The Age of Agile

Stephen Denning

• Publisher: AMACOM
• Year: 2018
• ISBN:
  9780814439104
• Topic: Negocios y empresa
• Subtopic: Operaciones

An unstoppable business revolution is under way, and it is Agile. Sparking dramatic improvements in quality, innovation, and speed-to-market, the Agile movement has helped companies learn to connect everyone and everything…all the time.

With rapidly evolving consumer needs and technology that is being updated quicker than ever before, businesses are recognizing how essential it is to adapt quickly. The Agile movement enables a team, unit, or enterprise to nimbly acclimate and upgrade products and services to meet these constantly changing needs.

Filled with examples from every sector, The Age of Agile helps you:

• Master the three laws of Agile Management (team, customer, network)
• Embrace the new mindset
• Overcome constraints
• Employ meaningful metrics
• Make the entire organization Agile

Companies don't need to be born Agile. With the groundbreaking formulas laid out in The Age of Agile, even global giants can learn to act entrepreneurially. Your company's future may depend on it!

[PARTONE]

AGILE

MANAGEMENT

1.

MORE VALUE FROM LESS WORK

What we need is an entrepreneurial society in which innovation and entrepreneurship are normal, steady, and continuous.

—PETER DRUCKER¹

For Spotify—the fast-growing Swedish music streaming service with over 100 million active users and more than 30 million paying users—the true value of Agile management became dramatically apparent in mid-2015. Spotify had embraced Agile management since its launch in 2008, with swarms of self-organizing teams intent on delivering steadily more value to Spotify’s users. The premise of Agile management is that empowering bottom-up innovation will steadily add significant value for customers and the firm. Accordingly, the teams at Spotify—some 2,500 people as of mid-2016—seek to learn everything about you as both a listener of music and as a user of Spotify, and then find interesting ways to appeal to you on both levels. Sometimes they do that by matchmaking, by telling you at the right moment about a great playlist, or a great new feature, or some new content that they think you will like. Other times, they do it by creating new listening experiences.

Innovations generated by Agile teams had fueled Spotify’s growth for seven years. But in March 2015, a couple of Spotify’s software engineers—Chris Johnson and Ed Newett—came to Matt Ogle, a senior product leader with two degrees in English literature and a background as an engineer, with an idea that turned out to be a game-changer. They had thought of a way of solving a problem that had stumped Spotify and other music streaming services like Pandora and Apple Music for years: How could users find the music they would really love in a library of millions of songs without wasting time browsing through music they didn’t like?²

In 2013, Spotify had introduced a feature called News-Feed in which users received personalized recommendations of albums and artists. This was progress, but it still took a lot of effort on the part of users to engage with the recommendations and get to listen to the music.

In 2014, Spotify had offered a feature called Discover, which grouped the recommendations into strips, as on Netflix. This was easier to use than News-Feed, but it also required active user effort. Studies showed that users were still spending more time listening to playlists that Spotify’s editors had created.

Now the two engineers had another idea. What if, they asked, we could completely remove the friction for you as a user? What if we took the music you had listened to in the past and sorted it into micro-genres? What if we analyzed the billions of playlists created by other users and algorithmically matched preferences with your playlists, so we can then create a new playlist specifically designed for you? What if we delivered this personalized playlist of songs for you once a week? What if, every time you skipped a track, we learned from that and made sure that your next weekly playlist would appeal to you even more? What if we did this not just for you but for every one of our tens of millions of active users? Would that be possible? Or would it just produce noise? This was the embryo of the wildly successful idea on Spotify that became known as Discover Weekly.

Ogle liked the idea. He discussed with the engineers different ways of making it work. They brought in a designer who played the bad cop in the discussion. “Why should this feature exist?” he asked. “We already have too many things for users! What will it do that we’re not already doing?” Those questions helped the team get clearer on what the new idea was for and what value it might add.

Ogle’s team had all the elements in place to conduct a quick experiment. Spotify had already collected data on active users—which then numbered some 75 million. They had also built high-level capabilities in machine learning and artificial intelligence. They had already developed micro-genres of music and classified its entire vast repository of music and its billions of playlists.

But most important, Spotify had created an organizational culture of Agile management in which autonomous cross-functional teams were encouraged to experiment and create new ways of adding value to customers. With Agile management, Ogle and his team didn’t need to prepare a detailed cost-benefit proposal and seek a series of approvals up a steep management chain before they could try out their idea. They were used to working as a team, with radical transparency among the team members. They were already tightly focused on the user experience: They knew how to test alternatives and learn from the tests. Within a couple of weeks, the tiny cross-functional team had pulled together a quick prototype and tried it out on Spotify’s own staff—all active Spotify users.

The result? Spotify staff just loved it. Ogle himself became a huge enthusiast. On one of his very first playlists, he recalls listening to a song by Jan Hammer, the composer of the Miami Vice theme. “It starts off with this poppy thing, then the strings,” said Ogle. “When the vocals came in, I thought, holy shit, we have to ship this feature. Whatever just served this song needs to be out in the world.”³

Ogle and his team did another quick experiment on one percent of the active Spotify users—close to a million people. Again, the response was strongly positive. Amazingly, 65 percent of respondents found “a new favorite song” in their personalized weekly playlist. As a result, Spotify’s management was ready to introduce Discover Weekly for all Spotify listeners.

Scaling up the Discover Weekly algorithms from one million users to 75 million users in twenty-one languages in multiple time zones each week proved to be more of a challenge than the engineers expected. Nevertheless, working in an Agile fashion totally focused on the goal, the team took only a couple of months to complete the work. When Discover Weekly was deployed to all Spotify users in July 2015, just four months from the initial concept, it was a wild success—beyond anything Ogle and his engineers had imagined.

In fact, Discover Weekly has become a global phenomenon. It has resulted in a massive boost for Spotify’s brand and a huge influx of new users. It is more than just another feature—it is almost a new brand in itself, with foreign-language countries clamoring for “Discover Weekly” rather than a label in their own language. Every Monday morning, Spotify users—now more than 100 million of them—receive a playlist of thirty songs that feels like a gift from a talented and knowledgeable musical friend who understands their taste in music and who has searched the world to put together a handpicked playlist of the very best music they will adore.

Users say it’s spooky how fresh and familiar their Discover Weekly playlists feel. A common reaction is, “How come Discover Weekly knows me better than myself?” Within the first six months, songs from Discover Weekly had been streamed several billion times.

“If you’re the smallest, strangest musician in the world, doing something that only twenty people in the world will dig,” says Ogle, “we can now find those twenty people and connect the dots between the artist and listeners. Discover Weekly is a compelling new way to do that at a scale that’s never been done before.”⁴

Discover Weekly gives Spotify a massive brand advantage over competitors like Pandora and Apple Music, which also have vast catalogs of music but without Spotify’s personalized approach to help you find music you will enjoy. Yet Spotify knows it can’t rest on this success. It knows that its competitors will soon emulate Discover Weekly. In the spirit of Agile, Spotify is already racing ahead with further innovations that will bind its user community ever more tightly to the music streaming service they have come to love. Spotify’s management knows that it will only survive if it continues to pursue Agile management and innovates faster than its competitors.

At first glance, the idea that Barclays—a 327-year-old transatlantic bank with more than 100,000 employees—could become as Agile as Spotify and deliver an instant, frictionless, intimate banking experience at scale might seem ridiculous. The bank operates in a difficult environment. It’s highly regulated. It’s recovering from a major financial crisis. And it has new challenges coming its way as it grapples with what Brexit means for the future. It’s a transatlantic bank offering products and services across personal, corporate, and investment banking, credit cards, and wealth management, with a strong presence in its two home markets: the United Kingdom and the United States. The bank operates in over forty countries. One-third of payments made in the U.K. pass through Barclays.

Despite its size and reach, Barclays, like all the big global banks, finds itself in a world in which its customers are coming to expect the same kind of instant, intimate, frictionless responsiveness at scale that they experience with Spotify’s Discover Weekly playlist. What they would like from a bank are prompt, helpful responses, not just to simple questions like, “What’s my bank balance?” but also, “Should I spend this money on this car? Should I buy, lease, or get a loan? What sort of insurance do I need? What impact will this have on my savings? How is my retirement looking?”

Ironically, if Barclays, like all banks, knew what it already knew, it could, like Spotify, provide good answers to those questions. That’s because Barclays, like Spotify, has massive amounts of data about its customers and clients that could help the bank add value by answering some of these questions—if this data was put to better use.

Barclays, like all the big global banks, also faces the challenge of inherited management practices and old data structures and processes that can make it difficult to deliver instant, frictionless, intimate banking experiences at scale. As an old institution, it has to invest time and money in upgrading and streamlining old data structures, processes, and applications to improve the products and services it can offer its customers. With individual customers’ information stored on separate parts of the bank’s systems, it can be difficult to provide the level of customer experience that customers have come to expect from companies today.

Decades ago, none of that mattered to customers when they would make an appointment to see their local bank manager and discuss how they could finance an extension on their house, or buy a new car, or invest in shares to provide for their retirement. Much depended on a personal relationship with the bank manager. In the end, customers might have gotten the loan or the advice they needed. But the process took time to arrange. It was inconvenient. It involved significant effort producing documents and records. And it worked for only a handful of customers.

How could Barclays possibly go from that old-school banking experience to the kind of easy, convenient, personalized responsiveness that its millions of twenty-first-century customers are coming to expect in everything they do?

Unlike Spotify, Barclays had not, until recently, made an institutional commitment to Agile management. Like most of the big global banks, Barclays had management practices and processes that were steeply hierarchical and bureaucratic. As in most large organizations today, Barclays had isolated islands of Agile software developers, but this wasn’t consistent across the organization. Nor had Barclays developed the capability to carry out and learn from rapid experiments with its customers.

Yet management could see that some of the bank’s competitors are already acting with that kind of agility. On the international front, large Asian competitors, such as Alibaba and Tencent, are expanding rapidly, with management and data systems oriented to meeting their customers’ needs, not their own internal requirements. They are acquiring new customers for just a couple of cents...