“Agile” methodologies for helping enterprises adapt to a faster-moving and more demanding world came from software development in the late 1990s and early 2000s, although their roots probably go back as far as the 1950s. As we write this, Agile is still most often leveraged for software development, although it is “scaling”—that is, moving beyond software to other parts of enterprises. This evolution to broader applications looks somewhat the same as when “quality circles,” “continuous improvement,” and “Six Sigma” started in manufacturing/factories and then migrated elsewhere, or as “design thinking” started in product design and has now been tried across functions and industries.

It is easy to see why Agile has become fashionable. In a more unpredictable and rapidly changing world, it logically follows that you need more agility. And it is easy to posit a logic for why it started in software development.

By the 1990s, all medium and large firms had serious, expensive IT functions that had experience in going from one generation to the next of hardware or software. More often than not, those experiences were painful. Transitions took too long. Projects exceeded already sizable budgets. Sometimes enterprises simply failed and had to start over.

Back then, IT sometimes seemed like a budgetary black hole. Work often appeared to move at 15 miles an hour, which created pain both inside and outside IT. And that pain created a demand that led to a 4-point manifesto and 12 principles that defined a different way to develop software, with a greater emphasis on responsiveness to customer needs, and less focus on rigid, process-driven plans.

The Agile Manifesto and principles have a lot of validity. For example, if marketing asks for a different sort of customer management system software, you don't assign an IT team to work in a conference room for months and months and only have them show it to marketing after the system is up and running. Experience shows that marketing will be upset not only about how long it took but also how much it cost. Even more so, they will have needs and suggestions, uncommunicated or unrecognized at the beginning of the project, which will require more than a small amount of rework. Solution: Agile Principle #4, “close daily cooperation between business people and developers.” In this case, have some marketing people on the team from the beginning, which will enable them to spot problems and opportunities earlier, and thus correction or capitalization will occur when it is still easy and fast to do. Buy-in and adoption also tends to increase—often dramatically—when end-user input is taken into account from the outset.

Because of a fair degree of face validity, and because of the sheer pressure from the business environment to develop software today faster, better, and cheaper, some Agile ideas have made their way into virtually all large companies and many medium-sized firms. In big companies in particular, you can usually find a software initiative or two (or even more) that has come close to really embracing Agile and achieved impressive results. But even in those cases, the success formula has rarely spread to become the software development norm in the firms involved, much less sustainable organization-wide norms beyond software that fosters agility.

Indeed, if you look at the initial press Agile received at the turn of the twenty-first century, the gap between prediction and promise, versus today's reality, is a large one—despite the pressures to move faster to cope with a more complicated world. In light of the emerging science of change, this outcome is not surprising.

Why Agile Does Not Create Sustained or Scaled Agility

Implementing Agile methodology, as it is too often done today, is not the same as becoming agile. The fundamental problem is that Agile Principles are not consistent with the basic design of modern organizations. So it is easy for Agile Principles to be overtaken by rigid and detailed managerial processes—losing the intent and results those principles were meant to produce.

Remember, the large enterprises that began to emerge in significant numbers a century and a half ago were created to produce and distribute products at unprecedented scale without the enterprise falling into confusion, chaos, intolerable inefficiencies, and the like. The whole design leans toward methods that foster predictability, stability, and order to create reliable product quality and healthy financial results.

So, for example, Agile Principle #2 is “Welcome changing requirements, even in late development.” But planning discipline is central to the modern organizational form. Good planning is done thoroughly at the outset, and then executed. It is not done, then redone when new requirements emerge, then redone again when more new requirements come along. The latter is disruptive, inefficient, confusing, and thus unacceptable. Even in organizations that claim to embrace Agile's “fail-fast,” “minimum viable product” (MVP) essence, one rarely sees leaders providing air cover to teams trying to implement this way of working despite the barriers. Human nature and the modern organizational form are more powerful forces on senior management than the logic and usefulness of Agile.

Of course, a strong leader, some enthusiastic people, or even some desperation can overcome natural, built-in organizational barriers and force an Agile approach. But as soon as the leader, high enthusiasm, or desperation goes away, the organization tends to reassert its natural form and the Agile methodology starts to wane. Questions arise about the details of an initial plan, sometimes demanding answers to every possible contingency. Instead of being praised for getting an MVP out the door, teams are penalized for imperfections in initial output. All this starts to raise alarm bells, and shuts down the Thrive-activated speed and innovation that Agile is intended to foster. The same sort of phenomena occurred with many efforts at installing Six Sigma, Design Thinking, or other potentially powerful approaches that came on strong, were “adopted” by large numbers of organizations, peaked, then began to lose momentum, and struggled with sustainability.

So, is sustainable and scaled Agile impossible? It is impossible with the primary organizational form found in the world today. But that is not the only way one can set up and run a significant modern enterprise.

A Dual Systems Approach

Somewhere around 2012, we discovered in our research and practice that organizations tend to go through a metamorphosis as they age that is similar to, but still different from, conventional notions about enterprise life cycles.

Specifically, enterprises tend to be born looking not at all like a modern organization. Formal planning systems, budgets, carefully drawn organization charts, metrics, and control systems, as well as formal policies and the like are all essentially missing. For the bank, if a loan is needed, or for the angel investor, if money is to be raised that way, entrepreneurs will put on paper something that reads like a conventional modern organization. But in reality, it is mostly fantasy.

Young firms do not operate with rigid formal hierarchies. They operate more like loosely knit networks, without a great deal of management. But successful cases demonstrate aligned leadership, usually coming strongly from one or two people with a little more of the same from many around them. Formal policies and systems and reports are rare.

To a large degree, young successful enterprises, especially in the tech world, operate by Agile Principles. And these firms behave with agility, with initiatives coming and going, and the shape of the network and peoples' place in it shifting regularly. Nearly everyone is engaged. The strength of the system is its capacity to adapt, move quickly, innovate, and in general change with evolving knowledge and requirements.

But with success and growth and scale comes the need to manage and control. Early on, a node somewhere on the network starts to develop a different structure and process. Within this node, or sometimes more than one node, the structure is hierarchical. The process is more managerial. Systems and policies slowly start to emerge. And with growth, this new aspect of the organization starts taking on a larger and larger role.

In all successful organizations, there is a period of time when both systems are operating together—a dual system—each focused on different goals. The original entrepreneurial/leadership network tends to activate Thrive and to drive innovation, speed, adaptability, and change. The new hierarchy connects more with our Survive side and drives efficiency, problem-solving, reliability, and stability. This dual arrangement is often not visible because one part is formal and explicit and the other more informal and implicit. And these are not two separate departments, staffed by different people. Most of the same managers and employees work both sides, often one as a “day job” (usually the hierarchy) and one as a “side gig” (usually the network).

Because the two systems are so different, the potential for conflict is inherent.

In some cases, the original entrepreneurial network limits the natural and needed growth of the management hierarchy and systems. People in the former see the latter as a threat to their freedom, as undermining their ability to innovate, and decry the horrors of bureaucracy. This sort of fight can continue for some time, with the original system dominating until the negative consequences caused by inefficiencies and chaos overwhelm.

In other cases, the management hierarchy takes over prematurely. Those in charge talk of the need for growing up. “We are no longer five people operating out of a garage and we have to stop acting as if we are.” But with the agile network arrangement beaten down, more often than not, innovation and growth slow.

In the most successful enterprises we have studied, the two systems work for a while in tandem with a variety of mechanisms mediating natural conflict. It helps that the same people play a role both in what becomes an informal network and in the management hierarchy. You don't find the “us-versus-them” and silo problems we have all experienced. It also helps greatly when people explicitly recognize how they are operating. It helps, for example, when senior executives have learned that their job is sometimes to be a “sponsor” for network-based initiatives, to deal with barriers that the teams cannot handle by themselves, and then to get out of the way.

But even in virtually all “successful” businesses, over time the management hierarchy becomes stronger and bigger, out of necessity, as production, distribution, and administration demands grow and grow. At some point, it is not unusual for the management processes to crush the entrepreneurial network. The firm emerges as a mature, more slowly growing, not at all agile enterprise.

In the past, in a slower world, even “overmanaged and under-led” organizations could perform adequately by the standards of the day if they had some source of strength: strong brand recognition, high market share and economies of scale, key patents, or a unique global presence. With some modification, where network-like task forces are added to drive initiatives, survival was secure. But today, increasingly small tweaks to the single system that runs mature modern organizations is not enough to create the agility, adaptability, and speed needed to compete and win. What is needed is that dual system that all big organizations once had, if only briefly, early in their histories.

When the dual system becomes just a part of “how we do things here”—that is, as it sinks into the culture—you get sustainable agility. You create an environment where it is actually possible to implement Agile Principles the way they were intended—leading to a more adaptable organization that gets things done faster. You end up with a situation that is not dependent on one unusually capable boss to push through new and better ways to handle strategy, digital transformation, restructuring, culture, or M&A. You have new and better methods for dealing with change that do not fade away when a great boss moves on. We mean, of course, methods such as a bias toward a select few and diverse many, toward using have to and want to, engaging head and heart, demonstrating vigilance about threats and opportunities, and the like. You also have an operating model that is more consistent with, and supportive of, Agile Principles. A network, with its good working relationships across departmental silos, for example, is the perfect mechanism to consistently apply Agile Principle #4: “Close daily cooperation between business people and developers.”

A dual system in the culture yields an organization that allows both Survive and Thrive to do what they were designed to do without overheating or going to sleep—all of which helps create an enterprise that is sustainably reliable, efficient, fast, and agile.

It Is Not Just about Software Development

This dual system applies in general today. It goes way beyond just software development. Scaled and Sustainable Agile requires an agile network structure built into the entire organization, and with it more leadership built in everywhere, yet without abandoning management and hierarchy.

We have seen dual systems provide agility not only in IT but in sales organizations, not only in high tech, but low tech too, not only in the U.S., but worldwide. Dual systems can help support new and better ways to form and execute strategy in a rapidly changing world. They can help with restructuring, cultural renewal, M&A, and digital transformation.

To some degree, dual systems better mirror the dual design of human nature than the modern conventional organizational form. With hierarchy more adept at dealing with immediate threats and networks more capable of capitalizing on novel opportunities, dual systems make it easier to mobilize masses and provide a platform for more leadership than the conventional form.

And—this is the big point—once locked into place because it's just seen as “the way we do things here” (that is, it's in the culture), a dual system makes short-term efficiency and reliability as well as longer-term agility and innovation sustainable.

Building a Dual System: An Example

“It has sustained itself for seven years now,” he tells us, “which is remarkable since most of the people here thought it would last one year at most. We had a history of ‘flavors of the month' activities where we launched projects, task forces, and programs, perhaps had some initial success, yet failed to sustain. But not in this case.”

He works in an 80-year-old business that was started in wholesaling for some big-ticket consumer items. After initially establishing itself as a successful, growing enterprise, the firm expanded by aggressively buying small, local mom-and-pop wholesalers in their industry and then letting them operate with some autonomy. The organization evolved over its first 65 years, but slowly and very incrementally. No one would have dreamed of calling it a tech business.

Change has sped up in the last decade due to a variety of new forces, including digital disruption, the need to better integrate all the acquisitions, and the opportunity to merge with newer online retailers. During this time, the company has prospered by adopting a dual system, changing more, moving faster, and in general becoming more agile.

The nerve center of the dual system is a “guiding coalition,” a core team that coordinates the activities of the network and ensures integration with the hierarchy. In this case, the 2019 guiding coalition (GC) comprised 60 people who were selected from 189 applicants. This group of volunteers represented each department and geographic area and consisted of individuals with great diversity, passion, connections within the business, and initiative.

The GCs had a tenure of one year and each year's group incorporated the learnings from previous years. The senior leaders demonstrated their commitment and willingness to invest in the teams by supporting a “kick-off” event over multiple days at corporate headquarters. Top executives participated in the event, providing their perspective about the state of the business and even pitching ideas (which the GCs would be free to choose or not) about what they felt could be powerful strategic initiatives for moving the business forward.

Through an open and transparent brainstorming session, in 2019 the team identified nearly forty potential initiatives. Some were about sales and growth, others about operational efficiency, others about digital or technical issues, and some about culture and employee relations.

They had learned that the network functions best when a diverse group of individuals work on projects that they feel passionate about. Therefore, a critical role of their GCs was to match people with projects. That same year the team narrowed down the initial project list to the 14 with the most energy behind them (i.e. individuals with activated Thrive willing to lead the project) and which most strongly connected to the overall business opportunities. The end result was seven action teams, each comprising approximately seven members and focused on two initiatives per team.

A key principle behind the activities of their network is that the teams make their own decisions on how to realize the opportunity in each initiative. Each team devised their own metrics and their own action plans. To keep activities coordinated and to help remove barriers, the teams reported monthly to key executives. Once a quarter, they met face to face. Recognizing the need to celebrate and generate excitement around participating in this work, a big face-to-face report out was scheduled at the end of the year—a celebration and, in essence, a “graduation.”

Interdepartmental or business unit politics was not totally absent in the networked activities, but it was low. People acted as unified teams with an openness and candor that was not typical in the organization (or in virtually any large modern organization). Busy people rarely dropped the ball in their initiatives or on their “regular” jobs. The diversity within teams more often led to creativity, not unproductive conflict. Bosses rarely shut down activity with smothering controls or demands, and some stepped up to aggressively remove barriers that the networked teams could not figure out how to remove by themselves. As a result, useful initiatives were identified, pursued, and executed both in a volume and at a speed that is simply not “natural” in modern hierarchical, management-focused organizations.

While the network did its work, the regular hierarchy continued to focus on buying, selling, warehousing, collections, and all the many tasks needed to run the business each day, week, quarter. The network, including the core group of 60 and hundreds of others who were mobilized to work on specific tasks or projects, helped the firm change, improve, and move ahead, with agility, into an always shifting future.

“We are not perfect, let me be clear,” one of those intimately involved in their dual system told us recently. “But I am often asked by people I know who don't work here how we have managed to do this. I think typically it sounds too good to be really true. So, anyway, I have thought about that question and I think there are two reasons that are particularly important.

“First, we sought out good expertise in helping us set this system up and, as a result, we started actually getting things done, that were important to the business, faster and better than people expected. The GC that first year was maybe 30 people (we were a smaller organization). Nevertheless, the very first year we successfully addressed a chronic business issue that had been slowing growth for years and years. That was crucial because it began quickly to win over a lot of skeptics and caught the attention of the executive committee, especially the new COO.

“Second, and related to the first reason this has worked so well, a few key executives, including the COO, once they saw the logic and power of what was happening became real champions, so when we hit natural bumps—political, bureaucratic, interpersonal—they did not hesitate to take action that would smooth the way.

“And the overall business results speak for themselves. We have added additional wholesale brands. We have better integrated acquisitions. Our foray into digital retail is working. We have maintained or added to our strong competitive position. And we have grown a lot.

“On the more personal side, there are some people who have worked on the GCs along the way who will tell you that it was the best work, or the best developmental experience, they have been involved in within their entire careers.”

Here, and in similar cases in which we have been involved or researched, human nature and modern organizational tendencies pushed heavily against the formation of a functioning sustained scaled agile system. Formal hierarchies and management systems tend to naturally throw up barriers of all sorts. Modern organizations are inclined to turn leadership networks into check-the-box, highly standardized activities that do not activate Thrive, unleash innovative energy, mobilize people, and thus accomplish much—which makes it easier to kill them off.

But, bottom line, there is no question that attention to those forces, keeping Survive from overactivating, and revving up Thrive, with the lessons learned from leading change and brain research, can create twenty first century dual-systems organizations, where sustainable agility across the enterprise continues to achieve hard-to-imagine results at hard-to-believe speeds.