What happens when an organization sets up agile units with flatter hierarchies and fewer predefined processes than in the rest of the organization? First, the desirable: people have more decision-making leeway. But there are other consequences: Where agile units and the “rest of the organization” work together, contradictory expectations may arise. Suddenly, it becomes the personal responsibility of individual members to ensure that the interfaces work. This can lead to problems – as this case from a corporate group shows.
Agility leads to new business models
The setting for this development is a corporate group in the automotive industry, which was studied by the two authors as part of a research project (cf. Gebauer/Weber, 2021). As in so many corporations, the central challenge is that the main revenue is still generated by the existing but declining business model. The pressure to develop new business models is high. In this context, a plan to build new agile units which focus on finding and developing new business models is devised. After the initial Scrum projects are established in the IT area, agile organizational modes start to get support from the top of the organization. The executive board undertakes a learning journey in Silicon Valley: There, they want to get to grips with zdigitalization trends. In retrospect, this appears to be the “tipping point”: Upon their return, the board gives the green light for the expansion of agile organizational modes. Almost a quarter of the workforce is to work in agile teams in the future.
Enabling agile working – without abolishing hierarchy?
What is interesting about the implementation strategy is that the structural changes are discussed but then deliberately left out. The original idea of attaching the agile teams to the existing structures was not realized. Instead, they are arranged in a project structure. This means that the hierarchical communication channels remain in place while a hierarchy-free space is created in the agile units. For the team members, this means that they are part of both the line organization and the agile organization. Project organization alongside line organization is not new in the company. What is new, however, is the idea of so-called self-direction. In our example, this refers to the end-to-end responsibility of the agile teams and the non-intervention of managers from the line organization regarding content direction and correctness of the teams’ results. Only the agile teams themselves are responsible for the results and how they produce them.
However, this structure leads to problems at various junctures. For example, some managers and employees work together simultaneously in both the line organization and in an agile, i.e., hierarchy-free team. The resulting coexistence of hierarchical communication paths and expectations of work in the agile team is contradictory for managers. They have difficulty changing well-established communication paths between themselves and employees. In addition, managers who embody the interface between the agile team and the line organization face a tricky challenge: According to the hierarchical communication paths, they are still responsible for decisions as managers. The agile teams, on the other hand, are expected to bear end-to-end responsibility.
The agile teams become dependent on goodwill at the interface
The consequences of decisions in the teams encroach on the responsibility of the managers at the interfaces to the line organization. In our example case, the result is a very heterogeneous picture. Since there are conflicting specifications at the interface to the agile organizational modes, the people involved must inevitably decide how to deal with them situationally. Consequently, tensions are not dealt with organizationally but personally. This increases the uncertainty of all involved. Especially in tense situations, it is not certain which expectations will be formally enforced: In one case, after a team had spent six months developing a solution for a reorganization of its own unit in agile sprints, the management group seized control of the project because the proposed solutions did not meet its expectations. The reorganization became a matter for the boss again and was announced after it had been developed.
Where the organization has not yet found an answer to the contradictions, individuals must act. The responsibility for dealing with or enduring areas of tension is seen as lying primarily with the individual managers. This plays out with varying degrees of success because leaders’ strategies depend on individual skills and preferences. The implementation successes in the teams, therefore, also depend on the ” capabilities and personality of the individual managers” and are not comprehensive but “insular” according to the observations of an HR manager.
How do the results get back to the line organization?
If the work results of the agile teams are to be continued in the line organization, the question of end-to-end responsibility arises more acutely. If one takes the mission described above for the agile teams seriously, they define their own work mission. However, the work results are highly relevant for the line organization – after all, they are to be transferred into the work routines of the line organization. This circumstance is taken into account in the agile teams: Product owners integrate stakeholder expectations, and in reviews, the stakeholders provide direct feedback on whether the results of a sprint meet expectations. Nevertheless: Qua role in the hierarchical communication paths, neither the product owners nor other members of the agile team are responsible for the results. Since the original idea of growing agile teams has been discarded, line organization executives remain responsible.
It was precisely in the transfer of results from the agile teams to the line organization that it became apparent that end-to-end responsibility was not formally enforceable. This was because how these results were transferred was not (yet) formally regulated. Therefore, bridgeheads were needed who would continue to represent the original idea and ensure that new impulses were not normalized according to traditional logic: “It is difficult to take over products or increments that have been worked on in agile forms of collaboration and are then completely transferred to the line. Optimally, someone who worked on the development continues,” was the observation of an agile coach who had accompanied several teams.
The organization needs to ease the burden on its staff
Where agile structures are implemented, similar to our example, it is the rule rather than the exception that the responsible bodies intervene in the work results. After all, they also have to answer for them later. Where this is practised, self-control and end-to-end responsibility are either abandoned – or left to the personal responsibility of the members. Accordingly, the members of the agile teams and also the line organization have to deal with the results in a dynamic and uncertain manner. So members wonder: which organizing principle applies when? What expectations can we use as a guide?
Sustainable agile solutions rely on clear formal structures at this point. As much as this sounds contradictory to the idea that agility should mean “fewer formal rules,” it is precisely this that first stabilizes the work of the agile teams because the staff is relieved and the power of the line organization’s executives is limited. The following questions can be helpful here:
- What criteria characterize a good result?
- How do you create certainty of expectations that goes beyond the hiring of individual managers?
- How do you integrate expectations from the line organization well?
- How do the agile teams nevertheless retain control?
Thus, where line organization and agile ways of working meet, more rules are indeed helpful to enable working with fewer rules elsewhere.
This article is based on a contribution in the edited volume “New Organizing”, Groth, Krejci & Günther: 2021, Carl-Auer Verlag.