 Okay, welcome everyone to this session on Beyond Agile Preparing for Digitalization. My name is Jutta Eckstein and I'm an Agile coach, consultant, what else? Trainer, author, speaker. I started off with Agile, actually with my first XP project. I think it was in 98, I don't know, 97, so it feels like I'm in the Agile world forever. However, well, and I wrote about that stuff, about my experiences, however, today I want to talk about my newest thing, which is also, well, which is the Beyond Agile, and it's also my latest book, which just came out last week, so, and it's available also in India, so that's a good thing. So, well, maybe I don't say more about that. We dive into it. So, preparing for digitalization. First of all, what are the times we are living in right now? You might have heard that term already over the course of the conference, VUCA. I think it hasn't been mentioned today, I'm not quite sure. So VUCA stands for Volatile Uncertain Complex and Ambiguous, and these are the times we are living in. So it's really just hard to plan a year in advance, even like half a year in advance because things will change so rapidly that the plan is worthless as soon as it's done, and therefore, we cannot do more of the same, we have to do things in a different way. And with the book, something else is coming along, which is digitalization, which is the theme of the day, and digitalization actually means that almost every company is a software company, and maybe the company doesn't know it yet. So that's kind of the big thing here. Now, in software, we know that agile is at least the thing people talk about. Some are doing it more or less successfully. However, it's the kind of the popular thing in software, which means now software through digitalization is getting more and more at the core of companies, means that agile is getting more and more at the core of companies. So that's kind of the thing, which is also a problem because, well, if you look at the manifesto, the core values, I assume you all have seen that, who has not seen that? Okay, so I don't want to go into that, the thing is if you look at that, and also even more if you dive deeper into the principle, they have been created all around software. Well, the general mindset, well, general underlying values, they still can be useful, but it's just hard to go in companies and say, well, in order for preparing for digitalization, just be agile. And then they take a look at what agile is and they say, well, that's not applicable for us because if we look at the organizational level or at the whole company, not everything we do in the company focuses on doing software despite of digitalization. There's stuff like HR, finance, whatever, they might use software. Well, they definitely do, but their core product is at first not software. So what's needed is a kind of translation, and this is what we did. We looked at the values and principles and tried to come up with values that are in the same mindset, in the same spirit, but are applicable outside of software. So preparing the beyond, agile, and for the digitalization. And the values we came up with were self-organization, transparency, constant customer focus, and continuous learning. Now for those values, actually for implementing those, there is a lot of stuff out there. And it's not just we in the agile field thinking of how to prepare for digitalization or for being more agile as a company. Now speaking of the lower case, a agile, so flexible, adaptive, responsive, being able to deal with the bookhead challenges, there are many more. So this is amateur, probably you can't read it far back and maybe not even really in the front. There are really a lot of streams out there and I just want to pick a few. There are some specific implementations like Mondragon, Gore, or SEMCO in Brazil. Morningstar, we have heard about them, I think, yesterday. Then there are philosophies like what Senghe is proposing of theory, you might be something you have heard about. There are facilitation techniques, growth cafe, appreciative inquiry, egalitarian methods, holocracy, a big thing, growth blue, maybe not so known. So there is a lot of stuff out there and so we have dived into it and looked at those and took a little bit of a Goldilocks approach. We thought we don't want to go for a specific implementation. For example, what you hear a lot that people say, well, we use the Spotify model. If you ever have talked to Spotify people, they would tell you there is no such thing as the Spotify model. Because they might talk about it, block about it, but the sooner they are done talking, blocking about it, this thing has changed. And so people just copy like one snapshot of what Spotify is doing, but don't crash, but what Spotify really is doing is changing all the time and not having like this one fixed model. So we just feel like a specific implementation is too specific and the other thing like philosophies, they are too generic on the other hand. So it's not concrete enough, but it's all guided us. So what we did was picking four streams where we thought they will combine, address the challenges we are facing and these are the four streams we were picking and you see, maybe we picked them because it created that great acronym with Bossa Nova. So beyond budgeting, which is addressing actually more or is coming more from the finance and HR path, then we have open space as a facilitation technique, but it's really more like focusing on inspiration. Well, on the next slide, I go briefly into all of those. Then sociocracy, which looks more in the power structure in companies and HR, well, I guess you know about that. So now briefly looking at this, so this talk is not a dive into all of these streams, right? So just to give you a little bit of a background here. So beyond budgeting, despite the name, it's not about budgeting actually. Well, it started in finance, but the core thing is that they say we are a system or a management model that is more empowered and adaptive. Well, that sounds very agile to me. However, again, they are coming from the finance path and so the way beyond budgeting says you can implement this is by looking at what's the purpose of a budget and actually the purpose of a budget is three-folded and we are trying to put all these three purposes normally in one number and this one number tries to express what are we aiming for, that's the target, then what we think will happen, that's the forecast, and then how much do we want to spend where and that's the allocation. And so all these three things we put together into one number and the suggestion of beyond budgeting for providing more flexibility and being able to adapt to change is to separate those out. So we have targets as one thing and the targets are at best that's a recommendation relative. So maybe it's a too simplistic example, but still I hope it brings the point across. If I'm a salesperson and my target, my boss gives me is I should sell a hundred units this year, whatever thing we are selling. And let's assume I'm hitting my target and I sell a hundred, but the competitor sold 200, which means the hundred doesn't really mean much. So I wasn't really successful, but I was because I hit my target, but compared with the others I wasn't. And also vice versa, is the competitor only sold like 20? Well, wow, I was highly successful. So targets often make only sense, especially in this adaptive fast-moving world, if they're relative to something else. It could be also relative to our own learning, right? Then the other thing is the forecast, so which is like, what do we think will happen? Well, because things are changing so fast, it doesn't make sense to make a forecast for a whole year, but more like at least whenever something is changing, we should have another look at how, if you think, it all turns out and where do we need to adapt in the chat. So that's the second thing. And then the third thing, and I have to, well, at least it's a warning probably for myself, so when I see resource, and here's the resource allocation, what I think with my actual background, I think resource, oh, somebody uses this bad term for people, and we know that people are not resources, they are humans. The unbudgeting people mean with resource actually the money. So it deals with like, where do we spend the money? And of course we can spend the money also on people, so there is a connection, but we can spend it on all kinds of things. The recommendation here is to have a dynamic resource allocation, meaning whatever we learn from now the rolling forecast, we make a decision where is it wise for us to spend the money on. What kind of product or project or however you run your company, and that's the beyond budgeting thing. Now, how am I doing? I don't know. Open space, the other stream coming here in it. So let me do a check, who knows open space? There are some. So open space is actually a facilitation technique, and you heard already one of the principles which Neresh at the beginning stated, which was the law of two feet, which says, well, whenever you feel like you are in, for example, a meeting where you can't learn anything and you can't contribute to the learning of others, you better take your feet with your brain and go somewhere else because your brain has long gone somewhere else because you're not learning and you're not contributing to the learning. So basically, open space is based on self-organization, or what I learned from the open space experts while writing the book. Actually, the key word for open space is invitation. It's always based on we invite everyone to contribute, for example, to the learning, but also to contribute with ideas, with their passion into making any kind of difference. So maybe I'll try to do this quickly. So open space comes actually from the fact that at conferences, most is going on in the break because they are the networking and the deep dives are happening and because of that, open space took that as kind of principle saying, well, with the law of two feet, you're not standing with somebody where you feel like, oh, this is boring, so you move on and go somewhere else where it's not boring for you. So you go along with your passion and you're also standing there as long as you want to and you're not waiting until the conversation is starting, you're just started and you're not waiting until the right people are there, you're just talking to the people who are there, so everyone is the right people. So these are kind of the basic principles of open space. So the one thing now taking this on an organizational level also means that, maybe you're wondering about, that passion is bound by responsibility. So it doesn't mean everyone can do just anything. It means it's bound by the responsibility which is the overall strategy of the company. But anyone can suggest anything and just give you maybe one example which is Valve, which is the company being implemented using open space. It's a company introducing games and they are just saying everyone can suggest a new product and if there are enough other people who are interested in building that product, they are just building it. But if there are not enough people building that product, it will not happen. So that's open space. Then sociocracy is mainly based on equivalent. It looks at the power structure and tries to make decisions in a shared decentralized way. So there are two key things. The one is making decisions based on content which says we are asking for acceptance and not for agreement. So it's more can I live with a decision and not am I in favor with the decision so that's compared to consensus. And the other kind of key thing is embed feedback in the organizational structure which is called double linking. So from every level in the hierarchy you have people elected as representatives which will be one level in the hierarchy higher up and represent the team group below or unit below which means the double linking solves that separation of concerns to see with center positions we often characterize middle management. So middle management often where we say okay they need to ensure that the decision that may top down are ensured there but also they have to speak for their own group or unit so they are kind of squeezed in the middle that's why that center position is coming from and so we want to separate this out. There's one as the appointed manager is just a regular hierarchy and the other one is from the bottom up that's the double link building in that feedback. Okay and then there is agile and agile is basically continuous learning through feedback so making this quick and so the key thing with that is to plan to inspect the depth and I assume you all are aware and know about agile so I don't want to dive more into that but those four streams together they provide basically the implementation for those values so transparency is creating transparency I'm reading that out for all involved in two directions by providing information and lowering the barrier to those seeking information so it's no like hiding information because of maybe I want to protect my power but if somebody needs the information I provide it so it's both ways providing it and seeking for it then continuous learning always learning contribute to others learning get feedback and adapt we have constant customer focus especially two days ago at the business agility day that the customers at the core of business agility so focus by it on every aspect of the company product and process structure and strategy individual contribution and people they are all focusing on the customer then self-organization which is use accountable cross-function teams that select themselves and follow their passion with responsibilities so it all kind of brings those four streams together now this is how those four streams build in or implement those values there's actually multiple which is that bringing those two those four together also changes the way we actually should look at the organizational charts and this was kind of a surprise for us when we were looking into that stuff so the basic classic way of looking an org chart is like well the shareholders are in control then we have the board and I have to quote my colleague author John Buck here he often has that nice saying well the board is kind of sitting on a veranda and surveying its property and the property is like the support service teams like HR and finance and so on and then there's production so that's kind of how it is laid out now one problem which has nothing to do now with the whole bossa nova but it was something that came up for us is that for organizational charts they actually depict the static structure of a company and often what we think it also depicts the dynamics but that's not true well at least not in all ways so what you hear when people think an organizational chart depicts the dynamics is at least I hear that at times well if we would work the way the organizational chart shows how we are connected nothing will get done here and the other thing is also that people say well maybe you want to look at whom are you working with and so which is often called trusted networks however even those you can only do snapshots because it depends what you are working on how the connection is really there so for example if you look for career advice you go to somebody else and if you look for understanding a specific technical framework and you will work with different people so there are completely different connections so my point here is an org chart just has like well it still has value because it shows like a main grouping which makes sense in some way so it can show geographical groupings or capabilities or skills or also key connections for working together and producing something so this is more like a warning whenever you see an organizational chart it just does one thing it doesn't show the dynamics and now I said like looking at the four streams changed something for us and how we think an org chart should look like so the one thing is that at the core of the company now should be what's called a value center all those cross-functional teams providing the value for the customer well if the customer is at the core of what we are doing that has to be shown somehow and then there are the support service teams which are more like the connection to the society at large meaning also regulation but also the ones we connect with like suppliers, vendors and like everything we want everybody we want to work with and then of course it's also the ball to whom we have like a direct connection however you always see these double connections which might remind you already on the double linking so that's what we have in mind so there should always be a double link from each side also with the customer and by the way if you read product owner here product owner for us it's more a function than a role so it's more like ok we need to have the connection with the customer and it's not meant necessarily you have that person who has that role ok so this is like this part of the value center as the core there's actually a bit more to it which we call now the art and spirit perspective and this goes more into if you heard Steve Tenning's talk of the keynote and also his other talk this goes more in the direction of strategic agility because now it brings in which comes actually mainly from open space so everything around innovation, inspiration, passion, creativity also more reaching out to the broader community it could be crowdsourcing, swarming all this in order to really come up with innovation which is different than your connection to the customer because you know your customer now we're talking about art and spirit it's going to open up a completely new market and maybe some of them will then be customers later on so yeah I guess that's good enough for here so if it all comes together and still it only has one perspective on it and one depiction and if you would look at how people are working together you probably would find out there are many more errors going back and forth but in the core of the whole art job is the value center, the cross-functional team teams providing the value which is actually the first thought we got from that about that wasn't beyond budgeting they talk about that a lot and of course you probably know in actual we talk about cross-functional teams too and then the support service teams finance, regulation, all of them supporting, creating the value talk about customer growth and then the connection with the art and spirit however they are all connected that's the dotted circle so that makes the whole new thing so okay now what does this mean so maybe now you heard okay those four values different perspective on the art job but now what does it really mean and what it means is and that's the last I hope maybe more difficult picture here is that if you want to change something in a company but really changes well at the end it's kind of the culture but changing the culture is not that you say okay now we change the culture that's not how it's happening culture is changing by different behaviors and habits and they are expressed in like what do we do with our strategy how do we behave and act in our processes and how are we structured and all these three structure strategy processes actually characterize companies it's also something well there's a lot of there are many papers out there or research actually where you see like well strategy follows structure but then there are also papers saying no no there's proof that structure follows strategy and the same is true that processes follow structure but also the structure follows so it's all kind of connected the other way of looking at it when I say like companies are characterized like that it's like the structure is like we say well a company has an organization and that's kind of the hierarchy or however we are structured or it's being organized and these are the processes we are using or it is an organization it is more like okay what's our purpose here which is the strategy so this is kind of the thing how they are together so I showed you that I promise it's kind of the last which is a bit more difficult here I showed you this because what we did is now looking at what are different probes, trials, experiments, baby steps speaking with Linda's work you can do in order to change the habits, behaviors for processes, structure and strategy and this way implementing or preparing yourself for digitalization and again this might not be readable everywhere but the thing is we found those different probes that really track back to okay and this is a way how you can implement something for changing your processes or for changing your strategies I just want to show in the next slides I think like two different probes we have for strategy changes or test experiment and also for structure of course we have those too so looking at probes for strategy one sample probe which is also kind of maybe a simple but an important probe which is called like is trust cheaper and the background is that travel expenses are often really burdensome and they are annoying and the thing is that the way travel expense procedures are built up is that it's assumed that the company can trust their own people the key thing often is well people can be trusted but there will be always like one exception you know somebody will abuse their trust the thing is now we are coming up with procedures meaning that everyone else will suffer from that mistrust because they will be mistrusted from that one abuse of trust so our hypothesis is that such procedures cost more than they save and they are demoralizing so then the experiment what you can do is first of all make a pre-measurement and see okay how is the moral and how is it that people think about the travel expense procedures then you try for three months for example one thing you can try and that's what a company we know is doing so they have guidelines saying well there are exactly three things you have to watch out for so one thing is wherever you are going so you are spending money on your travel it has to be legal how you spend it so no nothing that's not legal well that's a good advice at least then the second thing is you should take care of yourself so don't make anything that well for example me coming over to Germany maybe it's coming over from Germany or flying back it could be much cheaper if I make like seven connections and fly over whatever but that would mean I take care of myself really and the third thing is it should be economically sensible but it's just that really economically sensible and not anything else so it's in relation to what we are doing and so the experiment has come up with for example guidelines like these try for three months and then do a post-measurement and see if things have improved also if the trust is going up here and the moral is going up and if it's not working maybe you should come up with something else and if it's working you can roll it out and so that company I was talking about so they are doing this now for many years so this is working fine for them another example probe just to have like two examples can we be more scientific and the background for that is that well in your company there are probably a lot of places where people are quite scientific so they research or look what kind of research studies are out there and they are using it and learning from them and they publish and so on but that actually typically doesn't happen in management style of working so we kind of the intelligence we are creating on the management level is still kept as a secret and even inside a company every unit starts learning the same lesson so the question is can we be more scientific also in a way how we do things like management, leadership and things like that so it's not done in isolation and the hypothesis is that we can increase cross-company collaboration thinking by sharing lessons from experimentation and there our experiment or the experiment that you could try and set up is having a peer-reviewed journal where you report your experiment management practices and this journal at first probably it's better to have it like company internally and not like across companies however you could also do that which would be another step in your experiment and then you can monitor like numbers of contributions reviews, searches and also users of what you've learned inside the company so these were just like two sample probes that what can be done in order to implement these four values that prepare you for digitalization and the way it's working actually is well you look at what is your own context so reflect your situation so we're starting at the top then you compare the probes that are there to your situation and see if something is fitting and if something is fitting you try and experiment and then again you reflect your situation but at best you also publish that to your peers what's your experience with that so others can learn from it and if you are there then your next step would be not using the probes that are out there but kind of doing the same thing but a little bit different which is now it doesn't say compare probe but it says design probe so come up with your own little baby steps and try those so again come up with what's the context for it so that was the background section what's their hypothesis what do you want to achieve with implementing that probe and then create and post-measure and see what you can learn from it and then report on it and that would be great so other people can learn from it so at first I thought I am absolutely running out of time and now I have realized that I have much time left but this is great because then I think we have really great time for discussions and questions so so far thank you very much and I am happy to take your questions