The ten stages of the Agile transformation

journey
Stephen Denning

gile processes and concepts are driving rapid-paced, customer-focused continuous Stephen Denning is the

A innovation initiatives needed to survive in today’s dynamic marketplaces. First adopted

by digital innovation teams, the Agile mindset is spreading to middle management
author of The Leader’s
Guide to Radical
Management (Jossey-Bass,
operations and top level leadership initiatives in many established organizations. Soon their
2010) and The Age of Agile
leaders may face the necessity of undertaking a company-wide Agile transformation.[3] For (HarperCollins, 2018), which
traditionally managed hierarchical organizations, the transformation will include radical describe principles and
shifts in power, attitudes, values, mindsets, ways of thinking and ways of interacting practices for reinventing
with stakeholders—customers, employee talent, shareholders and partners. management to promote
continuous innovation and
adaptation (steve@
Agile management vs. the hierarchical corporation stevedenning.com). His
essays appear at Forbes.
Most long-established large firms today are not agile. A recent Deloitte survey of more than
com: http://blogs.forbes.
10,000 senior executives revealed that less than 10 percent of senior executives see their com/stevedenning/.[1] He is
current organization as “highly agile today.”[4] a member of the board of
Yet more than 90 percent of those executives see “agility and collaboration” as critical to directors of the SD Learning
Consortium and a member
their firm’s success.[5] This in turn reflects findings by McKinsey & Company that firms and
of the Advisory Board of the
units implementing Agile do better financially than those that don’t.[6] Drucker Forum.[2]
The intended outcome of Agile management is clear: “the ability of an organization to renew
itself, adapt, change quickly, and succeed in a rapidly changing, ambiguous, turbulent
environment”[7] as well as “the ability to quickly reconfigure strategy, structure, processes,
people, and technology toward value-creating and value-protecting opportunities.”[8]
Yet implementing Agile methodology is not the goal. The goal is to
enable the organization to generate instant, frictionless, intimate,
incremental, risk-free value at scale, and to gain the financial
rewards that flow from that capability.[9] In the race for such
outcomes, rigidly hierarchical firms are at a disadvantage.

Where does the transformation start?

Not waiting for top management, some successful Agile champions
have begun their journey without central authority or committed
budget resources. Yet it can be hard for people at lower levels to
acquire the organizational knowledge or the social capital to mobilize
broader support.
Not surprisingly, progress towards business agility correlates
positively with the level of leadership directing the Agile journey.

DOI 10.1108/SL-11-2018-0109 VOL. 47 NO. 1 2019, pp. 3-10, © Emerald Publishing Limited, ISSN 1087-8572 j STRATEGY & LEADERSHIP j PAGE 3
 Recent surveys shows that the more senior the leader, the greater the progress towards
business agility (Exhibit 1).[10]
1. Start by taking stock
Top management needs to start by considering whether the firm’s own management is up
to the challenges that lie ahead on an Agile journey. A first step is to absorb some of the
latest literature on the subject and consider the implications of the three laws of Agile.[11]
䊏 The Law of the Customer: practitioners are obsessed with delivering value to
customers.
䊏 The Law of the Small Team: a mindset that throughout the organization work should be
done in small autonomous cross-functional teams working in short cycles on relatively
small tasks that deliver value to customers and getting continuous feedback from the
ultimate customers or end users.
䊏 The Law of the Network: practitioners view the organization as a fluid, interactive and
transparent network of players that are collaborating towards a common goal of
delighting customers.
To varying degrees, Agile principles and practices have already begun to take root in parts
of many organizations. The global Agile movement is now so wide in scope, particularly in
software development, that most organizations of any size have at least some pockets of
Agile management.
Top management needs to find these pockets within their own organization and learn what
progress they have made to date as well as what constraints they are facing. Top
management will need to celebrate any successes that have occurred and so lay the
foundation for future wins. The leaders of these prior efforts are potential allies and
champions for spreading Agile.
For instance, when the top management of Barclays began looking into Agile
management in 2014, it discovered that there was already an underground movement
of Agile practitioners. In March 2015, when Barclays’ operations and technology team
announced that becoming Agile was a key strategic initiative, the many islands of Agile

Exhibit 1 Mapping the Agile transformation journey

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 “First adopted by digital innovation teams, the Agile mindset is
spreading to middle management operations and top level
leadership initiatives in many established organizations. Soon
their leaders may face the necessity of undertaking a
company-wide Agile transformation.”

within Barclays were invited to come out from the shadows and become the champions
of Barclays’ Agile transformation.[12]
Top management will also need to learn from any failed prior efforts to launch Agile
initiatives within the firm.

Assessing the opportunity

Top management should weigh the risks and benefits of launching an Agile transformation,
given its circumstances and resources, and assess whether the change is achievable, and
if so, when and how to start it.
Experience proves there’s a wrong way and a right way to begin a major change process. If
top management tries to force people to adopt Agile processes because being agile is the
latest strategy buzzword in their industry, the risk of internal resistance will increase
significantly. When introducing transformational cultural changes like Agile, “Copy & Paste”
doesn’t work. Instead, the firm needs to grow the change organically from within, so that
native champions are empowered.
In considering whether and when to proceed, top management will also need to assess
the size and intensity of any big battles with stakeholders that lie ahead. Will conflicts
arise between the goal of the Agile—an obsession with enhancing customer value
above all else—and the normative priority that many public firms give to maximizing
shareholder interests?
Top management will also need to be aware of the likelihood that some deeply entrenched
practices of a traditional bureaucracy such as budgeting and HR will eventually need to
undergo transformation.
While it’s not necessary to engage in all those battles on “day one” of the Agile
transformation, top management will need to be giving thought as to when and how such
battles will be fought.
Some firms may decide that the time is not right to start an Agile journey and opt to continue
as they are, at least for now. This isn’t necessarily a bad choice. A decision not to proceed
may be better than a half-hearted launch, which will likely result in “Agile in name only”[13]
and may generate an impediment to undertaking a genuinely-enthusiastic Agile journey at a
more opportune time.

2. Learning from peer practitioners

To better weigh whether to proceed, top management can learn from visiting similar
organizations that practice Agile and learn about key practices worth emulating and
pitfalls to avoid.[14] Senior leaders who have made such site visits have observed that
an Agile transformation isn’t just a project, or an initiative, or a new process, or
organizational structure, but rather a way of thinking that is fundamentally different from
the top-down hierarchical command-and-control approach of the typical 20th Century
organization.

VOL. 47 NO. 1 2019 j STRATEGY & LEADERSHIP j PAGE 5

 Site visits can help show how some firms are achieving business agility and getting benefits
from it by adapting Agile practices to their specific circumstances while other firms are
implementing all the Agile practices “according to the book,” but not getting much benefit
from them.[15] Site visits can also demonstrate the centrality of the Agile mindset and the
reality that “one size does not fit all.”

3. Forming the Team to Lead the Transformation

Ideally, the team to lead the transformation will include members of the C-suite with
the support of the firm’s board of directors. That’s because an Agile transformation
will ultimately affect all units of the organization and the firm’s relation with its
stakeholders.
In the early going, the Agile leadership team may be a subset of the C-suite and may
include Agile champions from other levels of the organization. In principle, individuals in the
leadership team may come from anywhere in the organization. If the leadership team is
composed only of senior executives, the team risks being seen as command-and-control. If
the team doesn’t have participation from the top, the team may never have the authority to
grow the change organically.
Outside help from consultants can be useful but should not be depended on to achieve
successful implementation. External advice focused on specific issues needs to be
received, evaluated and adapted as needed by functional unit champions.

4. Proving the Concept of Agile

The transformation process will often begin by proving the concept of Agile in one or
several small teams that successfully implement Agile management and then using that
success to spread their energy and enthusiasm elsewhere in the organization. The
successful teams start talking to and inspiring other people to imagine and implement Agile
operations.
For example, Microsoft, began with one team in 2008, added several teams in 2009, then
some 25 teams in 2010 in the Visual Studio group, then several hundred teams in the
Developer Division in 2011, and then a commitment to take Agile across the whole
organization around 2014. Implementation is still under way today.
There have instances where large launches have been undertaken in one fell swoop.
For instance, in 2006, Salesforce.com went all-out with change across the whole
organization from the start and successfully completed a transformation from traditional
management to Agile management in just three months.[16] It’s worth noting that
Salesforce already had a team in the organization that had already successfully run a
high-visibility project using iterative methods. This experience served as an example for
other teams.[17]

“The goal is to enable the organization to generate instant,

frictionless, intimate, incremental, risk-free value at scale, and
to gain the financial rewards that flow from that capability. In
the race for such outcomes, rigidly hierarchical firms are at a
disadvantage.”

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 “Ideally, the team to lead the transformation will include
members of the C-suite with the support of the firm’s board
of directors. That’s because an Agile transformation will
ultimately affect all units of the organization and the firm’s
relation with its stakeholders.”

5. Maintain Momentum Despite Setbacks

Even the most notably successful organizations have encountered setbacks, particularly in
the early going. For instance, at Microsoft, it took about a year before teams were able to
meet the nominal goal of Agile teams—to complete work fully in the course of a sprint.
“Initially there was a lot of pain,” says Microsoft’s Aaron Bjork. “It took a long time before we
could actually ship at the end of a three-week sprint. In reality, we were running three-week
milestones. That’s all they were. We would get to the end of a sprint and a team would claim
that a feature was done and be celebrating and then I would try to use it and it wouldn’t
work. The team would say, ‘Oh, we didn’t do the set-up and upgrade for it.’ And I would ask,
‘I thought you said it was done?’ It took a long time for everyone to grasp that we needed to
get fully done in every sprint. It took about a year to learn how to do it.”[18]

6. Evolve the Change Idea

The idea of Agile itself will continue to evolve as it is adapted by the organization. The
process is not a matter of crafting a plan and then rolling it out across the organization. It’s
not a mechanical eight-step program. It requires continuously adapting the idea to the
circumstances of the organization. As the organization and everyone in it adapts the Agile
approach to their own context, each individual needs to own it.
Thus, it’s one thing to create Agile teams. It’s another to make the whole organization Agile.
For instance, General Stanley McChrystal in the Iraq Task Force in 2003 had excellent
individual teams, but, as he explains in his book, Team of Teams, they weren’t collaborating
together as one. The problem wasn’t collaboration within the teams themselves, but rather
collaboration between the teams.
Resolving the problem required bringing all the key actors together in a common physical space
to enable horizontal information flows; pushing decision-making down to the lowest levels,
exchanging staff between teams, and most importantly, changing his own behavior. McChrystal
had to unlearn a great deal about his role as a commander. “I began to view effective leadership
in the new environment,” says McChrystal, “as more akin to gardening than chess.”[19]

7. Avoid the “Fake Agile” Trap

Given that many organizations are now proclaiming that agile and collaboration initiatives
are their highest priority, the risk of “Fake Agile,” the concept being dumbed down to
become just another a set of efficiency tools aimed at reducing head-count, is significant.
For instance, Agile can be adopted as a mere a cost reduction program, or as a patch on
the existing work flow. A number of websites chronicle the misadventures of “Fake Agile”
implementation.[20]

8. The Normalization of Change

Once Agile teams are firmly established as the normal way of doing work in the
organization, the effort needs to turn to bringing all the back-office functions of the
organization, such as accounting, budgeting and audit, in line with Agile goals.

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 9. Achieving Agile Fluency
As organizations become more adept at adapting Agile to their own needs and
circumstances, the Agile mindset will increasingly become more fluid.
One popular way of describing this process is by reference to the martial arts concept of
Shu-ha-ri, which describes the stages of learning mastery. It has been applied to Agile by
Martin Fowler. Shu-ha-ri describes how a person passes through three stages of gaining
knowledge:[21]
䊏 Shu: In this beginning stage the student follows the teachings of one master precisely.
䊏 Ha: With the basic practices working the student now starts to learn the underlying
principles and theory behind the technique and explores alternatives.
䊏 Ri: Now the student is learning from practice and adapting that knowledge to the
particular circumstances.
In the later stages of the Agile journey, the principles and practices become second nature
to everyone working in the organization. At that point, Agile thinking has become fully
internalized.

10. The End Goal: Strategic Agility

The dark secret of the Agile management revolution: high speed incremental product and
service innovation will be a survival skill, not a sustainable competitive advantage. The
major financial gains from Agile management will usually come from achieving Strategic
Agility—identifying and taking advantage of opportunities to develop market-creating
innovations. These unique business models open up markets which didn’t previously exist.
䊏 Sometimes they transform products that are complicated, inconvenient, and expensive
into things that are so much more affordable, convenient, and accessible that many
more people are able to buy and use them.
䊏 Sometimes the new products meet a need that people didn’t realize they had and
create a “must-have” dynamic for customers.
For most organizations, even the most successful, Strategic Agility is the next frontier of the
Agile journey. Operational Agility is important—indeed, increasingly necessary for a firm to
survive. But in a marketplace where competitors are often quick to match changes made in
existing products and services and where power in the marketplace has decisively shifted
to customers, it can be difficult for firms to monetize operational gains and improvements.
Market-creating innovations are where major revenue growth generally comes from. That’s
because market-creating innovations lead us to the so-called “blue oceans” of profitability,
as W. Chan Kim and Renée Mauborgne explain in Blue Ocean Strategy (2015). An
organization can generate high growth and profits by creating value for customers in an
uncontested market spaces, (“blue oceans”), rather than by competing head-to-head with
other suppliers in the existing sector (“red oceans”).[22]

“The idea of Agile itself will continue to evolve as it is

adapted by the organization.”

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 “The process is not a matter of crafting a plan and then
rolling it out across the organization. It’s not a mechanical
eight-step program. It requires continuously adapting the
idea to the circumstances of the organization.”

Takeaways
Reviewing the ten stages of the Agile journey is a helpful way to anticipate what an Agile
transformation would entail in an organization and how long it will take. Today, firms
practicing Agile have already outraced the lumbering industrial giants of the 20th Century to
become the wealthiest organizations on the planet. Agile is a remarkable success story.
Time to get started.

Notes
1. This article draws on insights from the author’s blog: http://blogs.forbes.com/stevedenning/ and the
author’s books, The Leader’s Guide To Radical Management (2010) and The Age of Agile
(HarperCollins, 2018).
2. SD Learning Consortium: www.sdlearningconsortium.org/
3. Denning, S. “Why Agile Is Eating The World,” Forbes.com: www.forbes.com/sites/stevedenning/2018/
01/02/why-agile-is-eating-the-world%E2%80%8B%E2%80%8B/#6f5b351d4a5b
4. “Rewriting The Rules For The Digital Age,” 2017 Global Human Capital Trends: www2.deloitte.com/
content/dam/Deloitte/lu/Documents/human-capital/lu-hc-2017-global-human-capital-trends-gx.pdf
5. Ibid.
6. Aghina, W., De Smet, A. Murarka, M. and Collins, L. “The keys to organizational agility,” McKinsey &
Company: December 2015: www.mckinsey.com/business-functions/organization/our-insights/the-
keys-to-organizational-agility
7. “The Keys To Organizational Agility,” McKinsey & Company, December 2015: www.mckinsey.com/
business-functions/organization/our-insights/the-keys-to-organizational-agility
8. Aghina, W., De Smet, A., Murarka, M. and Collins, L., 2015, ibid.
9. Denning, S. The Age of Agile (HarperCollins, 2018); Denning, S. “Why Agile Is Eating the World”
Forbes.com: www.forbes.com/sites/stevedenning/2018/01/02/why-agile-is-eating-the-world%E2%
80%8B%E2%80%8B/#1c7241804a5b
10. The Business Agility Report (1st Edition, 2018): Business Agility Institute, https://businessagility.
institute/learn/business-agility-report-2018/
11. Denning, S. “Understanding the three laws of Agile,” Strategy & Leadership, Vol. 44 No. 6.
12. Denning, S. The Age of Agile (HarperCollins, 2018), Chapter 1.
13. Turner, J. “Agile in name only.” http://radar.oreilly.com/2013/04/agile-in-name-only.html
14. www.forbes.com/sites/stevedenning/2018/06/27/six-lessons-that-society-must-learn-about-agile/
15. SD Learning Consortium: www.sdlearningconsortium.org/
16. The early history of iterative approaches in software development is described in detail by Craig
Larman and Victor Basili in “Iterative and Incremental Development: A Brief History,” Computer,
2003, 36(6), 47–56. Iterative approaches to work build on the 1930s work of Walter Shewhart, a
quality expert at Bell Labs who proposed a series of short plan-do-study-act (PDSA) cycles for
quality improvement: Shewhart, W. Statistical Method from the Viewpoint of Quality Control, New
York: Dover, 1986, (Originally published 1939).
17. Denning, S. “Successfully Implementing Radical Management: The Case of Salesforce.com,”
Strategy & Leadership, Vol. 39 No. 6.
18. Denning, S. The Age of Agile (HarperCollins, 2018) p. 128.

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 19. McChrystal, S., Collins, T., Silverman, Silverman, D., and Fussell, C.: Team Of Teams (Penguin
Publishing Group), p. 24.
20. For examples of why Agile fails, see Jez Smith’s site, “Why Agile transformations fail, and what you
can do to prevent it,” http://whyagiletransformationsfail.com/
21. Fowler, M. “Shu-Ha-Ri”, https://martinfowler.com/bliki/ShuHaRi.html
22. Kim, W.C. and Mauborgne, R. (2005), Blue Ocean Strategy: How to Create Uncontested Market
Space and Make the Competition Irrelevant, Boston: Harvard Business School Press, and Kim, W.C.
and Mauborgne, R. (2017), Blue Ocean Shift – Beyond Competing: Proven Steps to Inspire
Confidence and Seize New Growth, New York: Hachette Books.

Corresponding author
Stephen Denning can be contacted at: steve@stevedenning.com

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