Why Most Scale-Ups Fail to Scale Agility – and How to Get It Right
It is a curious inclination of human nature to address known problems only after their consequences have become painfully (and often irreversibly) apparent. We introduce additional security measures after an accident has occurred, we start exercising after our back has started aching and we invest in infrastructure only after traffic congestion has reached unbearable levels.
Ask a bunch of enterprise consultants specialised in lean-agile practices what type of companies are their primary clients in adopting scaled agile frameworks, and they will all tell you it’s the old, large and bulky corporations stuck in organisational structures that made sense before the steam engine was invented. If you then ask them (as I have more than once) what type of companies are the most likely ones to fail in adopting scaled agile frameworks, they will likely point to the same ones.
Rightly so too.
Scaling agility is harder when there’s no agility to scale
Going agile when you’re an ancient industrial mastodon so deeply confined in project management thinking that your phase gates were wielded by the blacksmiths of the early iron age and your Gantt charts were carved into cave walls by Neanderthal artisans is a bit like designing a whole society around burning fossil fuel and then, in the last century before the looming environmental collapse, deciding to gradually reduce carbondioxide emissions. Even the leading scaled agile framework SAFe states that the best time to start implementing scaled agility is when a company has reached the tipping point, beyond which glares the abyss of immenet doom (the framework uses slightly different wording).
While as an agile transformation consultant, I too am inclined to advise my clients against stepping into abysses of doom, as a former CEO of several tech start-ups and scale-ups I find it quite depressing to think that a company should have to venture as far as to the brink of failure before reverting to organisational practices that best fit its needs. Besides, however much I believe that adopting scaled lean-agile frameworks is a great way for large traditional companies to become more competitive in the digital age, there is another type of companies that need them even more.
However counter-intuitive it may sound, the type of company that needs a solid framework for scaling agility the most is an agile company that needs to scale.
I am talking about scale-ups, particularly in tech. These young tech companies were start-ups a short while ago. They passed the infamous Valley of Death where most start-ups end their journey, raised an A (perhaps even B) series and are now expected to grow at a pace that will make them a lucrative asset to sell to whoever wants to be the next big fish on their market (or who happens to be a fish and prefers to stay big).
Why scaled agile frameworks are ideal for scale-ups
Apart from the obvious phonetical fit, the advantages are several:
- Almost all tech startups already use agile methods – at least in product development. They don’t need to be convinced why they are better than waterfall projects with phase gates. Many of them have never even heard of waterfall projects.
- Start-ups already have the growth mindset. They wouldn’t have made it through that Valley of Death if they didn’t. It’s in their DNA to learn from mistakes and adapt quickly.
- Their processes and structures are still young and fragile (and mostly non-existent). While to managers in large traditional corporations’ frameworks like LeSS or Nexus might appear a bit too much as fuzzy mumbo-jumbo, managers in start-ups, who are used to constant chaos, tend to appreciate the structure and stability such frameworks bring.
- Scale-up don’t need scaled agile frameworks to fix organizational dysfunction, break up functional silos or untangle themselves from suffocating bureaucracy. They don’t have any of that! They need such frameworks to help them scale efficiently and to ensure that their rapid growth is controlled.
The SAFe framework boasts its ability to leverage the innovativeness and flexibility of the entrepreneurial network that every company began with, without eroding the functional hierarchy developed as the company grew big. The problem with doing so in a 50-year-old 30k+ FTE company is that their entrepreneurial network has typically gone extinct a couple of generations ago, so in order to be leveraged, it will first need to be revived by means no less sophisticated than extracting dinosaur DNA from a mosquito in an amber stone. It doesn’t mean it’s too late to implement SAFe or any other scaled agile framework in such a company. It’s just so much better to do it while that entrepreneurial network is still alive and kicking.
Why scale-ups rarely use scaled agile frameworks
As someone who has both led tech startups and scaled agile transformations in larger companies, I can think of no better point to implement a scaled agile framework than when a young tech company of 50 employees needs to ramp up to 200 in a year and quadruple its revenue. In fact, I see a great risk with not doing it. A development organization of 2-3 scrum teams with good scrum masters can usually self-organize quite well, especially if the distance to strategic leadership is short. Increase it to 5-6 teams and put the CEO into a corner office with a secretary barricading the door – and you’ll have total chaos before you can say PriceWaterhouseCoopers.
So why does it almost never happen? One reason is that many scale-ups are founder-led. And founders tend to have a type of personality and skillsets which are optimized for running start-ups (thereof their success), but not as fit for organized organizational scaling. This is why many venture capital firms insist on replacing the management after buying the majority stake in a successful startup.
However, in my experience, the type of management usually trusted by venture capital firms tends to be a lot more proficient on the commercial side than in understanding organizational frameworks that best fit software product companies. An understandable priority, given that the VC expects you to triple your turnover every quarter while keeping your Customer Acquisition Cost to a minimum. As a result, many successful startups step into the same trap as their prehistoric industrial ancestors did a century ago, building up functional hierarchies that slow them down more and more until a decade later they too need to be rescued by a bunch of agile coaches when balancing on the tipping point of that same abyss of doom.
How scale-ups should approach scaled agile frameworks
So, what are scale-up leaders and venture capital firms to learn from this? Here’s some advice I’d like to give leaders of scale-ups and their shareholders.
Start scaling agility early. Start scaling your agile organization at the same time as you start scaling your business. It doesn’t matter if all you have is just two development teams, a pack of sales reps and an overworked CMO/Social Media Manager/Head of Diversity and Inclusion. If your goal is to scale fast and you want to stay agile – put a scaled agile framework in place and let the organization grow within it.
Be consistent. If agility is already working for you, you’ve figured out your scrum and are releasing continuously, don’t assume that you need to change that when your organization grows. It’s an achievement to be cherished and nurtured. Use the same approaches in the new units. A strong agile mindset and best practices can be just as powerful in sales, marketing and recruitment as they are in R&D, and with the right scaled agile framework you’ll be able to connect it all to work as one organism that will give the xenomorph an inferiority complex.
Stay proactive, not reactive. Don’t wait for dysfunction or bottlenecks to become evident before implementing change. The best time to structure an agile scaling framework is before you’re overwhelmed by the challenges of rapid growth. It may seem like a distraction from the hustle of daily demands, but it will pay off in a smoother, more cohesive scaling journey.
Invest in agile expertise early. It can be tempting to focus all funding and talent acquisition on sales, marketing, or product development, but agile expertise is key to ensuring your teams grow effectively together. Whether it’s an experienced in-house coach, a consultant or a COO/Head of Growth who is trained in scaled agile frameworks. Investing in someone who understands how to navigate the growth from an agile startup to a (still agile) market leader can prevent costly pitfalls down the line.
Build an organizational culture that aligns with agility. Scaling agile is not just about adopting new processes; it’s about fostering a culture that supports continuous learning, experimentation, and collaboration. This usually comes naturally to successful early stage start-ups (and is, to a great extent, what makes them successful), but venture capital firms (especially those with short investment horizons) don’t always appreciate the value of an agile culture enough not to thwart it with aggressive short-term financial targets, incentivising a culture that makes growth unsustainable in the long run.
Do this, and the growth journey on the organisational side will feel more like scaling a hill than a mountain. As it should, because – in all honesty – mountains don’t really need scaling. They’re big already.
