Shapeshifting Mindsets @ Jurgen Appelo – Promoting Business Agility in Software Outsourcing Companies
13 December 202104 October 2019 | Insights
In dynamic business environments, change, and the capacity to adapt to it shapes the path towards success or failure. For software outsourcing companies, shifting from traditional models of delivering software solutions towards a continuous evolution and innovative approach is imperative.
At Fortech, we gathered extensive experience and skills in developing custom software for clients in the USA and Western Europe. Since 2003, we adapted our organizational structure and processes continuously to fit the dynamic ecosystems of our clients. As part of our continuous organizational structure redesign, we recently announced the latest changes in the way we organize ourselves to seize innovation and growth opportunities.
But achieving business agility requires a lot of work. And especially the right mindset. That is why in our strive for excellence, we promote shapeshifters from within the organization in critical key roles. With the right tools, mindset and leadership support, they are the ones to take the organization further in its journey.
Also, we reach out to external consultants to help us apply groundbreaking models or methodologies into our processes.
This year, we had the pleasure of learning from Jurgen Appelo how to apply the Management 3.0 principles into our day to day work and organizational structure. Jurgen Appelo is a world-renowned author, speaker, trainer, and founder of the Management 3.0 company. His pioneering leadership writing and teachings are designed to help innovative businesses survive and thrive in the 21st century.
We are excited to share with you our insights on driving business agility and organizational shapeshifting gathered from several training sessions on the Management 3.0 methodology and practices and a very engaging, productive and fun company-wide morning session with Jurgen Appelo.
What is Business Agility?
The concept of business agility is often linked with the software development Agile methodology. According to the Agile Manifesto, four central values lay at the Agile foundation:
- individuals and interactions vs. processes and tools,
- working software vs. comprehensive documentation,
- customer collaboration vs. contract negotiation, and
- responding to change vs. following a plan.
All the above are essential to an Agile mindset. But the last one leaves the most significant footprint on the business agility concept. However, following principles or practices by the book, without any check and balance in the real environment and adaptations to it, can become a failure recipe.
In simple words, business agility means the ability of a company to thrive in a dynamic environment by causing, responding to, adapting to, and surviving change.
Thus, agility means more than just being flexible enough to keep up with the world. It also means that, from time to time, you must be the fastest one, the one who learns the most and disrupts through innovation. To outcompete in the marketplace, companies must live by and practice business agility at their core.
Business Agility in Software Outsourcing Companies
Software outsourcing companies face an increasing challenge to become completely Agile. Still, when looking at the software development methods required by clients, we’ve noticed that some firms prefer to develop their projects in traditional approaches, such as the Waterfall methodology.
This indeed might create a dilemma regarding what path software companies must embark on. But outsourcing vendors must distinguish between the desire to implement a specific methodology in a project versus the need to work with an Agile organization at its core.
Also, nowadays, clients from Western Europe and the USA have more dynamic requirements than in the past years. The main reason is that their customers are becoming more and more demanding in terms of obtaining innovative solutions for their problems and challenges. Thus, clients are shifting their focus on nearshoring or offshoring to software development companies that feel the market rhythm and can adapt to change fast.
Therefore, to remain competitive in the software market, outsourcing companies must evolve at the same pace as their clients.
Here is where the business agility mindset and the way of working intersect. Driving business agility in a software outsourcing company means shifting from the traditional approach towards the agility approach. It involves shifting from centralized decision-making environments to taking the best situational decisions at the right level. This is done by keeping the focus on the big picture and remaining committed to the strategy.
The agility approach sets the basis for a healthy working process that relies on flexibility. This should be applied throughout the company, including in the functional areas. HR, marketing, finance, and other business functions must align and embrace agility just as well as software development, software testing, or DevOps teams.
“Everyone wants agility at scale, but nobody knows how to change.” – Jurgen Appelo
Thus, to drive business agility at an organizational level, companies evaluate the need for standard practices in support departments – such as the traditional KPIs, 360-degree evaluation process, etc.
Also, software outsourcing companies must reflect their business agility in their engagement models. As the traditional time and materials or project-based ones might still apply for some clients, offering product teams or temporary Agile squads or teams is crucial.
Finally, to gain business agility, software outsourcing companies must balance the focus on operational efficiency with client-centricity. Understanding how to best tailor processes to fit the clients’ ones leads to connected experiences and higher success rates.
All in all, to have business agility, software outsourcing companies must become shapeshifters. To cause change and adapt to change, every day.
“Shapeshifters are the ultimate form of agility. They adapt to context, every day.”– Jurgen Appelo
Becoming a Shapeshifter – Promoting a Business Agility Culture in a Software Outsourcing Company
There is no one size fits all approach to promote business agility. Each company is different, and a successful path towards business agility must be tailored to the specificity of its stakeholders.
Thus, the most efficient starting point might be a stakeholder awareness program. In this step, companies must carefully analyze all their stakeholders (whether they are clients, employees, investors, partners, or suppliers) and understand what drives them further – desires, culture, values, and behaviors.
Then, relying on the results, create a change strategy, and start promoting it into the company. Reaching a balance between stakeholders’ expectations and keeping them engaged in the business agility mindset is essential to achieve long-term growth and innovation.
In the Management 3.0 approach, Jurgen Appelo promotes a series of techniques that can facilitate becoming a shapeshifting and managing change in an organization. Read further to discover our favorite techniques that can easily be applied in software development outsourcing organizations.
Understanding how People Change
One of the pillars of organizational change is breaking the habit cycle of employees. In software development outsourcing companies, each business function might have different habit cycles.
For example, software development teams might form habit cycles around an Agile sprint. Or marketing departments might create habits around the major yearly company events. These habits often keep people in a comfort zone, hindering innovation.
For each habit cycle, companies must identify little ecosystem changes that can disrupt the work environment on the long-term and influence change at a larger scale.
One of the most efficient methods of disrupting habit cycles is applying gamification strategies along the way. Yu-kai Chou’s Octalysis gamification framework is a great inspiration resource.
Applying simple gamification tactics into the day to day work usually results in a higher buy-in from employees than imposing rules. For example, by simply adding a different concept to each Agile sprint, people might be more productive and think outside the box. These concepts might be superheroes, cartoons or anything eye-catching.
Bringing Happiness into the Mix
People are at the core of any organization. The happiness and engagement level of employees also has a substantial impact on the success or failure of an organization. And reaching business agility as an organization is impossible without keeping people happy and engaged.
Software development outsourcing companies have particular challenges for keeping employees happy. From the attractiveness of projects to the technologies used or the relationship with management or clients, all factors must be accounted for in measuring happiness and engagement in a company.
There are many ways to energize people and influence them to remain active, creative, and motivated so that they can outperform their norm. But all methods must be weighed against the basic principles that drive us as individuals and adapted to fit broader contexts.
According to the Management 3.0 approach, 12 steps can lead to happiness (see the image below). Backed by science, these can provide companies with an excellent basis for developing a productive organizational culture.
Image Source: Management 3.0 – 12 Steps to Happiness
The Celebration Grid
In today’s era of technology breakthroughs, the daily working schedule in software companies is often overwhelming. Leaders solve one urgency after another, leaving limited time for strategy and learning.
Also, software outsourcing companies in Eastern Europe don’t celebrate success as often as Western ones. And failure is often a taboo concept. Thus, celebration as a concept, in general, is often overlooked.
The Agile software methodology offers a great example of why reflecting on success and failure is paramount for learning. In particular, the Sprint Retrospective meeting (one of or, maybe, the most important from the Scrum ceremonies), where the scrum team analyses what went well or wrong during the sprint and what could be improved.
A simple step to business agility is shapeshifting the mindset of managers and team members in all departments towards using celebration techniques or instruments.
The celebration grid from the Management 3.0 approach is a great tool for software outsourcing companies. It can easily be replicated on one of the whiteboards in the office.
The purpose of the grid is to celebrate the learning that drives improvement. It compares behaviors with outcomes by analyzing both success and failure from multiple perspectives – mistakes, experiments, and practices.
Image Source: Management 3.0 – Celebration Grids
Have a look at this video by Jurgen Appelo to learn more about Celebration Grids.
Finally, there are a lot of methods to drive change in an organization. The key is to find the ones that can easily be tailored to your software outsourcing processes. Regardless of the technique you choose, you should build with purpose, innovate in management, accelerate learning, run experiments, embrace playfulness, and nurture happiness.
“To be agile and innovate at scale, organizations must be shapeshifters, by continuously trying practices, shifting between control and freedom, gamifying all small improvements, and turning behaviors into habits.” – Jurgen Appelo
Breaking the Mold – Solving the Innovator’s Dilemma
The Innovator’s Dilemma concept was first introduced in 1997 by the Harvard professor and businessman Clayton Christensen in his bestseller – The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail.
Clayton Christensen argues that successful organizations that do everything right might still lose market leadership or fail in case of unexpected disruption. The innovator’s dilemma focuses on two aspects: the value of innovation in an S-curve and the incumbent sized deals. For software outsourcing companies, the innovator’s dilemma is promoting a startup culture without losing the scaleup culture.
Over two decades later, the innovator’s dilemma is still a struggling concept for many managers and CEOs around the world. But with business agility as a mindset and the right tools, companies are prone to overcome any disruption barriers. Or even be the disruption.
Eastern European software outsourcing companies are more prone to achieve business agility than the ones located in emerging IT centers.
For example, while companies in emerging IT clusters still gather fundamental software development expertise, the ones in Romania already have extensive experience and established processes. Thus, they can focus on growing their organizations and gaining business agility by embracing change and disruptive innovation.
We extracted three actionable steps from the Management 3.0 approach for breaking the mold and solving the innovator’s dilemma. These can easily be applied in software outsourcing companies.
Adapting to the Business Lifecycle
Firstly, companies must learn to organize themselves and the innovative processes based on the business lifecycle step they are on. The practices applied must depend on business maturity rather than standardize frameworks. Models such as the design thinking process, the lean startup process or similar ones might work just fine.
But do they work in any organization, at any time? Of course not.
For example, the lean startup process might apply to software product teams. It provides them with tools for building software products fast and learning from those experiences. But it might fail when applied to board members, who have limited time and need to take strategic decisions often.
Companies must apply the right tailored techniques in different steps of the business lifecycle.
Leveraging the Innovation Vortex
Secondly, outsourcing companies must learn how to develop for the long-term. Learning from product development companies, outsourcing vendors should aim at achieving sustained innovation. The process is like a vortex with different streams of actions implemented gradually.
The Shiftup Program is a great example of how companies should achieve innovation. This model relies on seven different streams: contextualize (frame), empathize (discover), synthesize (define), hypothesize (ideate), externalize (build), sensitize (test) and systematize (learn). In the innovation vortex, the intensity of each stream is determined based on the maturity stage of the company.
At first glance, the program might look tailored to software product companies. But it can be applied to any company interested in continuous innovation and transformation. Software outsourcing companies might use the method by forming a growth dedicated team that leverages the innovation vortex to drive the organization throughout its evolution process.
Gradually shifting from disruptive to sustaining innovation is challenging. The key is to adapt the innovation vortex to each maturity stage in a company’s lifecycle.
Building an Innovation Funnel
Finally, to solve the innovator’s dilemma, software outsourcing companies should break the mold and create their innovation funnel. In the traditional approach, outsourcing companies rely on clients to bring innovative concepts into their processes. But from time to time, outsourcing vendors must take it upon themselves to innovate for their clients.
An innovation funnel is a set of tools, processes, and actions aimed at promoting innovation in a company. It might take the form of a committee or board that oversees the innovation process from start to end by guiding shapeshifters to reach their goals. Or it might consist of a series of programs designed to aid innovators in each step of the funnel.
Regardless of the method chose, to achieve sustained innovation, all actions must be carefully nurtured and integrated into a well-defined innovation process.
Final Words
Software development outsourcing companies must step out of their comfort zones. Fast.
Traditional vendors of on-demand software services rapidly lose ground in favor of disruptive shapeshifting companies. Thus, learning how to promote business agility as a mindset and facilitate innovation is crucial to surviving and thriving in today’s dynamic market.
There are many methods out there to help managers promote a business agility culture and innovate. The Management 3.0 approach is a great one that works for us. But it is up to each company to choose the practices that best fit its culture, business model, and industry.
Finally, change is imminent. Having the capacity to adapt to it and seize opportunities is essential.
On an ending note, I want to leave you with a great quote from Steve Jobs.
“Here’s to the crazy ones. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. […] While some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.” – Steve Jobs
This one is for you, the shapeshifters who break the mold and change the world.
About the Author
Alexandra
