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7 prerequisites for a successful Agile transformation

Nowadays more and more companies are interested in becoming Agile. The change is not easy, but the results are worth it - Agile companies deliver faster, build products that customers love and yield higher revenue. Some organizations are born Agile, while others need to undergo a lot of significant changes. In this blog post I would like to summarize a few important conditions that need to be met before the transformation in order to ensure its success.

1. Organization structure design

When we go Agile, we set up cross-functional teams, and if the organizational structure doesn’t support it, it has to be changed. Old function-based departments would go, and new company divisions aligned to products or product areas would be set up. For example, if you used to have departments like Sales, Marketing, Design, IT, Planning etc, now you will have departments named Product Line A, Product Line B etc. Inside each of those there will be a number of smaller cross-functional teams, each including a Product Owner and specialists that they need in order to support their product end to end.

2. Leadership understands the value of Agile and is willing to change

Without leadership changing their ways of working the transformation will most certainly fail. It is important that leadership understands what Agile is and makes commitment to support the organization in its transformation. In the new paradigm the managers will become servant leaders, enabling the teams to unleash their real potential. They will no longer be dictating people what to do, punishing them for mistakes and failures and rewarding the outputs. Instead, the Agile leaders will be helping teams to define their visions and set their goals, they will reward the experimentation and celebrate the failures as valuable learnings and they will be rewarding people’s contribution to the business success.

3. There is a clear vision

We do not become Agile for the sake of being Agile - we do it in order to achieve the business outcomes. It is absolutely necessary that everyone in the organization is aligned on the outcomes: what they are and what success really means. This is impossible without a vision, so identifying and sharing with the organization a clear vision is a necessary part of the preliminary work when you initiate an Agile transformation.

4. Org-level OKRs are defined

This is step two after setting the vision, but is equally important. Setting up the OKRs means that the organization is focusing on the outcome-orientated goals aligned with the vision and that the success criteria is clear and transparent. Department and team level OKRs are usually set during the course of Agile transformation, but it is important to set and share the org-level OKRs with everyone beforehand - those would be serving as a guidance for the teams when they start discussing their goals.

5. Hierarchy is flattened out

Traditionally organizations consist of many layers of managers - the bigger the company is, the more managers there are. In Agile companies self-organizing teams set up goals for themselves, so you don’t need that many bosses anymore. It doesn’t mean that they need to be fired. Most likely they have extensive experience and can provide a lot of value to the organization, but they won’t be doing only people’s management anymore. In Agile organizations the managers convert back to “doers” and join teams in order to help them build amazing products. Of course they should not feel like they are being downgraded. Some would prefer to focus on coaching people, others would be happy to get back to their area of expertise and get their hands dirty. And of course there would be a few who can only work in "command and control" capacity and care about the status and power more than anything else. Unfortunately, those are likely to go, as they are probably not suited for Agile organizations.

6. Selection criteria for key roles are defined

When we are setting up an Agile organization, there are a few new roles that appear (Product Owners, Scrum Masters of Agile Coaches, sometimes also Chapter Leads and Tribe Leads if you're adopting Spotify model or Release Train Engineers if you're going for SAFe). There are also fewer management positions left, as we flatten out the organization. As a result, there will inevitably be some competition for the roles, and people will be attempting to either keep the status quo or climb up higher in the rank. So it is very important to define in advance the selection criteria for certain roles. What is the experience and what are core skills that a Product Owner has to demonstrate? Which soft skills are important for a Scrum Master? Ideally everyone in the organization should be able to apply for the new roles and be examined and interviewed thoroughly by a cohort of unbiased fair interviewers.

7. Transformation is supported by a professional Agile coach

Agile is simple but not easy, especially if we are talking not just about one team, but about org-level transformation. Don’t expect that a few books and blog articles would make you an expert. An enterprise Agile coach is someone who has extended experience in organizational transformation, knows how to design the organization, how to drive the change and capability building and is able to support you throughout the way to make sure the transformations is a success.
Agile transformation is both exciting and challenging - if done right, it can significantly increase your company's productivity, performance and employees' motivation. However, if you ignore some of important key elements and change only processes without changing the organization itself, you might face a painful failure.
Agile transformation Leadership Business Agility Agile coaching