IBM's Agile approach to working - exemplar or warning to others?

Profile picture for user catheverett By Cath Everett August 21, 2017
Summary:
IBM says it is attempting to transform its business by adopting Agile ways of working across the organization. Cath Everett explores what it is doing, why and how likely it is to succeed.

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Earlier this year, IBM, one of the pioneers of remote working, caused shockwaves around the industry by apparently demanding that thousands of its North American employees start working in-house again or lose their jobs.

A number of month’s later, the company’s vice president of human resources Sam Ladah posted a blog attesting that the media had got it wrong and what it was actually doing in certain unspecified areas of the business – although they appear to include marketing, design, procurement and large parts of the IT department  - was restructuring itself into “small, self-managed, multi-disciplinary teams working together in physical spaces”. Ladah continued that these teams would be:

Armed with data and analytics and continually generating and refining ideas based on real time feedback. These self-directed teams break work up into manageable pieces, prioritize what needs to be done first and identify obstacles early so they can be overcome.

In other words, the company’s teams would use Agile approaches not just as a methodology for developing software but as “an engine for business transformation”. To this end, IBM has spent $380 million in setting up a number of “agile hubs” in six strategic centres in Austin, Texas, San Francisco, Atlanta, New York City, Cambridge, Massachusetts, and Raleigh, North Carolina.

While the number of employees returning to the computer giant’s offices will still be less than 2% of its global workforce of 375,000, the move will disproportionately affect North American staff, some 20% of whom currently work from home, as the majority of employees elsewhere apparently already work either in an IBM office or at a customer site.

As for the rationale behind the move, Ladah sums it up as being intended “to encourage interaction and collaboration” – and presumably boost revenues, which fell for the 21st successive quarter during the second fiscal quarter of 2017.

So just what is going on here? Is IBM trailblazing new ways of working once more or is the use of Agile for business transformation purposes actually more common than you might think?

Business transformation

According to Cain Ullah, chief executive of software consultancy Red Badger, while agile is still mainly used within IT departments, some large corporates such as General Electric and UK supermarket chain Tesco have been investing heavily in the methodology for business transformation purposes. The same is true of some big banks, retailers and media companies. This means that, while IBM’s tack is not unique, it is far from ubiquitous either.

Matt Crosby, a senior client partner at management consultancy Korn Ferry Hay Group (KFHG), explains:

We’re seeing a lot of customers that are curious but not many that are organising their way around it. Agile is being used in some instances for business transformation, but we see it being used much more where there is some kind of purpose such as multi-disciplinary projects – and some of these are actually giant, year-long initiatives that are worth hundreds of millions of pounds. So they’re not necessarily small and they could be changing the whole way the organisation is going to interact digitally with customers, which means they end up being big transformational projects in their own right.

Harry Metcalfe, managing director at software consultancy dxw, agrees, adding:

There’s widespread recognition that Agile processes are useful for more than tech and that a successful deployment should be broader than just IT. But in many cases, Agile has not been that broadly introduced even in the IT department. The thing is that, going on a training course to understand it doesn’t mean you can just go back to the office and do it. Lots of people are trying and going in the right direction and there are pockets of really good practice. But Agile is cultural and methodological - and cultural change takes a long time.

Consulting partner at Deloitte UK Phil Neal, on the other hand, does not believe that Agile is necessarily a suitable approach for all areas of the business anyway. In his view, the technique comes into its own in complex, project-based environments, generally in the digital world, where it is difficult to plan or predict an outcome. But it is less suitable for steady-state, more “physical” situations.

However, while Neal does not expect Agile to take over the world, possibly ever, he does anticipate that it will become increasingly prevalent alongside more traditional ways of running the business. This will lead to the creation of new, hybrid models of working. He explains:

It’s not about world domination for Agile - it’s about appropriate use. Many established ways of working will endure, but over the next five years, a lot of organizations will also invest substantial amounts of money into making their business model more Agile than it is today.

On the right track?

The thing is that, if implemented properly, the methodology’s ‘Fail Fast, Fail Often’ philosophy encourages experimentation and innovation in an increasingly digital world where speed-to-market and meeting customer expectations swiftly are key.

But is IBM – which refused to speak to us in order to clarify its approach – currently on the right track? Red Badger’s Ullah believes that only time will tell:

IBM is talking the right talk, but it remains to be seen if it can walk the walk. It’s talking about taking four years to move to an Agile way of working, which sounds about right, but the only way to know is if it delivers industry success. A key component of Agile is Kaizen, which is about continuous improvement. So four years should be mission complete, but in theory we should see value much earlier. They’ll ideally create small Agile teams, scale them and then get better at it and, if they do it correctly, there should be an immediate impact internally.

Ullah also points out that creating Agile hubs “is the kind of thing I’d expect to see” in that it gives people the freedom to iterate, make changes and also make mistakes. But adopting this approach will not be sufficient in and of itself, he believes:

It’s necessary, but not enough. You can’t do Agile in cubicles as you need a collaborative space to focus on customer needs rather than specs. So I’m excited to see how the IBM situation will work out. The danger, of course, is that little changes as the blog doesn’t mention culture once, but cultural change is the key.

KFHG’s Crosby, meanwhile, believes that Big Blue has two tasks ahead. The first is to be clear about its strategy and to harness Agile ways of working in order to deliver on that strategy.

The second is to acquire and develop a workforce that can operate in an Agile way – hence IBM’s decision to invest $1 billion in training and development programmes for its US workforce over the next four years and to introduce a so-called ‘New Collar’ form of recruitment. This approach involves not just hiring graduates but also individuals without degrees in sought-after skills areas such as cloud computing, cybersecurity and digital design.

My take

IBM is a big beast and, despite its current financial woes, there are few other companies in the world of either its size or reputation. So what it does is important in a market sense, and it certainly has the resources to put genuine substance behind its words. Writ large, it is what many organizations are doing, or talking about doing, elsewhere so it will be interesting to look back in four years time to see how the vendor has managed to get on.