A lot has been said about the need for big companies to act more like small ones. To become faster, more flexible, more agile. We took a look at the subject ourselves on this blog back in January. But what does agility really look like in a large organisation?
First, a recap. Why is it that Mega Corp needs to start behaving like a 20-people-strong start-up? Well, the old rules don’t apply any more. Big is not necessarily best when innovation and speed to market are the ways to satisfy customers demanding more choice and personalisation. Large organisations have always benefited from financial muscle and plenty of reach, but now they’re finding it harder to connect. They keep getting beaten to the punch by nimble lightweights.
A startup can react and move as one whereas a lumbering heavyweight has to wait for the signal to make it from C-suite brain, down the organisational neurons to the muscle before it can act.
So, if a large organisation can find ways to operate with real agility it gets the benefits of speed to market and innovation backed by enterprise resources — surely a winning combination. It would be simple if the two things didn’t appear to be opposing forces. To achieve true agility, an organisation has to radically shift its strategy to one based on outcome rather than process. That means focusing on products and services and the teams that deliver them.
A top-down hierarchical structure won’t work here — too long for an idea to make it down from on high, navigate departmental silos and make it to the delivery end. Teams are key, along with the autonomy for them to move quickly and independently.
The gospel for de-centralised team working is Team of Teams, the book by General Stanley McChrystal. During the Iraq war, McChrystal was taken aback when his better-equipped and better trained army kept getting beaten in battle by seemingly inferior Al Qaeda fighters.
The problem was that, while technically superior, the US army was designed to face a foe that resembled itself and fought in the same way. Here it was up against small bands of insurgents deploying guerrilla tactics with no clear chain of command. McChrystal’s solution was to radically de-centralise command to teams who could respond to their unpredictable environments. The analogy with big business is clear — the well-resourced, highly disciplined enterprise versus the startup insurgent with laser focus on a single clear objective.
Amazon is regularly held up as the exemplar of how agility can work in a hugeorganisation — and for good reason. Benedict Evans of Andreessen Horowitz says Amazon “discloses revenue in three segments — Media, Electronics & General Merchandise (‘EGM’) and ‘Other’, which is mostly AWS” before going to reveal the real picture:
“Amazon is in fact organized not just in these segments, but in dozens and dozens of separate teams, each with their own internal P&L and a high degree of autonomy. So, say, shoes in Germany, electronics in France or makeup in the USA are all different teams.”
Amazon’s famous ‘two pizza teams’ — so-called because Jeff Bezos defined this as the required amount to feed the the optimum-sized team — are actually called ‘Service teams’ according to Chris Munns, DevOps business development manager at Amazon.
Munns explains that these teams are responsible for product planning, development and client support, with some of the team members being shared across the organisation. The philosophy is “you build it, you run it” — while teams always know they are part of something much bigger.
The result is a culture of innovation and experimentation that has seen Amazon spread far beyond online book and music retail.
Most businesses are already moving away from rigid departmental and functional structures. According to a report by Deloitte, only 38 per cent of companies – and just 24 per cent of large ones – are organised functionally today. More than 80 per cent of those surveyed have restructured or are in the process of doing so, with only seven per cent saying they had no plans to change.
The study offers advice for making the shift: “Integral to an effective network of teams is to define the mission of each team clearly, delegate responsibility, assign strong team leadership, and build a shared culture and set of information and communication tools that help teams align with each other.”
Where does the road to agility end? Is it possible to completely delegate command to mission-focused teams? To have no hierarchy at all? Could companies in the future end up being totally de-centralised, self-organising systems?
After all, such systems have been pretty successful. Take the internet. It works and continues to evolve without central ownership or control. It started out as a radical departure from existing methods of network communication. The underlying protocol – TCP/IP – replaced fixed lines of communications between nodes on a network with a system of small data packets that could take any route to arrive and be re-assembled at their destination. What was once revolutionary now underpins the modern world.
Blockchain technology is another decentralised, self-organising system that is gaining momentum beyond its original purpose of enabling crypto-currency Bitcoin. Blockchain is an open, distributed ledger that is developed and maintained by a correspondingly distributed community in a similar way to TCP/IP.
Could a business really operate like this? After all, even agile Amazon has the formidable Jeff Bezos at the helm. Perhaps artificial intelligence will one day replace even the most senior executives and constantly reposition a company’s strategy to capitalise on emerging opportunities, aligning teams with new goals as it goes.
The shifts we are more likely to see will be born of necessity. Deloitte highlights two factors driving the shift towards an agile ’team of team’ approach within large organisations. One, as mentioned earlier, combined with what the report calls a predisposition for team-based working among a more ‘empowered’ workforce. The second factor is the way digital technology lends itself to team working:
“Today, teams can easily use web or mobile apps to share goals, keep up to date on customer interactions, communicate product quality or brand issues, and build a common culture. Rather than having to send messages up and down the corporate pyramid, people can access information immediately.”
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