Who manages in an agile organisation? And what exactly do they do?
The agile workplace is becoming increasingly common. In a McKinsey survey of more than 2,500 people across company sizes, functional specialities, industries, regions, and tenures, 37 per cent of respondents said their organisations are carrying out company-wide agile transformations, and another 4 per cent said their companies have fully implemented such transformations. The shift is driven by proof that small, multidisciplinary teams of agile organisations can respond swiftly and promptly to rapidly changing market opportunities and customer demands. Indeed, more than 80 per cent of respondents in agile units report that overall performance increased moderately or significantly since their transformations began.
These small teams, often called “squads,” have a great deal of autonomy. Typically composed of eight to ten individuals, they have end-to-end accountability for specific outcomes and make their own decisions about how to achieve their goals. This raises an obvious and seemingly mystifying question for people who have worked in more traditional, hierarchical companies: Who manages in an agile organisation? And what exactly does an agile manager do?
The answers become clear once you understand that the typical agile company employs a dynamic matrix structure with two types of reporting lines: a capability line and a value-creation line. Nearly all employees have both a functional reporting line, which is their long-term home in the company, and a value-creation reporting line, which sets the objectives and business needs they take on in squads.
In agile parlance, the capability reporting lines are often called “chapters” and are similar in some ways to functions in traditional organisations (you might have a “web developers” chapter, say, or a “research” chapter). Each chapter is responsible for building a capability: hiring, firing, and developing talent; shepherding people along their career paths; evaluating and promoting people; and building standard tools, methods, and ways of working. The chapters also must deploy their talented people to the appropriate squads, based on their expertise and demonstrated competence. In essence, chapters are responsible for the “how” of a company’s work. However, once talent is deployed to an agile team, the chapters do not tell people what to work on, nor do they set priorities, assign work or tasks, or supervise the day-to-day.
The value-creation reporting lines are often called “tribes.” They focus on making money and delivering value to customers (you might have a “mortgage services” tribe or a “mobile products” tribe). Tribes are similar to business units or product lines in traditional organisations. Tribes essentially “rent” most of their resources from the chapters. If chapters are responsible for the “how,” tribes are responsible for the “what.” They set priorities and objectives and provide marching orders to the functional resources deployed to them.
This article was originally written by Aaron De Smet who is a senior partner in McKinsey’s Houston office, and full credit goes to McKinsey, who published this article over a year ago. This article has been reprinted for the purpose of education.