the past five years to innovate like a lean start-up have not yet generated the financial results sought by activist investors and the board of directors, and several senior executives recently resigned.
Our studies show that companies can scale up agile effectively and that doing so creates substantial benefits. But leaders must be realistic. Not every function needs to be organized into agile teams; indeed, agile methods aren’t well suited to some activities. Once you begin launching dozens or hundreds of agile teams, however, you can’t just leave the other parts of the business alone. If your newly agile units are constantly frustrated by bureaucratic procedures or a lack of collaboration between operations and innovation teams, sparks will fly from the organizational friction, leading to meltdowns and poor results. Changes are necessary to ensure that the functions that don’t operate as agile teams support the ones that do.
A version of this article appeared in the May–June 2018 issue (pp.88–96) of Harvard Business Review.
Darrell K. Rigby is a partner in the Boston office of Bain & Company. He heads the firm’s global innovation and retail practices. He is the author of Winning in Turbulence. Jeff Sutherland is a cocreator of the scrum form of agile innovation and the CEO of Scrum Inc., a consulting and training firm. Andy Noble is a partner in Bain & Company’s Organization practice and is located in the Boston office.