Peter Drucker once said, “the only sustainable competitive advantage is a company’s ability to keep transforming itself.” This is sound advice, but it’s not that simple for most companies. Many companies struggle to succeed with even one transformation, let alone living up to Drucker’s more continuous and agile transformation vision. According to McKinsey, a global consulting firm that deals with business and management, 70% of transformations fail to achieve their goals. This number holds true with agile transformations as well. The most common problem in agile adoption efforts is treating it as a business process update and forgetting that agile is not just a process — it’s a culture. This mistake sets the entire transformation up for failure because it doesn’t address the critical cultural, management, organizational, and technological challenges that an agile transformation faces.
Culture Comes First, Then Process
Company culture is much larger than just a set of written values hung on a conference room wall or published on a website. These values govern interactions between people, departments, and customers when practiced. With its customer-centric values and principles, agile is often used to enhance or reinforce existing company values.
A company’s values are a powerful source of energy when they shift. In fact, it can be a significant force in transforming the whole company culture. A great example of this was in 2014 when Satya Nadella, who was new to his CEO position at Microsoft, took a move to focus the company’s vision and mission in a more people-centric and, in my opinion, agile way of work. The shift was from what he called a “know-it-all” culture of individualism to a team culture that was focused to “empower every person and organization on the planet to achieve more.” Now, almost a decade later, by embracing Nadella’s vision, the company has improved employee satisfaction and turned decades of cutthroat aggression into a more agile attitude of productive collaboration between employees, management, and customers. This was an inspiring transformation, and it had a massive impact on all levels of the company, its customers, and its profitability. It would have been impossible without the support of transformational leadership from the top levels of the organization.
Culture Comes From The Top
Leadership sets the tone for employees to follow. How leaders behave ultimately translates into how employees behave. This was perhaps the most critical ingredient to Nadella’s success at Microsoft. He reinforced the new company values not by telling people what to do, but by becoming an example for others. For example, he did not preach to others about the need for empathy, time management, or learning; he modeled that himself. In his book, Hit Refresh, he outlines how he believes being accessible to every person on his staff is crucial for a healthy workspace. Putting those words and sentiments into action is what makes it transformative. This leadership style is vital for an agile or any other cultural transformation to be successful. Transformative leaders are able to motivate their team by living the values themselves and not just promoting them. It gives legitimacy and importance to the team, making it much easier to shift the norms and behaviors that may hold a transformation back.
Remember, it’s a Continuous Journey.
What we learn from Drucker and Nadella is that transformations are a continuous journey. For Drucker, transformation is a process of constant renewal. This is the idea that we must continually change and innovate to stay competitive in the marketplace. Nadella showed us to lead by example and to work in a transformative way. Transformation is not something you do for a few months or years and then stop. It is something that you practice doing every day within your company at all levels — and it starts with culture and it starts at the top.
This article was originally published in Raconteur/The Times of London special business report on Agile Business, March 24, 2022. This full report was produced in collaboration with Raconteur and Agile Alliance. If you want to read the entire special report, you can download it for free at the Agile Alliance.