Much like going global and doing digital, it’s fashionable to say your business is agile. Yet it’s easy to devalue the term and lose sight of what it means. Agile brings together professionals from different functions to design, build and launch solutions together in one space and team with aligned priorities and schedules. Teams focus on a particular problem by iteratively testing and learning in small experiments to find new solutions that are immediately shared (who with depends on the business and its function, but usually customers).

“Organisations that are actually agile are more likely to have clarity on the outcome they want to achieve, to achieve that outcome and be satisfied with the journey,” says John Williams, chief executive of the Agile Business Consortium.

Many companies find tangible value in incrementally shifting to a more agile approach, allowing them to deliver things more quickly while continuously learning. This offers businesses an approach that could help them nimbly respond to change and make clear, evidenced decisions. It also presents them the challenge of deciphering what agile could mean, and learning how to avoid sporadic use of agile tools and principles.

One major impetus for becoming agile lies in the concept of volatility, uncertainty, complexity and ambiguity (or VUCA), which describes an unpredictable world. A great example of this is the state of play in the UK regarding Brexit, what form that will take and what it will ultimately mean for the economy.

By the time you read this, those uncertainties may have changed. Meanwhile, you may continue to wrangle with how technology may disrupt your market or how your customers’ priorities are changing.

The solution to surviving this unpredictability, says Williams, is to be flexible enough to adapt to the unexpected. Being agile as a business, then, allows you to respond to change more effectively. According to Paul Clark, chief technology officer at fintech bank Tandem, this all starts with a fundamental change in mindset.

Agile is unlike the traditional waterfall method of delivering long-term phased programmes, where work is handed from one team to another, each working to differing priorities, expectations and speeds, and all reliant on predictable assumptions and a stable environment.

The risk associated with large waterfall programmes increases in a volatile climate. Huge investments can be made in outcomes that are out of date when they eventually land, according to Vikram Jain, managing director of London-based agile consultancy JCURV.

When applied well, early and frequent delivery and experimentation with agility can improve productivity and capture changes and uncertainties in weeks rather than months. The result, for Clark, is that being agile offers a deliberate and empirically provable way to discover what customers want. He says that the art is to dream big but start small. For Tandem, this meant starting with a hypothesis that a piece of functionality will enable customers to do something better.

Companies that do agile well can, in a short time, give customers something, watch them use it, then decide what to do next based on that feedback. This is how agile can work when a business is set up to do it well. But even famous examples, such as the bank ING, did not become agile overnight: rather they gradually transformed over a decade. And there are plenty of challenges to getting there.

The agile approach of testing imperfect versions of products and services with customers requires a shift in thinking. The business will need to stop operating as a hierarchical environment where products must be perfect before they reach customers.

Jain explains that it is counter-cultural for many organisations to say “in two weeks’ time we want something to test with the customers”. But doing so reduces the risk of ending up with one big failure at the end of a large programme, to focus on small, manageable failures that teams can learn from to reduce future failures.

The idea of any failure is uncomfortable, and so for Andrew Young, a managing director at consultancy Accenture, change needs to start with the leadership team. Young believes initial conversations should start with an examination of what in the current business stops the organisation reaching its goals, how the business serves customers, and ultimately asking “what stops us from being fast?”

Leaders must be clear about intended outcomes. Jain explains that in order to create a safe environment they must understand agile ways of working and model these before teams start operating, so that people can feel supported. Within the shorter, iterative environment, leaders have an opportunity to encourage innovation and more chances to acknowledge good work being done. Accenture and JCURV have both observed improved employee engagement when leaders have enabled properly functioning agile techniques.

When starting to adopt agile, beginning with small pilot teams is broadly advised. Jain warns that this can mean quickly encountering a blockage caused by the existing corporate culture.

Jain saw one case where the budget approval process could take six weeks from application to receipt. This left the business unable to move any more quickly, preventing agile projects from iterating every two weeks as desired. But piloting agile enabled this team to identify the problem early on and raise it with the finance director, who agreed to a tiered approach of approving small funding requests.

After setting the teams, the next step is to establish a few experimental areas in which to test and learn how agile works. Jain suggests these experiments should be of medium complexity with a medium-to-high business benefit. Taking this approach means appointing product owners and building multi-discipline teams to work closely with internal stakeholders.

Young suggests that this could include risk and compliance. By testing the agile methods, the business starts to find the most appropriate agile framework.

Further iterations as a result of conducting experiments will refine the processes, identifying and addressing bottlenecks in the business.

Scaling agile ways of working – introducing the concept organisation-wide – brings us to the concept of enterprise agility. Once control functions such as finance and risk start to embed within multidisciplinary teams, the business is in a stronger position to let the team make decisions and trust them to do so.

Competing priorities do not disappear, but as the business gradually scales, Young explains that future vision needs to be continually in balance with today’s business costs.

One of the common concerns about agile reported by Accenture is that it can be used as an excuse to ditch planning, documentation and delivery disciplines: essentially a loss of control. The web is saturated with articles about the virtues and perils of agile, with practical examples on both sides. In addressing these concerns, Young explains that documentation should still be generated using agile but on a smaller scale, allowing the team to learn from and explore the outcomes of project experiments without being bogged down by reams of detail.

Neither does agile mean not having targets. According to Williams, it means being flexible about how to reach those targets. He empathises with people who may perceive agile to be chaotic, but stresses that keeping a destination in mind is important, and it always requires thoughtfulness and reflection.

But there are many ways agile can fail.

The name cargo culting dates back to the Second World War, when South Pacific Islanders were reported to have mimicked US soldiers’ signalling to planes with bats, believing their actions might result in the reappearance of cargo planes. Agile cargo culting, Clark explains, is where people implement one part of the agile process without understanding everything else that goes into building and running it. Companies then miss important lessons about how culture, processes and leadership must adapt to accommodate agile successfully.

According to Jain, the ‘big bang’ approach of setting a date to be agile will not work anywhere near as well as taking the iterative route. If businesses invest upfront in agile, without the leadership team first understanding and assessing whether the work is going to be right for that business, Young warns that they risk putting the organisation under stress: “They need to get used to working with it and change must be iterative.” Jain says that iterative practice means learning how the business works with agile, and only scaling up after a reaching a point where you can be confident of a scalable model.

Attempting to use agile ways of working in isolation can exacerbate other problems like cargo culting by failing to develop leadership, processes and cultural change. It’s important to start with a leadership team that understands agile and become immersed in the experience. Without setting up multidisciplinary teams around specific problems, experts say that teams risk remaining in silos with misaligned priorities, approaches and timelines.

Jain believes that one of the biggest challenges for finance directors when it comes to agile is annual budgeting. The perceived control that comes from having a plan at the start of the year can be undermined by the need to move to a fast-changing world. He explains: “It’s critical that finance teams build more flexibility into budgeting and adapt budgets based on what is happening within the year, rather than only once a year.”

And yet among some of Accenture’s clients, Young has noticed that finance and risk professionals are becoming the biggest advocates of agile, because once businesses move more iteratively and transparently, greater financial control becomes possible.

Finance and risk can equally apply iterative methods to the way they work. Taking multidisciplinary approach embeds finance experts within teams and allows collaboration on costs and financial risks associated with activities.

Fintech bank Tandem has always operated with agile methodology. Last year the bank completed more than 3,000 production releases, according to chief technology officer Paul Clark.

Tandem has a “test and learn” culture, never second guessing what customers want. Seeing how they respond informs what teams do next. For example, before developing an auto-savings feature, they would first test customers’ ability to easily connect to instant access savings accounts, then test how the customer funds this, then test a rule to allow customers to fund it more regularly.

Eventually this process leads to testing a rule that analyses bank accounts to suggest savings amounts. Little by little this can lead to a product like auto-savings, which uses machine learning to determine how much customers are safe to save each month, automatically saving that money for them. In this way, rather than producing an instant solution, Tandem works with customers to establish the best option.

Before building anything, Tandem has an idea or a hypothesis to test. After mocking this up on paper, they prototype three or four different ways to test that idea. This is cheap and allows for initial usability testing with customers, followed by functional prototyping which they test by interacting with members of the public at King’s Cross. If early results validate the idea they commit to building it.

Tandem budgets like any other company. It has a five-year plan and a one-year budget. But less commonly it replans every quarter, negotiating strategic themes from management that are met with hypotheses from teams providing the chance to test these ideas and frequently review them.

When Helen Hunter, then-new chief data officer for Sainsbury’s, entered discussions about changing the operating model with the director of central finance and other leaders, she was told she had six weeks or the work would be taken offshore. Her response was to request that during those six weeks leadership join her on the agile journey. Leadership quickly identified what slowed them down.

After hearing from analysts and data scientists who felt bogged down in endless, low value, repetitive tasks, Hunter and her teams set out to upgrade data quality. They piloted agile analytics, creating teams to work closely with internal customers to give them insights they needed to drive learning and propagate value more quickly. Talking to 2018’s Women in Data conference, Hunter described how one member of staff had spent seven years working for an internal customer he never met, receiving feedback second-hand weeks after delivering on his projects.

Some 10 weeks after inviting that business stakeholder to get on board with agile, the multidisciplinary team worked together to automate the supermarket’s daily sales and waste report. Pre-automation, this report used up considerable resource and previous attempts to automate had failed for 10 years. Similarly, the team built an algorithm to find the optimum way of breaking down delivery units and distributing products to shelves. With 130,000 daily delivery units, this has implications for millions of pounds worth of labour.

Hunter described how close collaboration with stakeholders forces everyone to prioritise the highest value pieces of work in a way that is not possible when tasks are simply passed from team to team with long delays in feedback.

Download pdf article:

• Make your business agile
  Business & Management Magazine, Issue 274, May 2019

Full article is available to ICAEW members and students.

Further reading on the agile approach is available through the articles below.

These articles are available to ICAEW members and ACA students.

Online articles

The Library provides access to leading business, finance and management journals. These journals are available to logged-in ICAEW members, ACA students and other entitled users subject to suppliers' terms of use.