Why do managers hate Agile?

Change of Paradigm Continuous Innovation and New Creative Economy

The sun does not revolve around the earth!
In January 2015, Forbes writer Steve Denning wrote two articles titled “Why Do Managers Hate Agile?” in January 2015. In this article, we will talk about those two articles.

These articles have multiple focal points and the above drawing is one of these focal points. In fact, it is one of the two most important ones. This simple drawing tells us so many things. For example, it summarizes the failure of the “Vertical Hierarchical Bureaucracy”, which was the governing model of the “Industrial Revolution”, which continued its dominance for 150 years, and categorizes it as the “Copernican Revolution in Management”. Why?

Until Copernicus in the 16th century, the general belief was that the sun revolved around the earth. And, the Roman Catholic Church was the center of the universe. The king and the queen grounded their governance on the divine right. In other words, the government was “sacred”. The “evil” discovery of Copernicus that “the earth revolved around the sun” came like a bombshell.

Copernicus’s “discovery”, though primarily related to astronomy, had a great impact on all levels of life. Yes, it was a great discovery in terms of astronomy, but it also paved the way for people to question many rules that regulated social life. This also meant “the earth, and therefore the Roman Catholic Church, were not the center of the universe”. In fact, the basic elements of the monarchy were also questioned, meaning that the divine right was groundless?

Why Do Managers Hate Agile?

Denning establishes a very successful relationship between this historical example and today, and says that Agile has created an impact like Copernicus did and declares that the 150 years old Vertical Hierarchical Bureaucracy Paradigm has died.

Slavery is a Revolution!?

Before the Roman Empire, soldiers who were defeated and taken captive in wars were killed; because it was impossible to feed thousands of people. Production resources were inadequate and inefficient. So defeat and death meant the same thing.

However, the Roman government brought a different perspective and tried to use them as “slaves”. This decision was a revolution for that time, because defeat in the war and death were no longer the same. This decision of Rome produced very effective results both for captives and economy. The inclusion of a large number of slave labor into the economy has led to an increase in production and a vibrant market. This was followed by the development of trade. Those who were defeated in the war and became “slaves” did not complain because they would either die or work and survive. The emergence of “slavery” was “revolutionary” for those times even though it does not seem so today…

The industrial revolution that rose from the mid-1800s had a good way of producing large quantities of consumables: machines and people making production together… The production practices, which started to spread in workshops before, needed to “be scaled” over time. The production activity of hundreds or even thousands of people had to be “managed”.

The Difference between Production Goods

During the industrial revolution, producer goods were designed to meet the basic needs, not customized for personal needs of people, and subject to mass consumption: food, clothing, goods, then vehicles.

In this process, employees did not have any knowledge about the production, or even the goods they produced, and there was no need for that. It was enough for the mediocre workforce to perform simple production activities assigned to them continuously and well enough. It was clear that the workforce had to be managed. Thus, the vertical hierarchical bureaucracy was born.

The “managers” were positioned as people that would manage those “people” who “could not know” how to do their job well. Employees did not need to know much in traditional production; they had to continue with the same practices with as little mistakes as possible. Nobody expected creativity and intellectual contribution from them.

As shown in the drawing above, the customers had to meet their needs from the producers. Especially when the number of companies to provide their needs was not so much and it was not easy to reach other manufacturers, what the customer could do was to live with what they were given. The customers were revolving around the firm, like the belief before Copernicus.

We Are From Different Worlds!

“Agile” and “Management” words belong to two different worlds, so it is hard for them to get along.

Denning sums up these different worlds as follows:

“The world of “management” is vertical. Its natural habitat comprises tall buildings in places like New York. Its mindset is also vertical. Strategy gets set at the top. Power trickles down. Big leaders appoint little leaders. Individuals compete for promotion. Compensation correlates with rank. Tasks are assigned. Managers assess performance. Rules tightly circumscribe discretion. The purpose of this vertical world is to make money for the shareholders (and the top executives). Its values are efficiency and predictability. The key to succeeding in this world is tight control. Its dynamic is conservative: to preserve the gains of the past. Its workforce is dispirited. It has a hard time with innovation. Its companies are being systemically disrupted. Its economy—the Traditional Economy—is in decline.”

“The Agile world is horizontal. Its natural habitat is in low flat buildings in places like California. It is spreading rapidly like a virus. The Agile mindset is horizontal. Its purpose is to delight customers. Its dynamic is enablement, rather than control. Its communications tend to be horizontal conversations. It aspires to liberate the full talents and capacities of those doing the work. It is oriented to understanding and creating the future. It believes in banking, not necessarily banks. It believes in health, not necessarily hospitals. It believes in transport, not necessarily cars. It believes in education, not necessarily schools. Its economy—the Creative Economy—is thriving.” Agile is a response to hierarchical bureaucracy.

Denning says Agile arose as a response to the problems of hierarchical bureaucracy that is still pervasive in organizations today: falling rates of return, a decline in competitiveness and widespread disruption of existing business models.

He says that given these problems, it’s easy to forget that hierarchical bureaucracy was a great advance when it was introduced 150 years ago.

The basic idea of hierarchical bureaucracy is that work is organized with individuals reporting to bosses who tell them what to do and control their work. The roles, the rules, the plans, and the reports of hierarchical bureaucracy created order where previously there had been chaos.

As Gary Hamel has noted, hierarchical bureaucracy solved two essential problems: getting semiskilled employees to perform repetitive activities competently and efficiently; coordinating those efforts so that products could be produced in large quantities. In a stable environment, it had great strengths. It was scalable. It was efficient. It was predictable and it delivered reliable average performance.

Hierarchical bureaucracy had some liabilities. It was vertical. It was non-collaborative. Its plans were linear. It couldn’t change direction very fast. It was dispiriting to staff but at least people had a job. And the customer was noticeable by being totally absent: the focus was internal.

Change wasn’t important. A firm could go on, grinding out the same basic product for years without much risk of harm. In a stable context, it could predict what customers would buy. And, nobody really cared if the workers were dispirited. It was enough that they had their job and their paycheck.

In a world where workers were only semi-skilled and information was hard to come by, it made sense to put the boss in charge. In that setting, managers generally did know best.

Then the world became turbulent…

The world changed and the marketplace became turbulent. There were a number of factors: Globalization, deregulation, and new technology, particularly the Internet. The Internet changed everything:

Power in the marketplace shifted from seller to buyer. Suddenly the customer was central, not something you could take for granted.

Now the new norm as “better, cheaper, faster, smaller, more personalized and more convenient.” Continuous innovation became a “requirement”.

In a world that required continuous innovation, a dispirited workforce was a serious productivity problem.

As the market shifted in ways that were difficult to predict, static plans became “liabilities”.

The inability to adapt led to a big disruption.

In this turbulent context, the strengths of hierarchical bureaucracy evaporated.

• Scalability turned into unmanageable complexity.
• The efficiency of economies of scale disappeared.
• Predictability turned into a crippling lack of agility.
• Reliable average performance wasn’t good enough for customers who wanted “faster, better, cheaper, smaller, more personalized and more convenient.”

The horizontal world of Agile

In light of these problems, managers began to fundamentally rethink the way organizations are run. And so Agile was born.

The approaches all had certain features in common:

• Work is done by self-organizing teams that could mobilize the full talents of those doing the work.
• Work is focused directly on meeting customers’ needs.
• A “lens” focuses attention on the customers’ needs. When the lens is a person, as in Scrum, the person is known as a “product owner”; in large-scale applications, the lens is “a platform.” (like Apple App Store).
• Work proceeds in an iterative fashion so that it can progressively satisfy customers’ needs better.

Instead of a vertical dynamic of hierarchical bureaucracy, the firm operates horizontally. The basic dynamics of the traditional economy are reversed.

Instead of a controlling ideology, the approach is one of enabling self-organization.

Instead of static linear plans, plans are iterative and continuously on the move.

Instead of a workplace that is dispiriting to staff, the workplace is interesting, even inspiring, because people have the autonomy to deliver their best.

Instead of the customer being absent, the customer is now central. The goal of the firm is to delight the customer. Profit is not a goal but a result.

INTERMEDIATE RESULT
These two worlds, which the author has studied very successfully, are indeed revolutionarily different from each other.

As Darwin said 200 years ago, size or power is no longer enough to survive.

The world has met with the concepts of “Continuous Innovation” and “Creative Economy”, and the meaning of size or power has changed. As Klaus Scwab said in a way to support Darwin, “it is not the big fish that eats the small fish, it is the fast fish that eats the slow fish.”

Agile represents and creates the new economy and the new world. This world expresses that change is inevitable.

If we look at the recent past, we can better understand how the “giants” of their time in the personal communication devices industry where high-tech products develop very fast such as Nokia, BlackBerry, Ericsson or even Sony, were “defeated” by Apple, Samsung and even Google which more agile.

Change “frightens” everyone who has difficulty in understanding this change. The horizontal world replaces the “vertical world of hierarchical bureaucracy”.

150-year-old “vertical hierarchical bureaucracy” management understanding has come to an end; the paradigm has changed.

The old world inevitably “hates” the new world.

This is why managers hate “Agile”…