Hey everyone, Kumar Dattatreyan here with Agile Meridian. We're up to our, I think, 98th or 99th episode of the Meridian Point. And today I'm joined by my friend and colleague, Glenn Marshall, and we're gonna be talking about how there are companies out there that manage to be agile, nimble without using any frameworks. In fact, they probably haven't heard of the Agile manifesto. And yet, they are some of the most agile, nimble organizations around. So let me bring Glenn into this conversation, and we're gonna talk about that. What makes these companies tick? How do they get to where they are, and what can we learn from them?
I think that's a great question, Kumar. I think they probably have heard of the manifesto, but they certainly are not religiously following it. We did some digging this afternoon, and we came up with a couple of points, 3 points actually.
I think the first one is customer centricity. It's kind of a simple one, and it's not terribly hard for companies to get to. But a lot of times, companies tend to be focused on profit and cost cutting. I've always struggled with that. Of course, you need to keep the lights on. Of course, you need to be profitable. Businesses are not charities. But if your customers aren't happy, that's not gonna end well. You may make your quarterly numbers, but unhappy customers are definitely a big problem. And customer loyalty is, surveys have indicated, going down. So companies are not taking care of their customers, and that is a major problem. If you don't care about your customers, they're just gonna drift away. So you do need to be customer centric and focus on the customers.
A simple way to do this, without getting too deep into agility, is to rank the work that you're doing by customer value. How valuable is this to the customer? Of course, you need to consider effort, so there's an ROI calculation in there. But just doing something as simple as that, I think, will go a long way.
I think that you're definitely right. I mean, of all the companies that are out there that are successful today and are in some way, shape, or form agile, without using frameworks, and there's many of them - Netflix, Amazon, Valve, Buurtzorg, a nursing organization out of the Netherlands, I believe. All these companies have that as a core premise - they are insanely focused on their customer.
And I think there's a component of that that maybe we're glossing over, which is that the mission, the purpose of these companies are such that the people that work there understand that mission, understand that vision, and can personify the customer experience in some way, shape, or form. They are close to their customers. They understand what it is they want and need, maybe even better than the customers do themselves, and so they're able to create experiences that their customers just truly love, which is why they keep coming back.
I would add a couple of qualifiers, particularly if you're a product company. In order to be responsive to your customers, you need to get product out quickly. And the way you do that is slice it down into small chunks, prioritize those chunks, and continuously get stuff out to the customers. Nothing makes a customer more unhappy than having a bug fix that waits for a year. Definitely not keeping or making the customer happy.
Of course, there are constraints that you have to work within - financial constraints, regulatory constraints. Obviously, those are constraints. You simply have to pay the cost of doing that. But your focus is on the customer while, of course, keeping regulators and so on happy.
Technical debt, if you're a product company, that's a thing. So you need to allocate some portion to maintenance, if you will. But other than that, focus on the customer.
You know, I remember my days in the restaurant business, and it strikes me now as we talk about customer centricity that back in those days when I used to run restaurants, our focus was entirely on the customer, on the customer experience, on the quality of the food that we provided, the speed at which we provided it, the smiles on our waiters' and waitresses' faces when they served them their meals. And the job of the managers was to be out on the floor talking to the customers, making sure they were happy.
And I feel that that experience taught me a lot about customer experience, and the customer being the ones that are buying your products or services. Right? So in restaurants, it's very easy to see the customer. They're very tangible. They're walking through your door every minute of every day. If you're successful as a restaurant owner or manager, then you have a steady stream of customers that are walking through your doors and ordering your food. And if you have a sit down place, they're sitting there enjoying a meal with their family or with their friends.
It strikes me that we mint people in our educational systems, colleges and whatnot, to be developers, product managers, product designers, UX people, and so on and so forth. And there are some companies that really do well with ensuring that these people, when they come out of college and they get hired, understand who their customer is. And maybe even send them out in the field and have them work with their target audience, if you will.
I remember working at a newspaper a while back, and I had to go out and work at the newspaper, to see how they set the paper. This is way back, I'm old, who reads a newspaper anymore, right? But I had to go do that, and I think - maybe I don't know this to be true, but please comment - when I go out to a client site and they hire me to be their agile coach, the people there are so far removed from the customer. There's so many layers between them and the customer that how could they possibly build something that is fit for purpose? Because they don't really know.
There you go. I think there are a number of companies that have people regularly go and talk to their actual customers. I think that's an important practice, and I can't think of any company where that would not apply or where that is not a good thing.
Of course, when you go to an organization, sometimes there are internal customers. But regardless of whatever you're working on, there is a customer somewhere. Find them and make sure they're happy. And they really should be a member of your team or at least a representative of the customer.
So customer centricity definitely is a key factor that makes these frameworkless companies tick. Right? They don't use agile frameworks, they don't know what Scrum is, but still they're able to respond to changes in the marketplace nimbly with agility and provide great value to their customers. What else?
The second thing is around getting feedback and looking at how you would change your practices and processes, what the agile folks call a retrospective. But this is where there's a little bit of humility needed. Nobody knows everything about everything. Things are always changing. Customers are changing as well. The marketplace is changing. Whatever - nothing is ever really perfect or finished. And worse than that, the world is changing. So you have to be open to changes to your process and your practices, and that's where the retrospective comes in.
The notion of experimentation - you may not know, well, just do an experiment and try it. There's no such thing as a failed experiment as long as you show up. An experiment that does not work out as expected has eliminated a possibility. So experimentation and retrospectives are critically powerful. You're continuously improving.
Yeah. It's a good point. It's the spirit of continuous improvement. Right? Kaizen, if you want to call it that, from the lean folks. Small improvements over time yield significantly large results, which is what allowed industries to flourish, especially in Japan, and provided sort of a litmus test for the US auto industry to emulate back in the '80s and '90s.
I also think that these companies that are naturally agile, nimble and lean, they may not use these words but you're right, they have that built into their culture - that they're always examining at how things worked and how they might make it better. And using those lessons to conduct these experiments, whether they call them experiments, we're using that language, who knows what they're using? Right? They may use their own internal vernacular to describe these types of events, these inspect and adapt events, as some of us have called it.
What do you suppose is needed to have that sort of introspection, that humility to question the way things work and ways to make it better?
That's a good question. I would say it's a mindset - just be constantly curious, constantly questioning, and recognize that nobody knows everything, like I mentioned earlier. Your example about Japan is an interesting one. Absolutely, Japan had nailed it in terms of building cars with a fewer number of defects than North America. But I'm rather fascinated by what's going on today. There are several different major manufacturing groups. Japan is one of them. And everybody's going to EVs, except for the Japanese. They are the furthest behind. So in terms of continuous improvement, they certainly did that in the small. But in terms of the large, at the executive level, I would say they're very behind and they're in for a lot of pain because they are so far behind.
Yeah. I think maybe the Japanese auto industry is maybe a little less resilient and adaptable than we thought they would be, in the face of change where China has emerged as this juggernaut, threatening to take over the entire world with their cars that are produced with quality and much cheaper than the Japanese, the US or the Europeans can muster. So it's gonna be an interesting time over the next 5, 10 years or so. Not to get into politics too much, but personally, I don't believe that tariffs are gonna do anything except drive up costs for us here in the US. But that's another point.
The but there's an interesting point here. I still think the Japanese do make excellent cars - yes, using some outdated technology, in my humble opinion. So in the small, they're still very, very good and still producing very good cars. But at some level, they stopped looking at the big picture. It's interesting - you can get the small details right but miss the big picture.
Right. And I think maybe they're starting to play catch up. And when they do, you know, they have all that manufacturing prowess, that will hopefully keep them competitive with the rest of the world.
But I was really looking at, you know, what makes a company - what are some of the cultural habits, if you will, that make a company more or less able to examine themselves and the way that they work, and look for improvements everywhere. What is that ingredient that may be missing in companies that rely on frameworks to do this for them?
I think a critical aspect is the notion of autonomy with alignment. So you have alignment around certain goals. A big one would be to make sure your customers are happy. But you have autonomy in terms of how you achieve it. Of course, you're going to be measured on it. But the focus really is on delegation and letting teams make their own decisions.
There are a couple of, so we're really talking about the notion of dialing up the authority and the capability of teams. A huge factor here is cross-functionality. In my coaching work, I sometimes talk about finance. If there are a lot of financial components on a team - I work with software a lot - bring a person from finance onto the team. Have them be an actual full-fledged team member, perhaps part time. Legal is perhaps a better example. Sometimes there are a lot of legal or audit aspects. Bring them on the team. It's way, way more efficient. And then the team can do everything. And this is what you want.
Another factor is psychological safety. That's huge. Everybody has to be free to speak up without fear of humiliation or punishment. And sometimes you don't see that in some organizations.
I think you're touching on a lot of different facets of this set of characteristics. You talked about alignment with autonomy, and we talk a lot about this notion of alignment with autonomy in XSCALE. And I think to have that, you have to have a culture that values trust and autonomous teams. Right? Values that more than other things, maybe more than hierarchy or whatever level you have. A culture that rewards and supports decentralized decision making so that the people closest to the work can make decisions. Even if it's a wrong decision, it facilitates learning because you're gonna learn that was a wrong decision, and you're gonna make a better decision the next time. What do you say to that?
There are a couple of points there. First of all, things are so complex and moving so quickly these days that hierarchy just isn't responsive enough. You simply have to have distributed decision making or you're gonna be behind. It's just too slow. It's just too inefficient. And the people at the top don't know everything. They're very bright, of course, but they can't know everything. So this is why you want to push decision making down as close to the person who is receiving the information as you possibly can.
This is a big deal though. I'd like to read very briefly about a practice on self-management, if I may.
Sure.
This principle is called the Advice Process. And under the Advice Process, the basic idea is that anybody can make any decision, including spending company money. But first, that person has to seek advice from:
1) People who have experience about the topic. And if we're talking about spending money, that would include financial folks doing cost-benefit analysis and so on.
2) From those people who will be meaningfully affected - that is, they will have to live with the decision.
The decision maker must consider all advice seriously, but the goal is not to make a watered-down compromise. After careful decision making, the decision maker chooses what they see as the best course of action, even if that means going against a piece of advice received from a colleague.
So if somebody has a burning desire - let's say they're working on the assembly line, we can get a better machine to do this. Well, talk to finance, talk to the people who are using that machine, come up with a good case, and then just spend the money. As long as you consult, you can spend money. This is kind of a litmus test - if teams are allowed to spend money, that's distributed decision making, and that's autonomy. If they're not, it ain't.
Yeah. That's a good way to think about it. But it seems kind of radical. Right? For at least companies that are not - and we should talk about some examples of companies that are agile without using frameworks. But for those that do rely on frameworks to stimulate this type of a culture, that can be hard to do. Right? And using a process like this is a radical change.
Yeah. And the way I would suggest to start on that is get one of your best teams and give them some autonomy. Start small, prove it works, and then scale it up. This is gonna be extremely disruptive to the organization. There's no question about it.
Right. And especially for a public company, allowing employees to spend money, that may be a difficult thing for a traditional company to go to. But there are probably other ways you can go. You can go pretty far in terms of decision making without the financial aspect of it. Wouldn't you agree?
You could do it in phases. You could empower teams up to, you know, $5,000 or $10,000 or something. And then as it works out, you increase it. The idea is to trust your people. And if your people are not trustworthy, then why are they there? I've seen in a number of organizations, it seems they have some people that seem to be less than capable. And what they do, they hire a supervisor. Well, really? How's that gonna help? You're just making the problem worse because you're adding overhead.
And Peter Merrill with XSCALE, he talks a lot about the - well, how does he put it? The doer-decider distance?
Yep.
Right? Can you explain what that is? I have an idea, but I don't remember how he puts it.
I'm gonna just be going from memory as well. But it relates exactly to this concept - the person doing the work versus the person making the decision, you want that distance to be as short as you can make it. You don't want 5 levels of hierarchy. You may have to have 1 or 2, but you want it as short as you can make it. So this gets into the notion of delegation, empowerment and all that sort of stuff.
I think I would like to just add a comment on what I said a moment ago. And that is, in terms of radical organizational change, this is not about hurting people and cutting people left and right. In fact, I'm very unhappy with the organizations that seem to think that this is the way to go and grow their companies by whacking people. This has to be done in a humane way. Introduce it, explain what's going on, for people who were former decision makers who now will not have a role, give them a chance to go and find another role within the company. The recommendation is a year. And if that doesn't work, give them a package. But at all times, you have to treat people with respect. And sadly, this seems to be out of fashion with many companies these days.
Right. Because people are a resource. People are not resources. People are people. Machines are the resource.
I know. That's the prevailing notion. Right? It's a human resource, but it's just a resource. It's made up. The company is made up of people. Right.
You're preaching to the choir here. I was just trying to get you riled up and evidently, I did.
So maybe an example of a company that sort of has charted their own way to agility - and I don't even know if they call it agility, it's just their way of working, their operating model. What would you say is an example of a company that you'd like to speak about?
The company that seems to be the most advanced in terms of these practices would be Buurtzorg, the Dutch nursing company. They have something like 9,000 nurses, and they have 50 people that are not nurses, providing support. 50 people for 9,000. So they are practicing and taking this agility notion very seriously. And the amazing thing is that their costs are much, much lower, and people are leaving traditional nursing organizations in droves to join them.
So how does that work? How do 8,950 people just go nurse without any supervision?
They are self-supervised. The basic model is a nursing group. So they obviously have to have some senior people, some less senior people, and some specializations. I'm not sure how it works with doctors. Do they have doctors on the team or not? But the basic idea here - well, it's all nurses. No doctors.
Okay. Yeah. All nurses. They will operate in teams of up to 12. If it grows beyond 12, then at some point they split into another team. And these are self-contained, self-managing teams of nurses.
Mhmm. If it goes below 6 then they merge with another team.
Okay. And so that's their structure. It's almost like an organism of cells. Right? The cells can't be much more than 12 people, and be much less than 6. And here's the thing - an organization is like an organism. And treating it hierarchically really is not reflective of the way things actually work.
But it's not as simple to say, okay, let's take an example - just pick a company. I don't know, I'll just pick a company. And this is not meant to pick on any company. I'm just gonna pick one - IBM. And they have, say, 100,000 people. It's not to say, okay, you know, let's fire all of the managers, only leave 50 managers, and 99,950 people, you guys self-organize into teams of 12, and all of a sudden IBM's gonna run like Buurtzorg. No. Lots of things have to be in place in order for that type of a structure to work. Correct?
And the way I would recommend going about it is pick some strong people that basically build up a cross-functional team of quite strong people, and then gradually give them more and more ability and more power.
Target, I believe, has this model. They have an innovation lab of coaches. And if you want to go and introduce agile practices to your team, your whole team goes into the innovation lab and stays there for 6 months while they learn this under intense supervision. And then they go back to where they were.
So you're talking about Target. Is that Target you're saying? Yes.
Would you say that they are a naturally agile company, or they have implemented a framework?
I would say this is part of their journey. The critical thing to keep in mind here is this is a journey. I don't think they're there yet, but I thought that was a good way to go and introduce these practices.
Right. Right. Okay. It was under intense - they're under intense monitoring. And people have to actually apply to go to the Innovation Lab, and they're interviewed and that. So it's like an honor. And when you graduate in a sense, then you go back to do your work, but differently.
I would love to learn more about that maybe in a future talk that we have - just about their journey and maybe some companies that, that didn't start out like, say, Buurtzorg or Netflix or whatever and have had success with frameworks. There are plenty of them, right, that have had success with frameworks. But I wonder if you compare them side by side with an organization like Buurtzorg - how would they stack up? Right? How nimble is Target compared to say a Buurtzorg or a Netflix? You know, how adaptable are they? How valued do the people feel? How compensated do the people feel? And most importantly, what is the perception of value from a customer standpoint? Is it comparable?
This is the - I think you're coming back to what I see as the difficult question, and that is delegating decision making. Buurtzorg has done that to an extreme degree. I think they're lightening a path for other companies to follow. But I don't want to diminish how hard it is to go down that path. It's gonna require CEO support, and it's gonna require a lot of courage. And it's going to be very disruptive. And the people who are disrupted will be very unhappy and very vocal about it.
I've worked in companies that will go, "I'm not sure which one is better. Okay. You try that, and you try the other one." And we'll have a contest.
I used to work with Sun Microsystems. I was always very intrigued that they would sometimes have 2 engineering teams working on the same thing at the same time, trying 2 different approaches. And then they'd have a contest to see which one was best.
So, Glenn, it's getting to be 30 some minutes at this point, so we probably need to cut this fairly soon. What is your takeaway? What can we take to a traditional organization to say, "Hey, you need to be more like Buurtzorg" and they're gonna laugh in your face and say, "Get the heck out." They might use some other choice language. I don't know.
The critical thing with these practices is that it's a journey. Don't do it all - it's not like add water and stir instant change. That simply is not the way to work. I would start by introducing customer centricity. Just doing that alone will have tremendous benefits, and then it'll lead to other ones.
The customers will - if you're taking a long time to deliver product, customers would complain. "Hey, but we're supposed to make our customer happy." Then we better go and deliver more quickly. And the way you deliver more quickly is by slicing things down. So an awful lot of things just flow from that simple thing. And that's where I would say companies would start. The other stuff, leave that to later. One of the practices of improving is to be agile about improving, which means don't do everything at once. So just pick one thing, and that's the one thing I would pick. When you've cut that nail, then we can talk about the next one.
That is good advice. And I think that's a good place to start because if an organization, a department, a division within a company, whatever - right? One single product line starts to practice being more customer centric, it's gonna trickle throughout the organization. It's gonna require that people make decisions that are more local rather than global. It's gonna require that leaders serve the teams that they're leading rather than the other way around. So I think that's a great place to start.
Anything else you'd like to add before we end this one?
I will add that this will present a challenge because so many companies are focused on quarterly results. You need to go and keep the lights on. You can't not make profit. But if you take a bit of a longer view, you can add customer centricity in there as well. But the folks might have a bit of a challenge with this.
Right. Right. Exactly. That's definitely a challenge.
Alright. Well, I hope you enjoyed this episode of Meridian Point. And, as usual, I always enjoy talking to you, Glenn. So, we will see you for our next Glenn and Kumar episode on topics around XSCALE and Business Agility in about a month. Thanks for joining. Bye bye.
Bye bye.
