Many companies are currently in the process of initiating an agile transformation. The IT department is often the pioneer by replacing traditional ways of working with agile methodologies such as Scrum or SAFe. This is followed by business units that are linked to IT in such a way that they become part of interdisciplinary cooperation. In many cases, agile transformation then comes to a halt from here, because the agile methodologies familiar in IT cannot be so easily transferred to other business departments.
In this article I will discuss how agile performance management can be instrumentalized to overcome this classic inhibition threshold of agile transformation.
Thee design dimensions of an agile transformation
An agile transformation succeeds if three central design dimensions are taken into account (Krapf 2018a). It is therefore not enough to use only agile practices & processes such as Scrum or SAFe. Rather, the structure & governance as well as the values & competencies must also be aligned accordingly (see Figure 1).
Figure 1: Reference model for organizational agility (Krapf, 2018a).
Agile performance management is agile and promotes agility
An agile performance management is a high potential instrument for the promotion of agility, because it pays into all three design dimensions and is not limited to the specifics of the IT departments. Currently, the OKR approach, which was successfully introduced at Intel in the 1970s and later at Google, is attracting a lot of attention. I have already written more about OKR as agile performance management in another place (Krapf 2018b). However, agile performance management does not mean that OKR must now be used exactly as in these pioneering organizations. Rather, the basic principles contained therein must be observed and adapted to the company-specific culture.
Basic principles of agile performance management
- Promoting flexibility and customer focus through the ability to adapt goals to changing market requirements
- Ensuring transparency for all employees in the achievement of objectives and the achievement of objectives
- Promotion of goals to be achieved by interdisciplinary and self-organised teams with an end-to-end view
- Enthusiasm among employees by formulating meaningful collective goals and eliminating false monetary incentives.
- Support in setting a focus for a reasonable period of time in order to generate value for the customer in a short period of time
Why agile performance management accelerates agile transformation
As shown above, agile transformation in many organizations comes to a halt as soon as the IT-related environment is left. In these cases agile performance management is an extremely effective instrument to accelerate agile transformation beyond this inhibition threshold.
On the one hand, this is due to the fact that it can be used directly in business and solves existing problems there. This is particularly helpful because agile performance management does not have to be sold to agility critics in connection with agile transformation. Rather, agile performance management can be sold as promotion for the enhancement of motivation, focus and impact of teams. No manager has anything against it.
On the other hand, agile performance management accelerates agile transformation because it contributes to all three design dimensions and thus ensures a sustainable agile culture.
How agile performance management accelerates agile transformation
Once an organization has decided in favor of agile performance management, it will very quickly realize that this only works if there are corresponding adjustments in the structure & governance, in the working methods & processes as well as in the values & competencies. The agile transformation through adaptation in the corresponding design dimensions then no longer seems like an experiment by agilists, but is a necessary step so that the new performance management can be lived.
The diagram below summarizes how agile performance management makes corresponding adjustments in the design dimensions necessary and obvious in order to support agile transformation.
Figure 2: How agile performance management accelerates agile transformation
Krapf, J. (2018a). A framework for organizational agility. https://joel-krapf.com/2018/08/07/a-framework-for-organizational-agility/
Krapf, J. (2018b). How modern performance management fosters agility. https://joel-krapf.com/2018/09/16/how-modern-performance-management-fosters-agility/