Introduction

“My role is that of a catalyst”, wrote Ricardo Semler in Maverick, “I try to create an environment in which others make decisions”[1]. Semler’s statement may appear simplistic when considering the deep changes that turned the Brazilian machine manufacturer Semco into a pioneer of entrepreneurial self-organisation: from decreasing the number of management roles, to empowering local decision makers, and the transparency of all relevant business data up through employee profit sharing.

For me, Semco´s evolution is one of the most spectacular examples in the history of self-organisation. It seems to be a worthy opening for my new book, which includes many sensational stories. Semler’s catalyst statement emphasizes three core elements of self-organising enterprises. First, it emphasizes the importance of the environment, or context, in which the work occurs. Second, it emphasizes the role of decision making through which we continuously re-organise ourselves. And third, it emphasizes that the decisions are made by the subject matter experts instead of their superiors.

The changes in Semler’s own role over the course of the company’s history are similarly spectacular. After many years as CEO, he withdrew himself from the daily business of Semco. “Now I am just another counsellor. But my job hasn’t changed. I try to make things happen, like a catalyst.”[2]

It’s interesting that Semler affiliated his management and counsellor role with the same metaphor. On the one hand, this double metaphor contains, like brackets, an important period in Semco’s evolution. On the other hand, Semler himself merges two areas that are the focus of this book. Management and coaching are seen as essential services for successful business development. Both services are necessary for developing a work system that is as agile as possible to respond to the rapidly changing market. I believe self-organisation is the foundation of this kind of entrepreneurial responsivity. If we are not able to create a supportive environment, encourage people to manage themselves within clear boundaries, and trust that they will do their best, achieving success will be extremely difficult.

Many companies dream of business agility, but this is impossible to achieve without self-organisation. Clever concepts and management rhetoric are not enough. It needs profound understanding, flexible forms of interaction, and enough stamina for the long journey of incremental improvement. Luckily, self-organisation today is no longer rocket science. There are enough enterprises that we can learn from to find our own way. Semco is only one example of such an enterprise, and you will learn about many others in this book.

The question remains as to why management and coaching should play an important role in self-organising enterprises. What exactly do managers need to do to create such an enterprise? What should the coaches concentrate on to inspire this creation? And which unique opportunities result from combining leadership and coaching?

I answer these questions in the four parts of this book. Part I deals with a concept of management that can cope with the challenges of the agile world. I attempt to dispel some myths about agility and self-organisation. After that, I will refer to several topics from my last book, Leading Self-Organising Teams [3], and will show you, among other things, how such teams can continue to grow.

In Part II of this book, I go beyond the individual teams and methods to examine enterprise-wide self-organisation. To achieve this, we can refer to eight design principles, and each will be examined in their own chapter:

1. Customer First
2. Visual Work Management
3. Fast Feedback Loops
4. Customized Decisions
5. Bold Experiments
6. Lean Organisational Structure
7. Distributed Management
8. Continuous Training

A broad spectrum of practical examples from various industries, contexts and countries should help you to pursue your own change initiative without having to rely on standardized frameworks.

Part III of the book explains why I view coaching as a core skill for such initiatives. First, I will give a solid definition of coaching: What is coaching? What distinguishes this kind of professional help from other forms of support? And what does it have to do with self-organisation? In addition, I introduce four types of support that now belong to the daily business of self-organising enterprises: peer consulting, peer feedback, and coaching managers as well as managers as coaches. Real-life examples help to convey a practical understanding of these concepts.

In Part IV, I focus on the idea presented at the beginning of this foreword from Ricardo Semler. I have even dared to create a short manifesto for self-organising leadership in which I propose that management and coaching should go hand in hand. With regards to this special partnership, I outline a different way of leading and share some personal experiences.

Who can benefit from these four parts? The subtitle of the book, "Management and Coaching in the Agile World", focuses on two target groups. The first target group is line managers who want to create an agile enterprise and know, or at least have an idea, that they need self-organisation and a fresh understanding of management. The second target group is coaches who support such a transformation by using their specific subject matter expertise and process knowledge. It would be even better when a coach reads the management part of this book, just as a manager might dig deeper into the coaching part. Managers are playing an increased role as internal coaches and mentors, and the concept of a sparring partnership between managers and external coaches encourages out-of-the-box thinking.

Because this book advocates leadership at all levels, it has something to offer to many other members of the organisation as well—whether they be technicians, product managers, project leaders or human resources specialists. The distribution of management responsibilities that characterizes a self-organising enterprise, the delegation of decision-making authority, or the peer coaching and feedback are practices that everyone can benefit from.

Why should you keep reading? What do you get out of it? Essentially, you will learn how to take better care of your customers, give your employees a more satisfying work life and at the same time make a respectable profit. Not a bad deal, if you ask me. Specifically, I will describe:

• How you, as a manager, can concentrate on the design of a work system that will be fit for the future. I'll show you how to establish such a system so autonomy is gradually expanded. To achieve this, you will need decision-making policies, fast feedback loops and a smart distribution of traditional management responsibilities.
• How you, as a coach, can help cultivate self-organisation by providing helpful impulses. A careful balance between expert and process coaching is as important as the ability to support, as well as challenge, the managers. For me, one of the obvious consequences of agile transformation is that managers themselves gain more coaching competencies.
• How you as a subject matter expert can create an open atmosphere with your colleagues, but also with management, and take full responsibility for those work areas for which you are accountable.

These three value propositions reinforce my argument that self-organising enterprises are a catalyst for leadership capabilities. However, not all employees are equal in a self-organising environment. If anything, the business value of self-organisation lies in the ability of not only respecting, but also deliberately utilising, the employees´ differences in experience, skill levels and personality. The agile coordination of these differences comprises the lifeblood of self-organisation.

Maybe all of this sounds familiar to you. If that is the case, I hope that insight (and not the devil) lies in the details. Even more, I hope the details in this book will help you with your own organisational design..

It won't surprise you that I didn't invent self-organisation. There are several pioneers that this book refers to. I would like to specifically mention the inspiring work of Brian M. Carney, Isaac Getz, Gary Hamel, Dominik Hammer, Stefan Kaduk, Frederic Laloux, Dirk Osmetz, Hans A. Wüthrich, and the Corporate Rebels Joost Minnaar and Pim de Morree.

Inspiration is also the keyword for the insights I got from the books of practitioners like Hermann Arnold, Corinna Baldauf, Timo Capriuoli, Alexander Gysinn, Klaus Hoppmann, Bodo Janssen, Detlef and Ulrich Lohmann, Tim Mois, Lee Ozley, Ricardo Semler, Rich Teerlink and Götz Werner.

A special thanks goes to all my partners from the various enterprises covered in this book: Sandra Altnow, Gerhard Andrey, Michael Beyer, Peter Hollenbeck, Katrin Dietze, Hans Gruber, Jutta Handlanger, Erich Harsch, Thijs Havenaar, Achim Hensen, Cliff Hazell, Holger Karcher, Marijke Kasius, Werner Kohl, Stef Lagomatis, Benno Löffler, Ulrich Lohmann, Sönke Martens, Markus Monka, Thu Pakasathanan, Matthias Patzak, Clemens Riedl, Arne Roock, Hartger Ruijs, Michael Rumpler, Peter Stämpfli, Frank Schlesinger, Alexander Schley, Markus Stelzmann, Eva Stöger, Nicole Tietz, Stefan Truthän, and Carina Visser.

I would also like to thank these brave people who worked through several versions of this book and significantly influenced it: my brother in agile arms Klaus Leopold, my editor Christa Preisendanz, my translator Jennifer Minnich, my dear friend and intellectual companion Georg Tillner, and last but not least Sabine Eybl, my business partner and love of my life.

I dedicate this book to our two daughters — with the hope that they´ll find more opportunities and less restrictions both in society in general and in the business environment in particular.

Part II Scaling Self-Organisation

"What do you mean with scaling?" my younger daughter wanted to know as she was glancing at the preliminary table of contents. "It means expanding the concept of self-organisation, ideally to all areas of an enterprise", I answered. "That means there are just more employees and teams that decide for themselves what they do?" "Well, yes and no", I responded, "what you say is true, but it also isn't that simple."

The blank look my daughter gave me at the end of this fleeting visit was what I would call a typical reaction. The topic of scaling can easily cause confusion. It is complex, has a tendency to bewilder us, and eliminates simple cookie-cutter solutions such as "double the number of teams", “install Holacracy” or "implement Agile methods in all departments". Despite all the flexibility that goes along with self-organisation, it is not a mix-and-match collection that you can combine however you like. Self-organisation is, and remains, challenging. A supporting context, clear boundaries, a good mixture of diverse people, and an open exchange between them are essential factors for its success.

These fundamentals remain the guiding principles if we talk about self-organisation across the entire enterprise. But what is needed to develop the existing potential within the organisation? Where do we begin if we want to combine the capabilities of all employees in the best way possible? And which methods have proven themselves worthwhile?

Just like at the team level, certain myths at the organisational level distort the more reasonable answers:

• The myth that an agile enterprise automatically results from the sum of all agile teams.
• The misconception that we can use methods for agile software development in every department.
• The assumption that we can anchor self-organisation within the enterprise by using a blueprint model fresh off the drawing board.
• The illusion that agility can be ensured by assigning special roles to employees.

Without question, business agility is a hot topic at the moment. Faster, more lightweight, more flexible is the creed for all companies who want to respond to the current challenges. If even the CEOs of industry giants such as Deutsche Telekom are concerned about agility, they appear to have set the course for a better future. At the same time, it cannot be ignored that applying agile means nothing more than local initiatives in many cases. Software Development increases their output while the chaos in the rest of the company worsens. Production drastically reduces their cycle time, but the total time to market remains unchanged due to the overall coordination issues between departments. There are innovative ideas, but the fast feedback loops of design thinking are limited to a few experts. At the end of the day, none of our agile ideas changes anything for the customer at least not for the better. They may even have to wait longer for the promised products and services.

There appears to be an invisible barrier in many enterprises that reminds me of something written by Austrian poet Johann Nestroy: Thoughts are free—as long as they remain in the mind. Isn't it also true that agile initiatives remain free only as long as the initiative remains at the team level? Is it just a coincidence that agile initiatives remind us of Gallic villages where magicians are mobilized, but the enterprise remains firmly in the hands of the Roman empire?

Fact is enterprises are not made up of teams alone. More importantly, successful self-organisers apply more than one approach rather than believing there is a one-size-fits-all method that can deal with every challenge. Very few of the companies I looked at work with ready-made frameworks that just need to be correctly implemented in the problem area. Even fewer of these companies attempt to ensure agility through an alternative organisational structure. Which raises the question about what action can be recommended if we want to see self-organisation grow within our enterprise. What must we do if we want to customize our system rather than applying scaling templates? Which elements encourage an organisational design that is fit for the future? And how can we use the entrepreneurial spirit throughout the organisation for this?

It makes sense to answer these questions not just theoretically, but with practical examples. Fortunately, finding such examples is no longer like looking for the proverbial needle in the haystack. There is an abundance of sources with specific examples from which we can gather information. Thus, I have collected, from the gamut of available resources, insights from business literature, interviews with practitioners, as well as my personal coaching and consulting experiences. I am not concerned with providing an encyclopaedia-like overview, nor about giving anecdotal case studies. Instead, I would like to explore the variety of entrepreneurial self-organisation in order to find out the best practices. What works well? Which design elements are used again and again? How do the various companies proceed? And how can they recognize if this approach is worthwhile?

Table II-1 documents the different contexts, industries and countries where enterprise-wide self-organisation is used.

Company	Industry	Country	Employees
AES	Energy	USA	21.000
AllsafeJUNGFALK	Load Restraint	Germany	200
AutoScout24	Online Car Sales	Germany	400
AVIS	Car Rental	USA	30.000
Buurtzorg	Nursing	Netherlands	10.000
bwin	Online Gaming	Gibraltar	3.000
Compax	Software Dev	Austria	140
Computest	Software Test	Netherlands	120
dm	Drugstore	Germany	38.000
eSailors	Online Lottery	Germany	130
Finext	Finance	Netherlands	140
FAVI	Metal Processing	France	400
Gore	Clothing	USA	10.000
Handelsbanken	Finance	Sweden	11.000
Harley-Davidson	Motorcycles	USA	5.900
Haufe-umantis	Software Dev	Switzerland	130
hhpberlin	Fire Safety	Germany	160
Hoppmann Auto	Car Sales	Germany	460
IDEO	Design	USA	600
ImmobilienScout24	Online Platform	Germany	600
Incentro	Software Dev	Netherlands	285
InVision	Software Dev	Germany	150
Jimdo	Software Dev	Germany	200
LIIP	Software Dev	Switzerland	150
Morning Star	Tomato Products	USA	600
Menlo Innovation	Software Dev	USA	180
Patagonia	Outdoor Clothing	USA	1.100
PKE Electronics	Software Dev	Austria	1.100
Richards Group	Marketing	USA	680
Semco	Manufacturing	Brazil	1.000
sipgate	Telecommunication	Germany	120
SOL	Cleaning	Finland	11.000
Spotify	Music Streaming	Sweden	2.500
Stämpfli	Communications	Switzerland	410
Synaxon	Networking	Germany	130
Swiss Railways	Travel	Switzerland	29.000
TELE Haase	Relays	Austria	85
Traum-Ferien	Travel	Germany	120
Toyota	Automotive	Japan	300.000
Upstalsboom	Travel	Germany	680
USAA	Finance	USA	26.000
Volksbank Heilbr	Finance	Germany	320
Whole Foods	Supermarket	USA	40.000
Zappos	Online Shopping	USA	1.500

This table is comprised of pioneers such as AVIS, Gore and Semco, trendsetters like Patagonia, Morning Star, Upstalsboom and Spotify, as well as aspiring newcomers such as sipgate, Computest and Haufe-umantis. It lists enterprises with anywhere from around one hundred up to several thousand employees where self-organisation has been implemented to varying degrees. It contains companies with spectacular success stories, but also examples such as FAVI or Jimdo, where freedom and autonomy are now history. Self-organising enterprises are not protected from fundamental changes — whether it be changes in ownership structure, new top management or hard cuts and turnarounds. For example, energy company AES, a self-organising pioneer since the 1980s with over 40.000 employees, experienced such a turnaround in the 2000s.

The more companies I looked at, the more intrigued I became in what I was seeing. Self-organisation was like a kaleidoscope where colourful pieces were continually creating new images. However, a few characteristic patterns repeatedly emerged. As different as these examples may appear, they are very similar in their approach. When comparing the various enterprises, I discovered a surprisingly consistent set of principles and practices had been implemented. Following is a brief summary of the principles and practices, which will be explored in depth later.

1. Customer First. In any company where self-organisation was successfully scaled, the customer has been the focal point. The customers' perspectives, interests and needs are the centre of business. This is reflected in the framework of an enterprise, whether it be a powerful mission statement, strategic direction or guiding principles for a long-term company vision. It is also reflected in the way things are done when having a customer-oriented portfolio.
2. Transparent Work Flow Management. Smoothly running processes are necessary to best serve the customers. We want to create value rather than just keep ourselves busy. Value can only be created if all essential activities are properly coordinated. However, this coordination has less to do with organisational structure and more to do with work flow, from the first input up to customer satisfaction. Transparency of this flow and its ongoing management not only provides the best quality, but also a high degree of reliability for the customer.
3. Fast Feedback Loops. The quality of decisions is directly related to the quality of feedback we receive. Without accurate feedback, our management efforts are doomed to failure. Managing complex work can seem like pinning the tail on the donkey. Self-organising enterprises use a proficient system of meetings, metrics, and personal feedback to make this task easier.
4. Customized Decisions. Managing the value stream can only succeed if we make the right decisions. To go back to my boat metaphor: Only if the wind and sea conditions are favourable, the sails are let out and the rudder is correctly set, is it possible for the enterprise ship to set sail. In order to pool our strengths, new decisions have to be made repeatedly in many areas. In a self-organising enterprise, the necessary authority for these decisions is delegated to those persons with the highest subject matter expertise and situational knowledge. The hierarchical position is no longer crucial, but rather the proximity to the work that is affected by the decision.
5. Bold Experiments. Agility does not mean than we are safe from failure. Quite the contrary: Incremental improvements, just like breakthrough innovations, require trial and error. Not only do you need good feedback, you also need a culture for dealing with failure that supports experimentation. And there needs to be a learning culture that constructively deals with any tension or conflict that arises.
6. Lean Organisational Structure: Self-organising enterprises thrive on the autonomy of their business units. Loosely coupling these units empowers them and facilitates flexibility. This is why many enterprises are set up according to customer needs, with flat hierarchies and minimal staff functions.
7. Distributed Management. There are at least two consequences from the points discussed so far. One, traditional management responsibilities in self-organising enterprises are distributed amongst many people. Second, the responsibilities of line management change. The difference between working on the system versus working in the system is quite eye-opening. Subject matter experts in the subsystems enjoy wide-ranging autonomy, while line managers ensure clear boundaries, a supportive context and appropriate coordination.
8. Continuous Training. Self-organisation did not develop on its own in any of the companies listed in the table. Miracles only happen in fairly tales. The reality is that self-organisation needs profound information (keyword: transparency), consistent empowerment (keyword: skill building) and disciplined practice (keyword: routine) in order to master new challenges.

As mentioned, I discuss each of these design areas in greater detail in the following chapters. Along with a detailed discussion of each design area, I describe the management tools used in various companies. Specific examples will illustrate how these tools are applied and give you a better idea how you could use them for your own business.

1 Customer First

"The only thing that bothers us is the customer", as the saying goes. Anyone who thinks this is just a cliché should take a look around. Customer trouble is still very much alive, especially in large enterprises. The day-to-day business is overloaded with tasks, work is broken apart by constant changes and line management adds additional uncertainty due to micro-managing. The fact that many companies willingly outsource their customer support speaks volumes. Instead of seeing their customer service as a valuable feedback loop, it is delegated to a call centre where the primary goal is efficient processing. The call centre agents do not concern themselves with the relationship between company and customer, nor do they provide feedback on this relationship to the company. Rather, they are used by the companies to keep the customers off their back.

Everyone is talking about agility, especially those who complain about market volatility. They want to reduce complexity, and dream of shorter response times. The brave ones apply Scrum and Kanban in more and more areas to achieve these goals. Some even see themselves as an agile enterprise because they have agile teams. At the same time, very few of these enterprises place the customer first. Instead, their organisational agendas remain focused inward. Local optimization (i.e. so-called high performing teams) and tactical action (i.e. performance management) are the order of business.

It's easy to forget, in light of such a mindset, that even the largest companies once started small. Today, we refer to them as startups. Despite many constantly changing factors, one law remains the same: companies can only survive if they have customers — and can only grow if the number of customers, along with their willingness to spend money, increases. When founding a company, it is completely normal to focus the company's actions around the customer. You know the customer, understand their needs and how to generate revenue from it. Otherwise, the company's development is over before it starts.

But how can a company keep its customer focus when it is no longer in its startup phase? How, when it's no longer a so-called garage-based business, but rather an enterprise with a growing number of employees? How, if it gradually starts becoming more concerned about process guidelines or standards of conduct rather than on activities that have value for the customer?

I am going to give you three answers that define the state of each enterprise: the mission, the vision and the strategy.

1.1 Mission and Vision

Why does our company exist? This is the fundamental question that a so-called mission statement answers.

Before you start writing your statement, there are two things that you should consider. First, how can you make sure that your mission statement drives the company, versus just being a piece of paper? Second, how would you like to develop this statement? Are you just going to dictate it from the top? Will you consult with certain colleagues? Maybe you will even have customers validate your value proposition?

The way in which you answer these questions could also reveal something about your understanding of management and your corporate culture. Regardless how large the organisational unit where the mission statement is intended, it should be a concise summary regarding the "what" and "why" of your work. Perhaps some practical examples would help? The mythical motorcycle manufacturer Harley-Davidson states, "We fulfil dreams through the experiences of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments". The supermarket chain Whole Foods writes, "Whole Foods Market is a dynamic leader in the quality food business. We are a mission-driven company that aims to set the standards of excellence for food retailers. We are building a business in which high standards permeate all aspects of our company. Quality is a state of mind at Whole Foods Market. The Swiss software developer Liip created a manifesto around their core values of agility, innovation, sustainability and fun. Besides the adaption of the manifesto for agile software development, you will also find some basic beliefs regarding web and development: the view that our current culture is determined by the internet, that it is imperative to invest in the company and in people equally, using Open Source technology, or the commitment towards innovative projects which foster the unique capabilities of the customers. And at outdoor specialist Patagonia, all of their activities consistently revolve around their mission statement to "Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis".

The Dutch nursing network Buurtzorg also started an ambitious undertaking:

"Improve the service and quality of home care through guidance and cooperation with local nurses, allowing every person to receive the type of care they need the most at the place they prefer to be—avoiding expensive institutional nursing care for as long as possible."

The Californian tomato company Morning Star even has four different mission statements: at the company level, between the autonomous divisions, in each operational unit and for every individual employee.

• The personal mission statements form the backbone of the company. They describe how each person contributes to the company's success.
• In a so-called CLOU (Certified Letter of Understanding), agreements between colleagues who work closely with one another are summarized. The majority of employees have approximately ten such CLOUs in which results, goals and metrics are stipulated.
• Every two months, the achieved results are used to compare the actual performance to the planned performance in the CLOU and, if necessary, take corrective action. The CLOU is transformed into a type of guidance system for the activities, instead of simply becoming a bureaucratic task.
• The same coordination principle is also used between the various departments and divisions, weaving each employee and each subsystem into a dense network of commitments. However, the network is not dictated by hierarchy, but instead is negotiated between colleagues. This is the main point of personal responsibility at Morning Star. "Make the mission your boss" is the motto [1].

Making a mission statement into something operational is important, because they often suffer the same fate as corporate values or principles. The mission statement lists a number of buzzwords, and leads a miserable existence plastered on the office walls. If carefully implemented, however, it can provide a high degree of clarity: It outlines what is expected from every individual, what they are supposed to do and how they contribute to the overall enterprise. According to Jean-Francois Zobrist, well-formulated mission statements help us go from being a "how" company to a "why" company. For the former CEO of the self-organising pioneer FAVI, it is not necessary to constantly tell someone how to do their job. By concentrating on plans, regulations and standards, you are occupying your time with everything other than what really counts, which is whether or not the work is completed properly and if the customer is satisfied. In comparison, "why" companies replace the proliferation of standards by one single question: "Why do you do what you do?" As long as the answer is, "To make the customer happy", according to Zobrist, there is no need to give any thought about how exactly that is accomplished [2].

If the mission explains the existence of your company, and gives each individual clarity about how they contribute to its success, then full speed ahead. But what is a vision then? Is it not the same thing? Although mission and vision are often interchanged in practice, there is a one main difference. While the former drives your business operation, the latter defines your higher aspirations. A vision should not be confused, however, with operational targets. Instead, it frames an idealized picture of your company's future.

• What do you want to accomplish in 5/10/x years?
• How will your business area look then?
• Who are your customers? What value will you deliver to them?
• What distinguishes your organisation? What separates you from your competition?

A well-formulated vision communicated to everyone can serve as a kind of guiding star, turning the focus towards the big picture when making decisions. Perhaps the most famous example of such a guiding star is Toyota's True North: zero failures, 100% value added, one-piece-flow, overall work security (mental, as well as physical) and professional challenges (meaning continuous improvement). At first glance, it is obvious that this vision can never be achieved. It is too strongly based on the superlative. Relentlessly striving for perfection, though, always spurns new improvements and ensures sustainable economic success, as Toyota has impressively proven despite various crises.

Companies in completely different sectors also understand how to set the bar high. The Finnish cleaning specialist SOL, for instance, formulates the vision of an outstanding service provider. "We want to be the best operator in the field of environmental issues, both for our customers and our personnel." Although this objective seems inconspicuous, it is quite ambitious since they are using chemicals on a daily basis. On the other hand, Zappos predicts., "One day, 30% of all retail transactions in the United States will be online. Consumers will buy from the company with the best service and the best selection. Zappos.com will be that online store."

Harley-Davidson has a vision which places an emphasis on two areas: "to continuously improve our mutually beneficial relationships with stakeholders (customers, suppliers, employees, shareholders, government and society)" and on the "empowerment of all employees to focus on value-added activities".

1.2 Strategy and Culture

Both mission and vision are ineffective without a coherent strategy. If you offer unattractive products and services, it makes little difference if you are self-organising or not. The same goes if you chase after a guiding star that doesn't shine. The customers will be as indifferent as your value creation. How can specific strategies be created that will pool existing strengths? How can you prevent these strategies from becoming costly ceremonies, like those celebrated all over the country by the large consulting firms? How can you set powerful objectives instead? At their peak, the Hamburg-based website specialist Jimdo was a perfect example of how strategy development can be done in a way that systematically uses the potential of self-organisation. The main idea was based on consistent focus. Goal #1 became whatever was currently promising the greatest value. This goal was not, however, simply given out and then monitored behind closed doors. Instead, delegates from all areas met at regular intervals in order to exchange information and to ensure effective coordination of everyone involved [3].

For strategy-oriented coordination in a self-organising enterprise, the swarming method has proven itself useful. These swarms are used anywhere the company has a complex business problem to solve. Similar to a swarm of fish, those persons having the necessary expertise for a solution self-organise themselves into a group. With adequate training, the swarming needs neither special facilitation nor a dedicated management to allocate resources. At personnel software expert Haufe-umantis, swarming can even be found at the strategic level. In the research and development area, there are around 60 self-organising employees that get together to pursue, from their point of view, the best value proposition. How does it help the customer to work even more successfully? What brings the greatest benefit? And how can we manage it? Every three months, these questions are worked on together so the available resources can be pooled in the best way possible. Fixed departments are as rare as classical managers in the research and development area. Harley-Davidson builds on something similar. Their "natural working groups" are organized into three segments and are geared towards bringing the right people together to implement projects with great potential. The employees find themselves within certain product, support or marketing circles to find appropriate solutions for the customer.

The Dutch nursing network Buurtzorg impressively demonstrates how an ambitious mission can be combined with a clear strategy. This strategy is comprised of six components [4]:

1. Assessing the patient's needs. This is done holistically, and includes medical, social and personal concerns. Based on this assessment, an individual care plan is drafted.
2. Gathering all the informal networks and their contribution to the care.
3. Identifying the official caregiver and their involvement.
4. Implementing the care.
5. Supporting the patient, thus allowing them to exercise their social roles.
6. Promoting independent care and personal independence.

These strongly bound components set the framework in which the private and professional nurses provide their services.

The question remains, though, about how you can assure the customer remains at the centre of your strategy. The answer to this question can vary, because self-organising enterprises themselves are quite diverse. The one thing they have in common is the consistent inclusion of the employees. Instead of making strategy exclusively a management responsibility, it is instead based on the experiences and ideas of those who are usually much closer to the customer. This can occur, as it does at sipgate, in a group composed of people from a range of departments and hierarchy, who regularly meet for strategy workshops. Or it can include all employees, like at eSailors, who meet quarterly for an overall review and planning meeting. Or, in the case of Computest, through a group delivering company-wide services, managed with a so-called discovery board.

Figure 1-2 shows my comparison in picture form. Furthermore, the picture solves the puzzle of what the spaceship should be named.

The importance of culture hardly needs to be emphasized in agile environments. "Culture is the true North Star," notes Arne Roock, which is obvious in many self-organising enterprises [5]. For business success employee satisfaction plays as equally a vital role as customer satisfaction does. And culture is often used as an argument for employee satisfaction. So far, so good. Figure 1-2 underscores, though, that this culture cannot be reduced to atmosphere, climate, spirit or something similarly vague. It emerges more as a result of the dynamic interaction of strategic, procedural and behavioural factors. The easiest way to translate the cumbersome concept of corporate culture, underlining this interaction, is "this is how we do it here”: this is how we see the market, this is how we perceive the challenges, this is how we work together, this is how we serve our customers, etc.

Corporate culture is not a single factor. It is not the product of the interplay of strategy, structure and behaviour. Thus, it is a broad and deep phenomenon that governs our thinking, feelings, actions. That is why changing the corporate culture is a costly and time-consuming undertaking. As dm´s CEO Erich Harsch points out, we cannot simply "flip a switch. Changing culture takes years." This change will be driven, according to Harsch, by two inseparable principles: through a customer-oriented stance and through the appreciation of individuals. The principle is, "customer first, and success will follow". This only works, though, if the individual isn't simply seen as a way to maximize profits. "If I treat my employees poorly, I shouldn't be surprised when they treat the customers poorly."

The power of corporate culture does not come as a surprise for Peter Stämpfli, president of the board of directors at communication service provider Stämpfli. On the contrary, the step-by-step transformation of the long-standing company towards more autonomy is hard to imagine without the existing foundation of equality and commitment. According to Stämpfli, this foundation is extremely important for answering the pressing questions of today: What challenges will the company face? What will be the effects of the ubiquitous digitalisation in various areas? And, as Stämpfli states, can "a different synergy between awareness and interaction" be achieved? More decision-making autonomy within clearly defined boundaries is one of the answers they are currently working on. Stämpfli is convinced that additional answers will lead towards a more agile leadership philosophy. Regardless how many more change experiments will be needed, the motto remains the same: Communication – person to person. And this motto, built on respect and trust, will continue to apply to employees as well as customers.

Harsch´s and Stämpfli´s ideas underscore an additional risk that accompanies every change of corporate culture, namely the risk that employee satisfaction and customer satisfaction will be separated from or even pitted against one another. Does the customer or the employee come first? Do we want to do a better job or create a good working environment? Do we want to embrace more business opportunities or cultivate new ways of working? It goes without saying that employees are the most valuable asset of an organisation. Without their experience and capabilities, without their commitment and business intelligence, we cannot achieve a single benefit of agility. This requires us to foster every type of corporate culture, whether it be treating each other with respect, exciting challenges, attractive conditions or a powerful employer brand. At the same time, it is important to retain the best employees over the long-term and win the war for talents.

On the other hand, we should not ignore that neither human nor technical resources can be used effectively if there is too little demand. If we want our business to develop, the unavoidable question is how we retain our regular customers while gaining new customers. How do we consistently align our corporate culture to the customer? Which structures and processes are needed for this? How does this affect the behaviour of the employees? How do we strategically align these behaviours? And, in turn, what effect does this strategy have on our structures and processes?

1.3 Design Thinking

I know these questions will be like opening up a can of worms. Almost 15 years ago, Henry Mintzberg already warned us about the adventures awaiting us in the jungle of the strategy industry [6]. But, with all due respect, I would like to wrap up this chapter by briefly taking a look into this jungle. Self-organising enterprises are not spared from the strategy safari, so how can you avoid getting lost in this concept jungle?

Based on what has already been stated, the answer is straightforward: Every strategy safari that has real discoveries in sight must inevitably lead us to the customer. However, it begs the question how to best make this journey, and at the same time learn something from it that benefits from our corporate culture. To navigate this journey successfully, I recommend using Design Thinking, which has significantly influenced how to develop an organisational strategy since the beginning of the 2000s [7].

Design Thinking was initially meant for the early phases of generating ideas, but has since been used in many business areas: the entire product development cycle, the introduction of various services, strategy development, as well as organisational design. Moreover, Design Thinking pioneer IDEO has been using this method in developing countries for several years.

Since its start, Design Thinking has left its mark on many companies. It can be seen in new products or services. It can also be seen, though, in the change initiatives, innovation forums or strategy discussions. Invariably, the same issues always have to be addressed. Issues such as how to raise the awareness of each employee, how to use their knowledge and experience, or how to transform these forces into promising initiatives.

The interdisciplinary and iterative nature of Design Thinking makes it a close relative of agile methods. On the other hand, the focus on customers, the experimental nature and the prototype-focused approach are in the tradition of lean thinking. And without self-organisation, without the willingness to intensively communicate across many areas and test new methods, every innovative endeavour is already on the wrong path.

At the same time, Design Thinking inspires new practices in all of these areas. Ash Maurya's Running Lean concept appears most promising in this regard [8]. Maurya starts with the classical innovation questions: Are the customers interested in our product or services? Are they also willing to pay for them? And how difficult is it to actually develop and deliver? The answers to these questions are driven by a Unique Value Proposition. In the area between problem and solution, this proposition outlines how the customer benefits from our idea. Before we do our best to get this idea to market, however, we should also do some homework. Which channels do we want to use to distribute our product? What does it cost to provide a specific service? What type of revenues are we expecting? And how do we know if we heading in the right direction? To prevent us from going crazy with so many questions, Maurya offers us a simple template to keep an overview of our most important answers. Figure 1-4 shows his so-called Lean Canvas, which can be used as a template for the entire innovation process.

The canvas alone does not eliminate all of the questions we are confronted with at the beginning of any innovation cycle. However, it helps to keep an overview of all the relevant factors when dealing with three business-critical risks:

1. Product Risk: Which problem are we solving? What needs are being met with it? What would a minimally viable product (MVP) look like, which allows us to test our idea with minimal cost?
2. Customer Risk: For whom exactly is the problem we have identified a concern? For whom is it so important that they would be willing to pay for a solution? How do we find those who are ready for it right now?
3. Market Risk: How is the problem being dealt with currently? What other solutions are already available? What price can we charge for our solution?

For effective risk management, Maurya recommends that we don't rely on typical data gathering. The number of clicks, the usage time or simple sales figures tell us little about the actual customer experience. Instead of vaguely interpreting these figures, we would be better off having direct contact with the customer. He recommends three specific formats for this: the problem interview, the solution interview and the interview regarding our MVP.

Regardless of your specific business hypotheses, prototypes or interviewee partner — the direct interaction will help you gain crucial insights with minimal effort. Interviews are a simple means to continuously collect data in an iterative way. Instead of pondering too long over ideas, sitting forever in internal innovation workshops and keeping yourself busy with your own product versions, you should follow the basic principle of business agility: customer first!

The next chapter will give you information on how you can successfully implement your business ideas. If your company is not a startup, the innovators are forced to compete with existing offers. Which begs the question as to how you can make sure your innovation initiative doesn't just get started, but can be finished within a reasonable amount of time without negatively affecting your current cash cows. How can you manage such a balancing act? How can you secure enough resources for new initiatives when the existing work itself requires so much? How do you continue to improve? And how do you monitor all these things?

Key takeaways from this chapter

The title of the first chapter on scaling self-organisation points out the course of action: customer first. This course of action is reflected in the mission of a company, as well as in their vision or the strategy they use to follow this vision. If it doesn't add value to our customers, it doesn't count.

In the introduction to this chapter, you get an overview of the companies that were examined. Following that, specific examples are given of how companies focused on their customers. It's interesting to see how customer focus is done in companies of various sizes, histories or sectors and how it leads to a unique corporate culture.

State-of-the-art methods, such as Design Thinking or Lean Canvas, reiterate the idea that a customer-oriented corporate culture is not just important for the current business. Such a culture also leads to new products and services that, now more than ever, depend on agile interactions with the market.

2 Visual Work Management

Traditionally, management operates behind closed doors. In various meetings, program managers, product managers or line managers get together to discuss key figures — be it the state of completion, cost efficiency or resource allocation. Doing this fosters tunnel vision: little attention is paid to anything beyond the functional organisation. Because of this, management of customer-oriented value streams remains largely non-transparent; not entirely clear in the best case, and completely obscure in the worst case.

How do self-organising companies manage their work flow? How do they deal with the complex and mostly invisible dependencies of knowledge work? And how do they overcome the chronic lack of communication that paradoxically occurs from an overflow of information? From my experience, which I also wrote about with Klaus Leopold in Kanban Change Leadership [1], you get the best answers with the help of visual work management systems.

2.1 Kanban

Visual work management helps us visualise what is normally invisible. Complex processes become transparent when we use simple practices to represent our daily work. Figure 2-1 shows a sample of such a representation, which manifests itself as a physical board. Such a board shows us many elements:

• All the work we are currently working on (small squares).
• The types of work there are (for example, features, changes, or bugs).
• The characteristic activities that the work goes through before it's completed (denoted abstractly as A, B and C between the columns of Options and Next on the left hand-side and Done on the right hand-side).
• The maximum number of work items that can be in each activity at one time—regulated by the so-called WIP limit (see the numbers above the columns).
• The quality criteria that are assigned to each activity (definition of "Ready" or "Done").
• Who is busy with what (according to the avatars used, represented by coloured dots here).
• Work that is blocked (shown as little red squares).
• How many activities have already been completed on each work item (according to the work flow).

What does visual work management have to do with flow? With Kanban, it's about having processes that flow as smoothly as possible—and overcoming the inherent risks in these processes. We want to manage our work with our eyes open, channel it correctly, recognize necessary changes early and take care of them as fast as possible. The emphasis is placed on the "We" because Kanban makes everyone working in the system responsible for its management. It isn't just a coincidence that a key principle in Kanban is encouraging leadership at all levels.

Visual work management systems support shared responsibility in many ways:

• It brings work and management together: those that operate the system also manage it.
• For logical reasons, the people managing the work flow are also involved in the design of their management system. The design should be created by those who work in the system rather than dictated by hierarchy.
• External stakeholders only influence this self-organising dynamic by coordinating the input queue. Customers, or customer representatives, determine the what, but the how is defined by those who operate the system. Micromanagement destabilises the system as much as every stakeholder does when attempting to bypass the rules.
• The conscious limitation of all parallel work from arrival (see "Ready" in Figure 5-1) across the entire work flow (see the value-generating activities "A", "B" and "C") up through departure (see "Finished") helps the operators keep their system stable and predictable.
• The system operators are empowered to make all decisions relevant to the workflow, such as handling blockades, dealing with bottlenecks or analysing customer feedback.
• The necessary feedback loops are also created together. How often do we need to synchronise with whom about what? Which metrics make sense? What do we want to communicate to the outside? With whom should we regularly coordinate our efforts?

All work follows some kind of flow. This is why it is so important to keep an eye on the quality of this flow. You can certainly manage a flow-based system without Kanban. As soon as we treat our work process as a series of value-generating activities, we are already on our way. The crucial point is not the method, but the logic behind it; namely, the logic of defining the enterprise in terms of customer-oriented flow instead of internal organisational structures.

2.2 Flight Levels

Experience has shown that we can make our management lives easier with Kanban. This applies to subject matter experts, who can see their work in a new light, the same as it does to line managers, who suddenly have the black box of daily business illuminated. Above all, visual work management systems provide an outstanding service when dealing with enterprise-wide self-organisation. My colleague, Klaus Leopold, shows how we can setup such systems (Figure 2-2) with his Flight Levels model [2].

Basically, each level uses the same core practices and principles. Just as you can see in the above figure, it means tailoring the various elements to fit your needs. This applies to the operational board of individual teams (Flight Level 1), the cross-team coordination of the entire value stream (Flight Level 2), and the system that illustrates the portfolio of a business area (Flight Level 3).

Klaus Leopold emphasizes that these Flight Levels are not a capability maturity model: Flight Level 2 is not twice as good as Flight Level 1, and also cannot be refined into Flight Level 3. Although it has to do with transparent management, each level addresses special challenges. For instance, the flow of tasks in daily operations, the creation of value across various units, or the focus on company performance based on a good mixture of projects, services or innovation initiatives.

The various Flight Levels are, however, very much associated with different levels of effectiveness. Kanban can be implemented well at the operational level of teams or departments, but the potential for improvement is much higher at the coordination or strategy level. Flight Level 3 inevitably has an effect on many, if not all, areas. With the help of professional visualisation, we could even gain an overview of the whole enterprise at this level. And this is where the decisions are made that have far-reaching ramifications for our business. How do we handle the gap between the existing business opportunities and our current capabilities? How do we choose the most promising ones from our pool of options? And how many initiatives can we work on at the same time, in light of our limited capabilities? All in all, Flight Level 3 deals with "making prudent choices and combination of projects, developing products and strategic initiatives, recognizing dependencies and optimizing the flow through the value creation chain with the currently available resources" [3].

Of course, the Flight Levels do not force us into an either-or scenario. The various levels can be connected to one another, like the brackets in Figure 2-2 suggest. A strategic portfolio can easily use Kanban for the entire value stream, which in turn supports any number of operational teams. In specific cases, special projects that have no need for coordination can be derived from the strategy board —thus connecting Flight Levels 1 and 3.

Nevertheless, it is not inherently necessary that all initiatives monitored on the strategy board work with Kanban. Scrum, or even the classic Waterfall approach, can be used for running your daily business. Ultimately, substantially larger units flow at the portfolio or value stream level than at the team or department level — strategic options like "less consulting and more service at the customer" and "international expansion of our platform in three countries". While strategic options are chosen at Flight Level 3, Flight Level 2 helps monitor the progress of larger work packages, which are split into individual tasks and executed at Flight Level 1.

The UNO (Unified Network Objects) department at the Swiss Federal Railways is a great example of how a system can operate over two Flight Levels [4]. As pioneer in a now enterprise-wide initiative, the department began in 2012 to apply visual work management. What started off as an overwhelming jumble of Post-its visualising all the tasks for the first time, gradually developed into a management system that connected Flight Levels 1 and 2. Figure 2-3 shows UNO´s workflow, starting with customer input via the Key-Account Management Board, monitored on the main board and processed step-by-step on the team boards. Continuously aligning individual activities (see the red arrows) with their main board ensures superior quality of the deliverable object. Internal dependencies, blockades or bottlenecks are identified early on and dealt with together. The frequency of meetings providing regular feedback is denoted in the red boxes: the individual team standups, the coordination of the team delegates, as well as the monthly retrospectives for working on the change board, where all internal improvements are monitored.

This system-wide networking is a good fit for the content that UNO works with. The Unified Network Objects specialists link a large amount of raw data to an information network that is the basis for timetable planning, train prognosis and train control. Overview is an important issue to ensure completeness, quality and consistency of the output. Kanban has benefited UNO in many ways in the nearly five years it has been in use. According to team leader Michael Beyer, following are the most important benefits:

• Rapid Success. Quick Wins encouraged further improvement activities, which in turn have a positive effect on the daily work and keeps motivation high for everyone involved.
• Improved Management. Transparency facilitates better communication with all internal and external stakeholders from UNO. In addition, the principle of stop starting, start finishing helped to optimise both throughput and quality.
• Active Agility. Continuous inspection and adaption to changing circumstances is now a standard procedure. The amount of improvements that have been implemented over the years has impressed everyone involved.
• Cultural Change. Since the introduction of Kanban, employees have gradually become players instead of observers. The shared responsibility for creating value leads to teamwork that is characterized by mutual respect and understanding the big picture. The employees have become active change agents who not only run, but also regularly improve the system. In the best sense of self-organisation, the subject matter experts take on a large amount of management responsibility. They make the necessary decisions and bring new ideas to make UNO even more efficient.

Another practical example shows us how Kanban can be implemented with a focus on strategy. This example is the Kanban board from the German online platform AutoScout24, on which the work for a total of 250 people is represented (Figure 2-4). As a system of the third Flight Level, the board shows us the larger projects, instead of individual tasks, that generate value for the customer as soon as they are completed. In order to assure a good workflow and identify any flow problems early on, the entire value creation process in all relevant customer segments is visualised (see the green cards on the very left). In addition, the individual teams within these segments are represented (see the vertical column of yellow cards). The main activities for the entire workflow across all segments are included on the larger cards running horizontally across the top of the board. In typical Kanban manner, these activities go from an open option pool to an idea generation and assessment phase where the most promising projects are chosen. In addition, these projects are developed using specific success criteria that are checked against the original value proposition. This way, the precise impact of the project is documented.

Since the individual options can vary in size, an overall fixed WIP limit cannot be used. However, too many parallel initiatives will lead to bottlenecks at this Flight Level too, so the WIP limit is always on the agenda at the regular alignment meetings with the representatives of each segment. Along with limiting the initiatives, these meetings deal primarily with four questions:

1. What impact did we achieve with our initiative?
2. What actual value has been created?
3. What is the state of our current initiatives?
4. And what can we learn from the overall situation for future use?

2.3 Information and Interaction

All in all, multi-level systems create new design opportunities for any organisation:

• It's suddenly apparent for all people how their own work contributes to the big picture—not everyone may like this transparency, but it allows for more open discussions.
• The personal contribution to overall success is as obvious as the factors that can jeopardize it.
• The systemic effects of individual action become tangible.
• The need for continuous improvement becomes transparent.
• Feedback loops between individual subsystems become faster.
• The entire system can respond more quickly to changes—regardless if these changes are dictated by the market, forced due to strategic initiatives or imposed because of internal problems.

The Flight Levels reiterate the idea — inspired by Russell Ackoff — that an agile enterprise is not the sum of its agile subsystems, just as a team´s success is not the sum of each individual's performance. It isn't enough to just have Scrum or Kanban teams. What's really needed is agile interactions between these teams and the relevant stakeholders of the system. How do we make sure that we are working on the right things at the right time? Who needs to coordinate with whom to optimize the handover? How can we rapidly respond to blockades or bottlenecks? And how do we know if we are really improving? It is important that the entire value stream is considered when answering these questions. Only then can we guarantee our customers also benefit from our self-organisation.

Many companies align themselves along customer groups or product families in order to strengthen their strategic focus. This way, strengths can be pooled, handovers simplified and cycle times reduced. The German load restraint specialist allsafe JUNGFALK had this goal in mind when they eliminated all of their departments—the word department itself means to divide, which prevents flow-based connections. Instead, the company defined customer-oriented processes, which fosters good workflow in all areas.

In many cases, optimising the value stream goes hand-in-hand with its focus. One example is the French automotive parts supplier FAVI, when under the leadership of Jean-Francois Zobrist, that had so-called mini-factories, each focusing exclusively on a specific product or customer. Each mini-factory employed between 20 and 35 workers who had the necessary expertise to be fully responsible for their whole business. And each factory had its own identity, characterised by a colour or customer logo, and was led by a democratically elected manager.

The real estate platform ImmobilienScout24 is a similarly flow-based organisation. Scrum teams that were responsible for development and service were consolidated first into product-type service lines, and later into specific market segments. To ensure mindful management, each of these market segments are led by a cross-functional team from Sales, Product, Marketing and IT. Together, these fantastic four have complete responsibility for the product and business development in their segment.

The online travel agency Traum-Ferienwohnungen is also completely focused on their customers. Each of the five cells of Traum-Ferienwohnungen contains employees from all domains who must work together to provide a high-quality service: customer service agents, software developers, marketing and sales professionals, as well as controllers. The internal coach Achim Hensen states: "In this way, the employees can focus on the requirements of their specific customer group. And they can completely serve the customer from a single source".

Transparent management is inseparable from an open information policy. For instance, the employees of the fire protection experts hhpberlin can access all relevant business data at any time in the CRM system. There they can find information about the progress of current projects, identify new options and connect them by topic. At the same time, the executive management receives a real-time overview of the current situation, has an eye on running costs and can dispatch necessary resources in a timely manner. What IT provides the six locations and approximately 40 competence areas at hhpberlin for a fluid project organisation, is dealt with in a haptic manner and at a single location by allsafe JUNGFALK: partition walls with the relevant key figures, magnet boards with statistical results or blackboards with business information are ever-present. In addition, there is also a strategy wall where all current processes, employees and customers can be found.

Viennese software specialist Compax achieves transparency in a similar fashion: In a monthly newsletter, the executive management communicates all relevant business data, discusses customer projects and introduces new ideas. And Hoppmann Autowelt publishes not only noteworthy business information in their employee newspaper, but also the current profit and loss statements. However, we should not make the mistake of equating pure information with understanding. In many cases understanding is also dependent on expert know-how. Publishing financial figures only makes sense when they can be read and understood in the context of your own work. To achieve this, for example, self-organisation pioneer Semco taught their employees how to read a balance sheet.

Simply imposing self-organisation rarely leads to the desired results. In addition to the basic information of what and why, the how must be designed together. Without open discussion, true commitment will not be achieved. This is also clear to the hotel chain Upstalsboom, which is why culture workshops have become as standard as the breakfasts where ten randomly chosen employees from various departments take part. Workshops and breakfasts help prevent silo thinking and instead encourage exchanges across all areas. The framework supports a deeper learning and understanding of the existing differences: At each workshop, the participants consist of at least 50% new employees across all departments and a maximum of 40% management. This framework provides meaningful exchanges where personal feedback is as important as feedback to the company. And this leads us nicely into the topic of the next chapter.

Key takeaways from this chapter

If companies want to be agile, they need flexible management systems. If they need an eternity to respond to external change impulses, they have already lost. Flexibility is not possible without transparency. Otherwise, it is too difficult to recognize where the company is currently heading and whether or not this course should be modified. Last but not least, companies need to concentrate on workflows that generate value, making customer benefit their top priority.

In this chapter, you learn how a visual work management system (Kanban) can be used to successfully combine transparency, flexibility and flow. Klaus Leopold's Flight Level model allows for such a combination for different purposes: for improved handling of operational tasks in teams or departments, for coordinating value streams across teams or for designing your strategic portfolio.

All Flight Levels exist to utilize the available resources in the best way possible. Because of this, they must align themselves towards maximum customer benefit, limit the amount of parallel work and share the available knowledge. The online platform AutoScout24, the load restraint company allsafe JUNGFALK, the metal processor FAVI or the hotel chain Upstalsboom demonstrate how a company can achieve a high level of self-management without losing control.

3 Fast Feedback Loops

In the previous chapters, I outlined what drives an organisation and how the path towards a vision can be broken down into strategic initiatives and managed with a flow-based system. In this chapter, we want to check if we are doing things right. Do we see how well we are fulfilling our mission? How can we evaluate the quality of our strategy? Which navigation tools are available to us? What do we need to quickly adapt to changing environments? “Fast feedback loops” is the answer to many of these questions. This kind of loop has become the centrepiece of business agility in the last few years. Generally speaking, there are three different types of loops: meetings, metrics and personal feedback. For a thorough description and discussion of personal feedback, please go to Part III, Chapter 1 (not published yet).

3.1 Meetings

Much, if not all, has already been said about agile meetings. If we round up the usual suspects, we will notice a few characteristic features.

Despite the differences between the individual formats, meetings in a self-organising environment all share the following features:

Conciseness: Everything is about coordinating as quickly and precisely as possible, from the classic 15-minute timeframe for Standups, to diverse ad-hoc agreements or the selection of specific topics.

Regularity: Although self-organising enterprises communicate as needed, regular meeting sequences are helpful. On the one hand, regularity ensures that cross-system coordination takes place and on the other hand, they keep the cost of coordination low. This is as important for portfolio planning as it is for controlling product quality. To ensure product quality, interested employees from all areas at sipgate meet every 14 days for a so-called demo meeting to show one another their current results. This meeting is not a work-in-progress report, rather it’s about demonstrating products that have been delivered to customers and are expected to create value.

Focus: Usefulness is naturally the standard measuring stick. What results are needed to make the meeting worth the participants’ time? Who should take part? Or, for the sake of simplicity, who does not need to attend? Focus also means understanding the differences between operational meetings (Standup), strategy-oriented meetings (Portfolio) and learning formats (Retrospectives). In the end, the right people should meet at the right time in the right context to provide an adequate Return on Time Invested (ROTI). In self-organising environments, there are no overwhelming agendas. Instead, a focal point is set such as testing prototypes, assessing business options, working on quality issues or evaluating data.

Directness: Self-organising enterprises prefer face-to-face communication. Agile Meetings are neither about traditional status reporting or formal presentations, nor serving only individual interests. One-way communication is as undesirable as political games. Rather, it should be a professional exchange about the current results and challenges. The seating order can influence the quality of this exchange as much as the choice of location. Is everyone gathered around a huge conference table? Does each person have their laptop opened up? Is it possible to move around freely? And is the focus really on direct contact, or is it a case of death-by-PowerPoint?

Connecting Mental and Physical Presence: It is no secret that meetings are conducted with more than just our brains. It’s important to engage as many senses as possible. This can happen in many ways: simply standing at the Standups, wandering through gallery-type presentations, using the so-called Law of Two Feet for decision-making or designing workshops for customers who put their hands directly on prototypes. A spectacular example of such activities is the stairwell meeting held by the Richards Group. Information that is relevant for all employees is conveyed as soon as possible in the stairwell that connects the two floors of the company building—thus building a bridge between the different areas, symbolically guarding against compartmental thinking.

Facilitation: In self-organising enterprises, facilitation is rarely done by specialists. According to the idea of encouraging leadership at all levels, facilitation is spontaneously taken over by a meeting participant or determined upfront on a rotating basis. The latter is based on the principle of distributed responsibility, which is especially meaningful at a cross-system level. This principle helps arrange the meetings in a variety of ways and cultivates a broad range of leadership impulses.

Professionalism: Leading effective meetings at the system level is not child’s play. Whether it is coordinating various delegates, seeking stakeholder agreements or designing customer events, many factors for a successful meeting are defined in the preparation phase: setting goals, choosing participants, organising the communication process, as well as documenting and reviewing the results.

3.2 Metrics

The second feedback loop that is used as a standard in self-organising environments is metrics. It’s common knowledge that in traditional organisations much is measured but little is learned. The majority of companies are characterized by figures that sustain the illusion that complex systems can be easily controlled: from company-wide budget planning to department specific cost efficiency and individual performance indicators. This illusion is the reason why many agile practitioners are sceptic of metrics. Most agile practitioners have worked in traditional environments and had bad experiences with metrics. “Why should we measure?”, is how a senior developer at a mid-sized IT service company once made the point: “We know when we deliver good work. Management should trust us instead of wasting our time with pointless indicators.” Although I can understand such concerns, it’s a little like throwing the metrics baby out with the command-and-control bathwater. Because true learning is hard to achieve without measuring what we actually accomplish. How do we determine if we have done a good job? If we have made the best use of our capabilities? Whether we actually improve if we change our way of working? And if the product we ultimately deliver to the customer has the expected value? Which leads us to the big question of what we want to measure and how we do this. Dan Vacanti recommends a lean set of metrics for this purpose.[1] In his view, three metrics are enough to inspect and adapt the quality of our workflow:

1. Work in Progress is the number of parallel work items that are being worked on at the same time in any particular activity of our value stream.
2. Cycle Time is the time each work item needs to flow through our system to reach the customer.
3. Throughput is the amount of work we complete in a given amount of time.

In Actionable Agile Metrics for Predictability Vacanti shows us how we can use a single tool to collect all three measurements: The Cumulative Flow Diagram (CFD). What exactly is a CFD? Basically, a CFD gives us information about the amount of work in our workflow. It shows us how much we have in the Option Pool, how much we are working on and how much is completed over time. Beyond that, we can capture how much work is in which stage of activity, such as idea generation, development or validation. Regardless which degree of detail we are interested in, a CFD is always produced in the same way: a timestamp is assigned to every work item (ticket) as soon as it enters the next activity of our value stream.

Figure 3-2 shows a sample CFD, which allows us to see several things at one glance:

• The proportion between pending work (see Input), work that we are currently working on (see Doing) and completed work (Done).
• The respective WIP limit, meaning the number of all work items that are found in our work system at a given time (vertical line between input and done).
• The average cycle time of work from the chosen starting point in our workflow (the initial point at the very left of the horizontal line within the Doing band) up to the time of completion (the very right of the same horizontal line).
• The average throughput, which is ascertained from the slope of the lower line of the Doing band.

A CFD gives us insight about the quality of our workflow as well as how it develops over time. For example, we can follow the relationship between started and completed work by simply checking if the lines between Input-Doing and Doing-Done have a similar slope, or if the lower line flattens out. If the latter is the case, we know we are finishing less work than we are starting — resulting in a bottleneck, which can eventually lead to a complete standstill.

There are, of course, other metrics for assessing our agile fitness. For example, Histograms are a type of bar chart showing clusters of average cycle times. Another example is a scatter plot, which gives a spatial illustration of the real cycle time per work item. Or even flow efficiency, which shows the relationship between the average cycle time and the actual amount of time that was actively spent working on specific work items. Together with the CFD, such metrics help us to establish Service Level Agreements that we can — assuming a stable, WIP-limited work system — adhere to with a high degree of probability. When we implement a smart control system, we basically know how long, on average, we spent a specific piece of work. Our commitments are no longer based on rough estimates, but on objective performance markers. This way, we can make agreements with our customers and fulfil the expectations associated with those agreements, without overloading our system. Other tools that can strengthen our predictability and reliability are classes of service, which groups work according to risk and prevents unnecessary cost of delay, as well as forecasts that enable future prognosis based on historical data.[3]

3.3 Control

Why are feedback loops so important for agility? The way I see it, there are four obvious answers:

1. Business agility depends on lean management principles. The more unfinished, delayed or accrued work gets dragged along, the more difficult it becomes to deal with it. CFDs, as well as scatter plots, give us exact information on this situation.
2. The awareness of employees rises and falls with the amount of work they are busy with. If it´s too much, people will not find the time to look beyond their own area – let alone discover new options. Only through voluntary constraints are employees able to sufficiently concentrate and, at the same time, gain the necessary space to observe and communicate. Such mindful monitoring is only possible with strict WIP limits and the team’s commitment to focus on business-critical bottlenecks and blockades.
3. The response time of a company does not only need awareness, but also time to discuss what people are aware of and what this means for the business. If self-organising enterprises want to use all employees as sensors for what is going on in the market, they need effective meetings to coordinate accurate responses to what they sense. The earlier such coordination occurs, the easier it is to keep up with the market dynamics.
4. The changeability of an enterprise increases with the quality of organisational learning and vice versa. Visualising flow is helpful for this, as is recognizing and dealing with critical points in our workflow. It needs a smart system of meetings where all people are given an opportunity to share their own perspectives. And it needs metrics showing current performance levels to help us accurately discern the strengths and weaknesses of our system.

However, feedback is not only important for managing the daily business. As much as it helps to keep our standard products and services in order, it is also important in a completely different area: innovation. It’s nothing new that this area is associated with a large amount of uncertainty. The key question is how we deal with this uncertainty. Whatever metrics you prefer, the main point is to prevent hierarchical methods of control. In this respect, there are a few self-critical questions which cannot be avoided:

• Does the metric help us understand the current performance of our system? Does it show us where we need to improve?
• Is this metric relevant to our mission? Does it say something about the value we generate for our customers?
• Are all metrics integrated into our work? Are they in the hands of those people that should benefit from them? Are they used for self-control and not for surveillance by management?
• Are we using a cohesive control system versus just individual metrics? Do the measurements help us identify problems in the overall value stream? Do we know if we have found solutions for these problems?

If you can answer, in good conscience, yes to questions 1 through 4, then is very likely that you already use metrics according to self-organisation ideals. If not, you probably have already identified potential areas of improvement in your work system. Either way, you find yourself in another feedback loop—namely the one resulting from recursive meetings and metrics. It’s the nature of metrics to call for meetings. How else can we interpret them and determine the next steps? To avoid overdoing it with meetings, I recommend to regularly review your current answers to the above questions:

• Who is interested in this feedback? For example, who should receive customer feedback?
• Who needs this feedback for making decisions? Who should consult with whom about it?
• How should this consultation be done?
• Who also needs to be informed about it? How will this be done?
• Which decisions need to be made?
• Who is responsible for implementing the decisions based on the feedback received? The questions might seem simplistic. However, the next chapter will make it clear that the answers to these questions contain certain hazards.

Key takeaways from this chapter

This chapter shows how you can gain clarity, quality and certainty with fast feedback loops. Such prospects are promising in times like these. As such, it pays off to invest some time and effort to implement feedback in a way that will meet your needs. In self-organising enterprises, three loops have proven themselves especially useful: meetings, metrics and personal feedback. Since personal feedback is discussed in detail in the second part of this book, this chapter concentrates on the first two loops. You get an overview of the most common meeting principles, formats and techniques, and learn how you can use a single metric, the Cumulative Flow Diagram, to determine the quality of your process. It is essential that meetings and metrics are not dictated from above. In order for feedback loops to be a learning tool, they must make sense for everyone involved. Otherwise, instead of contributing value, they will only create waste.

4 Customized Decisions

Decisions are the lifeblood of organisations. By making decisions, we process complexity, absorb uncertainty and empower our actions. If you follow systems theory, organisations can only exist if decisions are made and communicated on an ongoing basis. According to systems thinking guru Niklas Luhmann, “communicating decisions, and continuously reproducing the need for decisions, ensures the system has a kind of self-made chaos.”[1]

Thus, organisations are only effective, if they thrive on this chaos by continuously developing their decision making capability. Which leads to the question about how decisions are made. What is the decision-making culture of your company? And how does this culture support self-organisation at all levels? Traditionally, decision making has been a function of hierarchy. Line management os calling the shots. This reduces the effort, but leads to a list of problems:

• Decisions are either made too late or not at all.
• Decisions are not transparent and, as such, difficult to understand.
• The authority to make decisions is not defined. For certain decisions, nobody is responsible, but for other decisions, several people are responsible.
• The scope of decisions is unclear: What even needs to be decided?
• The procedure for making decisions is unclear: How will decisions be made?
• Decision-making authority is clarified, but then is overruled by a higher-ranking person in the hierarchy.

Looking at our daily problems, it should come as no surprise that centralising decision-making authority hinders both agility and self-organisation. Decentralised decision making is even more valuable when you consider risk management. On one hand, it speeds up the company´s response time: Critical points are dealt with more quickly, risks are anticipated earlier and counter-measures are better undertaken—just like the procedures of High Reliability Organisations show. On the other hand, it also addresses general business risks. When decision-making power is monopolized by top management, the economic potential of lower-level decision making remains untapped. As Don Reinertsen argues, decentralised decisions have an enormous effect on the performance of the entire organisation. If we assume an organisation is dependent on its most important strategic decisions, we will become victims of what Reinertsen calls the Pareto-Paradox. We overmanage the 20% of large decisions and undermanage the 80% of small opportunities that, in terms of true agility, should be realised for the customer’s benefit.[3]

4.1 Delegating Authority

The Swedish Handelsbanken is a great example of how delegating decision-making authority can be profitable. This venerable bank, in business since 1871, emphasizes a decentralised structure, making each local branch fully responsible for their entire business. Each of the almost 800 locations in 24 different countries, determine their own strategy, product portfolio, and marketing. Corporate-defined goals, fixed budgets and detailed forecasts do not exist. The efficiency of this approach is validated by an above average profitability for the Handelsbanken over the last 40 years, outstanding cost-efficiency and customer satisfaction. Not to mention, this financial institution was the only one in Sweden that did not receive governmental support during the global financial crisis. Obviously, it pays off to have relevant decisions be made by those closest to the customers. It not only makes economic sense, but also reinforces a relationship of trust and increases the employee’s self-awareness that their work contributes to both the customer’s satisfaction and the success of the company.

A similar story can be seen at Dutch software expert Incentro. At Incentro, there are neither fiscal plans or planning rituals, nor centralized functions that manage marketing or HR. Instead, all relevant business decisions are made by the individual business units. These units are organised according to geographical or technological areas, and concentrate on what company founder and board member Stef Lagomatis calls “the focus of energy”. Each quarter, 30 to 60 employees from all areas of the company realign their energies in order to keep their unit moving in the right direction. Employee satisfaction, customer satisfaction and profitability provide the key signposts for this course.

The Dutch healthcare network Buurtzorg also demonstrates that these principles lead to impressive synergies in a non-profit organisation. This network, which has grown to over 8,000 employees in 2016, is strictly organised into regional teams of 10 to 12 nurses. Beyond that, there are neither management teams nor centralised staff functions. Each team makes their own decisions, whether it is the number of patients cared for, how the care is given or scheduled, how meetings are conducted or how to coordinate with the family members, doctors and administrators. Each individual nurse acts more like a professional health coach than as an efficiency-driven healthcare agent. With ongoing training and coaching, each nurse makes all necessary decisions themselves. Self-management is ground breaking not only in the internal organisation, it is reflected in the autonomy of the patients that benefit from this relationship-based form of care. Instead of being dealt with anonymously, the nurses take time to ask questions, listen to the responses and support social activities. Without a doubt, these investments cost a lot of money. However, a 2010 survey by Ernst & Young calculated that these investments yield an impressive return. Since the patients are more satisfied with their care and require the services only half as long when compared to traditional care facilities, the public saves as much as 40% of the typical healthcare costs. A review by KPMG not only confirmed these figures, it also detected valuable side effects:

“Essentially, the program empowers nurses (rather than nursing assistants or cleaners) to deliver all the care that patients need. And while this has meant higher costs per hour, the result has been fewer hours in total. Indeed, by changing the model of care, Buurtzorg has accomplished a 50 percent reduction in hours of care, improved quality of care and raised work > satisfaction for their employees.” Buurtzorg

Something similarly impressive, but in a completely different area, can be seen at the German load restraint expert allsafe JUNGFALK. Between 1999 and 2016, revenues increased six-fold, EBIT increased twelve-fold and the number of employees increased five-fold. This period of success was accomplished by consistent lean management. Traditional departments and hierarchies were abolished and replaced by self-organising workflow management. Today, production teams themselves prioritise all incoming customer orders in order to guarantee good flow and high quality.

The terms quality, workflow management and success are naturally associated with Toyota. In their newest management agenda, the car manufacturer explicitly focuses on making decisions closer to the customer. Therefore, they will strengthen regional missions, support business activities having a close relationship to the community and allow more local autonomy. In addition, the hierarchy was pared down: Instead of 27 directors, there are now only 11, and globally only 60, rather than 77, top managers.

Delegating decision-making authority is important because business opportunities do not last forever. Just like risks, opportunities change over time, and often quicker than we would like. The longer we need to take advantage of certain options, to free up a bottleneck or to resolve a problem, the larger the economic effect will be. Profit margins disappear into thin air as solution costs rise to astronomical proportions. Usually, most opportunities and risks will be first recognized by the people who work closest to the customer. Zappos is convinced of this:

“Although change can and will come from all directions, it’s important that most of the changes in Zappos are driven from the bottom up: from the people on the front lines that are closest to the customers and/or issues” Zappos.

If the front lines were not given the necessary decision-making authority, the information — positive or negative — remains unused. Often such information doesn’t even show up on the business radar, let alone that it would become relevant for making decisions.

If we want to drive agility by increasing our awareness of opportunities and risks, then delegating decision-making power is necessary. This means giving enough authority to the areas that are closest to the customer. Ultimately, we want to be as “situationally elastic” as possible — as stated by the former Austrian Defence Minister, Gerald Klug, thereby creating the Austrian Word of the Year 2014. This type of situational elasticity has become standard in almost all self-organising enterprises, which grant experts a broad range of freedom. Agile feature teams at eSailors, for instance, determine their product development pool themselves, just as the interdisciplinary groups at Traum-Ferienwohnungen autonomously serve their customers, or the so-called niches at financial consultant Finext determine their specific project management. Even allsafe JUNGFALK has long ceased centralised supply management, repairs or investments. The employees make all the relevant decisions themselves and determine on short notice what they need for each customer assignment. And they also define when, how long and where they work. Instead of the usual control mechanisms, there is now trusted working time.

At the Viennese relay specialist TELE Haase, operational decisions are also made by the respective experts. The flow of core and support processes is determined by a group of 20 employees. An open exchange between the process circles encourages unforeseen capabilities to emerge, whether technical, managerial or linguistic, as was the case with a Portuguese-speaking apprentice who supported the sales team with a Brazilian customer. The transparency of decision-making in the various circles is shown not only on individual computers, but across all distributed iPads within the company. This way, it is possible to have access to all available business information on the in-house Infonet — whether at the employees work space or in the break areas.

Such democratic company cultures demonstrate that self-organisation is not just about operational decisions. At Haufe-umantis, for instance, strategic decisions are also made by involving all employees — such as the portfolio change from custom to standard software, the agreement about the company takeover by the Haufe Group, or the periodic election of executive management. In a similar way, design specialist IDEO always consults the employees before making important strategic decisions. At metal processor FAVI, teams were consulted when financial shortages arose from the economic crisis. When the final solution came from the employees, it reinforced the willingness to take responsibility and ensured these unpopular measures had the necessary support.

In many self-organising enterprises, decisions about new employees are made by those who will be impacted. After all, many of us spend more time with our colleagues than we do with our own families. Peer recruiting should enable all those involved to find a good fit for the group. Instead of classical HR processes, direct talks with potential colleagues, practice tasks or trial work days are used for testing teamwork. The hiring process at German telecommunications company sipgate is a perfect example. It begins with teams deciding if they need someone new for their team. If so, the team drafts a job advertisement and delegates someone to sit in on job interviews alongside personnel experts. The next steps are driven by fast feedback loops: Job applicants receive a response within 24 hours, and in the case of a negative message, the applicant is informed of the reason behind the company’s decision. The initial interview takes place with three or four team members along with HR, who then mutually decide if the candidate makes it to the next round, such as setting up a trial work day. The team is not only responsible for deciding on a candidate, they are also responsible for giving active feedback during the probationary period if someone is hired. The final decision of offering a permanent position is also made by the team—and directly communicated by them. This can be difficult, especially if they choose to not keep the new hire. However, it encourages consistent self-organisation over the long term, and improves personnel decisions as well.[4]

Autonomously managing planned and unplanned absences due to vacations, illness or business travel is standard in many self-organising enterprises. At pioneers like Semco, Gore or Morning Star, even determining the salaries is done on a cooperative basis, where those colleagues that work closest together give each other ratings: How great a role did my colleague play in the overall success? More, or even much more, than myself? Or less? At consulting firm Vollmer & Scheffczyk, a system where the employees determine their salary has been in place for several years. To start, everyone must consult with at least two co-workers using a new format about their respective salary suggestions before setting their own salary. It is based on two simple questions that must be answered by all employees. The first is: At which salary would you consider me overpaid? And the second is: At what salary would I feel underpaid? According to CEO Benno Löffler, this leads to an approximate range of your own and peer estimations, which yields important insights. Where does it fit? Where should we increase it? And what conclusions can we draw from the overall picture—especially in regards to typical salaries for this profession? As Löffler says, this enables transparency and makes individual decisions part of a cooperative network.

If you think such participative management would ruin the company, rest assured it doesn’t. The salary expenses at Vollmer & Scheffczyk have remained the same. Meanwhile, the heated discussions when this approach was first instituted have given way to pragmatic attitudes. Personal responsibility and commitment have risen considerably with this approach. The same goes for TELE Haase. As was the case, when self-determined salaries increased by nearly 90,000 Euros, it was clear to everyone that more revenues were needed to cover these expenses. In that same year, they achieved an increase in efficiency with an estimated value of more than 100,000 Euros, as well as a better gross margin, showing that a fundamental trust in the employee’s willingness and capabilities pays off. Such willingness is also underscored by a profit sharing model at allsafe JUNGFALK. According to executive manager Ulrich Lohmann, there are many forms for showing appreciation: boundaries that support autonomy, processes that ensure good workflow and continuous improvements made possible by the knowledge and good judgement of the employees. However, profit sharing that has been in place for many years is also important. When the company is doing well, everyone should benefit. And this profit sharing has had the positive side effect of employees paying more attention to costs and reducing waste.

4.2 Explicit Decision Management

The title of this section might be a bit irritating: Why must we again, or still, manage things? Isn’t it enough to just delegate decision-making authority? We should not overlook the fact that the path towards self-organisation brings more than just new freedom. The dissolution of traditional structures can bring unforeseen power struggles. All of a sudden, negotiation processes that were once dealt with through hierarchical structures are now part of daily business. To prevent possible confusion, I recommend once again to define explicit parameters: Which decisions need to be made? In what form will this occur? And who is responsible for it? If there is no active management of these new options, it can quickly lead to false assumptions. Each person has something different in mind and often relies just on their gut feeling. This leads to recurring debates á la Bill Murray in Groundhog’s Day.

So how can making decisions be regulated across the entire company? How can an organisation make sure their entire business know-how is available when dealing with critical decisions? How can you find out which decision-making format makes the most sense? From my experience, two methods are especially useful for answering these questions: the RACI Matrix, which originates from the Six Sigma approach, and the Delegation Board, which comes from the field of systemic consulting. How do these methods work? And how do they support entrepreneurial self-organisation? Generally speaking, the goal of the RACI Matrix is to clarify specific roles and responsibilities. It is filled out in three main steps.

1. Defining Roles: Who is involved? Who needs to be included and in what form, if we want to make good decisions?
2. Identifying Work Packages: What needs to be decided? Where do we need clear responsibilities?
3. Clarifying Responsibilities: Who does which work (R stands for responsible)? Who carries the overall responsibility (A is for accountable)? Who should be actively involved and possibly even asked for input (C like consulting)? Who needs to stay informed (I for informed)?

Work	Role 1	Role 2	Role 3	Role 4
Package 1	R	A		C
Package 2	A	R		I
Package 3		A	R	C
Package 4	C	I	A	R
Package 5	R		I	A

Table 4-1 Sample RACI Matrix

Co-creating a RACI Matrix has several advantages: * It helps us to capture the typical range of work in our system. * It assigns those responsible and those involved to these tasks. * It improves communication. * The probability of overlooking important stakeholders is reduced. * Misunderstandings can be eliminated with open dialogue: At the end, everyone knows what their tasks are and with whom they need to coordinate. * In this sense, the decision management can be seen as a twin of visual work management—while the latter provides visibility, the former explicitly defines what is often only implicitly understood.

In comparison to the RACI Matrix, the Delegation Board concentrates more on how the decisions are made. As soon as the “What” is clarified, the next step is determining the “How”: How should we make decisions? Who should take responsibility for them? Who will be involved and in what form? And how can respective forms of decision making be setup? The board is worked out in the following steps: 1. Defining your decision-making areas 2. Defining how to make decisions 3. Clarifying your current state 4. Agreeing on your future state

Defining your decision-making areas

This point deals with collecting all relevant information for making decisions: Brainwriting (each aspect written on an individual Post-It) and clustering (bundling the Post-Its according to topic) are effective facilitation techniques that ensure a strict course of action. Table 4-2 shows an example of what this definition could look like from lottery specialist eSailors.

Area	Decisions
Technology	Technological decisions affecting the Team
	Technological decisions affecting various Teams
	Decisions about the infrastructure
Organisation	Internal work management
	Methods
	Meetings
	Metrics
	Homeoffice
	Holidays
	Continued Education
	New Hires
	Feedback on behaviour & performance
Budget	Investments in infrastructure & equipment
	Investments in hardware & licenses
	Investments in travel, training & conferences
	Investments in coaching or team building

Table 4-2 Sample Decision-Making Areas

Defining how to make decisions

In this step, you are clarifying how a decision should be made. My experience has shown that distinguishing four ways is enough: * Hierarchical decisions, made from the top down, are part of the systemic framework. * Consultative decisions are also made within the hierarchy, but where those affected by the decision are asked for their input. * Collaborative decisions are worked through in an open discussion forum. * Autonomous decisions are firmly placed within individual groups or with subject matter experts.

Clarifying your current state

What decisions are currently made? When is someone asked for their opinion? Where is there a case for peer coaching? And who is allowed to make decisions alone? True to the motto, “Start with what you are doing now”, ascertaining the current situation offers an effective foundation for delegating authority—and often uncovers different points of view (see the various coloured X in Figure 4-2).

Agreeing on your future state

Analogous to the Agile Planning Poker Game, this process can be done in a gaming fashion. Each person involved gets a set of cards covering all relevant forms of decision making, numbered 1 to 4. For each decision area, all participants play their cards at the same time. The cards are initially placed on the table without comment, then a discussion follows about the differences between the numbers chosen. However, it isn’t going about justifying the decisions or persuading others to change their minds. Instead, the goal is understanding: Why did my colleague play a 2, when the other colleagues and myself put down a 3? How does the manager explain his 1, when all the others played a 4? And so on. This type of poker has nothing to do with bluffing, rather it deals with open communication and sustainable agreements.

In order to clarify decision making effectively, it must be combined with professional change management from the beginning. Such change usually starts with the “Why?” This applies equally to the need for and the urgency of explicit decision management: Why do we need it? How does it support self-organisation? Why do we believe this will make us more agile? And what impact does it have on our value creation process? In this preliminary phase, information should not be confused with communication, and feedback should be taken seriously. Perhaps it is not clear to the stakeholders what the benefits will be. Perhaps the decision-making policies are not seen as a critical point. Perhaps the fear is that such policies will degenerate into political wrangling — or that they will make power struggles more difficult in the future.

Implementing a RACI Matrix or a Delegation Board requires thorough preparation in terms of facilitation and focus. While facilitation deals with the well-known issues of time, execution and intermediate goals, the focus should remind us that self-organisation does not mean grassroots democracy. Effective decision management is dependent on a clearly defined framework. This requires line management doing their homework: Which decisions must be restricted? What will not be put up for discussion—at least not now? And where is management truly ready to accept team or professional decisions? Part of this homework includes determining how to evaluate the set-up. How can the manager evaluate whether the quality of decisions has improved? And how exactly will it be validated? It’s understood that both methods described here are not intended to be used just once, but must be applied in a consistent manner. It is also important to check whether the delegation of decision-making authority supports self-organisation. Otherwise, there is a risk that the Delegation Board will become just another piece of paper.

4.3 Simple Techniques for Deciding

Along with the RACI matrix and Delegation Board, self-organising enterprises also use specific methods to simplify decision-making.

The Point Query has proven itself useful for finding a democratic majority in any group. Depending on what is to be decided, options are visualised on cards or on a flip chart. Then, all group members receive a set number of dot stickers and mark their respective favourites (depending on the number of ideas, typically 2–4). To prevent peer-group pressure, the individual favourites can be written on the dot stickers before the actual query starts. In groups that already have experience with this method, marking your preferences directly will also work. In this case, a simple X or I marking can be used instead of dot stickers. At the end, the points are simply counted and the options are ranked by priority.

The Law of Two Feet turns the more cognitive Point Query into a decision that you have to stand behind, so to speak. In contrast to the Point-Based Query, the options are not listed on a board, rather they are visualised individually on different sheets of paper. Afterwards, these sheets are distributed across the room and the participants are asked to go to the option that attract them the most. If there are not too many options in the room, the distribution of people determines the respective majority.

The Five Finger Demo also needs a bit of physical interaction. Some groups can discuss things forever, going over the same problems again and again and always asking new questions. In such situations, it can be helpful to interrupt the discussion to capture interim results and check consent. A method we call the Five Finger Demo can be used here. Everyone involved in the decision gathers in a circle and extends one of their arms. After a 3-2-1 countdown, everyone demonstrates their support for a specific idea with a showing of fingers. The number of fingers mean: - Five Fingers: I support the option 100%. - Four Fingers: I support the option by and large. - Three Fingers: I am going along with the majority. - Two Fingers: I would like to know more about certain aspects before I make a decision, namely …. - One Finger: I object to making a decision until we have dealt with the following question, namely ….

The so-called Thumb Barometer follows the decision-making system of the Roman Emperors. In our case, it is going about the fate of a discussion: Thumbs up mean “continue discussion”, thumbs down mean “stop discussion”. The same method can also be used for finding solutions. Thumbs down signalise a veto, thus showing that further communication is needed.

A Consultative Decision-Making Process allows employees to basically make every decision themselves, as long as they stick to a few fundamental rules. These rules include aligning with the most important stakeholders affected by the decision, as well as consulting with experts for the respective topics being decided. With this type of proactive help, the exchange of information and the quality and acceptance of decisions improves. Each decision is treated as a small change initiative, where those who are affected by the decision are also involved to a certain degree. At Gore, high risk decisions are called waterline decisions. Decisions that endanger the well-being of the company, such that the proverbial boat everyone is on is in danger of sinking, must be well coordinated: with those people who have expertise in the affected area and with the managers who are ultimately accountable. Based on these consultation principles, Morning Star employees are even entitled to make larger investment decisions. The waterline there requires creating a business plan that must then be presented and debated with colleagues.

Key take aways from this chapter

Decisions are the lifeblood of an organisation. When decisions are made, complexity is processed and uncertainties are absorbed. In this chapter, two strategies for making good decisions were presented. The first strategy looked at practical examples from very different, but equally successful, organisations such as the Swedish Handelsbanken, the Dutch health care network Buurtzorg or the Swiss software developer Haufe-umantis. The second strategy presented methods for how you could setup and implement you own decision management system. Whether you can take something from the examples given, can implement methods like the RACI Matrix or Delegation Board, or apply pragmatic approaches such as the Point-Based Query, Rule of Two Feet or a consultative decision-making process, one thing is for certain: you must distribute decision-making authority to encourage responsibility at all levels. The agility of your company rises and falls with the awareness of those who are based at the customer frontline. However, this awareness is about more than just simple observations. A crucial part of it is to embrace decisions that are relevant for the customer, as well as the company.

5 Bold Experiments

The legendary Bill Gore asked his associates time and again, “Have you made any mistakes lately?”. When they would answer with no, he would state his mantra, “You haven’t been taking enough risks” [1]. The risks that Gore had in mind pertained to the topics of improvement and innovation. How should something improve if you are not willing to do something differently and accept any possible failures? And how would you replace something if you are not willing to leave the well-trodden path, instead being confronted with possible detours and dead ends?

Eric Ries has given us a useful model to better manage the risks of innovation: build – measure – learn. His feedback loop is supported by two main elements. The first element is the Minimal Viable Product, a lean version of a product, developed with minimal effort, that can go through the entire loop. The second element is validated learning, which puts our subjective confidence “to the acid test of real numbers”[2]. According to Ries, too often the amount of uncertainty is underestimated. The explanations that are gladly given for why something didn’t succeed and all of the stories that are created to justify our actions and to rationalise disappointing results have nothing to do with valid feedback. The only thing that gives us certainty is empirical data on real customer behaviour. There is a reason why we talk about the value of experience. As different as these values might be, four fundamental questions remain the same:

1. Do customers know they have the problem we are trying to solve?
2. If there were a solution, would they buy it?
3. Would they buy it from us?
4. Can we build a solution for the identified problem?

Whoever tries something out also risks something, and whoever risks something doesn’t always have everything under control. So why should we take such risk upon ourselves? Former Formula One driver Mario Andretti had an answer for this: “If you have everything under control, you are simply not going fast enough.” Although very few companies deal with car racing, we can learn something from Andretti & Co. If we want our company to be as agile and powerful as a race car, we must accept certain risks. We cannot avoid uncertainty when we want to try something new.

5.1 Growth and Agility

According to Diego Rodriguez and Ryan Jacoby, two experts of the design thinking pioneer IDEO, there are four distinguishable paths for development. Their matrix, seen in Figure 5-2, shows that product or service innovation is coupled with different risks and, therefore, require different strategies.[3]

Basically, the strategies described by Rodriguez and Jacoby proceed along the dimensions offerings and users.

• If you are dealing with established products for regular customers, incremental management is required. Practical examples of this are additional products of a successful brand, the next generation of a best-selling product or introducing packaging or delivery services, such as those offered by dm or Whole Foods.
• If you want to stretch your market position, you can follow two evolutionary strategies. The first one is to adapt existing offerings to meet the needs of new customers or markets. Toyota is a perfect example of this when they introduced their hybrid Prius, appealing to customers interested in ecology and energy efficiency.
• The second evolutionary strategy extends existing offerings to solve the unmet needs of current customers. A great example of this is the Nano from Tata Motors, which conquered the Indian market as a cheap small car.
• The final quadrant is the one, without question, that carries the most risk: creating something new. Ground-breaking innovations are associated with revolutionary strategy. After all, they create new needs and new markets. Sony was able to do this with the Walkman, for example, and years later Apple did the same thing with the iPod. In both cases, the interesting point is that the innovation wasn’t the technology, but rather that it completely redefined the experience of listening to music.

Which leads to another question, which seems interesting to me in the context of this book: How much agility is really needed in order to implement the various strategies? I see a different amount of urgency for agility, as indicated by the red arrow in the diagram. For ground-breaking innovations, we have a high amount of product, customer and market risk to overcome, and need at least an equal amount of internal and external awareness. Even for continuous improvement, a good radar is necessary: Which existing products can be expanded? What could run better? Which markets can we still serve?

However, if we are talking about commodity, agile processes make little sense for me. The product and service risks are negligible, moderate measures are adequate and careful management is indicated. Where our cash cows graze, our desire for changes should be kept within limits. Operational efficiency is required here. This also applies to all areas of the organisation that are set up for stability. Or would you rather have your financial experts get creative all of a sudden, your back office constantly question themselves or the infrastructure guys have new surprises ready for you all the time? I wouldn’t go as far as John Kotter, however, who recommends having two different operations systems to accelerate the entire enterprise.[4] Splitting organisations into innovation and business as usual reeks of a bipolar disorder for me. Although it begs the very valid question of whether or not we really need one agile enterprise.

I think we need to avoid pushing agility, just as we must avoid a complete separation of the various departments. Asking the good old “why” questions — if necessary, several times— seems to be a constructive way to uncover the real motivation towards agile: Why must we be more agile? Why do we have a problem with our current management system? Why does it need different solutions than the ones we have? And why in this area? It seems to me that dynamic interactions would be appropriate, allowing for a high degree of autonomy and at the same time keeping the need for alignment in mind. It affects core processes, which we want to set up as value-adding as possible, as well as services that should help us with this. For instance, what should a financial system that supports agility look like? What methods can human resource experts use to foster self-organisation? And how does the back office provide stability when so much is in motion?

It is not a coincidence that we have landed at organisational questions while discussing about an experimental-friendly culture. This culture does not live just from innovative products and services, it inevitably includes the question about the design of the entire organisation. How can we create a system that gives employees the necessary freedom to address customer needs? Which boundaries are needed to contain this kind of freedom? And how can we make sure that these boundaries are regularly inspected and adapted?

5.2 Organisation Design

You might have noticed that we are back at the initial questions from this book. It shouldn´t surprise you that I connect a flow-based organisational design with innovation. In other words, with the ongoing improvement our workflow, allowing us to optimize our value stream. Both of these areas are important. Without new and attractive offers for the customer, our process improvements are nothing more than ingenious development ideas drowning in a dysfunctional workflow.

Every change initiative succeeds and fails within the boundaries you have set up. The focus on flow, the autonomy of the individual business units and a well-defined distribution of decision-making authority are key drivers for this. Not to mention, such a culture simply needs time — not time fixed to a ready-made agenda, but to openly discuss about observations, to discover areas of optimisation and to run improvement experiments. At allsafe JUNGFALK, such experiments led to more than just the next round of the usual continuous improvement process (KVP). “The KVPs infiltrated the entire company”, manager Ulrich Lohmann states, “they were an important catalyst for the overall change of our corporate culture”. Every company can ask itself how much they care about experiments. Are we aware of the meaning of such experiments? Is it up to each of us to determine them ourselves? Do we have enough resources? Or are we completely consumed by our daily business?

Last but not least, autonomy requires not only time, but adequate space as well. The corporate culture manifests itself within the office or shop-floor architecture. The desired improvement and innovation culture must be, in the truest sense of the word, furnished. Elements of a beneficial architecture includes:

• Open areas for communication, such as the ones at Spotify, where many sitting areas, pleasant meeting rooms or open meeting spaces are available.
• Play areas with foosball or ping pong tables, like those found at allsafe JUNGFALK and many other companies.
• A smart office architecture, such as the one at InVision, where large team tables without fixed working spaces or classical office equipment are used. In addition, there are also small rooms for working undisturbed, sound-proofed areas for customer calls and an upper level open to everyone, as long as the applicable library rules are followed.
• A library with interesting books, together with a comfortable reading space, should provide immersion and inspiration, just like it does at sipgate.
• Day-care for children, which is a cornerstone of Patagonia´s corporate culture.
• Kitchen areas, such as the impressive row of refrigerators at Spotify, or the daily lunches prepared at Computest or even the restaurants at InVision or sipgate, where their own kitchen teams create culinary highlights.

In order to support improvement and innovation, self-organising enterprises make sure there is adequate time and space, but also use some special formats.

Pairing can be used in all areas where the point is to learn with and from one another, as well as improve quality. Depending on the goal, two or more people put their heads together to complete a piece of work. To generate as many improvement impulses as possible, the leadership roles are often changed. One time this person leads while the others look over their shoulder, then the roles are swapped. This improves the awareness for various approaches, refines the questions asked and supports open feedback. Pairing, which originated in eXtreme Programming (XP) software development, is now used in the most diverse corporate areas. At sipgate, it is not only used in software development, but also by personnel or finance experts getting together to work on an issue. And at Menlo Innovation, nobody works alone. All activities are carried out together to prevent knowledge silos, to support each other and to quickly correct errors. In this way, sharing expertise is as routine as personal feedback. The weekly rotation of employees ensures ongoing challenges and fresh impulses.

Communities of Practice (CoP) work in a similar fashion. Such communities normally consist of people with the same expert background who meet for an open exchange beyond organisational borders. Compared to regular meetings, these exchanges have neither a fixed agenda nor standardised procedure. A CoP can deal with subject-matter discussions on various topics, consulting about challenging situations, as well as filling up a shared tool box. What makes CoPs valuable is directly linked to forming and strengthening the professional identity of the community members. At Spotify, these CoPs are even a part of the organisational structure. Their so-called Chapters connect experts from the same field and their interest groups (Guilds), ensuring a lively exchange across the individual core teams (Squads) and product areas (Tribes).[6]

Along with the more team-oriented Communities of Practice, many self-organising enterprises use various Large-Group Formats to foster system-wide communication. For example, the Viennese software developer Compax holds quarterly conferences on selected topics. They also combine their yearly Christmas party with an open space to work on strategic questions like “What moves us forward as a company?”. Likewise, large group events are standard procedure at Liip. Each week, so-called Tech Talks are held across all five locations to exchange ideas about ongoing initiatives and skill building. At sipgate, employees from various departments meet every two weeks for an Open Friday. This Open Space-format allows them to exchange experiences across all organisational units, work on difficult questions and develop new ideas—an opportunity that, on average, two-thirds of all colleagues take advantage of. Community events are another form that go beyond the usual team meetings. For instance, eSailors facilitates regular meetups on various topics, sipgate holds a series of lectures, Lean Dus, with renowned guest speakers and InVision has its hafentalks on technical topics. sipgate even hosts concerts and cultural events in their office space, which have absolutely nothing to do with the daily business.

Peer Coaching is another form of professional exchange that plays an important role in self-organising enterprises. As will be discussed in more detail in Part III of this book, this format can include simple questions, case studies or mentoring between senior and junior employees. As the Dutch health-care network Buurtzorg demonstrates, it makes a big difference if the peer coach is from our own turf or if s/he comes from a different business area. Often, an external viewpoint of the familiar can provoke a change in perspective, which is the prerequisite for any improvement, let alone innovation.

Peer Feedback is related to peer coaching, but is focused on individual improvement. In Chapter 3, I already mentioned that personal feedback is an essential part of any self-organising culture. In Part III of this book (to be published in Summer 2018), I discuss eight specific formats for this type of feedback. The IT group Synaxon uses a special form of peer feedback, Liquid Feedback (LQFB), where all types of improvement ideas are evaluated by the employees themselves. Based on a short description, an idea must be supported by at least 10 % of the colleagues before being put up for a democratic vote. All ideas with a simple majority vote result will be implemented, and it receives appropriate support from top management, even if they are not completely convinced about the initiative themselves.

Even in the most mature enterprises, there are situations where neither daily communication nor explicit feedback can help. The tension between individuals, or even entire teams, threatens to spread beyond those involved. For such cases, Peer Mediation has proven itself useful—nobody says that good solutions require hierarchical authority. Although such mediation is inevitably experimental, the phases of professional mediation provide reliable guidelines. The first step is about agreeing on certain mediation rules. The second phase is about clarifying the current situation, whereas the third phase involves collecting information about the disputed issues and each party’s perspective. The fourth phase brings the parties together to find solutions and work out specific agreements. The final phase is a follow up, where the agreements are evaluated and further steps are negotiated if necessary.

Retrospectives are regular meetings to inspect and adapt the quality of agile work processes. Some colleagues even suggest that retrospectives are drivers of agility in any environment. When compared to the traditional project reviews or post mortems that are typically conducted after all work is completed, the retrospective nurtures continuous improvement right from the beginning. It builds a bridge between looking back, the current insights and the outlook on specific improvement measures. Occasionally, retrospectives focus only on selected topics, such as blockades, performance data or customer feedback. At higher Flight Levels, such as strategic portfolios or value streams (see Chapter 2), delegates are used to check the whole system.

Self-organising enterprises also encourage a rotation principle of the delegates, which leads to changing responsibilities, different perspectives and positive information flow. In order to build on as much insights as possible, it makes sense to run the team retrospectives before the large-scale retrospectives. In other words, only after reviewing the various parts of the workflow does it pay off to look at the overall value stream.

Hackathons concentrate all available resources for a certain period of time to develop new solutions. The term, which is a combination of hack and marathon, guarantees intense collaboration outside your daily business, and requires stamina since hackathons typically run 24 hours. A hackathon is already self-organising because the participants decide where they want to run to, i.e. which projects they find most interesting. Depending on who participates, various mixed groups emerge to collaboratively drive their ideas forward. Hackathons can regularly be found in agile software companies such as eSailors and Spotify uses entire hack weeks.

Do Food Meetings can be in the form of a joint breakfast, an American-style brown-bag lunch or a catered meetup in the evening. Many self-organising companies support such informal gatherings by offering the necessary infrastructure (space, facilities or equipment), as well as providing food and drinks. This includes anything from the obligatory coffee machine or completely stocked refrigerators like at Spotify, as well as personal chefs like at Computest or sipgate that prepare fresh meals for the employees everyday. It does not always need to have a factory canteen atmosphere!

5.3 Developing Self-Organisation

The question of when and how you use which format to support organisational learning inevitably leads us to a much bigger question: How do you make way for self-organisation in your company? What must happen so that the entire system is set in motion? And which decisions are needed for this? “It needs a kick-off”, the long-time executive manager of Hoppmann Autowelt, Bruno Kemper, explains in an interview. “There has to be some form of initial spark”, he states, “along the lines of a Big Bang” [8]. This Hoppmann-ish Big Bang happened in the 1960s when Klaus Hoppmann took over the company after his father’s unexpected passing. Since then, participation and profit-sharing are important attributes of the company. Strategic decisions are made by their own economic committee consisting of five employee delegates and five employer delegates. Whoever thinks these are political games, however, will be disappointed. The focus of this committee is strategic decisions meant to benefit the entire company—and the employees also benefit, since they share in the profits. Hoppmann´s sustained success shows that this fair model pays off. Despite automotive and economic crises, healthy revenues were generated and steady growth was achieved with the company now having 460 employees. An evolution of the corporate culture has accompanied this, without using command-and-control management or individual patronization.[9]

All power to nobody, is how Andreas Zeuch summarises various examples of corporate democracy.[10] It sounds good, but has little to do with reality. Paradoxically, a certain amount of power is needed to get such a democracy started—and usually this power is in the hand of only a few people. If we compare the histories of self-organising companies, we see that it always started on top. “Owners, board of directors and executive committees must allow the employees to take part”, as Peter Stämpfli points out, himself President of the Board of Directors at the long-standing Stämpfli Gruppe. “Openness is the key factor in this context. Openness, paired with respect for the people we work with.” Stämpfli’s statement is quite representative: across various branches, market situations and corporate cultures, it is the owners or chief executives that initiate the journey towards self-organisation. It can be a response to the patriarchal culture of leadership from their father’s generation, such as at Semco, Hoppmann Autowelt or TELE Haase. It can be driven by a leadership crisis, as was the case for Uppstalsboom or Harley-Davidson. Some companies simply refuse traditional subordinate/superior structures, just like Liip, Computest or sipgate did. And sometimes, management has a strong vision of how the company should operate, as we saw with Zappos, Morning Star or Handelsbanken.

All these self-organising experiments are much more than just small tests. It requires courage and a willingness to take on difficult work, as protagonists of self-organising enterprises will attest. “Many would like an extra safe solution”, Markus Stelzmann, CEO of TELE Haase, states. “You would like change, but please without risk and make sure everyone is happy.” However, the shift towards self-organisation requires something from everyone, where some may feel they have something to lose, others may feel overwhelmed and a few will drop out. “You need the right employees who are willing to contribute, create and take responsibility rather than just wanting to do their work.” Stefan Truthän, managing director at hhpberlin, summarizes this in a similar way: “The company is like a Jacuzzi: It’s always bubbling. Nevertheless, some have a desire for quiet, they just want to swim along and hide themselves behind the hierarchy rather than spend their whole life in a Jacuzzi.” Therefore, as Ulrich Lohmann from allsafe JUNGFALK explains, it is crucial to win over employees for the new organisational design. “You must encourage them to do what they think is right. They should use their technical and social knowledge with a healthy dose of common sense.” The transformation of the traditional structures into a flow-based enterprise can only be successful through joint learning. And Lohmann is convinced that this learning never ends. “We must continue to learn from our customers, use the diversity of our teams, exchange experiences and relieve ourselves of dysfunctional dependencies in order to become better.”

The question is, how can companies best accomplish this? How can employees and managers be empowered? How do you encourage the willingness to take on responsibility? And how do you attract people for those everlasting changes, which are the boon and bane of the agile world? It goes without saying, that there is no one-size-fits-all answer that will work for every situation. Self-organisation does not follow a standard formula. “Freedom is the enemy of the formulaic”, as Brian Carney and Isaac Getz point out [11]. For companies that want to be freed from dysfunctional principles, there are four reference points they can use:

1. Listen more, talk less and eliminate all symbols and practices that stand in the way of equality.
2. Communicate the company vision in such a way that others can make it their own and understand that this can only happen when people feel respected
3. Stop motivating people and instead setup an environment where people can grow and motivate themselves. If they understand the vision, they will take care of the rest when they are allowed to.
4. Remain mindful and become a guardian of the new culture of freedom.

Frederic Laloux also provides a few tipps on how to cultivate self-organisation. To begin with, you can implement consultative decision management, which is an effective system for conflict resolution, peer feedback, and architecture encouraging communication. For existing companies, he recommends concentrating on one area at the beginning: the fundamental understanding of self-management, creating trust and psychological safety or mutually designing a meaningful future. [12].

Along with the individual practices, Laloux emphasizes the crucial role context plays for successfully developing self-organisation. Whether you allow a higher amount of autonomy for various business units, design for a higher degree of alignment or institute flexible forms of loose and tight coupling will essentially depend on two factors: the size of the company and the nature of the value chain. The first factor is easy to understand. The smaller the business unit, the easier it is for the employees to self-organise. This would suggest simply segmenting larger enterprises, just as Buurtzorg, FAVI, dm or AVIS have successfully done for years. Although these companies are from completely different industries, they have more in common than what initially meets the eye. They focus on service, build upon individual expertise, require relatively little division of labour and have a rather short value chain. The customer is near to the mission driving the company forward. In comparison, companies like Incentro, Compax or Handelsbanken need a completely different form of self-organisation. Admittedly, they also allow many tasks to be completed in small units; the complex nature of these tasks inevitably leads, though, to longer value chains requiring a much higher degree of alignment. On one side, this is accomplished by using interdisciplinary teams, or in the case of Incentro, cross-functional cells of 30 to 60 employees—and on the other side, this requires a good system for ongoing alignment between various experts and teams. If you want to proceed as agile as possible, strategic flexibility also comes into play, like at Gore or IDEO with their floating teams or like Harley-Davidson or Haufe-umantis show with their project-related swarming. On the other hand, consulting organisations like hhpberlin, Finext or Vollmer & Scheffczyk work very close to the customer. This requires intense networking, ongoing re-orientation, as well as a good amount of trust. Sometimes this trust leads to disappointment, but that lies in the nature of such things. However, there is no alternative, as Benno Löffler believes: “The price of more trust is lower than the price of less trust.” To wrap up this chapter, I would like to—fitting to the topic—present a minimal viable model that could help you in developing your own self-organising enterprise. Building on my ideas about developing self-organising teams, this model is also based on a simplified matrix.

On the vertical axis you find four areas of responsibility that can be assumed either top-down or bottom-up: operational responsibility, responsibility for cross-team coordination, responsibility for strategic decision-making and responsibility for organisational development. Combining these areas with the distribution of responsibilities, four characteristic organisation types emerge.

1. The hierarchical organisation in which the core teams are only responsible for the daily business while management deals with all coordination aspects. Depending on the hierarchy, management answers strategic questions and questions about company development. Agile procedures are very limited in this type of organisation and there is little room for self-organisation.
2. The participative organisation has teams that, for the most part, coordinate themselves and are sometimes even asked for input on strategy development (see the light blue squares in figure 5-6). In participative organisations, though, a higher degree of autonomy is the exception rather than the rule. Key decisions are still made from the top down.
3. Self-organisation on the team level can be found in all companies that build upon local autonomy. For example, Scrum teams in software development, the alignment of several product development teams or entire business units focussed on specific customer segments. Often, the individual units are even involved in strategic issues or at least asked their opinion. In many cases, there are explicit decision policies built upon bottom-up responsibilities.
4. Enterprise-wide self-organisation encourages agile interactions between all units. It is built upon a smart system of distributed management responsibilities, where the boundaries for this system are defined from the top down. Functional divisions (keyword: departments), as well as hierarchical management logic (keyword: above and below) are avoided. Agility is driven by decisions based on technical and field expertise close to the customer.

The chequered areas reiterate that the world is not black and white. In a number of companies, line managers and subject-matter experts share responsibilities. Depending on the topic and goals, this can lead to very dynamic forms of collaboration, keeping both the company and its employees on their toes. For Stefan Truthän, one of the executive managers at hhpberlin, this mobility is essential: “The organisation must remain open to change, otherwise it will become as hard as concrete—and once that happens, it is not possible to make it flow again.”

It’s quite possible that the matrix presented here will not help prevent any confusion, which may lead you to declare my experiment a failure. Without a doubt, the model is in many cases questionable, especially when identifying areas of responsibility, classifying the organisational form or defining conflicting priorities of top-down and bottom-up. Perhaps, though, it helps you better identify your current situation and, above all, ask helpful questions. What currently occupies us the most in regard to self-organisation? How is the interaction between management and technical experts set up? What can be done to realise more of our potential? These questions lead us to the next design area: the organisational structure needed to encourage self-organisation.

Key takeaways from this chapter

As always, mindfulness is called for when dealing with culture. This is true for companies in general, but especially true for self-organising enterprises — particularly if a process for continuous improvement and innovation should be established. This chapter shows how you can embrace such a process and what you can do to ensure the expected results. Once more, a few characteristic patterns can be identified. Design pioneer IDEO distinguishes between evolutionary expansion or adaption and the type of revolutionary creation found at Toyota. The Hamburg-based eSailors uses more or less the same innovation format like the California-based Menlo Innovation or Dutch Buurtzorg. And companies like InVision or Spotify not only supply their employees with the necessary technical resources, they also provide meeting rooms, quiet areas of retreat and good food. The ambition to experiment is also required if entrepreneurial self-organisation is to be strengthened. This can be seen in companies like Autowelt Hoppmann, the motorcycle producer Harley-Davidson, as well as the engineering experts Vollmer & Scheffczyk. At the end of this chapter, a simple matrix was shown that could help a self-organising enterprise determine their current state and define next steps of organisational development.

6 Lean Organisational Structure

Speedboat instead of steamboat is one of the slogans for business agility. Ultimately, we want to be fast and responsive instead of just clumsily chugging along. As I already explained in Chapter 2, these metaphors are chosen wisely: They emphasize the flow principle that drives our product and service “boat” to our targeted customer “port”. Although experience shows that value needs to be the centre of our attention, we cannot avoid questions about organisational structure. How should companies design themselves if they want to ensure agility? Which roles are needed to utilise self-organisation? And what procedures are necessary to coordinate various units?

Lean, de-centralised, loosely coupled, interdisciplinary, flat — these would be the structural requirements for self-organising enterprises. What do these requirements mean in detail?

Lean means, first of all, to focus on small business units. You are more flexible when responding to change as a result. Agility is unlikely if a large apparatus has to be put in motion. Across diverse industries, self-organising enterprises use core teams with a limited number of members. At Buurtzorg, there is a maximum of 12 people on a team, at sipgate it’s 10 and at Harley Davidson it’s 20. At their high point, FAVI had self-managed mini-factories, each with a maximum of 30 workers. Incentro is built on customer-oriented units having 30 to 60 specialists and Traum-Ferienwohnungen limits their autonomous cells to a maximum of 20 people each. If the work in these cells increases, along with the number of assigned experts, the cells are simply split apart. InVision, on the other hand, has shrunk their core unit in some cases to 3 or 4 people in order to make communication as easy as possible.

Working across teams is also limited. It can just be the organisational structure like at Spotify, where product-oriented tribes have a maximum of 150 employees. Or they focus on certain market segments, like it is done at ImmobilienScout24 and AutoScout24. Small business units also make it easier to have alternative management models, like Handelsbanken demonstrate: relative goals, continuous planning, resources as needed, dynamic coordination across various company areas and a high degree of autonomous decision-making [1]. The Finnish cleaning company SOL also manages without fixed goals and budgets. The 11,000 employees are organised into regional studios that independently manage their daily business—which is done during the day, in contrast to the industry trend of cleaning at night—and new business opportunities.

Decentralisation also has a considerable trimming-down effect. Static bureaucracies give way to dynamic networks. Whether it is Toyota’s manufacturing teams, Morning Star’s divisions, hhpberlin’s project teams or Liip’s autonomous locations: The traditional headquarters, as well as the hierarchy and staff functions that go along with it, are replaced by self-directed business units. Naturally, this is not a new model. The car rental company AVIS already used decentralised business units, each with their own profit-loss responsibilities, in the 1960s—and at the same time removed many status symbols such as reserved parking, prestigious offices or sophisticated job titles for managers. Decentralisation helps overcome many policies preventing people from giving their best. Less bureaucracy, no unnecessary management rituals and eliminating a culture of personal dependency are good prerequisites for this. Already in the 1990s at dm, the classical business pyramid was turned upside down. On top is the customer, or better said the stores, where they enjoy a high amount of freedom to design for their local customers. Management still plays an important role, but instead of the typical hierarchical structure, leadership is cultivated as a service. Instead of dictating budgets, revenue goals or conduct guidelines, they set general boundaries. The focus is on supporting the stores that serve the customers.

Loose couplings are often used to build self-organising structures. This thins out of all the lines, levels and boxes typically found in traditional command-and-control cultures — and can go as far as companies like Compax, Liip or Gore, where there are no formal org charts at all. This leads to employees not being fixated on an explicit job description. Just like positions, descriptions by definition tend to be static: We do only this job, we insist on this position and so on. Frederic Laloux compared job descriptions to a “honey pot for the ego”: They attract you and make you addicted, but ultimately are unhealthy [2].

“Don’t put people into boxes” Gary Hamel also warns us, because a narrowly defined role is as detrimental to learning as is exclusively focusing on just one area of expertise or over-identifying with a certain team [3]. Business agility should be nurtured by personal flexibility, where you work with various people on different things in order to go beyond your own core competencies. Great examples of this are the so-called fluid teams at Düsseldorf software developer InVision, the demand-driven transfer of production teams at FAVI or the strategic swarms at Haufe-umantis. Depending on customer requirements and the projects arising from them, experts find themselves in different constellations. Paul Bennet from IDEO even talks about loosely structured organisations requiring a special balance: “Enough design, but not too much. Sufficient structure, without feeling over-structured. Only enough planning as necessary, without controlling too much.”[4]

1. A constitution where the rules of the organisation are set.
2. A structure of circles, special roles and their dynamic interaction.
3. A decision-making process for regularly inspecting and, if necessary, adapting all roles and authorities.
4. Regular Meetings to coordinate individual circles and roles.

Decentralisation, just like coupling, goes beyond silo thinking. It is replaced with interdisciplinary collaboration at various levels. If individual business units want to operate autonomously, they must have all the necessary power for generating value. This applies to teams as it does for large groups that are together responsible for a product or service or for business units that work on an entire portfolio. At Computest, the whole organisation was converted from expert silos to interdisciplinary teams. The various service units include all competencies necessary for the respective customer segments. At the same time, strategic development is now driven by an interdisciplinary group of technical and process coaches, which have replaced middle management. A similar story happened at Traum-Ferienwohnungen. Before, customer-oriented changes were tied up with time-consuming alignment across various departments, but today are accomplished over a shortened route. Specialists from various areas work together within self-managing units and deliver the customer solutions from a single source. ImmobilienScout24 has the same goal. There, individual development teams are clustered according to market segment, focusing on cross-team coordination to generate value. The line management is interdisciplinary, too. The top people from sales, product, marketing and IT share overall responsibility.

Interdisciplinary structures should not only provide cross-functional expertise, but also promote learning. Mutual understanding is as important as building so-called T-shaped skills. As can be seen in Figure 6-2, the T-shaped skills result from connecting special expertise and general know-how. While the core competencies are like a deeply rooted tree, this tree can expand by learning from other experts. The growing branches of capability can be pictured at the top part of the T. In interdisciplinary teams, developers learn from testers, sales people from product managers, or designers from marketers. In this manner, they will never achieve the same level of knowledge. However, they increase their understanding of each other, are more aware of dependencies and better align themselves towards the big picture.

Last but not least, self-organising enterprises favour flat hierarchies. Many teams don´t have designated managers anymore. Basically, everyone is responsible for decision making (see Chapter 4). The same applies for planning, organising and controlling all work that has to be done to delight the customer. Naturally, this also holds for feedback, learning and improvement. Delegates, acting as speakers for the group, are chosen to coordinate with other business units. This ensures transparency and a common focus on both sides. Rotating group speakers prevents anyone from mutating into a chief delegate. dm is a great example of how a large corporation with an extensive store network can operate with a flat hierarchy. With 38,000 employees, there are only two management levels: a total of nine executive managers, who are also responsible for specific business areas, and regional managers that support 20-30 stores each. The broad areas of management responsibility strengthen the principle of subsidiarity and make micromanagement nearly impossible.

The story of InVision shows how you can go from a first iteration of agile change, to increasing bureaucratisation, back to a more or less mature level of business agility. Although the growth phase led to traditional structures with more and more line management, a radical form of self-management is nurtured these days. Instead of a hierarchy, there is autonomous teamwork. Instead of fixed roles and job titles, the exchange between various professionals is fostered. And instead of silo logic, there is an emphasis on value-oriented creativity (https://www.youtube.com/watch?v=OHcFd5KaYRI).

Just like at InVision, self-organisation is one of the reasons that middle management is shrinking—or even completely disappearing. What is middle management good for in a company where everyone is responsible for work, as well as people management? For Hermann Arnold, middle managers seem to have a similar fate as travel agents. In their current form, they are more and more unnecessary and need to reinvent themselves.[7] In some companies, managers go back to expert roles while others provide coaching functions, which I will discuss in more detail in Part III.

6.1 Minimum Guidelines

Lean, decentralised, loosely-coupled organisational units set the stage for a high amount of autonomy. Hierarchical interventions rarely help serve the customers better. This obviously does not apply only to the world of small software companies. Industry giants, such as American organic supermarket Whole Foods and the German drugstore dm, also succeed with minimum guidelines. Rather than bothering employees with superfluous standards, they are expected to bring their own ideas. At Whole Foods, experiments to better serve the customers are encouraged throughout the company. This can be in the form of regional product selection, an appealing presentation of goods or any type of help that simplifies shopping, packaging or transporting goods. At dm, each store determines their assortment of goods to a large degree, as well as any special services they want to offer the customers. They are also free to hire and coordinate employees as needed. Salaries are as transparent as the projects you can apply for. Personnel costs are understood to be employee income and further training is seen as an investment into the future.

Such design autonomy is not possible without a certain amount of decision-making authority. This applies to both the systemic and individual level, including the possibility of company internal job changes like at American finance expert USAA. The excellent customer service, for which USAA has received many awards, is reflected in a corporate culture where individuals have a variety of opportunities available. If someone is convinced they can serve the company better in a different area, the move is not only granted, but also supported with specific training.

However, self-organisation does not live from structural independence alone. It needs a willingness to responsibly utilise this independence at all levels, along with the commitment to develop your own capabilities.

A clear understanding of commitment is all the more important because self-organisation is not self-serving. The ultimate goal always remains the same: be profitable while ensuring employee and customer satisfaction. As Don Reinertsen so convincingly argues, proxy goals are too often pursued: more innovation, better product quality, democratic corporate culture or self-management and agility. None of these proxy goals are objectionable, as long as it is clear that they are a means to an end, namely making the organisation profitable.[9]

As crucial as profit is, the spirit of self-organising enterprises is not solely based on this. Sure, they need money, just like people need to breathe. But at the same time, people do not simply live to breathe. Companies like Patagonia, Gore, Haufe-umantis or dm don’t just exist to maximize profit. Instead, they are practical examples of why the particular balance between profitability, customer satisfaction and employee satisfaction is so important these days. Although customer satisfaction contributes to the obvious profits, employee satisfaction should not be underestimated. I believe it is a fundamental prerequisite for any sustainable value creation.

“Value creation through appreciation”, as Bodo Janssen points out for the German hotel business Upstalsboom. Anyone who thinks this is just another pathetic management cliché can take a look at a few impressive numbers. Since implementing democratic processes, employee satisfaction has increased 80% within a few years, while the sick leave quota sank from 8% to 3%. At the same time, guest satisfaction increased 98%, which led to a doubling of company revenues within three years, along with a significant increase in productivity.

9.2 Mirror Phenomenon

Thought leaders of self-organising enterprises have often alluded to the dynamic interaction between organisational and professional openness. The conduct within the organisation always affects the conduct of the organisation with its customers and vice versa. Corporate culture and customer relationship culture are two sides of the same coin. That’s why the way an organisation treats their employees affects the way customers are treated. If the employee’s need for respect, growth and autonomy is fulfilled, this not only has an effect on their own satisfaction, but also on that of the customer — in a sense, the spark is carried over.

Similar mirror phenomenon can also be found within the enterprise. Conway showed how company and software architectures influence each other in the IT business.[10] Simply stated, the structures and processes of one area are found in the structures and processes of the other area. This mirror phenomenon can be found in the history of each company. InVision is a perfect example of how growth and success can increase complexity in an unexpected way. What began as an agile experiment led to IT systems that were dull and prone to errors, which they tried to “fix” with an increasingly bureaucratic control mechanism. It’s no wonder, as CEO Peter Bollenbeck stated, that customer-focus, as well as the fun factor, had been lost over time.[11]

From Bollenbeck’s perspective, InVision found their way back when they began applying IT hacking principles within their organisation. This kind of organisational hacking not only required a profound understanding of what was going on, but also a certain amount of disrespect along with a trial-and-error mentality. In this spirit, the control mechanisms that made life difficult for everybody were attacked in at least two ways. First, the rigid IT standards from Microsoft, Oracle or SAP were gradually replaced with open source solutions. Second, command-and-control management was replaced with autonomous teams and flexible alignment. Both strategies encouraged entrepreneurial spirit along with business agility.

As we saw with lottery specialists eSailors, organisational development rarely occurs with a harmonious balance.[12] Similar to InVision, the software development at eSailors was also shaped by a monolithic IT architecture, which was migrated piece-by-piece to one that favoured autonomy of the cross-functional product teams. The independence of these teams forced, in turn, the transformation towards microservices. And changes turning the former assembly-line into customer-oriented processes eventually left their mark on the leadership culture. Figure 6-4 shows this new culture also led to a transparent workflow.

What can we learn from these examples? Maybe this: If we want a lean organisation we also need to make cross-team coordination as easy as possible. Or even this: If value creation and appreciation are like Siamese twins, we should pay attention to customer satisfaction and employee satisfaction in equal amounts. Both areas are valuable. Without question, an open-minded environment where experts manage their work themselves results in less employee turnover, as well as fewer costs for recruiting or onboarding. The outstanding commitment that distinguishes self-organising enterprises, such as identifying with the employer, a sense of responsibility towards colleagues and the willingness to serve your customers are themselves important values, too.

The emphasis is placed on balance. If the focus is on optimising workflow without giving people decision-making authority, such a balance cannot be achieved. The same goes for a work management system that allows transparency, but doesn’t support self-management. Self-organising enterprises have, above all, two benefits. First, they increase what is called the psychological revenue through an open working environment that nourishes the so-called happiness factor. Second, the marketing effects of a self-organising culture should not be underestimated. In a time where the war for talent seems to be ubiquitous, a company’s good reputation is a valuable commodity. That’s why the Dutch software expert Incentro has both employee and customer satisfaction on its agenda. They are convinced that satisfied employees will not only be happier in their jobs, but will also deliver better results. For Incentro self-organisation is not an end in itself, according to founder and managing partner Stef Lagomatis. It is a means to ensure satisfaction in all relevant areas. The company was recently voted a Great Place to Work confirming his conviction, as do the results of the Net Promoter Score (NPS), which collects customer feedback on a quarterly basis. Both of these interim results underscore the ambitious goal of making customers the ambassadors of Incentro.

**However, profitability can never be ensured through company structure, regardless how lean it is. The potential for improvement is minimal if we focus on the levels of our organigram. What benefit does it bring to the customer if we move boxes around? Reduce the number of levels? Pile up teams on top of one another like Legos? Reshape the silos? Or replace them with circles? Hardly any, I think. If the customer is unlucky, the product and service quality decrease because the organisation is too busy working on its internal structure. If, though, we can channel our value streams to improve cycle times, manage our workflow with less effort and deliver better quality, our customers will quickly notice.

In other words, flow is and will always be the determining factor of business agility. It’s a bit like soccer. The deciding factor is not the line-up, but rather how the game is played. Even a team of superstars will lose if they are not able to play well together. It is the interactions, not the sum of the individual elements, that determine the degree of agility. At the same time, the line-up cannot be completely ignored. A limping soccer forward would make as few goals as a blind goalkeeper could prevent. The same applies to the strategy we follow in our organisation. The more cumbersome our line-up is, the longer it takes to get things flowing. The clumsier our teamwork is, the slower our value creation becomes. And the more we centralise management tasks, the more artificial bottlenecks we create. Which brings us to the next design area of self-organising enterprises—distributed management tasks.

Key takeaways from this chapter

Business agility is not possible — and I consciuosly repeat myself here — without system thinking, lean principles and self-organisation. Although we focus on the interplay of work flow and value stream, we cannot avoid the questions of organisational structure. How should we set-up our enterprise in order to maximize value and minimize waste? With the keywords lean, decentralised, loosely-coupled, interdisciplinary and flat, we have some essential answers. A further hodgepodge of real-life examples shows how this can be done. For example, the Finnish cleaning services company SOL with its 11,000 autonomously organised employees, the loose coupling at the California tomato producer Morning Star, the interdisciplinary cells at Traum-Ferienwohnungen or the flat hierarchies at outdoor clothing experts Patagonia.

All of these companies show how to apply and gradually expand autonomy: whether it is the autonomy of work processes, decision making or networking. If this can be achieved, you will neither have to worry about customer and employee satisfaction, nor about the profitability of your company.

7 Distributed Management

It is often snidely remarked that experts do the work while managers sit in meetings. Skeptics equate management meetings with a black hole: Many go in, but nothing comes out. The cynical ones assure us that something does get spit out from this black hole, namely, decisions that make their work life more difficult.

However you want to interpret such statements, the fact is many managers in large organisations have very little to do with the core business. The higher they are in the hierarchy, the weaker their connection to the people who are actually responsible for creating value. The micromanagement attacks, especially in allegedly critical situations, reinforce rather than contradict this disconnection. The distance from the core business underscores how little some of the strategic decisions have to do with reality. Setting goals is known to be much easier than actually realising them.

The question is how do self-organising enterprises navigate — and who is sitting at the helm. What does it mean for our understanding of leadership if many responsibilities of traditional line management are taken over by teams? If experts themselves perform many of the tasks that have been the privilege of superiors? If everyone is a manager, as Morning Star CEO Chris Rufer asserts, or even a boss, as Hermann Arnold points out?[2]

Lean thinkers suggest managing the work, not the worker. As argued in Chapter 1, we should primarily focus on value streams. Transparent management systems and quick feedback loops, the subjects of Chapter 2, facilitate this focus. When we pay attention to how we coordinate various organisational units, we can make ground-breaking decisions together. As was shown in Chapter 3, everyone should be responsible for successfully designing and operating their own work system. And as explained in the last two chapters, this system is designed for maximum autonomy and minimum overhead.

7.1 Leadership through Networking

Self-organising enterprises stand out because their flow-based system drives both daily business and continuous improvement by relying on peer relationships instead of hierarchical relationships. At InVision, for example, joint sprint reviews are held every two weeks. By making work results transparent, all employees not only gain an overview, but also the opportunity to better coordinate their work with one another. Similarly, this encourages communication, looking outside of one’s own box and taking more responsibility for the big picture. Planning works without a manager the same way coordinating workflows does. Feedback is received directly from those who are involved, decisions are made based on this feedback and continuous improvement is driven forward autonomously. The captains of the organisation no longer find themselves on an aloof command bridge, rather they are found at the forefront where the customers are. Instead of heroic managers, there are a great number of small heroic acts in self-organising enterprises.

The distribution of management tasks does more than just encourage more employee participation. It is also about the competitive advantage an Agile company can gain from it. Market turbulence does not eliminate traditional management tasks, regardless the amount of volatility, uncertainty, complexity and ambiguity (VUCA) it brings. However, the market dynamic does profoundly change these tasks. The main issue is how a company responds to these turbulences that are constantly confronting them. How do you deal with complex challenges? What advantage does it bring to master the inevitable ambiguity of many topics? And how can you cope with the uncertainty that accompanies it?

The principle of self-organisation offers a simple calculation. The better a company designs itself to master change, the more business opportunities it will create. Distributing management responsibilities pays off in many ways – as the following list of classic tasks and benefits through self-organisation suggests:

Setting Goals Input: Many sensors help to identify the most important challenges Customer Focus: Respectful relationships make it more likely that we pursue the right things Autonomy: We set our goals based on local opportunities Ownership: Strategies for achieving goals are co-created by those who will implement them Planning Suitability: We create budgets from the bottom-up instead of top-down. Manageable Risk: We proceed iteratively, regularly inspecting and adapting our course of action Value-Orientation: We coordinate our input to pursuit the most promising business options. Flow Principle: Small batch sizes enable shorter cycle times and higher predictability. Decision-Making Clarity: We jointly define the what, how and who of decision-making. Delegation: We shift the decision-making authority away from the hierarchy and towards subject matter expertise Response Time: We encourage decisions that help us use business opportunities quicker and resolve problems earlier Minimize Risk: Decision-making responsibility is spread across several shoulders Organising Simplicity: Short feedback loops instead of bureaucratic reporting. Autonomy: Acting based on actual need rather than conforming to general guidelines Responsiveness: We use processes that allow us to quickly respond to changes Creative Space: We need time and the necessary resources in order to come up with new ideas Controlling
Self-Control: We take on responsibility for ourselves and for each other Lean Thinking: We reduce costly overhead wherever possible Overview: We use transparent management systems Learning Loops: We implement useful metrics in order to learn together.

“Leadership is a service, not a privilege”, as owner and chief executive of Upstalsboom, Bodo Janssen, states.[3] Everyone involved benefits from distributing this service. Professionals are respected for their expertise, teams are given the right to design themselves, value-driven coordination is supported, market-oriented business areas are given full responsibility for their profit-loss results and customers get what they need as quickly as possible. Using optimist jargon, we can talk about a win-win-win situation for the customer, employee and company.

Although it looks like everyone should be happy with this, there is at least one piece that remains unsolved. If management duties are distributed, systemic responsibilities embraced by various people and leadership agendas become a team effort, why would we still need line management? Strictly speaking, line management is a good example of what lean thinkers call wastefulness. This type of thinking borders on hierarchical sacrilege. But when examining it more closely, it’s not difficult to question the business value of superiors. Typically, customers place value on good business relationships, interesting products, professional services and the willingness of the company to go that famous extra mile. I have yet to see a customer that finds the hierarchical relationships within the company important. Why must highly-qualified professionals always obey the orders of a hierarchical superior? How does this fit to the requirements of the 21st century if we still connect our system performance with personal dependencies?

Nobody would deny that a certain amount of management is needed in any organisation. However, if the employees manage themselves to a high degree, the position of the former supervisor is inevitably in peril. What value is added by a manager in a self-organising environment? What can they do that the experts themselves, with a certain amount of practice, cannot do? Are hierarchical positions really superfluous, as agile evangelists have prophesied for years?

7.2 Line Management

Despite the risk of being misunderstood as the lifesaver of hierarchy, I would like to argue at least three good reasons for a powerful line management:

1. There has to be someone to work on the boundaries and contexts of self-organising systems. It requires to some extent a designer who marks out the playing field and does everything necessary so the people in the system can do their jobs as well as possible. In the words of Marc Stoffel, CEO of Haufe-umantis: “The challenge for top management lies in implementing an organisational design that not only meets the needs of the market and the customers, but also offers the employees and ideal working environment.”[4] A similar point in an anecdote by Paul Bennett starts with his job interview at IDEO. When he asked how he would know his work was successful, CEO Tim Brown gave him a nearly Yoda-like response: “The system will embrace you and you will see your impact.” As mysterious as Bennett found this prediction, after he started working he quickly understood what it was going about: “IDEO gives me a place where I can squint and feel my impact with just enough boundary conditions to allow me to feel safe” (https://lboi.ideo.com/oops.html). In addition to the infrastructural setup, a clearly defined decision-making authority are part of these conditions. Moreover, regularly inspecting and adapting these setups and authorities is essential.
2. In order to prevent global sub-optimisation, we cannot just concentrate on parts of the system alone (agile teams, etc.). That’s why along with designers, there also need to be something like architects, or perhaps choreographers, who work on the big picture. This is even more challenging in an agile environment, where we can expect little stability. Strategic swarms like the ones at Haufe-umantis or fluid teams like those at InVision are good examples of sub-systems that must be regularly re-coordinated. To accomplish this, there needs to be an overall system facilitator and choreographer. Top managers operate “not as a boss, but as a broker”, as Nicolaj Armbrust states, founder and one of the executive managers at Traum-Ferienwohnungen.[5]

1. Last but not least, we should be able to provide help to people too. The term coaching has established itself in recent years for the professional support associated with this. In the third part of this book, I will explain in-depth why managers should see themselves as coaches, and how they can implement this role.

“One of the symptoms of an approaching nervous breakdown is the belief that one´s work is terribly important”, the philosopher Bertrand Russel once said.[6] Many line managers in traditional organisations seem to be candidates for such a breakdown. They see themselves as doers, but fail to notice how they, in many cases, create bottlenecks by omitting information, making unclear decisions or delaying feedback. They interfere in operational work processes and fail to see how they patronise professionals when they do this. They set overly ambitious goals, but pay little attention to how these should be implemented. “They live in their own world”, is how a UX-Designer made the point. “When I look at some of the decisions being made, I don’t know if management is still on planet Earth, or if they exist in their own universe.” No wonder that many self-organising enterprises focus on making leadership a service. At Gore, line managers are explicitly there to serve the employees and support their work as best as possible. The same goes for Harley-Davidson. As the former CEO Rich Teerlink and his coach Lee Ozley wrote in More Than a Motorcycle, the ideas of shared leadership responsibility and cross-functional collaboration quickly bears fruit: decisions are made as close as possible to the source of the problem, leadership turned into a process where everyone took part; consequently, each person that had hierarchical authority turned step-by-step into facilitators and coaches.[7]

The German allsafe JUNGFALK can tell a similar change story. After all departments had been abolished and a customer-oriented process organisation was established, the job description of the former department managers was also forced to change. Flow thinking was called for rather than business administration. Today, management focuses on two areas: Optimizing processes and developing employee potential. Supporting autonomy is as important as the open discussion about failures and learning together. And along with continued training and coaching, the process leader accompanies the field service to the customer site in order to listen, watch and ask questions there. A similar story is told by Markus Stelzmann, CEO of TELE Haase. According to Stelzmann, he does not see himself as the big boss who wants to keep everything under control. Such an approach would be absurd in regard with TELE Haase´s self-managing business circles. He takes on two roles to influence the daily business: as a lobbyist for topics that are especially important to him and as a personal mentor helping individual employees. This is anything but child’s play: “How do you convey that it isn’t enough to just do your work? How do you nurture the mental readiness to try new things? And how do you support the bold actions needed for innovation?” The Dutch software specialist Incentro pushes the envelope of this idea. The executive management no longer acts as a control-oriented supervisory board, but rather as a board of inspiration hosting special guests several times a year, such as football managers, philosophers or artists like Dutch rapper Typhoon. A plethora of new ideas emerge from these workshop-like events, which then are disseminated within the company. The core values of ambition and happiness, along with inspiration, are the focus at Incentro. As senior manager Mathijs Kreugel explains, it is about giving “talented people…the opportunity to excel. We achieve this in a variety of ways, including by giving each other the freedom we need to grow, so that everyone gets a chance to develop their full potential.” (https://www.incentro.com/en/culture/happiness).

At Toyota, line management’s mission is enabling the team to win, meaning creating value for the customer. Management is not directly involved in creating value, rather they coach and support the team members. Which is quite similar to Zappos: “The role of a manager is to remove obstacles and pave the way for the employees to be successful” Zappos.

The only legitimate goal of line management is to support self-management, as proclaimed by Götz Werner, founder and member of the board of directors for dm. According to him, a manager is not someone who knows everything and can do everything better. A manager is able to ask the right questions. Asking questions increases the awareness of the person being asked, and makes it possible for them to find their own answers.[8]

Of course, this requires a special form of attention, as organisational guru Peter Senge claims: “The managers of today must be researchers who acutely study their own company. They need to be designers who initiate any learning process that enables self-organising and leads to profitable performances in an ever-changing world.”[9]

These examples reinforce a crucial point: distributing management is not a lifeline to save dysfunctional leadership. Instead, it’s about defining the services we need to encourage business agility on all levels. Designer, choreographer and coach are not supposed to undermine leadership as a team sport. Designing a successful organisation is still the responsibility of everyone. Line managers do their part by focusing on those things that go beyond the control of the experts working in a specific environment. They work on the system and not in the system, as John Seddon points out.[10]

Of course, that is easier said than done. The collaboration between line managers and subject matter experts remains challenging and requires trust and a special form of fitness. The last design area described in the next chapter — continuous training and coaching — emphasizes why this fitness is so important and how we can achieve it.

Key takeaways from this chapter

Self-organising enterprises break away from many traditions: the tradition of connecting management and hierarchy, the tradition of disconnecting planning, controlling and implementing, the tradition of telling highly-qualified professionals how to do their job or the tradition of treating adults like children.

This chapter tries to clarify what you are getting into when you break with these traditions. You can profit from it, but there are also risks and side-effects when you distribute management responsibilities across your organisation. The concept of shared responsibility also changes what line managers can and should do. Designer, choreographer and coach are three aspects of a new management that fits the challenges of the Agile world. Leadership is no longer a privilege, rather it is a service we provide our customers and each other for the benefit of the company.

8 Continuous Training

“Effective empowerment is the product of freedom multiplied by capability”, according to Jeremy Hope and Robin Fraser.[1] Many managers are intrigued by the idea of empowerment. They advocate for outstanding expertise, give their voice for interdisciplinary teams and support agile methods. In many cases, though, it remains rhetorical empowerment. In the worst case, when it is going about significant decisions, the well-known power structures are restored. Self-organisation is supported in theory, but command and control practices still dominate our daily business.

We find a similar contradiction when looking at the employees. Almost nobody has something against having more freedom. The idea of more self-control and room to manoeuvre is greeted with open arms. However, if it is going about handling critical situations, exploiting opportunities or holding each other accountable, often things look quite different.

Occasionally, true will might be missing. More often, though, the issue is understanding. And most of the time, people fail simply because they are incapable. Because self-organising systems not only need a different framework than traditional environments — they also require different competencies to make the best of these conditions. Just like the new structures and processes that make agility possible, these competencies do not develop by themselves. Nobody wakes up one morning and is an expert.

In my experience, whether the potential of self-organisation can be realised or not depends at least on four factors:

1. The knowledge of what self-organisation is about, why it is important for our business and what´s in it for each of us.
2. Being equipped with the necessary resources, methods and tools.
3. The skill that comes from disciplined practice.
4. Professional feedback. Practice alone is not enough. Beyond ongoing practice there needs to be accurate feedback. Ultimately, we must know if we are doing things right and if we are actually improving.

In this regard, metrics are as valuable as experienced coaches, who can help draw the right conclusions from the actual results, their observations and benchmarks. It is a little bit like sports: In order to be successful, top athletes must train certain sequences again and again. For effective improvement, exercise and feedback must go hand-in-hand. Based on their interplay, we discover whether we are on the right path and whether further action is needed before we open a new loop of training, observing and evaluating.

Kata is the Japanese term for this kind of loop. Operational routines that are essential for Toyota’s success are developed under this concept. They are practiced so long that they eventually become second nature. Toyota especially focuses on two things: the continuous improvement of all processes and the consistent coaching of all employees. In Mike Rother’s view, Toyota taps much more power from these two katas than from their organisational structures. While the latter mostly conforms to the traditional model of functional departments and expert silos, the root of sustainable success lies in the continued development of their core capabilities at all levels.[2]

But how does it work if we also want to make our structures and processes as agile as possible? When we want to realise our full potential without hindering ourselves with hierarchy and departments? If we concentrate on smooth value streams and discard organisational overhead as much as possible? In short, how would a Kata for self-organising enterprises look?

8.1 Kata of Self-Organisation

Although there is a dedicated part in this book to the topic of coaching, I would first like to offer some answers right now. In my view, a self-organisation kata includes at least four dimensions:

1. The competencies of the employees.
2. The support from teams and work groups.
3. The competencies of the line managers.
4. The continuous improvement of the entire system.

As self-organising enterprises show, employee development focuses on their management capabilities. This could be basic training in self-organisation, like Dutch healthcare network Buurtzorg requires for all new employees, or could be business management trainings like at Semco, or even customer-focused trainings, which are part of the routine at SOL. Beyond this, there could be workshops on consultative decision-making processes, like Morning Star has, or seminars on the topic of peer feedback like at eSailors. At sipgate, the entire advanced training is self-organised: Each employee decides for themselves which two trainings or conferences they would like to attend, publishes their choice on a post-it wall and commits themselves to reporting about their experiences. Along with professional training, personal coaching and peer mentoring also belong to the fundamentals of self-organising enterprises. At Gore, experienced associates look after younger colleagues for a time. As so-called sponsors, they provide important contacts, support professional learning and help master substantial challenges. On the other hand, teams and work groups are supported through kick-off events, team-building workshops or training of facilitation skills. Encouraging open communication helps to develop cross-functional teamwork. Productively dealing with all kinds of differences between people is often far more difficult than expected.

A regular time-out from daily work strengthens self-organising teams and supports their professional development. This can happen informally through joint activities or celebrations. Agile teams also foster their teamwork more formally with workshops. These can either be about social or technical issues: How do we work together? What do we appreciate about each other? What new approaches are there? How can we improve on how we manage our work? It is hardly surprising that addressing these questions requires state-of-the-art facilitation, just as it is hardly surprising that many self-organising companies use the help of professional coaches. The Swiss Federal Railways built up their own Agile Coaching Team (ACT), and the coaching team at Spotify, already includes more than 30 people.

On the other hand, Computest uses expert and process coaches that were line managers before, but now concentrate on a broad range of company-wide services. ImmobilienScout24 took the opposite approach. Over many years, a specialised team of Scrum Masters and Agile Coaches was used. As more and more conflict arose with line managers due to their taking over more and more responsibility for organisational development, the company chose a new set-up. In the process of reorganising along market segments, the leadership responsibilities were not only reduced, but a so-called Engineering Manager position was created, a hybrid of Scrum Master and team leader, who acts as a coach and captain. Traum-Ferienwohnungen implemented their own organisation developer, who manages all aspects of their ambitious change towards self-organisation. Likewise, the Stämpfli Gruppe is also preparing to engage an internal change agent to design their agile transformation.

In contrast to employees and teams, well-designed management training and coaching programs are rare. Helping traditional managers get accustomed to the agile world needs far more than just individual events. Year after year, investing only one or two days in the newest hype is definitely too little. Almost everywhere, there is a growing sense of urgency to overcome the traditional roles as administrators, commanders and controllers and instead move towards being designers, facilitators and coaches.

As designers, managers are responsible for setting the right boundaries and providing a supportive context: appropriate structures must be established, obstacles moved out of the way and bottlenecks resolved. As coaches, managers are supposed to accompany, rather than direct, their employees. At Harley-Davidson, even former vice presidents understood themselves to be such advocates. They supported their work groups without relying on hierarchical authority. Leadership was understood as a service and pulled in rather than imposed. The important thing is that managers lead the way by seeing themselves as learners, and commit themselves to mutual improvement. Instead of formal trainings at Gore, there were so-called Socratic dinners where company founder Bill Gore facilitated discussions about leadership principles with various associates.

As previously described, the manager´s role as choreographer is mostly about improving the entire system. On one hand, such improvement occurs through flow-based coordination across teams and divisions. Above all, though, it is important to strengthen the ability to professionally facilitate large groups.

In addition, the choreographer is responsible for improving the entire organisation. State-of-the-art change management is at the top on their agenda. The need for ongoing change results from many factors: ensuring growth, focusing on the market, vitalising customer relationships, responding quickly to new challenges and so on. However, I believe the deep changes that come along with any journey towards self-organisation cannot be accomplished without strong emotions. In my view, such emotions are literally the dynamo for keeping a company in motion.

8.2 The Power of Emotions

The experiment started in 2011 at the Volksbank Heilbronn is a perfect example of this. Returning to cooperative basics, organisational structures were radically modified: Solidarity was nearly absent in the existing set-up, as was self-management or individual responsibility. It was clear that more than a few superficial changes were required in order to bring these values back in order. What does a customer truly need from a bank these days? How must a bank be organised if it wants to deliver the service customers expect? And how do we help employees with different tasks, ideas and characters work together autonomously?

It was quickly realised that deep change was needed in order to answer these questions. And this change was driven forward. The middle management underneath the executive level was completely replaced by expert leadership, the airy-fairy strategy made by managers only was replaced by an interdisciplinary feedback circle, and the individual bonuses were replaced by a team-oriented salary model.

Deep changes often provoke strong reactions. In an article worth reading, two Volksbank Heilbronn managers wrote about the wide range of behavioural patterns that were affected by this change.[3]

• Passiveness: Employees do not actively take part, rather they take a wait-and-see approach. Following the motto: We’ll see where it takes us!
• Lack of Orientation: Even after a long period of observing, the way was anything but clear for some people. What exactly is expected from them? And what is no longer expected?
• Resistance: In those areas where good results were already being achieved, the people were unsure what good the change should bring. Why should something that obviously works well be turned upside-down?
• Reorientation: Employees and managers that did commit to change left the bank.
• Loss of Perspective: For all those who cared about social status and power, there were no longer many possibilities. With the removal of the hierarchy also went the classical career ladder.
• Identity Crisis: By replacing the hierarchy with a process-oriented organisation, many job titles became pointless. How do you explain at a party that you are no longer a powerful department manager but a regular employee? And how can you cope with the fact that the familiar network of superiors and subordinates is gone?

“Not every employee is ready or able to self-organise. The new freedom that comes with having autonomy and taking over responsibility, while at the same time removing the hierarchy, is not seen by everyone as an opportunity”, Gysinn and Capriuoli concluded. The paradox that freedom requires more leadership rather than less can be explained through the dynamic of deep change. Without appropriate boundaries, without professional facilitation, and without personal coaching, we support chaos instead of self-organisation.

Hartger Ruijs, CEO of Computest, the Dutch testing and security specialist, came to similar conclusions.[4] In his interim appraisal a half-year after he started Computest´s journey towards self-organisation, he acknowledges the emotional impact. He advises everyone considering such an experiment to not underestimate the importance that job titles and positions have for some people, and accept the fact that some people will leave. According to Ruijs, not everyone feels comfortable in a self-organising company. This can lead some people to decide for a different direction, but can also make it clear that some do not fit into the new structure. If a former CTO is relabelled as a performance coach, or the sales manager as a consultant, you should also be prepared that not everyone will be immediately happy with this. All the more important that your vision is implemented in detail: Why self-organisation? What does it mean for our customers as well as for our employees? And how is your own role as a CEO supposed to change? A new organisation cannot be created with the wave of a hand. Rather, all existing systems, contracts and rules must be incrementally changed and the new expectations towards teamwork must be communicated. This is the only way to clarify how you expect people to behave and collaborate in the future.

No motion without emotion is the point—and we need to remind ourselves that changes come with their own dynamic. On one hand, like the example of the Volksbank Heilbronn shows, you should be prepared for a wide range of very different emotions: positive emotions such as spontaneous commitment, willingness to experiment or even enthusiasm, but also negative emotions such as confusion, uncertainty and fear. With this perspective, it is easy to understand that many have mixed feelings about the transfer of authority. As always, if we shake the foundation professional self-esteem, manifested in specific roles, responsibilities or job titles, we are asking too much of some people and will alienate others. Despite the goal to improve the whole system, these changes are taken very personally. Almost like a reflex, three questions immediately arise with every deep change.[5]

• Do I need to change? Do I understand why our company wants to self-organise? Am I bound to this form of organisation, or are there alternatives? And is this now permanent, or will it also pass like many other fashionable methods have before?
• Am I able to change? Can I cope with self-organisation? Do I have the necessary competencies needed for it? What are my chances for good results? Will I be able to continue delivering good results?
• Do I want to change? Is self-organisation interesting enough? Is there a risk of losing money, relationships or career perspectives because of it? Or can I perhaps profit from it?

The range of emotions these questions churn up, just like market dynamics, are unable to be controlled. “Spirits that I’ve cited, my commands ignore” you might know from Goethe’s poem The Sorcerer’s Apprentice. Which begs the question, how you can use these spirits in a productive way? What should you pay attention to in order to avoid any unexpected surprises? How can you ensure the necessary amount of certainty that every experiment needs for it to be successful? And on what can you build yourself, when you are about to change?

Part III of this book should give you trend-setting answers to these questions. It follows the observation that coaching is an essential service in self-organising enterprises. Coaching is a chameleon-like phenomenon, though, showing up in various forms: as peer coaching between professionals, as personal feedback between peers, as explicit help from a manager or as a sparring partnership between a manager and a coach. Although coaching shows up under many different names, all these forms have something in common: the professional help to effectively deal with business challenges. What exactly stands behind this, why such support is important in self-organising enterprises and how they ultimately function, you will find out on the next pages.

Key take aways from this chapter

Whoever wants to support autonomy cannot avoid changes in management. It needs training in order to strengthen the necessary capabilities in all areas. And it requires discipline to practice what we have learned, until it becomes second nature.

In this chapter, you learn what you need to pay attention to if you want to strengthen your entrepreneurial fitness. Volksbank Heilbronn, Computest or Stämpfli have shown how this can be accomplished and what challenges can be expected. After all, it’s going about designing for deep change, which questions many things and requires effort to answer these questions.

Part III Coaching

15 Coaching Managers

Père Joseph was an extraordinary man. Born in 1577 as François Leclerc du Tremblay, he set new standards not only in France. As a Kapuziner monk at the beginning of the 17th century, he ensured a constant exchange of information with his fellow monks in all parts of the world—and with it created one of the first global networks. A close confidant of Cardinal Richelieu, he acted as what is commonly called a grey eminence. He was a trusted man, confessional priest and advisor in personal union—and as such, one of the forefathers of the coaching profession. Naturally, this profession has changed fundamentally since then. These days coaches share neither the same religion nor have they taken monastic vows. Instead of being obligated to an institution, today they are often successful freelancers rather than monks living with vows of poverty. And last but not least, the web of power, politics and leadership in the 21st century is certainly different than it was in the 17th century. Nonetheless, Père Joseph seems to have left behind a rich legacy. Modern management coaching also deals with the following:

• Mastering the challenges that arise from leadership positions.
• Building an exclusive relationship based on trust and confidentiality.
• Developing a common language for assessing the current situation, and defining appropriate measures for a better future.
• Securing a protected area in which the coach and coachee are able to operate as sparring partners.
• Gathering professional feedback, developing other perspectives and adjusting your self-perception with a professional outsider’s view.
• Exploiting new opportunities to improve and implementing specific experiments.

Exclusiveness, trust and protection — these are the essential parameters when coaching managers. It wasn’t without good reason that the business consultant Wolfgang Looss titled his book on management consulting Unter Vier Augen (Just Between Us). According to Looss’s definition, management coaching is going about the question of how the person will master his or her role [1]. This definition brings up many other questions with it. Why should a manager even take on such work — don’t they have enough other tasks to work on? Why should they trust a coach for this? If they decide for personal coaching, what does a manager need in order to be able to open up? And which parameters need to be considered if this coaching takes place in an agile environment?

15.1 Motivation

Let me first deal with the first two questions. According to a survey in the Harvard Business Review, management coaches are hired for three reasons mainly: for developing potential, for getting professional feedback and for changing dysfunctional behaviour [2].

The magazine’s survey conducted on coaching in the USA and Great Britain align well with the research in the German-speaking region. In this part of the world, managers profit from personal coaching in the following areas [3].

• Sharper Focus - What do the managers concentrate on in order to counteract the chronic distractions in their daily work? What do they primarily pay attention to? What do they encourage?
• Better Decision Making - What are the key decision-making areas? How should things be decided? What does the company need to encourage good decision making?
• Improved Self-Organization - How do managers pay attention to their core tasks? And how do they support this focus across the entire company?
• Professional Conflict Resolution - How can managers deal with conflicts? Which points should they stick to? And which strategies are worth following?
• Mindful Change Management - What exactly should be changed? Who needs to be involved? What does the approach look like?
• Balanced Self-Perception - What is seen the same way? In which aspects are there noticeable differences? And what does the coach see that the manager doesn’t?

In an agile world, nobody can eliminate uncertainty — not even managers. Neither are they able to hold on to the ideal image of the super-expert, nor are they well-equipped for a volatile business world. Last but not least, managers are under pressure in many different ways, which makes the topic of burnout into a true long-burning issue. In my view, it is exactly these three drivers of change from which the need for management coaching grows: the organisation, the roles and the person. These drivers cannot be completely separated from one another. They are dependent on and influence each other. What will be initiated by the organisation can have a huge impact on how you design your leadership role, role-related ambiguities could cause very personal issues, personal concerns lead in turn to organisational issues and so on.

For a deep understanding of management coaching, it pays off to take a closer look at the three change drivers mentioned above. Organisational reasons for management coaching mainly arise from the turbulence of today’s business world. Most companies cannot effectively address this turbulence without questioning both their structures and processes. This brings along new challenges for the senior management — and more often leads to the idea of getting professional help. Experienced coaches concentrate on the organisational questions that inevitably arise when fostering business agility: Which boundaries are needed if we want to support self-organisation? What impact does it have on the existing processes? What changes for the customer if we follow agile principles? What changes for the employees? And what is needed to achieve an overall culture of continuous improvement?

In the face of such questions, it’s no wonder that the topic of change stands at the top of many management coaching agendas. Along with the basics of change management, it is mostly about design topics such as:

• Designing work systems that help realise everyone’s potential.
• Ensuring a common focus in all areas of your organisation.
• Facilitating system-wide agreement and decision-making processes.
• Dealing with resistance that arises as a natural part of any change.
• Defining metrics that allow us to recognize if we are on the right track.

The first part of this book hopefully made it clear that these are everything but trivial tasks. Less clear is how managers should deal with the uncomfortable feelings triggered by these new tasks. What is needed to overcome the paradigm of business administration? How can the new design challenges be mastered as effectively as possible? Which new concepts and tools might help? When faced with these problem-focused questions, it is easy to understand why management consulting gladly utilizes standardized solutions. Accordingly, scaling models like SAFe, LeSS or Disciplined Agile Framework are at the top of the list. With detailed models, they suggest organisational feasibility and promise certainty at places where there is none. This kind of consulting focuses once again on instruction: An expert explains how it is done correctly and oversees the proper implementation of the prepared plan. Whether or not this plan actually improves your daily business is a different story. Anyone who is not satisfied with ready-made solutions needs a different approach. As described in Chapter 12 (not published yet), many coaches use agile and systemic know-how. They keep the balance between expert and process coaching, are able to connect their expertise with their ignorance and make sure that enough time is spent on analysing organisational dependencies. In order to effectively address the challenges identified, they combine various techniques and do not allow themselves to be held to methodical dogmas.

15.2 Preconditions

Non-dogmatic management coaches are hired to support managers who are dealing with agile challenges. The question remains about the requirements for such support. What is necessary to make mutual learning possible when uncertainty cannot be ignored? If certain risks are unavoidable when trying to solve the problem? If feeling threatened, as Wolfgang Looss suggests, is even a necessary prerequisite for any successful consulting? “Whoever asks not only for recommendations from experts, but truly allows themselves to be counselled, i.e. goes on a search for solutions that are not immediately apparent (…) voluntarily endangers themselves in their familiar role and evolved identity” [4]. So, when do executives commit themselves to such a seemingly dangerous experiment? The rational answer to this is: It happens when the risks created by not dealing with the current problems become bigger than the effort to work on them.

However, the decision for or against coaching isn’t just an intellectual matter. Just like most other decisions, the gut also has a say, that’s why managers also need an emotional answer when asking the question “coaching, yes or no?”. “It is a sign of strength and confidence to know when you’ve reached the limits of your knowledge and know enough to enlist outside help”, as Kathleen Sutcliffe and Karl Weick argue [5]. This argument is easy to understand from an intellectual standpoint and explains why coaching should actually be a given for all knowledge workers. Nevertheless, it is emotionally difficult for managers to recognize their need for help—and even more difficult to see this need as something benefiting their professional self-confidence. Without a doubt, this has something to do with the persistence of traditional management ideals. Such beliefs are more than simple role models that we can quickly discard. They act as mental models that filter our perceptions and guide our thinking. A manager’s reluctance also has a lot to do with the uncertainty that coaching itself represents. To a large degree, this is caused by a market situation that offers neither direction nor compelling value propositions. They first must make their way through the consulting jungle. Moreover, the nature of professional coaching forces managers into an unfamiliar situation. All of a sudden, they are the ones with the knowledge deficits they typically attribute to their subordinates. And then the coach seems to be in control of everything. In short: managers must allow themselves to be in a auxiliary position, intentionally increasing their uncertainty. This is demanding a lot from them.

The coaches, and not just the coachees, must also get involved—and they must create the conditions so the coaching can succeed. In my experience, four interventions can be used to ensure that the risks remain manageable:

1. By mindfully checking the essential cornerstones of coaching in the first conversation.
2. By defining an explicit contract** in which the necessary framework is outlined.
3. By combining a clear mindset with coaching methods that ensure psychological safety.
4. By having the courage to shake-up your collaboration, to prevent landing back in your comfort zone.

The next sections go into depth on these four interventions and show how they can contribute to successful collaboration.

15.3 First Contact

Each coaching is different—and yet always starts the same: with the first conversation. This conversation can be inspiring or pragmatic, it can literally crackle with tension or quickly lose steam, a coaching mandate can grow out of it or both parties go their separate ways afterwards. In any case, there needs to be a certain understanding. Often, the first contact occurs by telephone and the coach is not really prepared for it. Coaches don’t typically sit next to the telephone anxiously waiting for the next customer, and are able to focus when a potential customer calls. The telephone ringing pulls you away from a specific situation and you are required to open up to a very different situation. Postponing the conversation and offering a callback gets you out of a stressful situation but doesn’t always leave the best impression. Even if you believe that the power of a first impression is a myth, as a coach you do not want to start off stuttering. After all, your initial contact deals with groundbreaking decisions—or at the very least the decision about whether there will be a second conversation. In my view, the responsibility lies with the coaches to at least touch upon the most relevant factors. The following list of questions can serve as a checklist so nothing is forgotten if you are caught off guard.

Six basic questions you should have answered by the end of your first conversation

1. Who is contacting you?
   • Organisation, business unit, team, context and the like
   • Role of your contact person – also in terms of being the potential coachee, an assistant of the potential coachee, an expert from HR, …
2. What is your contact person actually looking for?
   • Help for a specific situation – If this is the case then do your best to learn more about this situation, e.g. by asking your contact person about the two biggest challenges and strengths they can build on
   • General information about coaching, your approach, your business model
   • An opportunity for a face to face meeting (for her/himself or someone else)
   • A tentative offer
3. Why are they contacting you right now?
   • There is a clear sense of urgency established
   • There is a big problem to be solved and its unclear how to do that
   • There is some curiosity to learn more about coaaching, agile management, lean and the like.
   • There is an event in the calendar that has to be managed
4. What does their experience with coaching look like?
   • Something they see as valuable support
   • Something they have mixed feelings about
   • Something they would like to encourage
   • Something they like to have because everybody else does
5. What do you need for providing professional help?
   • Clear decision to encourage professional coaching
   • Commitment by a potential sponsor
   • Willingness to co-create a culture of continuous improvement
   • Clarity about your fee and additional expenses
6. How do you proceed?
   • Sending a memo about the most important answers you got
   • Scheduling a face-to-face meeting with the coachee
   • Waiting for them to clarify a few things (e.g. about the prerequisites for your help)
   • Saying just thanks for calling and moving on

Depending on how the coachee answers, the coach will have additional questions — and will try to give all the essential information on what coaching can look like. A mutual understanding about the actual objectives, the entrepreneurial context and the essential framework conditions for the coaching should be established as quickly as possible. Even if it is just an assistant making contact, rather than the coachee herself, the coach should still give his best to clarify as many basics as possible.

During the first conversation, hypotheses can also be tested along with these questions. This becomes easier as the coach gains more experience in a particular area. “This sounds to me like…”, “I have the impression that…?”, “It seems like problem X is due to Y?!”, “Is it possible that…”, are typical formulations for this. If you want to go a step further, you can even test possible interventions: “If it is about X more than about anything else, have you already tried Y?”, “In a nutshell, your situation reminds me of a company that completely concentrated on Z — would that be something you might also consider?”, “Your initial situation suggests to me that we should quickly arrange for…!”

Whether the coach provides feedback, tests assumptions or explores further interventions, it is always going about building a mutual understanding of what is expected. Even in the initial discussion, though, exploring many relevant aspects of work, relationships, and business is impossible. If the one calling is a manager interested in coaching, it’s likely that they are under pressure. It’s equally likely that they will invest only a limited amount of time in general clarification. The telephone is also a medium that limits the bandwith of communication and therefore makes it difficult to establish a good relationship from the outset. Last but not least there is also the hurdle of basic conditions to be dealt with, let alone the coachee´s fee, such that some conversations suddenly dissolve into a discussion of costs. The value of professional help comes in at a poor second place…

If you manage to overcome this hurdle, nothing should stand in the way of a second conversation.

15.4 From Contact to Contract

“Customer collaboration over contract negotiation”, the Agile Manifesto proclaims [6]. How does this resonate with the need of an explicit contract for coaching? Well, the solution to the puzzle lies in the fact that a coaching-specific contract is not about formal negotiation. The focus instead is on clarifying all essential aspects of collaboration. Along with the content (focus, goals, methods, expertise and the like), the specific culture of the helping relationship is established (patterns of interaction, mutual expectations, trust, etc.). For me as a coach, it is always interesting to see how this culture develops from the very beginning. Is the coachee ready to put their cards on the table? Do they also bring up their considerations and concerns? Does not only the coach, but also the coachee, ask clarifying questions? And does not only the coachee, but also the coach, show areas of uncertainty? Especially in the context of agile companies, I believe it is important to understand cultural aspects right from the start. Balance is a main guiding principle for me: whether it be the balance between subject matter expertise and ignorance, personal or organisational focus or balancing the amount of talking and listening. For me, the balance between asking questions and delivering information is essential. Ultimately, we do not want to overwhelm the coachee with questions, but at the same time also not forget that they expect the coach to maintain a certain amount of control. The way I understand coaching, process expertise is needed just as much as professional know-how in business agility. Here are some guidelines for effective contracting in self-organising environments.

What?

Questions on

• Motive for coaching: What brings you to me? Which issues do you want to work on?
• Goals for improvement: What do you specifically want to achieve?
• Expectations: What are you expecting from agility/lean/self-organisation? What can the organisation do after the coaching that it can’t do at the moment?
• Environment: Which context factors are to be noted? Who are the relevant stakeholders of the planned changes?

Information about

• Topic: What agility/lean/self-organisation is from the coach’s viewpoint—and what it isn’t.
• Good practices: What has proven helpful (see “Who?“ & “How?“)
• Role of the coach: What are they responsible for? How do they contribute to your overall success?
• Benchmarks: What the coach learned in similar initiatives

Why?

Questions on

• Drivers of change: What are the most important challenges that you need to deal with right now? What are the three most important strenghts you can build on?
• Case for action: Why do you think it is the right time for a change?
• Approach: Why agile coaching? Why self-organisation?
• Support: Why coaching? What do you expect? What would helpful coaching look like?

Information about

• Experience with agile/lean/self-organisation: Why other companies have moved in this direction, what their experiences were and what they were able to achieve.
• Laws of change: What should be paid attention to in coaching.
• Mindful approach: Why stakeholder management is critical to success.
• Management and coaching: Why managers play a central role — and why coaching can be helpful in many ways.

Who?

Questions on

• Internal stakeholders: Who is part of the system that is about to change? Who is a key player? Whose expectations should not be ignored?
• External stakeholders: Who else is affected by your change initiative? Who should be involved? Whose OK is vital?
• Sponsors: Who sets the boundaries for successful change? Who is providing the resources needed??
• Change agents: Who takes care of the whole initiative? Who is driving things forward? Who is informing and involving other people?

Information about

• Systems thinking: Why we should design our enterprise from the outside-in
• Network of stakeholders: Who has to be involved in order to build and keep momentum
• Guiding coalition: Who should be in the driver´s seat? Who has to be informed regularly? Who is asked to provide feedback?

How?

Questions on

• Decisions: How to define change sponsorship and agency? When to kick-off? How to keep overview? Make sure that we finish?
• Collaboration: How do you want to interact with the coach?
• Lessons learned: What would you like to do better than before?
• Agreements: How do you want to move on? Who should be doing what until when?

Information about

• Coaching lessons: Good practices from the trenches
• Big picture: How to create a culture of continuous improvement rather than just managing change
• Next steps: Written summary by coach, joint review with coachee, clear decision

Of course, no conversation follows these guidelines exactly. It would be a strange understanding of agility if we would just go through these questions one after the other. Contracting is more similar to an interactive dance than it is to a one-sided clarification. The reality of coaching is that we jump directly from a What question to a Why question, we allow ourselves to be led by the coachee´s storytelling, use an aside to a past coaching experience to clarify the How of the current collaboration, wander towards a special aspect of the topic, go back to the goals, and so on. These guidelines have often proven to be useful because of the dynamic nature of your interaction. I can maintain an overview, am able to reorient myself during the discussion and don’t forget any important points unintentionally.

15.5 Creating Safety

On the journey from first contact to an explicit work contract, there is more than just the correct mixture of questions and information. We must also work on the typical psychological aspects of the starting phase. Because those who need help can easily feel that they are in a weaker, more or less subordinate position. This positioning is an issue, especially in management coaching, because many managers take their superior position for granted. All of a sudden, the manager-coachee must grapple with their knowledge gaps and tunnel vision, while the coach is associated with overview and expertise. This can awaken negative memories of strict parents or unfair teachers, which can then transfer to the coaching, making it uncomfortable. Even if the discussion quickly shifts to focus on the subject matter, the start of the coaching relationship remains dominated by various concerns.

• What will the coach expect from me?
• Where will the coach lead me to? How far must I follow them?
• What happens if I don’t do this? What if the whole thing turns out to be a waste of time?
• And I still have to pay a lot of money for it?

Such questions can mobilise defensive behaviour. Then, the coachee acts cautiously, does not openly address his hottest topics, avoids answering trickier points or just uses buzzwords. This ambivalence might seem confusing at first. Isn’t it the manager who is deliberately seeking help and turns to a professional coach to provide it? Perhaps it is true that you finally recognize your own limits and that you won’t be able to advance. At the same time, it is rarely the case that emotional strength is gained from this. Seeking professional help magnifies your own uncertainty.

What does this initial situation mean for the coach? How do they deal with the uncertainty that is the elephant in the room? And what can they do, right from the start, to encourage an equal partnership? According to my experience, acknowledging this precarious situation is already a good starting point. In addition, a mindset of respect is needed. And it requires techniques that overcome the negative feelings.

Ed Schein has given us a clever concept for combining respect and intense interaction [7]. Schein calls this concept humble inquiry, which fosters a special form of mindfulness. It deals with questions, active listening, but also with observing, the non-verbal communication level and personal feedback. You could say that coaches use all their senses to find their way forward. Humble inquiry can be accomplished by applying the Socratic principle: “I know that I know nothing!” Just like everything in life, this principle should not be overused, otherwise the coachee could easily lose trust in the professional expertise of the coach. In a balanced way, humble inquiry can help gain a lot of information. Beyond that, it puts the coachee in a position of an expertise and let her quickly gain safety during the initial phase.

However, psychological safety is not conveyed through humble techniques alone. Safety is created, above all, by dealing constructively with the typical coaching topics. Here is an overview of these topcis.

Defining Goals

Agile professionals know that they shouldn’t waste too much time defining the desired results. We also know, though, that a vision is needed so we can move forward with goals in mind. What would an organisation that fulfils the current requirements look like? What is such an organisation capable of? What are the core capabilities of its members? What do they deliver? And what do the customers get out of it? It is the nature of the agile approach, that the vision cannot be completely defined at the beginning. Without any vision, though, it is difficult to define and prioritize sub-goals for tackling the first stages of change.

Clarifying the Current Situation

Meaningful goals can only be determined if they are in the context of the current situation. Only then is creative tension created to drive change. From the coach’s viewpoint, the current situation, as well as the future situation, is unknown territory. As a consequence, the coachee is invited to tell their story. By actively listening, making humble inquiries and sharing certain asssumptions, the coachee and the coach are able to expand their mutual understanding.

Defining the Boundaries

It should be common sense that successful self-organisation requires clear boundaries. In order to create a trustful container, there needs to be some basic agreements. Personally, I deliberately define a few rules at the beginning—after all, I am responsible for setting up the coaching system. Since this is a multi-layered working-relationship-business, it includes rules for action (e.g. iterative approach), confidentiality (e.g. Las Vegas Rule), procedures (e.g. duration and frequency) and last but not least, economics (e.g. professional fee). Even for the annoying topic of liability, especially in regards to cancellation on short notice, there should be a clear agreement (keyword: conditions of cancellation). It goes without saying that these parameters, as well as the goals, must be regularly reviewed and, if necessary, expanded upon (e.g. agile contracting).

Creating Opportunities for Relief

Often the topics of burden and relief are immediately present: Managers are under pressure, teams aren’t delivering what they’re supposed to, the whole company must improve, and so on. Becoming more agile is seen as a magical solution. In such situations, the coach can easily feel like she should act as a solution hero. It’s likely that they immediately act like Merlin and brew up a magical potion for the organisation. I know how tempting such a situation can be and how easily you can fall into this trap. Humble inquiry is a tried and tested method to prevent such power illusions. By stepping back, the coach makes space for the coachee to be able to air their frustrations. It almost always pays off to start with open ears first, making emotional relief possible before starting on the professional solution.

Helping to Sort

The emotional roller coaster between feeling helpless and feeling like the big boss is often reflected in intellectual confusion. This can be seen in a wild mixture of myths and clichés, that are translated into weird concepts of change. It is the coach’s job to respect these concepts, and at the same time make it clear that there needs to be a more sustainable approach. Coaches do this by helping the coachee sort out the myths from the realities of self-organisation. What is necessary to continuously make the system more agile and what are just cosmetic changes? Where do we begin if we want to create smooth workflows, which ideas lead us to a dead end? In a sense, we separate the wheat from the chaff, pick up useful ideas and try making them part of an even better approach. Fortunately, in many cases we are able to rely on a good foundation. The coachee is knowledgeable in many areas, and maybe even builds upon relevant experiences. However, some of it is and remains garbage and coaches are doing a service by taking it out as early as possible. This is easier written than done because this means hurting someone’s feelings, disappointing them and fuelling their mistrust. Nevertheless, coaches who serve up half-baked management ideas are already setting themselves up for failure.

Instructing, Practicing, Learning

Professional coaches are aware that they must deal with a lot of unknowns at the beginning of a coaching situation. They are also aware that they have profound knowledge about success factors, which you can profit from during the coaching. They proceed methodically and use helpful tools: checklists, guidelines or simple models that offer some orientation to the coachee. Practical examples and benchmarks from other companies are always welcome.

Feedback can be enhanced when the knowledge transfer is combined with practical exercises. I have good experience with different variations of visual talk, which is an essential part of design thinking. Even better is when I apply visual talking with the coachee while standing together in front of a flipchart or whiteboard. This combines perfectly with subject matter expertise such as value stream mapping or Kanban. I invite the coachee to a special ping pong game by handing over the marker: How would their picture look? What can they add to it? What do they want to correct? And which impulses can the coach give them? This way, coaching suddenly becomes a kind of training camp where the manager is able to think through, test and improve things in a practical manner. I think it is important to stimulate a manager’s willingness to learn as early as possible. It continues on with the agreement on specific transfer steps: Improvement actions for the daily business, clarifying discussions with others or reading certain articles. It is also helpful to set up regular calls between the meetings to provide a minimum level of joint monitoring.

15.6 Creating Uncertainty

You might have already noticed: If there is a common thread that is pulled through this coaching concept, then it is the idea of balance. Whether it is the balance between knowledge and ignorance, between trust in the process and controlling the context, or between leading and being led—it’s going about preventing excessive bias. For this reason, we do not want to get too comfortable in coaching. To ensure an appropriate counterbalance, we can contrast the gentle art of questioning with what I like to call the respectful art of provocation. What is meant by this? Provoking literally means to challenge. For coaching this means not being satisfied with the status quo, It means stepping across the current line to create something better. To accomplish this, we can use various forms Ed Schein’s confrontational interventions from his process consulting principles [9]. I see confrontation as any intervention that is focused on making a difference. A Latin scholar knows the original term is confrontatio. And the coach, in turn, knows how to confront by posing a challenging question, bringing in an alternative way of thinking, using an irritating comparison or expressing a different opinion. For sure, we still need a minimum level of certainty to progress with the coaching. However, experience shows that this only brings us to a certain point. This point can only be moved along when we push the boundaries. If we, in other words, leave humility behind and focus on those aspects that seem questionable or even controversial. Thus, when we risk conflict—apropos confligere, “to engage, to confront” — we antagonize ourselves.

It is a truism that relationships are strengthened by jointly resolving conflicts. We are unable to understand our real differences unless such conflicts are brought to light. As mentioned, I feel that conflict-friendly exchanges are a constitutive element of any self-organisation. Challenging the manager’s point of view is absolutely critical for successful management coaching. It is laid down in the basic constitution of people who see themselves as experts in both personal as well as organisation development. If coaches are not willing to address these situations, they may not be respected as equal partners by their coachees. In my view, management coaches must regularly question their relationship. In soccer terms, we would say it is the ability to approach the opponent with unexpected moves, powerful tackling and a certain amount of resilience, so as not to fall apart at the first counterattack.

There are many ways to cultivate this kind of agility. Let’s take a closer look at four variations:

1. Constructive Mistrust
2. Systemic Questions
3. Open Disagreement
4. Personal Feedback

The first strategy to challenge the current state of coaching is what I call constructive mistrust. “Mistrust?” I hear you asking and can easily imagine you wondering about my mental health. After all, I am saying all the time that coaching is based on trust — and I am hardly the only one. A closer look at the genesis of trust shows where I am going with this. How do we build trust in coaching? First, both sides must be willing to grant some trust because without this, they can not confide in one another. This basic trust must be worthwhile, otherwise coachees will question further investments. Consequently, coaches should not stay in question mode for too long. Rather they must provide guidance and professional help so their coachees get a tangible return in the short-term and have a good reason for further investments.

True trust is acquired step by step, you must earn it as is commonly said. This applies to both parties, by the way: The coachee must learn to trust the coach, and vice versa. In order for trust to grow, positive experience with each other is required. Furthermore, a good balance of questions and information is needed. But can coaches really take everything that is told to them at face value?

Don´t get me wrong. I am not advocating general scepticism. We do not need to weigh every single word. As someone who had to learn it the hard way, though, I would like to advise against being too gullible — and to encourage coaches to do some reality checks. Do the stories that we are being told make sense? Are there essential parts missing? Does the story correspond to similar experiences? Do we get the impression that something is being concealed? Do we really see the entire problem, or are we still sorting it out piece by piece?

Instead of lulling ourselves into a false sense of security, we should regularly question the quality of our collaboration. The so-called systemic questions are a good means for that. Systemic questioning offers a broad variety of techniques to move from humble inquiry towards respectful provocation. We can differentiate various categories of questions. The so-called triadic questions concentrate on the perspective of an absent third party. Employees, management colleagues, friends or even the coach themselves offer a good anchoring point to expand the individual point of view. All systemic questions tend to challenge your worldview. Is my way of looking at things really the only possibility? Do all the others see it the same way? Or are there other perspectives that should also be considered?

Hypothetical questions make up another category. Simply stated, they deal with imaginary situations. “What would happen, if…?”, “What would the situation look like, without…?”, “What would be different tomorrow if a miracle occurred overnight and your biggest problem was solved?”, or “What would you compare your current situation to? What film would it be? What would the newspaper headline read?” Just like all systemic questions, the hypothetical questions seek to broaden your perspective. For this, coachees need a sense of creativity. Managers should be able to imagine a different situation and visualise certain changes as if they had actually already occurred.

The third category that I would like to recommend to you are the classifying questions. As the name suggests, it’s dealing with a special type of measuring: How heavy would the problem be if you put in on an imaginary scale? What t-shirt size would your current issues wear? And where on a certain continuum would your situation be positioned?

Systemic questions often provoke resistance. “How should I know what my employees think about this?”, stated an irritated Robert Kappacher in his company, as I turned our conversation to triadic questioning. “Am I supposed to be a fortune teller?” Don’t shy away from such defensive reflexes. Give yourself and your coachee time to consider the question. Allow yourself to paraphrase the question or explain why you are asking. There is one thing you shouldn’t do, however: Take your question back. Instead, you should see it as an essential part of your sparring partnership — as a mutual test of strength and fitness.

A spirit of sparring is also needed for a different type of intervention, which always provides a good portion of uncertainty: open disagreement. This type of dissent is present when you firmly have a different opinion. There can be many reasons for this.

First of all, coach and coachee can have different views. One of my favourite examples of this comes from a session I had with Dagmar Reininghaus, in which the managing director of a service company compared agile methods the following way: Scrum is for innovation projects, Kanban for incremental improvements, Scrum for complex challenges, Kanban for efficient operations, Scrum encourages creative lateral thinking, Kanban a good workflow, and so on. In Dagmar´s case, I couldn’t resist bringing up another abstruse comparison: “Did you know that home trainers were developed for ambitious athletes and fitness studios for lazy sportsmen?” As with many other polarisations, the key point lies in the randomness of our associations. Maybe there are certain tendencies, as I explained myself to Dagmar Reininghaus. In my view, though, what is more crucial is what you make out of your ideas in your specific environment. And to me, this seems to apply to fitness equipment the same as it does to methods.

Second, coach and coachee can contradict each other because they have different values. In such cases, this can quickly turn personal. I remember an intense dispute with Peter Larsen, the CEO of a medium-sized automotive supplier, as I explained my understanding of trust. True trust, according to the CEO, meant that his people should follow him blindly. If you didn’t just start reading this book, then you can probably guess my response. The interesting thing was that we quickly found ourselves, after our rhetorical head-on collision, in a constructive discussion about one-way and two-way streets in communication. And other contradictions followed this initial one because the CEO was well aware that there was room for improvement in his meetings (quote: “It´s death by powerpoint.”).

Third, agile principles are also useful for questioning the basis of coaching. In software development, the comparison of individuals and interactions versus processes and tools is an absolute classic. Nobody using agile principles suggests that the latter would be more important than the former. However, often enough decisions are made according to process guidelines, and tools are debated more intensely than their effect on collaboration. Coaching offers a good opportunity to detect such contradictions and to work out a more ambiguity-friendly understanding of agility.

Disagreement is also likely if the coach has completely different experiences than the coachee. In this regard, I have often felt like Don Quixote in my battle against traditional change windmills. These windmills may be called the masterplan, change-in-progress unlimited or missing monitoring.

It also shows that there are different expectations on how the coach and coachee should collaborate. Following their professional reflexes, managers in the agile environment tend to treat coaches like their employees. Personally, I have an allergic reaction to direct orders such as “Mr. Kaltenecker, go ahead and do …!” Consciously or not, manager-coachees try to make the coach responsible for things they are themselves responsible for. “Mr. Kaltenecker, speak to…!”, “Make sure that team X gets back in line!”, and the like. I highly recommend to resist such delegation strategies — and to see their occurrence as an indicator that your work agreement should be reviewed.

When we want to create more uncertainty and risk conflict, sometimes direct confrontation is a useful strategy. “Do you really believe that …?”, “You seem to be convinced that …?”, “I have never experienced that …!” Of course, if we want to encourage the ideas of agility and self-organisation, we cannot use blueprint models. We must resist oversimplifying concepts, and in some cases, we must go so far as to reconsider the coaching mandate. Can business agility be fostered if we only concentrate on teams? Is a management coach supposed to simply accept that decisions are still being made by superiors alone? Or that feedback loops wither away to just information rituals?

Last but not least, I would like to point out personal feedback as a tried and tested strategy to increase uncertainty. “Why is this unsettling?”, you might ask. Isn’t feedback a catalyst for improvement? Well, I admit that the uncertainty proposition requires some explanation. In the agile world, there is a surprisingly uniform opinion on feedback. Feedback is seen as essential, even necessary for survival and it should occur in short loops. It seems to be welcomed at every level, both in terms of our system´s performance and in terms of individual behaviour. So much for the theory. The practice of feedback offers some stumbling blocks, however. If it is going about critical responses, you have an entire pile of blocks to deal with from time to time. And if this criticism is concentrated on the manager’s behaviour, it can seem like a mountain of blocks. Feedback can turn out to be truly hard work.

What makes critical feedback difficult can be better understood by looking at the uncertainty that goes along it. It is anything but simple to have a positive discussion about negative aspects. Usually our own emotions get in the way, not to mention the emotions that our feedback triggers in the coachee. On top of this, most managers are not used to being confronted with critical feedback. At the same time, the higher up we go in the hierarchy, the more we see a true need for this. CEOs of large enterprises seem to be as many light years away from their customers as they are from an honest feedback on their real behaviour. Nobody dares to openly mention any weaknesses or blind spots. Naturally, it is quite possible that everyone share the same blind spots because CEOs like to surround themselves with people just like them (aka the mini-me syndrome). However, given the plenitude of power associated with top management, companies with this particular type of tunnel vision accept incalculable risks.

In my view, management coaches have a duty to work against this tunnel vision. They are required to use all their senses to provide accurate feedback on their coachee’s behaviour. The gap between saying and doing, knowledge and ability, willingness and capability offer a worthwhile starting point.

Like all other interventions to raise uncertainty, critical feedback has a challenging nature. It is driven by provocation. And it should also, as Figure 15-8 shows, not only cover conscious wants, but also unconscious needs. Unlike the additional wants revealed by expanding the public area, these needs are at first obscure for the coachee (aka a blind spot). Only the coach will have some insight, or at least some hypotheses.

The coach’s critical feedback emphasise that there is more than just the manager’s worldview. However, critical feedback has nothing to do with rebellious acts. It’s much more about aligning different perspectives that the concept of criticism literally stands for. Management coaching should support every exchange about differences, which is one of the basic ingredients of self-organisation. However, critical feedback needs to be given in the right doses. If coachees are confronted with too much feedback too quickly — as was the case in the previously mentioned case with the production manager — it can become overwhelming very quickly. In such cases you don’t need to be surprised when defensive behaviour takes place. That’s why the coach must make sure enough trust is built up before they confront the manager with other points of view. In other words, there must be some certainty established before uncertainty can be risked. To close out this section, I would like to recall a simple tool that I have used to prepare for and provide critical feedback [10].

As always, when we use certain techniques, we should not apply it too technically. Instead of just working through the boxes, we should use it as a starting point for an open discussion. In my opinion, a good balance of questions and explanations goes along with this, too. How does the manager see their behaviour? How did they experience certain situations? Which consequences are they aware of? And how can they ensure improvements? Personally, I shy away from recommendations for alternative behaviour. In many cases, I have certainly thought of some, but what is key is what the coachee themselves can imagine. Again, it is important to be patient, give enough time and not disrupt the coachee’s considerations early on with your own ideas.

Key takeaways from this chapter

These days, management coaching is a given in many companies. This chapter shows what motivates managers, how coaching works and what it means in an agile environment. On the one hand, I show how coach and coachee actually find each other. From the first contact, to an explicit contract, in which all essential goals, expectations and conditions are outlined. On the other hand, the chapter describes the exceptional interplay of professional management coaching – creating certainty and targeting uncertainty. In addition, you see the benefits of such an interplay and which techniques can be used to facilitate it.

References

Introduction

[1] Semler, R., Maverick. The Success Story Behind the World’s Most Unusual Workplace. Warner Books 1993, p. 3.

[2] ibid., p. 253.

[3] Kaltenecker, S., Leading Self-Organising Teams. Workbook for Lean and Agile Professionals. InfoQ 2015.

https://www.infoq.com/minibooks/leading-self-organising-teams

1 Customer First

[1] Hamel, G., First, Let´s Fire All the Managers. Harvard Business Review, December 2011,

https://hbr.org/2011/12/first-lets-fire-all-the-managers.

[2] Carney, B.M., Getz, I., Freedom, Inc. Free Your Employess and Let Them Lead Your Business to Higher Productivity, Profits, and Growth. Crown Business, 2010, p. 15.

[3] Roock, A.: Culture is the True North.

https://www.infoq.com/articles/scaling-at-jimdo

[4] Huijbers, P., Care in the Neighbourhood: Better Home Care at Reduced cost.

http://interlinks.euro.centre.org/model/example/ NeighbourhoodCareBetterHomeCareAtReducedCost

[5] Roock, A.: Culture is the True North.

https://www.infoq.com/articles/scaling-at-jimdo

[6] Mintzberg, H., Ahlstrand, B., Lampel, J., Strategy Safari. A Guided Tour Through The Wilds of Strategic Management. Free Press, 1998.

[7] Brown, T., Change by Design. HarperCollins, 2009.

[8] Maurya, A., Running Lean. Iterate from Plan A to a Plan That Works. O´Reilly, 2012.

2 Visual Work Management

[1] Leopold, K., Kaltenecker, S., Kanban Change Leadership. Creating a Culture of Continuous Improvement. Wiley, 2015.

[2] Leopold, K., Practical Kanban. From Team Focus to Creating Value. LeanPub 2017.

[3] ibid., p. 48.

[4] Kaltenecker, S.; Beyer, M., Kanban on track – Evolutionary Change Management at the Swiss railways.

http://www.infoq.com/articles/kanban-on-track.

3 Fast Feedback Loops

[1] Vacanti, D., Actionable Agile Metrics for Predictability. An Introduction. Leanpub, 2015.

[2] ibid., pp.123.

[3] Magennis, T., Top Ten Date and Forecasting Tips.

http://focusedobjective.com/top-ten-data-forecasting-tips/

[4] Reinertsen, D. G., The Principles of Product Development Flow. Celeritas Publishing, 2009, p. 222.

4 Customized Decisions

[1] Luhmann, N., Organisation und Entscheidung. Verlag für Sozialwissenschaften, 2000, p. 71.

[2] Weick, K. E.; Sutcliffe, K. M., Das Unerwartete managen. Was Unternehmen aus Extremsituaitonen lernen können. Klett-Cotta Verlag, 2003.

[3] Reinertsen, D. G., The Principles of Product Development Flow. Celeritas Publishing, 2009, p. 169.

[4] Mois, T., Baldauf, C., 24 Work Hacks…auf die wir gerne früher gekommen wären. Sipgate, 2016.

5 Bold Experiments

[1] Carney, B.M., Getz, I., Freedom, Inc. Free Your Employees and Let Them Lead Your Business to Higher Productivity, Profits, and Growth. Crown Business, 2010, p. 11.

[2] Ries, E., The Lean Startup. How Constant Innovation Creates Radically Different Businesses. Portfolio Penguin, 2011, p. 122.

[3] Brown, T., Change by Design. HarperCollins, 2009, p. 163.

[4] Kotter, J., Accelerate. Building Strategic Agility for a Faster-Moving World. Harvard Business Review Press, 2014, p. 163.

[5] Brown, T., Change by Design. HarperCollins, 2009, pp. 73.

[6] Kniberg, H., Ivarsson, A., Scaling Agile @ Spotify with Tribes, Squads, Chapters and Guilds.

http://blog.crisp.se/2012/11/14/henrikkniberg/scaling-agile-at-spotify

[7] Derby, E., Larsen, D., Agile Retrospectives. Wesley-Addison, 2006.

[8] Zeuch, A.: Alle Macht für Niemand. Aufbruch der Unternehmensdemokraten. Murmann Publishers, 2015, p. 105.

[9] Hoppmann K., Stötzel, B., Demokratie am Arbeitsplatz. Ein Modellversuch zur Mitwirkung von Arbeitnehmern an betrieblichen Entscheidungsprozessen. Campus Verlag 1997.

[10] Zeuch, A.: Alle Macht für Niemand. Aufbruch der Unternehmensdemokraten. Murmann Publishers, 2015.

[11] Carney & Getz, 2009, p. xvii.

[12] Laloux, F., Reinventing Organizations. Nelson Parker, 2014., pp. 259.

6 Lean Organisational Structure

[1] Olesen, A., Handelsbanken: Consistency at its Best. Case Report.

https://gallery.mailchimp.com/33069b15098259cee2f42cf2b/files/Handelsbanken_Consistency_at_its_Best_02.pdf?utm_source=Autoresponder+kampagne+juli+2015&utm_campaign=b04b30d4bd-&utm_medium=email&utm_term=0_c851225309-b04b30d4bd-199903217

[2] Laloux, F., Reinventing Organizations. Nelson Parker, 2014, p. 141.

[3] Hamel, G., First, Let´s Fire All the Managers. Harvard Business Review, December 2011

https://hbr.org/2011/12/first-lets-fire-all-the-managers

[4] Bennett, P., A Loosely-Designed Organisation.

https://lboi.ideo.com/oops.html

[5] Andrey, G. & Jung, P. E., Selbst organisiertes Unternehmen. Fallstudie zur Einführung von Holocracy. In: zfo – Zeitschrift Führung + Organisation, 06/2016, p. 386.

[6] Robertson, B.,

[7] Arnold, H., Wir sind Chef. Wie eine unsichtbare Revolution Unternehmen verändert, Haufe, 2016.

[8] Vacanti, D., Actionable Agile Metrics for Predictability. An Introduction. Leanpub, 2015, p. 141.

[9] Reinertsen, D. G., The Principles of Product Development Flow. Celeritas Publishing, 2009, p. 27.

[10] Conway, M.E., How Do Committees Invent?, 1968

https://www.youtube.com/watch?v=OHcFd5KaYRI

[11] Bollenbeck, P., Org Hacking for Fun and Profit

https://www.youtube.com/watch?v=OHcFd5KaYRI

[12] Gruczel, M., Kaltenecker S., Gruber, H., Agile Sailors. A Journey from a Monolothic Approach to Microservices. 2016

https://www.infoq.com/articles/agile-sailors-microservices? utm_source=infoq&utm_medium=popular_widget&utm_campaign= popular_content_list&utm_content=homepage

7 Distributed Management

[1] Hope, J.; Fraser, R., Beyond Budgeting. Harvard Business Review Press, 2003.

[2] Arnold, H., Wir sind Chef. Wie eine unsichtbare Revolution Unternehmen verändert, Haufe, 2016.

[3] Janssen, B., Die stille Revolution. Führen mit Sinn und Menschlichkeit. Ariston Verlag, 2016.

[4] Stoffel, M., Mitarbeiter führen Unternehmen –Demokratie und Agiität bei der Haufe-umantis AG. In: Settelberger, T., Welpe I., Boes, A. (eds.), Das demokratische Unternehmen. Neue Arbeits- und Führungskulturen im Zeitalter digitaler Wirtschaft. Haufe Gruppe, 2015, p. 269.

[5] Gloger, S., Demokratisch, praktisch, gut. New Work bei Traum-Ferienwohnungen. In: ManagerSeminare, Heft 227, Februar 2017, S. p. 32.

[6] Russell, B., The Conquest of Happiness. Routledge 2006., p. 48

[7] Teerlink, R., Ozley, L., More Than a Motorcycle. The Leadership Journey at Harley-Davidson. Harvard Business Press, 2000.

[8] Werner, G. W., Womit ich nie gerechnet habe. Die Autobiographie. Bastei Lübbe Verlag, 2008.

[9] Senge, P., Lehrmeister für Organisationen. In: Havard Business Manager, 6/2011, p. 78.

[10] Seddon, J., Systems Thinking in the Public Sector. Triarchy Press Ltd, 2008.

8 Continuous Training

[1] Hope, J.; Fraser, R., Beyond Budgeting. Harvard Business Review Press, 2003, p. 143.

[2] Rother, M., Toyota Kata. McGraw-Hill, 2009.

[3] Gysinn, A., Capriuoli, T., Die hierarchiefreie Bank – Umsetzungsschritte und Erfahrungen. In: Seidel, M., Liebtrau, A. (eds.), Banking & Innovation 2015. Ideen und Erfolgskonzepte von Experten für die Praxis. Springer Gabler, p. 85-91.

[4] Ruijs, H., Towards a Self-Managing Organisation, 2016.

https://corporate-rebels.com/guest-blog-hartger-ruijs/

[5] Doppler, K., Lauterburg, C., Change Management. Den Unternehmenswandel gestalten. Campus Verlag, 2002.

15 Coaching Managers

[1] Looss, W., Unter vier Augen. Coaching für Manager. EHP Verlag, 2006, p. 15.

[2] Coutou, D. & Kauffmann, C., What Can Coaches Do For You? Harvard Business Review, January 2009.

[3] Martens, A., Was kann Coaching? ManagerSeminare, Mai 2016.

[4] Looss, W., Unter vier Augen, p.40.

[5] Weick, K. E.; Sutcliffe, K. M.: Das Unerwartete managen. Was Unternehmen aus Extremsituaitonen lernen können. Klett-Cotta Verlag, 2003, p. 173.

[6] Beck, K. et al.: Manifesto for Agile Software Development. 2001, http://agilemanifesto.org/.

[7] Schein, E. H.: Humble Inquiry. Berrett-Koehler Publishers, 2013.

[8] ibid.

[9] Schein, E. H.: Process Consultation Revisited. Building the Helping Relationship. Addison Wesley, 1999.

[10] Jerome, P. J.: Coaching Through Effective Feedback. Jossey-Bass Pfeiffer, 1994.

[11] Looss, W., Unter vier Augen, 2006.