Agile transformation offices (ATOs) play a crucial role in the ongoing journey towards agility for many organisations. These entities help in transitioning from traditional, hierarchical structures to more flexible and efficient decision-making models. The COVID-19 pandemic intensified the urgency of this transformation, highlighting the necessity for adaptability and quick responses. As businesses emerge from the pandemic, some are looking to deepen their agile initiatives, while others are starting to explore the benefits of agility. Establishing an ATO can significantly enhance the likelihood of success in these endeavours. Whether the transformation encompasses part or the entirety of the organisation, a structured approach is essential to deliver lasting value.
An ATO shapes and manages the transformation process, facilitating engagement across the entire organisation. Its primary goal is to help embed cultural changes that will last long after the transformation is complete. Unlike traditional oversight boards or bureaucratic layers, an ATO operates within the existing organisational structure, harnessing the right expertise to achieve tangible outcomes. Becoming a truly agile organisation is a gradual process that occurs in phases. A well-organised ATO not only propels the transformation but also ensures that cultural shifts remain embedded throughout the organisation. It identifies potential obstacles that may hinder the transformation’s pace while maintaining a strong focus on delivering value.
How an ATO Structure Delivers Value
At its core, enterprise-level agility involves transitioning strategy, structure, processes, people, and technology to align with a new operating model. This is achieved by restructuring the organisation around numerous self-managing, high-performing teams while fostering a supportive framework. Changing the organisational culture is essential to success.
Comprehensive and Iterative Transformation
An agile transformation is both comprehensive and iterative. It is comprehensive in defining the organisation’s objectives and establishing the necessary processes and structures to meet those goals. Conversely, it is iterative because it requires testing, learning, and refining as each aspect of the new operating model is implemented.
Strategic Design Decisions
To successfully establish an ATO, organisations must make strategic design decisions in three key areas: its mandate, its structure, and the roles and responsibilities of its members.
Defining the ATO’s Purpose and Mandate
Alignment on the overall objective of the transformation is vital, as is establishing a clear and agreed-upon purpose for the ATO. Input should be sought from all levels, from C-suite executives to individuals who will play pivotal roles within the ATO. This step clarifies the ATO’s value proposition and explicitly connects it to the transformation’s rationale.
For example, a telecommunications company set up an ATO specifically to drive cultural shifts during its agile transformation. The ATO led the transformation with a clear mandate and engaged the entire organisation around its objectives. The focus was on delivering value to customers, employees, and the business. The ATO became the central hub for engaging leaders, functions, and business units to experiment with and implement new working methods.
Distinguishing Features of an ATO
An ATO’s mandate sets it apart from traditional project management offices (PMOs) in several critical ways:
- Driving the Transformation Roadmap: The ATO scales agility throughout the organisation, defining the timeline and methodology for implementing changes and determining how it supports each phase of the transformation. Key stakeholders must agree on a structured timeline and pace.
- Building Capabilities: The ATO is responsible for hiring and upskilling talent. To succeed in its transformation, the organisation must develop new skill sets for essential roles, such as product owners and agile coaches. The ATO plays a crucial role in shaping the talent pipeline for these positions, working collaboratively with other organisational units, such as HR.
- Championing Culture and Change: ATO members should exemplify the principles, behaviours, and mindsets required for the transformation. They are responsible for promoting the benefits and values of the transformation through various engagement activities.
- Coaching Senior Leaders: The ATO coaches senior leaders to become champions of the transformation and lead by example. Agility requires support from both top-down and bottom-up approaches.
- Managing Interdependencies: Its visibility allows the ATO to identify dependencies and potential synergies while serving as the final decision-making body for critical issues.
- Creating Best Practices: The ATO continues to evolve its understanding of best practices and behaviours that the entire organisation should adopt.
The decision regarding whether the ATO should take on all six mandates or select only a few depends on the overall objective of the transformation. It also relies on the organisation’s current stage in its agile journey. In most cases, the ATO drives the design and execution of the agile roadmap. It also builds agile capabilities, which are its primary distinguishing features. While this serves as a solid foundation, organisations can unlock the full benefits of an ATO only when it has strong sponsorship and a mandate across all six categories.
Real-World Examples
A banking organisation, for instance, defined its ATO’s purpose as delivering value across the business through the adoption of agile mindsets and working methods. Its test-and-learn approach involved locating several squads in a “garage,” allowing them to operate independently at first. This controlled experimental environment was pivotal in shaping the larger transformation model. The bank’s chief human resources officer (CHRO) prioritised and integrated lessons from the garage while building capabilities at scale.
In another instance, a telecommunications company aimed to extend its agile transformation across a significant portion of its core business. The organisation established its ATO’s purpose as igniting and sustaining an agile culture while partnering to change its foundational performance drivers. The chief digital officer sponsored the effort, leading to the launch of seven agile tribes within a short period. As many as 800 individuals were introduced to the new ways of thinking and operating.
Defining the ATO’s Reporting Structure
The appropriate reporting lines for an ATO depend on the organisation’s context and culture. In successful transformations, the leader of the agile initiative typically reports directly to the CEO or one of their direct reports. This structure ensures strong alignment and support from top leadership.
Successful Reporting Structures
For example, in an Asian telecommunications company, the ATO reported to the CHRO, who was the overall transformation sponsor. In a North American financial institution, the ATO leader reported directly to the CEO, enhancing accountability and facilitating successful outcomes. In another financial institution, the ATO reported to the COO, who led the entire organisational transformation.
Regardless of the chosen reporting line, it is crucial to make the transformation an integrated business priority rather than merely another change initiative operating alongside the business. Many organisations emphasise this distinction by establishing either solid or “dotted” reporting lines between functional leaders and the ATO execution leaders.
Building Skills and Capabilities
To support the transformation, capabilities and roles such as agile coaches, DevOps specialists, or technical experts often report to the ATO for a designated period. This arrangement allows the organisation to build these skills more rapidly. It also enables effective standardisation compared to a scenario where these capabilities are dispersed throughout the organisation.
Embracing Agile Mindsets for Long-term Success
In summary, the role of agile transformation offices cannot be overstated. They serve as vital facilitators of cultural change and are instrumental in embedding agility across the organisation. By focusing on clear objectives, establishing effective structures, and fostering a culture of continuous learning and adaptation, ATOs ensure that agile transformation is sustainable. This approach makes agility a long-term strategy rather than a one-time initiative.
As companies navigate the complexities of agile transformations, the establishment of an ATO can significantly enhance their chances of success. By unlocking the door to lasting impact, agile transformation offices enable organisations to thrive in an ever-evolving landscape.
Source: McKinsey & Company (2021), accessed in 2024.
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