Contact Us
We are taking you to another website now.
Banner image

PERSPECTIVES

The Agile Imperative Winning at Digital

 

Why Your Agile Team is Better Off Dispersed: The Case for Location-Independent Agile

Krishnan Ramanujam
President, Business & Technology Services, TCS

When the signatories of the ‘Agile Manifesto’ spelled out a new way to develop software in 2001, the sixth of their 12 guiding principles was having agile team members work in the same room. “The most efficient and effective method of conveying information to, and within, a development team is face-to-face conversation,” the authors said.1

But 17 years later, this is not only impractical for many initiatives, it has become a big liability. Letting agile team members work from different locations is now a must. And it is one that a growing number of companies are proving to be both paramount and possible.

What other companies have found is that having agile team members operate from different sites gives them three advantages in digital transformation: skills, knowledge, and speed. In this article, I will explain why location-independent agile teams can beat agile teams whose members occupy the same room, and thus why companies must be prepared to make their agile initiatives location-independent.

Ignoring the 6th Principle: Most Agile Teams are Already Location-Independent

It’s not hard to see why the authors of the Agile Manifesto urged companies to create agile teams that work in the same room. The ability to have face-to-face conversations on demand can increase trust, accelerate decisions, and spawn better ideas.

It’s a key reason why online music company Spotify has grown from zero to $5 billion in annual revenue since it launched its streaming service in 2008, and 39% alone between 2016 and 2017.2 With more than 160 million subscribers today to its streaming music services, Spotify (whose legal headquarters is Luxembourg) divides its agile teams into four types: ‘squads’, ‘tribes’, ‘guilds’, and ‘chapters’. Each squad works out of the same room (with one room devoted to each squad). A squad typically consists of six to seven people who produce the code that’s put into use often daily on the firm’s site for music listeners and music sellers.

Rapidly growing born-digital companies like Spotify are held out as agile exemplars. As two Forrester research analysts Amanda LeClair and Jeffrey S. Hammond stated in a 2017 report, “Co-locating software development teams is the ideal.”3 We certainly understand the sentiment. But it’s outlived its usefulness, as most organizations that use agile methods are now saying. Despite the benefits of co-located teams, several studies have found that the clear majority of those organizations are using remote members in their agile teams:

  • According to Forrester, only 12% of agile development shops at large companies have 100% co-located teams. The survey was based on 1,867 respondents.4

  • A VentureOne survey of 3,880 people at mostly North American and European organizations found 86% had agile teams whose members worked at multiple locations.5 The company’s 2015 survey on agile practices found more than twice as many (82%) had location-independent agile teams compared with the number three years earlier (35%).

  • Scott Ambler + Associates’ survey found 71% of companies had agile team members who worked offsite.6

In our work at global companies, we have observed hundreds of successful location-independent agile projects. One such company is ABN AMRO.7 With five million retail customers, its retail banking business is one of the top three in the Netherlands. From 2013 to this day, the bank has progressively embraced agile approaches to developing new digital banking services. Since then, the time it takes to test and build new digital offerings has been reduced by 60%. ABN AMRO has also cut by 83% the time it takes to shift new digital services or service updates from production into the marketplace (from 12 to two weeks).

“Our agile way of working now facilitates the quick implementation of ideas,” said ABN AMRO CEO Kees van Dijkhuizen in the bank’s 2017 annual report.8

That’s crucial given all the new digital competition for consumers’ banking business. “Digitalization and changing client behavior is moving far faster than we reckoned,” said van Dijkhuizen. One of the bank’s many digital innovations is a smartphone app called Tikkie. It allows customers to send payments to family or friends through text messages. By January 2018, more than two million ABN AMRO customers were using Tikkie—double the number just six months earlier.9

Since 2016, a U.S. insurance company has dispersed 70% of its previously co-located agile teams to location- independent teams operating in three geographies. Those teams include software developers in offshore locations on the other side of the world.

Three Reasons for Location-Independent Agile

So why are most companies ignoring the Agile Manifesto’s Sixth principle? We believe it comes down to three reasons:

1. They must tap important but rare skills from afar.

Agile teams require skills from multiple disciplines these days: software development, business processes, data science, and more. And, of course, each team needs someone well-versed in agile. (For example, Spotify’s ‘squads’ each have an agile coach.) Many of these skills are in huge demand and short supply. Companies located in areas in which software development and analytics skills are not abundant must bring those people on their agile teams. In many cases, that will mean tapping into them from afar. Yet some companies still tap skills from afar even when they are locally abundant. Consider the immensely popular blog site WordPress, which generates 153 million unique monthly viewers in the U.S. alone. Its parent company (Automattic) is based in San Francisco. Yet nearly all its 699 employees work from their homes in 62 countries.10

2. They need essential knowledge that doesn’t exist locally.

While it’s not easy to separate ‘knowledge’ from ‘skills,’ I consider skills to be the capability a person gains from doing something many times. Knowledge, on the other hand, is possessing information on a topic; those with the most information on it become experts that others go to for advice. For example, I can become highly knowledgeable about the sport of soccer (as many sportswriters are), but never become highly skilled at playing the game (as many sportswriters are as well). In the context of agile, many teams need to tap the brains of experts—not just the skills of other team members. This expertise could be about the messages on an important new user screen (i.e., is it clear and compelling?). Or it could be about deep customer insights that only someone in your firm’s market research department possesses—i.e., the person who conducted the research. Or it could be some other knowledge—i.e., knowledge from people with rare expertise and who don’t have the hours to commit full-time to any agile team. While you may not need this knowledge every day on an agile team, you might need to draw on it frequently. And if you want to draw on it frequently, you are very likely to need these people to share their expertise via web meetings or conference calls.

3. They need to make rapid decisions and not force people to travel to make them.

If you accept the need to have skills and knowledge of professionals from other locales on your agile teams, then you must also accept the fact that you can’t wait for these people to travel to the location of your core agile team before you can make key decisions. That adds days (or even longer) to your schedule. This will especially be the case if you’re drawing on knowledge experts from outside your company—i.e., people whose expertise is in such high demand that they don’t need to travel anywhere to impart it.

Mastering agile demands teams that are self-organized and disciplined, with a razor-sharp focus on goals and daily progress—thus the preference for having team members in one place to facilitate collaboration. Attempts to assemble a team in one location, however, can run into problems. It may be costly to move people, even temporarily, to co-locate them, and not everyone will agree to it.

Leaders are likely to face resistance if they try to force people with domain knowledge from the business side (marketing, finance, HR, etc.) to relocate to wherever the agile team members work. Furthermore, a large organization may have hundreds of agile teams and not enough business experts to assign to all of them.

Agile projects in many companies have grown in size and territory—across offices, states, countries, time zones, and even continents. Many large enterprises have skilled professionals in various disciplines all over the world collaborating to develop online business processes and the underlying systems.

Mastering agile demands teams that are self-organized and disciplined, with a razor-sharp focus on goals and daily progress—thus the preference for having team members in one place to facilitate collaboration. Attempts to assemble a team in one location, however, can run into problems. It may be costly to move people, even temporarily, to co-locate them, and not everyone will agree to it.

Leaders are likely to face resistance if they try to force people with domain knowledge from the business side (marketing, finance, HR, etc.) to relocate to wherever the agile team members work. Furthermore, a large organization may have hundreds of agile teams and not enough business experts to assign to all of them.

Agile projects in many companies have grown in size and territory—across offices, states, countries, time zones, and even continents. Many large enterprises have skilled professionals in various disciplines all over the world collaborating to develop online business processes and the underlying systems.

“Mastering agile demands teams that are self-organized and disciplined, with a razor-sharp focus on goals and daily progress."

Making the Location-Independent Team Click: Four New Agile Principles

At the risk of sounding like I’m writing my own Agile Manifesto (trust me, I am not), I do want to offer some new agile principles for companies that want their location- independent teams to thrive. These are messages for the leaders of an organization who can play a highly influential role in setting the rules for how globally dispersed, eclectically skilled, and ethnically and culturally diverse people need to work together.

  1. Ensure intellectual harmony. Make sure at the outset that all agile team members understand each other’s domains and terminology, to achieve a common understanding of the terms and manners in which they must work together.

  2. Promote role equality. Ensure unwavering respect for everyone’s expertise (i.e., no caste system).

  3. Protect strongly. Fiercely protect the dispersed agile team from the internal corporate attackers (especially when the investments mount and the returns are still in the future).

  4. Convert widely. Convince skeptical executives to become agile advocates—i.e., why this approach is essential to their and the organization’s success.

Locating all agile team members in the same room has become a well-intended but quaint myth. Instead, companies must create location-independent agile teams: groups working on the same effort not located in the same place. In this way, enterprises can tap the talent needed to innovate and remain competitive wherever it resides in the world, generating more and better ideas for improving digital processes or products.

The biggest reason why most companies are ignoring the sixth principle of the Agile Manifesto is that it no longer makes business sense.

Leaders who understand the severe limitations of forcing people with the skills and knowledge to be in the same room day in and day out are making location-independent agile teams work, and work well.

1. Agile Manifesto , Principles Behind the Agile Manifesto, accessed April 17, 2018, http://agilemanifesto.org/principles.html

2.  Fortune, Spotify IPO: What You Need to Know Now that the Paperwork is Public, February 28, 2018, accessed April 17, 2018, http://fortune.com/2018/02/28/spotify-ipo-what-you-need-to-know/

3. Forrester, Get The Most Out Of Distributed Agile Teams, April 27, 2017, accessed April 17, 2018, https://www.forrester.com/report/Get+The+Most+Out+Of+Distributed+Agile+Teams/-/E-RES137389

 4.   Ibid

 5.  VersionOne’s, 10th Annual State of Agile Report, 2016, accessed April 17, 2018, https://versionone.com/pdf/VersionOne-10th-Annual-State-of-Agile-Report.pdf

6. Ambysoft, Agile at Scale Survey, 2016, accessed April 17, 2018, www.Ambysoft.com/surveys/agileAtScale2016.html

7.  ABN AMRO, Barclays Global Financial Services Conference, September 11, 2017, accessed April 17, 2018,

8.  ABN AMRO, Annual Report - Interview with the CEO, 2017, accessed April 17, 2018, https://www.abnamro.com/en/about-abnamro/annual-report/interview-with-the-ceo/index.html

9. ABN AMRO, Tikkie Success Reaches 2 Million Users, January 29, 2018, accessed April 17, 2018, https://www.abnamro.com/en/newsroom/press-releases/2018/tikkie-success-reaches-2-million-users.html

10. Automattic, About Automattic - All Around the World, Building a New Web, and a New Workplace. Join Us!,accessed April 17, 2018, https://automattic.com/about/