Chief Information Officer,
Jeff Smith arrived at IBM just over one year ago, but his mantra—to create an agile culture across Big Blue—is already driving fundamental change. Using the collective wisdom of IBMers to build a new, more collaborative innovation model, Smith’s organization is creating loosely coupled, tightly aligned teams that combine the work ethic of a startup with the muscle of a large enterprise. As IBM’s CIO, he brings decades of experience steering sophisticated technologies to market. Formerly the CEO of Suncorp, Smith credits running agile at scale in the Australian financial services company as a major factor in its success. Now he hopes to bring the same operating esprit to IBM, a far larger and more diverse organization.
What does it mean to have an agile culture and why do you feel having one is so important to an organization like IBM?
An agile culture is a combination of leadership disciplines that govern how to form teams and distribute work, how to get teams to operate effectively and how to measure what matters and prioritize. Three precepts guide our approach to agile: Clarity is more important than certainty. Course correction is better than perfection. And self-directed teams are better than command and control. Success requires strong leadership and collaborative practices. The goal is to blend the innovation edge of the best small companies with the scale of IBM.
How do you scale innovation without scaling overhead?
You need to be really clear and disciplined in the way you form and manage your teams. With large organizations, the secret is taking great big groups with huge programs and breaking them into small teams. At IBM, our on-the-ground teams are called squads, small groups of 7-10 people. Multiple squads form a tribe and multiple tribes form a domain, each focused on a common problem set. That’s how you get the scale benefits of problem-solving while still allowing teams to work autonomously in loosely coupled, but tightly aligned groups. That construct works because unlike the command and control model of old, small teams are empowered to make their own decisions. They are constantly throwing things at the wall and teaching themselves. With agile, you have multiple teams doing work concurrently, trading knowledge, rapidly finding out where the errors are and figuring out what works. It is far more efficient than creating project management office overlays that are, at best, proxies for effective collaboration and teaming.
What makes agile more effective than Lean or other management disciplines?
I believe in mixing and matching the best methods and creating the most robust curriculum we can. Our version of agile, for example, comprises roughly 30 different processes. About half are traditional agile disciplines, but the remainder is a combination of Lean, design thinking, Kanban and others. Without Lean, for instance, I don’t think our squads would be nearly as productive. Likewise, design thinking methods provide enhanced visual control systems that help with all phases of the design process and the user experience in general.
Agile is not always well understood beyond the realm of IT. How can one make agile relevant to non-technical functions across the organization?
Agile may have started in software, but to think of it as a technology tool is really a misnomer. It’s a leadership and collaboration methodology. I came to IBM from Suncorp and we used agile across our shared services operations, in finance, in real estate, in procurement and in a host of other functions. Here at IBM, two-thirds of the agile practices we teach and espouse have nothing to do with technology. And non-delivery functions are the groups most clamoring to deploy. The emphasis on measuring what matters, prioritizing on business value, and continually refining and testing speaks to how we see ourselves in the market, as leaders and innovators, and I think that’s why it’s resonating so broadly.
Agile workflows have expanded out of IT and into all business matters requiring prioritization, Credit: thinkstockphotos.com
Where have you experienced the greatest pushback?
One challenge is breaking out of the insular mindset that says “we know best.” It’s a mindset that many big companies fall into because they have been successful for so long. But companies that take a more outward focus tend to be more agile. They listen, learn and leverage. That external focus provides an important gut check, validating what works and allowing them to be on the alert for ideas and avenues that may work even better.
The cultural shift can also be hard. With agile, leaders take a coaching role. Their job is not to dictate what to do, but to eliminate blockers that hinder teams from designing and executing solutions themselves. That shift can be an uncomfortable one, especially in large organizations where managers have traditionally been rewarded for their span of control.
What are the hallmarks of an organization that has really hit its stride with respect to agile?
One is mastery in managing work-flow and backlog. Another is allowing squads to stick together. The third is being disciplined about measuring and reporting on velocity and throughput. That’s the way to manage productivity.
Is fatigue an issue? How can managers and teams sustain the discipline and keep it fresh?
The most energized teams are those that have been in place the longest. I’m not a fan of breaking teams apart and regrouping. Bodyshopping nearly always comes at the expense of productivity. Instead permanent teams build chemistry over time. At IBM, for instance, we’ve found that teams who stick together over a three-four month time double their productivity. They build good friendships and solve things at a better pace. That creates a virtuous cycle. The autonomy and empowerment is intellectually stimulating. Members know they’re adding value because we track velocity and throughput closely and they can see the results.
Over the last year, what have you been able to accomplish and where do you want to go in terms of realizing agile at scale?
We’ve built a strong Agile training program and we have a sophisticated deployment program in place. Our new Mac@IBM program for IBMers to transition to Apple laptops and troubleshoot at a very large scale was created using this approach and we’ve learned how to listen and solve problems better.
Looking ahead, true productivity gains come from changing the way you work. That’s where our focus is. We track our velocity by squad and we measure throughput at every level. That way, we know how much we’re getting through the funnel. Next year, I want our teams to budget by story point and budget by solution. The more business value we get into production quickly, the more revenue lift we’ll get. I haven’t seen anyone try this at scale. If we succeed, I believe it will be transformational.
Smith discusses the Mac@IBM program at the CIO Leadership Exchange, Paris, France, November 2015
What’s surprised you most?
I took my team to visit Pixar because they were the best company for managing Kanban and backlog. One thing the Pixar team imparted was the importance of diversity. They mentioned their teams include a number of musicians. At the time, I remember scratching my head and thinking “why in the world would they need musicians?” But Pixar’s leaders explained that musicians bring important complementary skillsets, namely practice rigor. They’ve grown up understanding that grim determination is part and parcel of success. Pixar wanted that kind of discipline on their teams. At IBM, we need to take a similarly broad-based view. That means hiring liberal arts graduates, artists and others from non-traditional backgrounds who have the temperament and training and skillsets that round out our own. That’s how we’ll innovate and grow.