Digitalization and Agility: Joining Forces Against Silo Thinking

Dig­i­tal trans­for­ma­tion is not about tech­nol­o­gy and agile trans­for­ma­tion is not about process­es. Both are rather about cul­ture and above all a cul­tur­al fight against silo thinking.

Agili­ty thrives on short feed­back loops. Usable prod­uct incre­ments are deliv­ered in rapid suc­ces­sion and the insights gained from the use of these incre­ments sub­se­quent­ly influ­ence fur­ther devel­op­ment. Agili­ty is in prin­ci­ple a con­trol loop con­sist­ing of exper­i­ment and val­i­da­tion or fal­si­fi­ca­tion. The faster this con­trol loop is run through, the faster it can be checked whether one is on the right track and the low­er the risk of run­ning in the wrong direction.

Agili­ty and dig­i­tal­iza­tion are inter­de­pen­dent. On the one hand, dig­i­tal prod­ucts and process­es facil­i­tate agili­ty, because in dig­i­tal and vir­tu­al real­i­ty the deliv­ery of new prod­uct incre­ments is pos­si­ble much faster than in the phys­i­cal world. And of course it also makes a big dif­fer­ence when it comes to val­i­da­tion, whether it takes the form of a cus­tomer sur­vey by a call cen­ter or whether accep­tance of a new func­tion of the soft­ware is just a mat­ter of A/B test­ing.

On the oth­er hand, the dig­i­tal trans­for­ma­tion of orga­ni­za­tions, their prod­ucts and their busi­ness mod­els is pre­des­tined for an agile approach due to the uncer­tain­ty that comes with it. Agili­ty helps to keep the risks of dig­i­tal­iza­tion under con­trol. And last but not least, dig­i­ti­za­tion also means rethink­ing and relearn­ing, and this joint learn­ing jour­ney works much bet­ter in an agile way.

Fighting the Silos

Tra­di­tion­al hier­ar­chi­cal orga­ni­za­tions con­sist of func­tion­al depart­ments that divide areas of respon­si­bil­i­ty, allo­cate pow­er in the form of bud­get and staff, and sub­di­vide val­ue cre­ation. This results in silos, the walls of which become thick­er every year thanks to appro­pri­ate eval­u­a­tion and reward systems.

Due to this estab­lished struc­ture, agili­ty and dig­i­tal­iza­tion are in great dan­ger of run­ning aground with­in these silos. An agile project with­in a depart­ment does not make much of a dif­fer­ence because the depart­ment itself is only a tiny part of the val­ue chain and there­fore the feed­back on the department’s con­tri­bu­tion is only avail­able at the end of a long series of handovers.

Finally we're agile
Source: Geek & Poke

Agili­ty there­fore always implies a form of inter­dis­ci­pli­nary col­lab­o­ra­tion to reduce pre­cise­ly these han­dovers and thus to short­en the con­trol loop of exper­i­ment and val­i­da­tion. An essen­tial fea­ture of agili­ty is to work across silo bound­aries along the val­ue chain in an inter­dis­ci­pli­nary team. How­ev­er, this is not pro­vid­ed for in the orga­ni­za­tion and is usu­al­ly not wel­comed by the respec­tive princes of the silos.

Any orga­ni­za­tion that designs a sys­tem (defined broad­ly) will pro­duce a design whose struc­ture is a copy of the organization’s com­mu­ni­ca­tion structure.

Conway’s Law

The same is true for dig­i­tal­iza­tion. In the end, dig­i­tiz­ing the process­es and arti­facts in a few depart­ments will make lit­tle dif­fer­ence — espe­cial­ly not if the han­dovers in between take place with Excel at best. Or in the words of Thorsten Dirks: “If you dig­i­tize a shit­ty process, then you have a shit­ty dig­i­tal process! That’s why dig­i­tal­iza­tion also has to bridge and dis­man­tle the silos. On the one hand, cul­tur­al­ly in the sense of an open han­dling of data, but also tech­ni­cal­ly in the sense of soft­ware archi­tec­tures that do not sim­ply repro­duce the silos accord­ing to Conway’s Law, but offer open inter­faces for easy integration.

Attempt­ing to change an organization’s cul­ture is a fol­ly, it always fails. Peo­ples’ behav­ior (the cul­ture) is a prod­uct of the sys­tem; when you change the sys­tem peo­ples’ behav­ior changes.

John Sed­don

Cul­ture fol­lows struc­ture, as Craig Lar­man sum­ma­rizes. Silos lead to silo think­ing. Agili­ty and dig­i­tal­iza­tion nec­es­sar­i­ly shake these very foun­da­tions of hier­ar­chi­cal orga­ni­za­tions. For it to be effec­tive, any such trans­for­ma­tion must break down the silos, at least tem­porar­i­ly and selectively.

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