In this episode, Peter and Dave discuss an article by Steve Denning published in Forbes titled "Why the World's Most Valuable Firms Are so Agile." They explore Denning's observations about the agile mindset and characteristics exhibited by highly successful companies. The discussion revolves around the relationship between adopting an agile approach and organizational performance, as well as the potential correlation or causation between agile ways of working and the exceptional valuations of these firms.
This week's takeaways:
Resources:
Why The World’s Most Valuable Firms Are So Agile- https://www.forbes.com/sites/stevedenning/2024/02/26/why-the-worlds-most-valuable-firms-are-so-agile/?sh=1094bb1d794c
Have your own take on whether an agile mindset truly powers the world's most valuable firms? Let us know at feedback@definitelymaybeagile.com. Subscribe today to gain a fresher outlook on embracing organizational agility without the buzzwords.
In this episode, Peter and Dave discuss an article by Steve Denning published in Forbes titled "Why the World's Most Valuable Firms Are so Agile." They explore Denning's observations about the agile mindset and characteristics exhibited by highly successful companies. The discussion revolves around the relationship between adopting an agile approach and organizational performance, as well as the potential correlation or causation between agile ways of working and the exceptional valuations of these firms.
This week's takeaways:
Resources:
Why The World’s Most Valuable Firms Are So Agile- https://www.forbes.com/sites/stevedenning/2024/02/26/why-the-worlds-most-valuable-firms-are-so-agile/?sh=1094bb1d794c
Have your own take on whether an agile mindset truly powers the world's most valuable firms? Let us know at feedback@definitelymaybeagile.com. Subscribe today to gain a fresher outlook on embracing organizational agility without the buzzwords.
Welcome to Definitely Maybe Agile, the podcast where Peter Maddison and David Sharrock discuss the complexities of adopting new ways of working at scale. Hello, dave, how are you today? Very good, very good. Glad to hear it. You seem very happy today.
Dave:All I'm really happy about is I was going to go. I must make sure I time the talk because we want to keep it poignant to the point, pithy, full of fantastic comments and observations, rather than longer. Are you trying to say we have a tendency to ramble? Well, I didn't say you did, but I'll take credit for that. So, anyway, where are we going to ramble?
Peter:today. So the rambling today and what we're going to be talking about is an article by a gentleman called Steve Denning, who you've mentioned is known in the industry, who talks about Agile. There was an article he published in Forbes a little while back not too long ago, actually February and the title of it was why the World's Most Valuable Firms Are so Agile. And you and I had some thoughts on that and we wanted to explore it in the next 15 minutes or so to talk about where we see he's right and where we see that maybe we might not have necessarily thought this through all the way and some of it might be a little bit of wishful thinking.
Dave:So Steve Denning has been around the Agile community now at least for 10 years, if not longer, and was sort of came the Agile community and Steve Denning came together, I believe really driven by his book Radical Transparency that he wrote some years ago. He's written a number of other books and his thinking really strongly aligns with the Agile community and what they see as the impact they have on companies.
Dave:What I like about what Steve Denning when he's putting his thoughts together and he writes for a regular column for Forbes. What I like is he brings sort of grown-up thinking to the table, and by grown-up thinking I mean financial, shareholder value, perspectives of companies. And so many times in the Agile community we get caught up, kind of bottom up, we caught up in employee engagement and team performance, but we're not thinking about the indicator of company success, which is often it's not the only one, but is often dominated by shareholder value.
Peter:Yeah, and I agree. I mean, you say that there's three main levers, and you could argue that there's three main levers. You either growing revenue, reducing costs or managing risk, which is really the sort of the three things. Although, how was it someone? You're either making money, stopping the spending of money or doing something that the government's asking you to do. Was that something to me this morning actually?
Dave:Well, what I find interesting there is, I think, okay. So that's all the stuff I really like, and the article that we're referencing, which is why the world's most valuable firms are so agile, is really an interesting read. To look at the most most performant companies in the various stock markets and looking at those with the eye to say, well, hold on, look, if you look at how they work, would best be described as an agile way of working.
Peter:Right Now there's almost an interesting connotation around. Well, working in an agile way leads to this, but is it cause and effect? Which of these things led to the other, and did they go through a similar journey to get there? That is implied in terms of what led to that or like so where is the interconnectivity between what we see in the sort of agile industrial complex and these trillion dollar companies, and can?
Dave:we draw that one. I'm not sure. Given some of the conversations we've had about where agile is going recently, the idea that we have an agile industrial complex, I think, is a little bit hopeful. There isn't much of an agile industrial complex left, but anyway, some people may think there is not much of an agile industrial complex left, sort of joking aside. The first thing is there's no data in the sense of a validated cause and effect or some sort of statistical analysis of whether or not these sort of characteristics are correlated directly with the performance of the companies in the market.
Dave:I think, as an observer, an opinion. I think it's really interesting because this is what we would argue. We would argue that in order to be successful, you need to apply the agile mindset into how you get work done, because it allows you to perform better in a complex, rapidly dynamic, vuker, volatile, uncertain, complex, ambiguous world. So in those contexts we would exactly argue that. But what we wouldn't then say, and, by the way, is look at the top 20, 25% of the companies in the world. Every one of those companies is applying what you struggle to apply and is getting the results as a result of that, getting these high valuations as a result of that. That's a huge leap.
Peter:It is because there are a lot of other factors that lead to them. There are bits where you could say there are behaviors that they exhibit that could be considered to be behaviors that we would say, yes, but this is something you should do, and it's not uncommon to draw upon some of their methods and apply them back into organizations we try to avoid. As Deming always said, we don't want to copy. What works there will not work here. It's not one size fits all. You can't just take somebody else's operating model and apply it to your organization, because your organization is not their organization. You don't have the same people, you don't have the same businesses, you don't have the same market. Even if you are operating in the same market, there are going to be differences. So you can't just take and cookie-cut that blueprint and apply it to your organization.
Dave:So this gets. There's some really great arguments that Steve is trying to pull together, and his observations are he starts using some of the agile manifesto and stating look, they're using this part of the agile manifesto and this piece and so on.
Dave:But what I find interesting, as you dig into some of his work, is he's looking more into recognizing that a lot of these companies are agile in their mindset. They're applying the agile mindset. They're really thinking in terms of, for example, you know, many experiments, you know trying things out, being being innovative and doing that through very short cycle times, through rapid developments, through dedicated, small, dedicated teams as the primary sort of building block of your workforce in terms of how they get done. So all of these things we would kind of take off the table and say these are exactly what we talk about when we talk about agile.
Peter:I think where the headache is.
Dave:We then get bogged down in the frameworks and the how to do it and what these companies that are performing so well have sort of got the mindset running. If that makes sense, they're really able to get that type of thinking into their organization.
Peter:Yeah, and he does a job in this article. There's a piece here at the end where he's actually it's a little hard to connect together, but he is sort of talking about the well there's, hey, if you go and take out the rulebook, right, and you follow these set of things in the rulebook and you should see some benefits down at this level of the team. And this can be a big rulebook too. You could be one of the scaling frameworks but you're following all the things in the rulebook. But he's saying much the same, as we would say that until the organization adopts more of the mindset to go with that and the values and the culture drive and all the rest of the pieces that go with that, you need all of those pieces as well to go on top of it. Yeah, yeah.
Dave:And one of the things I really I mean it hurts to say it because, of course, we spent a lot of time with our shingles out saying this is what we do but one of the things he says is being agile.
Dave:Without using the word agile, and I think that's something that you know, we've got to recognize that there's a lot of misunderstanding or misinterpretation about what agile means, and it's often that conversation of what's the thing that you're doing, instead of being able to have a real conversation about mindset and about culture and about how we think about problems and how we tackle solving those problems and what we value when it comes to solving those problems. So what I again really good observations is that it's almost drawing out these things which are characteristics and they've been talked about. It's not like he's just observing it from outside. He's been either involved in or deciphering what is discussed to these sort of CEOs of huge companies talking about success with thought leaders in their space. So he's pulling together information really as close to what is happening in those organizations as he can find, and just drawing attention to the fact that they're all agile ways of thinking.
Peter:Yeah, so I mean, they're sitting at the boat and, as we were saying, it's a correlation or causation, and it's always difficult to say which. It is right. And it does seem that these organizations, or many of them, have characteristics that we would attribute to an agile mindset, like breaking down the work, thinking about things. It's all the understanding and experimenting and trying different things. There's a lot of the sort of characteristics you'd see, like the and, as you say, like the team, as the uniform building block of the organizational structure, that some of these things are quite common in the language and in the way these organizations operate. So there's definitely that piece, but, as you say, it's the leap between and because they do that, that's how they got to where they are.
Dave:Yeah, now I'm just reading through that agile mindset piece that he puts in the article and there's that I mean he's good at this stuff, right. So one of the things that he's mentioning and you can, it's a testable hypothesis. He's articulated that hypothesis, which is 20 odd percent of companies who exhibit these behaviors that we've described. May or may not be causational or correlational, whatever it might be, but of those 20% they're all growing faster than the S and P 500. And there's a sort of a corollary to this, which is this dig at, if you're still in the command and control mindset, if you're chasing quarterly results, you're growing slower than the S and P 500.
Dave:And I think that's a testable hypothesis, because we've had these conversations where you're continually bumping into that and maybe that's you know. I've often thought we should have a fund where we, with the companies we work with, we buy the stocks of the companies we think have a great agile mindset. Well, his argument would be we'd be doing better than the S and P 500.
Peter:Yeah, we see that. Yeah, so there you've got a like this is where we're going to see the two. Put your money away in the numbers Exactly exactly.
Dave:So what would you sort of? How do you summarize our discussion? I was going to say dissection, but let's call it a discussion of the Forbes article.
Peter:So I think it comes down to the, the agile mindset of like being able to think, do things in this way, actually taking an agile approach to things and having it more embedded into your culture. That, where that is seen, you can see a correlation to companies that have greater results Doesn't mean all companies that have greater results are operating that way, but if you start to look at it, you can start to see the relationship between the two, which is a good thing to see.
Dave:I think the other side of it is that the, the methodology, is on their own amount enough, but we've talked about that a lot and well yeah, and I feel what Steve Denning brings to the table is stop thinking about it as this way of working and start recognizing that it's way bigger than that.
Dave:Yeah, and he's talking about really, really significant companies, companies we all know about, who apply that mindset in the way they steer their organizations, and they don't use the word agile, right. So if we kind of shed that and understand that it's way bigger than how do you get work done, and it's much more about how do you structure the organization and build the culture of organizations that are able to succeed like that and I think that's what I really like about it is he pulls us out of the naval gazing, worrying about what we did last week and what we did that do next week, into the thing that you've got your hands on, something that really has is rocket fuel if you're able to communicate it and understand it and get in front of the right people and help them understand what's there.
Peter:Yeah, I agree. I think the other piece to add to that is the but you can't just copy what they're doing.
Peter:Yes re-arranging that it's, that it's. You can't just go and look at one of these organizations and say, hey, I should be doing things exactly like they do. You've got to work out what it is for you and how does your organization, or what does your organization need to do to adopt those mindsets and values and build that culture? So, yeah, okay, well, you want to take us away from there? Wrap it up. Sorry, I was just saying that again, wrap it up, okay.
Dave:So maybe, if I'm just trying to think of three things, first of all, keep an eye on Steve Denning, read his stuff. He's outside of the agile community but inside the agile community at the same time. He's got a really different way of thinking which I think not enough of us have. So definitely that's one takeaway is go follow his his stuff and keep an eye on it. The second one, I think, is financial performance. It's difficult to draw the connection, but we should be thinking in those terms much more than we do. And then maybe the final thing is it will probably not have the word agile in any sort of communication proposal. Way of you know that you get into talk about this with organizations. I think it's it's the last thing you'll mention, not the first.
Peter:Yeah, and I would agree. I think pretty much all of the conversations I have with organizations, especially these days, it's about like how do you help them improve and what sort of things they want to do, not specifically bringing agile into the conversation. Well, awesome. So, to all our listeners, don't forget hit subscribe. We should have another episode for you shortly, and it's always a pleasure, dave.
Dave:Always a pleasure, Peter Until next time.