Monday, July 25, 2011

Making Agile Stick

So many experts tell us mgmt is broken. Agile would fix many problems. Why is mgmt innovation so hard to apply?" I asked this question Friday in my Radical Management Thought for the Day. Don Reinertsen quickly replied, "Status quo is often a Nash Equilibrium."

For those of you (like me) who need to look it up, the Nash Equilibrium was named for its inventor, John Forbes Nash, the schizophrenic Nobel Prize winner who was the subject of 'A Beautiful Mind'.  Given a group of several players in game, "a group of players is in Nash equilibrium if each one is making the best decision that he or she can, taking into account the decisions of the others." (wikipedia) This does not optimize for all players achieving the maximum gain possible. Some higher profit strategies may expose an individual player to higher risks if the other players do not share a common goal (which they probably do not).

I have long believed that command-and-control hierarchies are dynamically stable. Now I understand why. As a manager, if you do not play your hand optimally, sooner or later, you will lose. Someone else will get promoted or you will get a black mark on your record which means 'no future here.' So managers follow a 'make no mistakes' strategy. Everybody wins a little bit, nobody loses, and everybody tacitly accepts that the overall result is suboptimal. (Today, "suboptimal" means sooner or later, your company will die or get acquired, but that is a separate issue.)

How do you ensure a successful transition to Scrum, Kanban, Agile or some other Radical Management framework? All these frameworks offer superior overall performance, but, as substantial changes in strategy, they may expose the early adopter to risk of losing as long as significant portions of the company are still playing by command-and-control rules.

Based on the successful (and indirectly from the non-successful) Scrum transitions I have seen, I think the following will be necessary for a long-term successful transition:
  • A culture of trust, especially in the transition phase. People must be able to change without risk of loss. They must also be discouraged from attacking others during this time.
  • Broad support for the new framework throughout the company.
  • A fairly quick transition. If the new rules are competing with the old rules, the proponents of the old rules may well strike back.
  • Measurements and rewards which reinforce the new framework. New social controls must also support the new framework.
In short, your Lean/Kanban/Agile/Scrum/Radical Management framework must become the new status quo. You need to create a new Nash equilibrium.

Want to make it happen? Join us for the Zurich Gathering For C-Suite Leaders with Steve Denning and myself: Zurich, Sep 12, 2011


jmeydam said...

>> John Forbes Nash,
>> the schizophrenic Nobel Prize
>> winner who was the subject
>> of 'A Beautiful Mind'

Ah - that Nash! :-)

I think there was a scene in the movie illustrating the idea of the Nash equilibrium.

Peter said...

I think the formal term was "Governing Dynamics." It may well be remembered for the case study "Ignore the blond."

jmeydam said...

Great case study! :-) That's the scene.