Leadership Development in an agile environment

Table of Contents

1 Introduction

2 Changing environment for companies

3 Leadership & Leadership Development
3.1 Leadership
3.2 Leadership Development

4 How to be agile - success in agile environments
4.1 Agility and its history
4.2 Relevant factors for success in agile environments
4.3 Best Practices according the implementation of agility

5 Leadership Development in an agile environment
5.1 How leadership must change to meet the future
5.2 Leadership Agility Development

6 Conclusion

I. Appendices

References

1 Introduction

The environment of companies changes and become more global, cross-culture and networked. Rapid changes in customer needs, global trends and technological possibilities create new challenges for companies and especially their leadership. The leaders are confronted with complex problems, unknown solutions and fast changing product requirements as well as a challenging role in the society because of prevailing crises in the economy.

To keep up success for the future companies have to react and adapt their strategies becoming more flexible and nimble. They have to anticipate what comes next and take the lead in developing future strategies to be faster than their competitors.

One common trend in this context is to be “agile” - not only according to software developing but also according to the whole organisation of a company. Many companies think they already are agile or are heading for agility but anyhow when a challenge arises the company can’t deliver.

To become “agile” it is not sufficient to adapt new strategies, restructure the organisation or increase speed in selected teams or products. Much more it is to introduce agility in the whole organisation including the culture of the company.

The questions for this assignment are Has agility an impact on leadership? Do new skills for leaders exist? Is it necessary to design new leadership development concepts?

To answer these questions the assignment starts with the definition of the changing environment, leadership and leadership development. After this it covers the topic of agility and the impact on leadership and leadership development.

The assignment is based on secondary data.

2 Changing environment for companies

The business environment becomes increasingly global, cross-cultural and networked and is characterised by high-speed in changing customer needs, technological possibilities and global trends. The rapid changes, increasing complexity and advancements in technology are creating opportunities for new business models, globalisation, digitalisation and shifting geopolitical forces as well as strategic revolutions (DeRue & Myers, 2014, p. 832). The results can be exhilarating for companies, industries and entire regions on the one hand but on the other hand they can be divesting.

According to this turbulent and dynamic economy the companies are confronted with complex problems, unknown solutions and fast changing product requirements (Joiner & Josephs, 2007, p. 5). In addition to that companies have a challenging role in the society because of existing economic, environmental, and ethical crises.

To have success in this market environment the organisation of companies must react and fasten their product improvement and development becoming more nimble and flexible. The companies have to consider what the consequences for their special business are and adapt their strategic business model. That’s why organisations around the world are adapting their strategies, structures, and practices with the intent to become more agile and responsive at the moment.

This intense period of change in combination with the increasing complexity in the organisational structure of companies leads to new requirements for employees and leaders. The willingness to change and try something new is more important than ever before. Because of this leadership is needed more than ever.

According to the technological advance companies don’t need just new products and services but also innovation in functional processes and new software tool including cost reduction in all possible areas to consist in this high dynamic environment (Rigby, Sutherland, & Takeuchi, 2016, p. 3).

3 Leadership & Leadership Development

3.1 Leadership

The summary of McKinsey’s study generated by a global sample of 5.560 leaders across 47 listed companies from all major industry sectors is: “Outstanding leadership correlates strongly with growth, but truly excellent leaders are few and far between” (Herrmann, Komm, McPherson, Lambsdorff, & Kelner, 2011, p. 6).

This statement outlines the importance of leadership competencies for companies in every industry sector especially in today’s business environment. McKinsey’s conclusion is also affirmed through another article about transformational leadership because they illustrate leadership as one of the most important predictors to perform effectively (Peterson, Walumbwa, Byron, & Myrowitz, 2008).

But what exactly is leadership?

“Leadership is a social and mutual influence process where multiple actors engage in leading-following interactions in service of accomplishing a collective goal” (DeRue & Myers, 2014, p. 834). To capture this citation leadership has various components which must be interlocked for company success. On the one hand leadership is a social topic building a high performance team with people having different interests and opinions. One key aspect of leadership is to motivate and support their team. On the other hand leaders have to achieve goals. According to this one task for leadership is to operate every task and team member towards this goal and make decisions always with their goals and the strategic alignment of the company in their mind. To meet these requirements leadership is a combination of interpersonal, conceptual and technical skills. The emphasis of these three skills depends on the organizational hierarchy (De Meuse, Dai, & Hallenbeck, 2010, p. 122).

3.2 Leadership Development

According to the study “Return on Leadership” from McKinsey a critical mass of excellent leaders is needed to trigger and sustain corporate growth. Therefore investing in leadership development is a top strategic pillar and potential source of competitive advantage for companies in every industry sector.

The problem is that it is not easy to develop leaders (Herrmann, Komm, McPherson, Lambsdorff, & Kelner, 2011).

Leadership development exists in two forms: individual leader development and developing the capacity of collectives to engage in the leadership process (DeRue & Myers, 2014, pp. 834-835). The solid foundation for successful leadership development is empirical research which is focused on thoughts and actions of people doing real work in the real world. It enables companies to understand about successful and unsuccessful approaches of leadership development and they can adapt the well working concepts. Through this way they learn and benefit from others. In the context of leadership development different instruments can be used. It is important that there is only one coherent model which is the basis for all instruments: classroom trainings, coaching and training on the job. The development concept should be based on the research to limit potential frustration and increase engagement (Akhtar, 2015).

4 How to be agile - success in agile environments

4.1 Agility and its history

Agility has transformed software development and experts believe that the methodology expands far beyond the IT now. But that is where it began - outside of IT. The starting of the story of agility was in the 1930s. Over the time the methodology develops for example through the new method “scrum” to develop software created by Sutherland which was presented in 1995 to the public the first time. In 2001 17 developers meanwhile a group of 30.000 members called “Agile Alliance” settled on a new name for this movement “agile” according to the book “Agile Competitors and Virtual Organisations: Strategies for Enriching the Customer”. This group developed 12 operating principles for agile techniques (Rigby, Sutherland, & Takeuchi, The Secret History of Agile Innovation, 2016).

The agile movement spread rapidly and it improves customer engagement and satisfaction, creates speed for the market access of most valuable products and reduces risks (Rigby, Sutherland, & Takeuchi, 2016, p. 7). The agile methodology runs with teams with members of different disciplines (usually three to nine people) including all skills which are necessary. The team manages itself and is accountable for every aspect of the work. Every team has one “team initiative owner” who is responsible for delivering value to the customer and to the business. The team initiative owner works with the team and coordinates all relevant stakeholders (Rigby, Sutherland, & Takeuchi, 2016, p. 4). The team creates a road map planning in detail only those activities that won’t change before execution. The tasks of the team are divided into small modules so the team starts building the product in short cycles which are less than one month (Rigby, Sutherland, & Takeuchi, 2016, pp. 4-5). The process is transparent for everyone having a team-board which illustrates the progress of every task. Every day they have a meeting called “daily meeting” to review the progress of every task. In order to the length of the planned cycles they have also meetings to plan the next building cycle so the team can concentrate on selected tasks in every cycle. The spirit in these teams creates organizational experiences and builds mutual trust and respect.

Today many corporate leaders think their companies are agile but they realise too late that they are thinking about a counterproductively way of agility being an end in itself. Through this way of thinking companies might be too agile chasing every potential opportunity without clear strategic goals. Being agile depends on developing strategic responsiveness as well as organisational flexibility but always with the approach of sustainability to change not only quickly but also profitably.

4.2 Relevant factors for success in agile environments

There are some relevant factors in the context of the existing fast changing and uncertain environment to have success in the implementation of agility.

Leaders have to understand what agile means and understand the approach through trainings, practice and feedback. Only using some agile instruments like “sprints” and “time boxes” does not make a company more nimble and flexible. They must be convinced of this approach to transfer it to their employees. Therefore the implementation of agility should be top down so that the executive management team is an agile team itself. But not only leaders have to understand the value. Even the whole organisation has to understand it because this is the only way the people are confident (Shahabi, Cusumano, & Sohonie, 2015).

The most successful introductions of agile usually are starting small for example in the IT and spreading to another function (Rigby, Sutherland, & Takeuchi, 2016, p. 10). By this way it is ensured that agility isn’t the next methodology which is thrown over the fence. Instead the approach is tested in a small circle and then spread out with positive recommendations.

In the context of large and complex problems where different teams have to work together it is necessary that all teams work from the same priority list even if not all teams are using agile processes. Furthermore even for people who do not know the agile methodology yet transparency is a relevant factor to have success in such a combination. The teams have to learn how to work together simultaneously and not separately and sequentially. Otherwise agile innovations will struggle in implementation because the agile team focuses on their small part but other have the same long cycle as before and the teams are not synchronised.

To have success with agile teams the team’s collective intelligence is relevant and not the individual one. The reason for that is that team results through clarifying roles, teaching conflict resolutions techniques and team happiness are higher than individual efforts (Rigby, Sutherland, & Takeuchi, 2016, p. 17). An agile process requires responsive people and organisations so agile development focuses on the talents and skills of individuals including leadership (Cockburn & Highsmith, 2001, p. 131).

To get the view on some examples where the implementation of agility has worked well in Appendix 1 are described two best practice examples.

4.3 Best Practices according the implementation of agility

One example for best practices in the context of implementing agility in an existing company is the story of John Deere. George Tome, a project manager within Deere’s corporate IT group began applying agile principles in 2004.

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