Too often, transformations in traditional industries, such as financial services, can be viewed as ‘old wine in a new bottle’, where established ways of working and practices persist with shiny new labels of Scrum or other Agile frameworks popular at the time.
With the State of Agile Report 2022 identifying “resisting or unengaged leadership” as one of the top three blockers of Agile transformations, we explore how a top-down leadership style that is common in the financial sector, presents a challenge to transformation and the actions leaders can take to change the status quo.
TOP-DOWN LEADERSHIP HOLDS BACK AGILE TRANSFORMATION
In an Agile organization, leaders aim to move authority to where the information is, by empowering teams and facilitating self-organization and autonomy. In contrast, in a traditional top-down organization, leaders wait for the information to reach them and then use their authority to dictate decisions and actions with little to no autonomy afforded to teams. This is not to say there isn’t a case for this, as they potentially have a better overview of the organization as a whole and can make globally optimal decisions. However, the result is often a lengthy decision-making process combined with teams that are accustomed to command and control. Naturally, this does not help scale agility!
In many financial institutions, centralized decision-making and strict hierarchical structure are still predominant and thus can hold back transformations. Our experience confirms that the necessary shift in mindset to overcome this cannot be achieved by merely understanding the benefits of transformation. Successful change relies on management understanding what tangible steps they need to take themselves to be part of the transformation.
SAFETY BEFORE TRANSPARENCY
Safety is the bedrock of transparency. This means that firms need to build an environment where teams feel psychologically safe to share their opinions, ask questions and challenge the thinking of leadership. Management can set an example here by sharing information and decisions more openly, providing context and rationale where appropriate. Even more importantly, they can create a safe, dedicated space for bottom-up feedback on how changes are being implemented.
ALIGNMENT BEFORE AUTONOMY
The value of autonomy and self-organizing teams who can make fast local decisions in line with the business objectives cannot be overstated. Such teams play a huge role in scaling agility in a large organization. However, having autonomy without alignment on the problem the organization is trying to solve, could cause redundant effort, chaos and conflict. That is why it is important for leaders to empower middle management to create alignment that connects strategy to delivery.
LEARNING ORGANIZATION BEFORE RELENTLESS IMPROVEMENT
It is natural for leaders to seek continuous improvement and innovation. However, demanding that from teams without equipping them with the necessary knowledge and resources is unfair and inefficient, if not pointless. It is therefore vital for leaders to invest in building a learning organization which will pave the way for ongoing improvement. An organization where everyone, from senior leaders to delivery teams, is committed to learning and innovation will always find new ways to improve and reinvent.
Mahatma Gandhi said, “Be the change you want to see”. This applies to successful Agile leadership which lies in actions not words. Agile leadership is not only about promoting change, but also about being part of the change itself. Once a firm commits to implementing an Agile setup, it must shift away from traditional top-down leadership by building a safe and aligned environment to create a learning organization and achieve change across all levels.
Every company is unique and Agile implementations require close collaboration with Agile experts. Capco’s Agile services partner with organizations through every step of their Agile journey, from determining the organizational readiness to scaling and accelerating the transformation. Contact us to discuss how we can help your firm establish, improve or scale Agile ways of working and achieve your transformational goals.
16th Annual State of Agile Report (2022) https://digital.ai/resource-center/analyst-reports/state-of-Agile-report/