ROI of Agile Transformation

Agile transformation has become a catch word since last couple of years.

Like so many things that have come and gone, this is like the latest fashion in the town.

Is agile transformation about driving the adoption of a newer method such as Scrum, XP, SAFe, etc. by an organization?

Or is it something which is above and beyond and involves changes in the mindset required to make an organization truly agile?

The dictionary meaning of the term agile is quite interesting.

Agile means "to be able to move quickly and easily".

"Quickly" means the time required to do something is, relatively speaking, on the lower side.

"Easily" means the effort required to do something is, relatively speaking, on the lower side.

So Agile means quick and easy.

This is a simple but very good definition of the term agile.

Even when agile as a method was not there, agile as an English word always existed.

When you say something needs to be "quick and easy" it is a good thing to have.

Over time, obviously, people created agile methods with their associated rituals like scrum, etc.

Agile transformation needs to look at above and beyond the method-driven approach.

Given the above, we now agree that any organization needs to be quick and easy.

And consequently agile.

This needs a foundation level shift in the way the organization is structured and run.

The top man needs to adopt an agile-based thinking.

The top man needs to drive "quick and easy" aspect into the organizational strategy and operations.

Agile transformation is not a technical subject.

The simplistic and popular views prevalent on agile are not right in this context:

• Agile is better than waterfall (one can leverage any method including waterfall in a truly agile environment)
• Agile is fragile (the failure points in Agile like design refactoring which can render the system-level architecture less than optimal can be better handled using the right method)
• Agile is for delivery function only (agile as a method can be useful for any function but agile as a mindset is most certainly useful for any function)
• Agile is the cure for all ills (there is no silver bullet, agile certainly is not one and there will never be one even in the distant future)

Agile transformation as mindset change is definitely crucial for companies and organizations in the present times where change has truly become the constant.

So is agile a good thing to do?

What is the ROI of agile transformation?

ROI has two components - return and investment.

What is the return from agile mindset?

There are several benefits an organization can derive from agile mindset.

Here are some of the important ones:

• The organization will have elaborate plans but will revisit and align the plans to keep them synchronized at all times with the changes in the environment.
• The organization will look for ways to empower its workforce at all levels to take important decisions without too many layers of approvals.
• The organization will have such policies in place that facilitate the various teams and their members to constantly improve their activities and operations to make them more "quick and easy".
• The organization will have the right structure in place based on meritocracy and competency without consideration to  loyalty and longevity.

And what are the investments required for agile transformation?

There are several expenses an organization has to incur for instilling agile mindset.

Here are some of the important ones:

• Setting up a dedicated core team to lead the agile transformation
• Training of top management, core team and others on the agile way of thinking
• Review and revision to the existing policies and procedures to align them with the concept of "quick and easy"
• Up-gradation of internal tools to improve the agile factor

The expenses and investments are really no different from what one would incur for running any organization-level change management initiative.

Any agile transformation is nothing but an organization-level change management initiative.

So are the returns from agile transformation commensurate with the investments made?

Is the ROI promising enough?

Yes and no.

Yes, if there is real mindset and cultural change at a deep level.

No, if the change happens but stays at the method-level and is at the surface only.

Many organization-level change management initiatives do not deliver to their promise as they fail to bring in true cultural change.

Culture is hard to change.

And in fact, culture is the only thing that needs to be changed, in any organization-level change management initiative.

ROI calculation for agile transformation is done in a manner similar to what is used for any organization-level change management initiative.

As someone said culture has strategy for breakfast.

The ROI is good if the culture changes.

Culture changes happen if they happen first and for keeps at the top management level.

Top management in many companies is expert at giving lip-service.

They would show as if they genuinely care but scratch the surface and there is only dirt and dust underneath.

They need to let things go, which is very hard if not impossible.

ROI for any organization-level change management initiative depends upon them.

Similarly, ROI for agile transformation also depends upon them.

There is a simple magical trick to get the ROI from agile transformation.

The magical trick involves just one thing.

The top management needs to change first.

Unless these folks change, no change happens for real.

And unless these folks change, there is no ROI of agile transformation.