By Charlie Mayes, Managing Director, DAV Management

It feels like every time I open a publication or look at a website ‘agile’ is presented as a dynamic and new way of working. In today’s post-recession business world 'agile' seems to have become the latest management terminology buzzword. However, if you look beyond software development where the ‘Agile’ methodology originated, I don’t think there is a clear enough definition as to what we really mean. As a result, there are organisations now using agile concepts to drive unstructured and uncontrolled delivery of large, complex initiatives, as they believe these will enable them to deliver value more quickly. The reality is that these initiatives, more often than not, are dismally failing to meet the desired outcomes because they have not been managed or structured in the appropriate way.

My question is, beyond the undoubted success in software development, how can agile concepts best be utilised to deliver business programmes and when do processes stop being agile and instead end up creating chaos for organisations who suffer as a consequence?

In software development, 'Agile' with a capital ‘A’ has been around since the early 90s when it was first called DSDM (Dynamic Systems Development Method). Since then it has evolved into a powerful way of managing the development of software characterised by the division of tasks into short phases of work and the frequent reassessment and adaptation of plans. For many organisations it has replaced the more traditional ‘waterfall’ method and is regarded as the ‘de facto’ approach for application development across the software industry.

However, take away the capital ‘A and replace it with a lower case ‘a’ and it becomes a term that is being applied to almost every process or new initiative as a way of reducing costs and speeding up delivery. There are some very good examples of where agile working methods are being used and making a very positive impact on the business. For example, Lloyds Banking Group has attracted a lot of interest in the press recently around its use of agile working methods and how this has impacted its bottom line. Lloyds claimed that owing to agile working practices which has enabled staff to work in different ways, this has resulted in a 3-7% saving on workforce costs and increased sales revenues by 11%. According to Lloyds, agile working practices has enabled it to more effectively meet the demand of its customers, it has created productivity savings, and it has enabled the business to recruit and retain staff more effectively. While these results are certainly impressive, I know that it takes a great deal of understanding and knowledge to create such internal transformations. In the rush to benefit from the latest and greatest, I wonder if other organisations truly understand what Lloyds actually did to generate these savings and benefits and without this insight can they replicate these sort of results in their own organisation?

In reality, being agile is easier for start-ups and entrepreneurs who don’t have a five year plan or a complex setup of established internal processes to grapple with. Agile is a way for them to be immediately innovative from the off and able to react quickly to the market — this is an essential element of being a start-up. Having said that, 'agile' has now become such a pervasive term that organisations are losing the ability to plan long term in a structured way for activities that need more rigour.

Although, I think some organisations have been too structured and slow to react in the past, there are times when there is an absolute need to take a step back to fully understand the vision, strategy, and most importantly, the steps that need to be followed to achieve that goal. In many cases, there are no short cuts but right now it feels like the whole management industry is all about pace and the need to just get on with it. Urgency can certainly be an effective motivator, but it can also result in a lack of rigour when it is often most needed. With 'agile' are we in danger of striving, albeit quickly, towards something that we have not yet clearly defined?

According to the Economist Intelligence Unit the traits of an 'agile' business are: rapid decision-making and execution, a high-performance culture, flexibility of management practices and resources, and organisational structures that support collaboration. They say that an agile workforce can help businesses provide better customer service, reduced costs and better retention of staff. But how you go about implementing an agile programme will be very different for every organisation.

I also read recently that using agile planning practices enables firms to ignore annual project budgeting and move towards continuous portfolio-based planning. I wonder what the investors will think about an organisation that has no budget in this context. And how do you ensure that you are on track and on or under budget? Sure, it is easy to track this in a small business, but how do you track progress and understand where everyone is at when you have multiple departments and multiple revenue or cost lines to manage? How do you get a handle on the performance of the business if you are a budget free zone? How do you measure?

Done properly, the introduction of agile practices into the culture and operation of a business can undoubtedly deliver huge benefits and, while I agree that management has become increasingly rigid - even spending against agreed budget often needs to be signed off in triplicate, which seems counter-productive — there needs to be a balance. If you go too far down the agile route without having a thorough understanding of what 'agile' really means you could end up with a lack of structure. What you thought was going to be agile could easily end up in chaos. However, if you put a straightjacket on decisions, budgets and employees, you are not empowering individuals. If you empower people they are typically more productive. If employees have more control over what they deliver they will do a better job. It’s all about managing the balance between agility and discipline within decision making. Like a walking tightrope, go too far one way or the other and you could end up spiralling down with no safety net to catch the business.