What is blocking your progress towards increased business agility?
We see an undisputed urgency for organizations to adopt business agility, yet many are
succeeding very slowly. The Deloitte 2020 Global Technology Leadership Study reveals that
much work remains in extending agility beyond software development and into the business:
Not even half (42 percent) of tech vanguards and only 14 percent of baseline organizations are
embracing Agile across the enterprise.
Two often overlooked blockers towards enterprise wide Agility are technical and
organizational debt. As with financial debt, these are costly burdens that impact organizational
performance. Financial debt is made explicitly visible on the balance sheet. Technical and
organizational debt, although at least as important, are not shown and therefor escape the
much needed attention. In this first blog post we look at the nature of technical and
organization debt and how it is restraining organizations in their ambitions to deliver better
customer value by business agility. Our next blog describes the consequences of ignoring tech
and org debt, and the third post will look at impactful ways to start tackling debt.
When asked about a year ago, pre-COVID-19, how successful organizations have been in
achieving benefits through working agile at large scale, a vast majority of respondents (84%)
said their organizations were below a high level of competency with agile practices, according
to the 14th Annual State of Agile Report. Similar findings from the 2020 Business Agility
Institute Report indicate organizational complexity is one of the major impediments to business
agility adoption.
Regardless of the lower levels of confidence, there seems a highly consistent view on the
benefits of business agility. 70% of the respondents to the Digital AI survey listed as the number
one benefit ‘the ability to manage changing priorities’. Other benefits listed in the top 5 are:
increased revenue, market share and brand recognition, faster turnaround times, higher quality
offerings, improved relationships with customers, greater transparency, and higher employee
engagement.
Despite the fact that since COVID-19 there is an even stronger and commonly shared
sense of urgency around the need for accelerating business agility, for many organizations
something seems to make acceleration cumbersome. The 14th Annual State of Agile Report
highlights that more than 50% of the responding companies is already practicing Agile methods
for over 3 years. This helps to achieve initial business agility benefits in the area of project
visibility, business IT alignment, increased delivery speed and even team morale. However, only
5% of organizations say their agile practices are actually enabling greater organizational
adaptability as the key benefit. In our experience this low percentage can be explained by
looking into organizational and technical debt. One or the other or in combination, these have a
substantial impact on the progress that organizations make and the effort required to increase
their business agility.
Insight 1: Even though we see the market strongly aligned around the key benefits of
business agility, even more so since COVID-19, the pace of adopting it at larger scale in
organizations is low, and requires enormous effort and persistence. The ultimate benefit of
business agility to manage changing priorities and enabling greater organizational adaptability
is rarely achieved because of the blocking effect of organizational and technical debt.
To actually achieve organizational adaptability at larger scale, bigger and slower moving
aspects need to be set in motion. Two of the major aspects we see often being ignored, or
consciously de-scoped from agile and digital transformation initiatives, are removing outdated
technology and redesign of organizational structures. For technology we are referring to
systems, but also software code that have never properly been replaced or removed. This is
also known as ‘technical debt’. When this debt increases, the IT landscape becomes too
complex and rigid. When these often monolithic IT systems were designed and implemented
the need for frequent changes due to customer needs was less relevant. Main design principles
at that time focused on stability instead of agility, e.g. support two major releases in a year and
ensure business continuity while upgrading. Compare this to modern systems and development
processes that allow for near instant changes to be implemented without losing stability. In
most cases technology debt cannot be repaired easily but require replacement or, at least,
significant re-engineering of the complex IT landscape.
‘Organizational debt’ on the other hand indicates outdated and/or inefficient
organizational structures. It refers to roles, processes, rules and organizational layers that no
longer serve an organization . This burden grows over time if roles or process steps or
management layers are added ‘every time something goes wrong’. This results in rigid, complex
bureaucratic structures, with duplications of roles, inefficient processes (gradually too many
steps added), and frustration over complex reporting lines and lack of transparency in decision
right and formal authority. When left unattended technology and organizational debt hinder
speed (time to market), security, quality and even impact employee engagement in multiple
ways. Technical and organizational debt acts like a ‘hand break’ on the acceleration of business
agility.
Organizational and technical debt are caused by inefficiencies left unaddressed, that have
grown over time at all levels in an organization. From lacking clarity on strategic accountability
for systems and the overall IT landscape, to insufficient developer discipline to write 'clean
code' that reduces rework and burden on maintenance of systems once software functionality
is used by end-users.
The same applies to organizational debt that piles up when roles are added fairly ad hoc,
or spans of control are applied too wide (too many direct reports) or too narrow (too few direct
reports), outside the overarching sizing guidelines for optimal spans of control and
organizational layers. That is how inconsistency, and inefficiency creep in, and if not looked
after with a more holistic view regularly, systems, organizational structures and processes
become incredibly complex and highly rigid (inflexible).
References
The kinetic leader: Boldly reinventing the
enterprise https://www2.deloitte.com/us/en/insights/topics/leadership/global-technology-
leadership-study.html
14th Annual State of Agile Report by Digital AI https://stateofagile.com/home#ufh-i-
615706098-14th-annual-state-of-agile-report/7027494
2020 Business Agility Institute Report https://businessagility.institute/learn/2020-
business-agility-report-responding-to-disruption/
The Technology Fallacy. How people are the real key to digital transformation, Gerals C.
Kane and others (2019), MIT Press Cambridge
Brave New Work. Are you ready to reinvent your organization? Aaron Dignan (2019),
Penguin Random House LLC
The product shift: Rewiring the organization to maximize business
value https://www2.deloitte.com/us/en/insights/focus/cio-insider-business-insights/three-
keys-to-building-organizational-agility.html
