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Agile Operating Model

Agile Transformation: Top-down vs Bottom-up

In this article:

What it means when we say ‘top-down’ or ‘bottom-up’. >
Top-down Agile Transformations – Pros and Cons >
Top-down Agile Transformations – The Pros >
Top-down Agile Transformations – The Cons >
Bottom-up Agile Transformations – Pros and Cons >
Bottom-up Agile Transformations – The Pros >
Bottom-up Agile Transformations – The Cons >
Benefits of a hybird model >

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In this article we look at the differences between a top-down vs bottom-up approach with agile transformations. We will review the pros and cons of each approach.

When you begin an Agile transformation, it’s important to understand where to start. Where to start will depend on your organisation. Each organisation is completely different in terms of culture, outcomes, goals, leadership support, tools, and overall organisational health. A myriad of factors impacts the positives and negatives for both top-down and bottom-up agile transformations.

What it means when we say ‘top-down’ or ‘bottom-up’.

The top-down agile transformation typically addresses the entire division or the entire enterprise at once. Such transformations take longer to prepare (for larger organisations the preparation could take more than a year).

During that period, a comprehensive org redesign is performed. Then the organisation is prepared for the implementation of an Agile Operating Model.

Nate Nelson, the ADAPTOVATE MD in USA says, “In a top-down transformation, you have an opportunity to align leadership. You can communicate a clear vision. You build an operating model to get you to your key results along the way. (We like to set those outcomes on a quarterly basis). It may take a little longer to do the upfront design, but you have the opportunity to scale faster, if it’s done right.”

The bottom-up agile transformation, on the other hand, is a stepwise approach where one or more pilot teams are launched first. These pilot teams allow you to test the new approach and adjust it to the specifics of the organisation before scaling-up.

So, which one is right?  Both. That is, depending on what’s required.  In fact, in some cases a hybrid model can be used.   

“Successful agile transformation needs to have a multi-pronged approach: Down from the top, up from the bottom, and across the middle. There needs to be alignment between leadership, management and individual contributors. A lack of understanding or resistance at any of those levels will impede the progress of the transformation,” says Karen Chan, senior consultant in our Toronto office.

TOP-DOWN AGILE TRANSFORMATION – PROS AND CONS

For the top-down agile transformation a longer period of preparation is followed by a relatively short deployment.  Then almost overnight the entire organisation adopts new ways of working. Silos are brought down and value creation resulting from the new operating model is unlocked across the entire organisation.

From our experience on many client cases, many (but not the risk-averse) large organisations go with top-down.  “There is a strong case to be made that successful agile transformations are leadership led. The leadership team align on the case for change and the “why” and create a mission and strategy which is cascaded to the organisation so that there is a shared understanding from top to bottom,” explains Rachna Verma, a senior consultant in Sydney.

KEY BENEFITS

Most staff listen to leaders, right?

It makes sense.  As Andy Koh, our project lead in Singapore explains, “The biggest benefit of a top-down agile transformation is the tendency for staff to listen to their leaders. The staff attempt to action on what they envision for the organisation. The barriers to obtaining buy-in further down the organisation is reduced by the very nature of the large hierarchical structure companies have.”

Another key benefit of this approach is that it creates more momentum behind the transformation. The entire division or organisation is involved in a big-bang style event – and delivers faster enterprise-wide results through faster adoption.

Slav Koziol, our project lead in Europe explains, “Ways of working are uniform across the organisation from day one and there is less uncertainty about when and how the change will be implemented in different parts of the organisation.”

Successful top-down transformations require strong executive-level sponsorship (typically CEO led). They are driven by ambitious enterprise-level business objectives where speed of transformation and a radical, disruptive change in ways of working, talent utilisation or organisational culture is a priority.

This could also include company turnaround, rapid response to major competitive threat or adjustment to new regulatory environment where a hard regulatory deadline is a major factor for the business going forward.

Further benefits include:

  • leading by example
  • standardisation of opportunities
  • adequate funding for necessary Agile Transformation tools and training etc
KEY THREATS

The top-down approach, however, carries a significant amount of inherent risk. Here are a few cons for top-down Agile transformation

  • Longer preparation phase and large-scale implementation pose a significant challenge and require adequate resourcing and a disciplined approach to be successful
  • Another con is that the Agile transformation is led by those who are not closest to the work and therefore might not know the best route forward for transformation. (e.g. shoehorning a team into Scrum when they would work better as Kanban, or an organisation into Scaled Scrum when they really need LeSS or SAFe)
  • “Command and control” style “agile” transformation might be an outcome
  •  Those who are closest to the work might not be involved as influential stakeholders, making the adoption less “sticky”

BOTTOM-UP AGILE TRANSFORMATION – PROS AND CONS

As mentioned earlier, bottom-up Agile Transformations see pilot teams rolled out first.

The teams that come next will adopt slightly improved ways of working that incorporate all the learnings gained in the first step. This way, each next wave of teams will be able to utilise the learnings of previous teams and avoid their mistakes.

That is: Bottom-up transformations lean towards the concept of letting decisions be made where the information is.

Singular teams or projects can start strong and become the shining beacon of success for the rest of the organisation to follow. When individual teams and managers are empowered to make decisions based on experience and current data, there is a high probability they are the right decisions.

KEY BENEFITS OF BOTTOM-UP

The test-and-learn and constant improvement approach allow us to decrease the risk of the transformation, however, at the expense of duration of the entire journey.

“This approach is a gradual transformation rather than a shock to the entire organisation,” says Slav Koziol.  “It allows for tracking the increasing complexity of the journey and immediate reaction where required,” he explains.

For these reasons it’s widely more popular with large traditional risk-averse organisations, where solving a contained immediate business problem is typically the starting point while a broad change is not necessarily the ambition.

One major benefit of this approach is that once the initial teams demonstrate impressive results, they become a topic of interest for the entire organisation which helps build buy-in for a wider transformation journey.

Other benefits include:

  • those who are closest to the work have deciding influence on implementation, strategy, etc
  • Adoption is generally more “sticky” due to ownership from those who are performing the work and bearing the brunt of most of the transformation
  • Transformation is generally faster at the team level
  • Highly effective for small organisations or a few teams in an organisation to spin up quickly and implement business solutions, solve problems and produce results
KEY THREATS OF BOTTOM-UP

What we see happen at many organisations, however, is a bottom-up approach where new ways of working are piloted within one or more organisational units.

After the initial approach is tested and refined and the first Agile teams demonstrate results, a tipping point is reached. At this stage it is often more beneficial to move the entire organisation to new ways of working to unlock the full value creating potential than to convert further individual teams.

A decision is made to apply the top-down transformation approach and implement a full Agile Operating Model for the division or the entire organisation.  Thus, it makes sense to have a hybrid model where both methods are used at different times of the Agile Transformation.


Staff do not know how


The pro of a top-down transformation can potentially become a major con when the gap between direction and action is not bridged. Once the big picture has been painted in bright colours and shown to the entire organisation, the effort of translation from strategy into tangible objectives and subsequent smaller outcomes can very often be underestimated.

Andy Koh explains, “If staff do not know how to translate leadership direction into actionable plans and behaviours, the entire initiative can falter.”

Staff struggle to link immediate work with organisational strategy

The danger in bottom-up transformations can appear when successful agile teams struggle to align with the strategic goals of the organisation. Pockets of agile transformation success suffer from lack of collective leadership buy-in and alignment to important strategic value drivers.

Both approaches can work overall, both top-down and bottom-up agile transformations have equal chances of success as a starting point. Along the transformation journey, the key is learning and adjusting to find the right balance, just like the agile values we adore.

Further cons include:

  • Standardisation across teams and the organisation is generally an afterthought making reporting across teams difficult and scaling across the organisation painful
  • Potential lack of management understanding and support for transformation necessities like tooling, training, etc 
  • Potential lack of clear-cut outcomes and goals of agile transformation creates ambiguity across teams for the ultimate reason for agile transformation

BENEFITS OF THE HYBRID MODEL


As discussed earlier, using both top-down and bottom-up at different times of the journey can be beneficial.   Where to start will be key, and specific to the organisation.

In a bottom-up transformation, there are key opportunities to create proof points within the organisation that leads to momentum. That’s great, but at some point, you will likely need more of a top-down design to scale.

Nate Nelson agrees.  He says, “My recommendation is a hybrid model. Incrementally design in a top-down way, put the fundamental pieces in place, and then start “piloting” to build momentum in parallel.

Both approaches can work overall, both top-down and bottom-up agile transformations have equal chances of success as a starting point. Along the transformation journey, the key is learning and adjusting to find the right balance, just like the agile values we adore.


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