Monday, October 12, 2015

Large companies and fast cars

A few weeks ago I tweeted:

“Large companies trying to be Agile remind me of middle aged men buying sports cars”

I wasn’t saying large companies couldn’t be Agile - heaven knows most are trying and a few have successful software teams but on the whole the successes are few and far between. My thinking has nothing to with whether they can succeed (they clearly can, but most fail), or whether we should try and help them (yes, I’ve helped a few in my time, and I’ve seen a few failures) but rather my thinking comes from Peter Drucker:

“Large organizations cannot be versatile. A large organization is effective through its mass rather than through its Agility.” Peter Drucker, Age of Discontinuity

Peter Drucker wrote that in 1968, long before anyone ever thought of applying the word “agile” to software or business.

What I’m getting at is: for most large businesses the things Agile requires go against the grain of what has traditionally made them successful. For example…

Big businesses use economies of scale to extract favourable terms from suppliers. But software development doesn’t have economies of scale, rather it has diseconomies of scale. Applying economies of scale thinking to software development and agile hinders it.

Big businesses (to achieve economies of scale and management) often favour standardised procedures and processes: these bring some benefits but they reduce variation (not good in software development), reduce experimentation (required if you are going to try something new) and discourage risk taking. Sure standardisation brings benefits but the benefits they bring are opposite of what agile thinking would suggest.

Big businesses have lots of customers who are customers because they are customers - inertia. For example changing your bank is so much trouble and effort very few people do it past the age of 25. All that Agile talk about MVP, product management, customers and so on doesn’t matter when you are dealing with existing customers who stay through inertia. You biggest risk is upsetting them enough to make them move.

Big businesses are inherently risk averse: the risk of upsetting customers, suppliers and shareholders is greater when you have more of them. Yet many agile practices look very risky at first, even if you understand logically that they are risk reducing simply doing something your peers don’t is a risk.

For example, image a manager who buys into the logic of continual delivery (CD) and sees how it reduces the risk of releasing software. If he alone adopts CD for his team - when all the other managers stay with the annual release - and something goes wrong then he will be seen as at fault. It leads to defensive decisions and an aversion to change because change is risk

And big companies have more people so there can be a herd mentality. Consider that example again, it there are only two development managers in the company and one decides to adopt CD then half the managers do CD and half don’t. If however he has 10 peers then there are 10 who take a different decision, i.e. stick with the thing that always “worked” in the past and one, him, who changes.

Big businesses often grow through acquisition. Acquisition is often the modus operandi of big companies: buy similar companies, buy their customers, extract economies of scale, install standardised procedures and remove differences. Thats how you make a merger work if efficiencies are your goal. But those things fly in the face of what an Agile company would do.

Some big businesses have got to be big by squeezing the fat out of processes and inventories, i.e. remove the slack. But without the slack there is no room to manoeuvre - remember queuing theory, once utilisation rises delays increase and variation is bad. That makes change more difficult and also makes practices like reducing WIP difficult to implement.

One way big companies succeed is to define roles and responsibilities, indeed hand-in-hand with economies of scale goes economies of specialisation. That is, as organizations (even teams) get bigger it becomes economic to have specialists, like business analysts, in particular roles. But again this cuts against what an agile company would do. Agile companies value multi-skilled/multi-functional people who can adapt to what is required. This approach also helps deal with bottlenecks; specialisation often creates bottlenecks (even met a test manager who carefully schedules his testers so nobody is ever underused?)

I could go on but hopefully you see what I’m saying here: the things that make a company successful at being big are often the same things that make it difficult for the company to be agile and, importantly, vice versa.

Size is inherently un-agile.

Thats not to say size is bad, size brings many advantages but these are not the advantages of agile. Trying to be big and agile is an example of having your cake and eating it. The few companies manage to achieve both really are the exception that proves the rule.

Hence: a company gets big and successful, like a middle aged man who has a good job, and in an effort to reclaim the nimbleness of youth embarks on a quest for a fast car and younger wife (agile), while forgetting that middle age brings its own benefits, notably in this context knowledge and experience.

Now, the question that lurks here is: if a large company becomes “agile”, that is, if it changes many of the things that have made it successful as a large company in order to achieve agility, then: does make sense to remain a large company?

Possibly by dismantling the things that make big successful and replacing them with practices and processes which allow agile to be successful the company has turned itself into little more than a disjoint conglomerate. In which case it may find better economies, and a better stock market valuation, by splitting itself up.

And that in turn suggests that any framework for “scaling agile” has a number of challenges to overcome if it is to succeed.

Finally, I don’t mean to be critical of people who try to help large companies, in many ways these people are taking on the most difficult tasks and deserve our support.

And for completeness, I should say: if you are a big company out there wrestling with these problems please feel free to call me, my rates are very reasonable!