Agile transformations can deliver big benefits for organizations and their employees and are a key strategy for long-term competitive advantage. 

In fact, McKinsey research shows that successful transformations can result in a 30% increase in efficiency, operational performance, customer satisfaction, and employee engagement. It also triples the likelihood of being a top performer. 

Yet, most organizations are falling short of this potential. 

In a study of more than 2,000 companies, McKinsey found that “two-thirds of those pursuing a transformation said that their organizations were just treading water, taking no decisive action, and consequently achieving little or no business impact.”

In other words, while many leaders think they’re “doing agile,” they struggle to fully enact a large-scale agile transformation in the organization, which can inhibit them from fully realizing the gains that would have been available. This means slower delivery of value, lower customer satisfaction, and wavering employee engagement compared to what could be achieved.

So what is holding leaders back from realizing the full potential of their agile transformation?

Reason 1: Not practicing what you preach

If you’re not seeing the expected results from an agile transformation, it might be because your leadership is not yet agile.

An agile approach focuses on four key values:
 

• Individuals over processes
• Working software over comprehensive documentation
• Customer collaboration over contract negotiation
• Responding to change over following a plan

These values prioritize collaboration and flexibility across teams and roles, helping organizations adapt to change and approach problems with a growth mindset. But traditional management is very different. Traditional approaches to leadership and project management focus on hierarchy and bureaucracy and can therefore be slow to change.

For an organization to fully transform, leaders must lead by example. 

This means you can’t just talk the talk—you must walk the walk. Leaders that fail to transform themselves alongside their employees will lose credibility in their efforts to promote an agile workplace and struggle to secure engagement from the bottom up. 

The first step is adopting an agile mindset. This requires building trust throughout the organization and demonstrating respect for your teams. In practice, this can look like trusting your teams to make decisions without micromanaging and recognizing failure as a part of learning and an opportunity to improve.  

As you adopt and demonstrate an agile mindset, your employees will see that example and be empowered to do the same. 

Reason 2: A culture that conflicts with agile practices

Building an agile organization goes beyond adopting agile processes or technical frameworks. Agile requires a culture shift from traditional ways of doing business. This means connecting silos between teams and departments and aligning efforts so everyone is working toward common strategic goals.

But changing culture isn’t easy. 

In fact, in a survey conducted by Digital.ai, 43% of respondents said a lack of cultural alignment with agile values was a top challenge for their organization. And lack of leadership participation (41%) and inadequate management support and sponsorship (40%) only exacerbate this issue further.

In other words, leaders play an essential role in enabling agile transformation. There are three main ways to achieve this:
 

• Creating space for hybrid teams to experiment
• Enabling cross-functional collaboration
• Building a strong feedback culture

By breaking down barriers to collaboration and encouraging a culture of experimentation and improvement based on feedback and failure, teams will be empowered to innovate while communicating and collaborating more effectively on every level.

Reason 3: Failing to be transparent

Communication and transparency are key to a successful agile transformation. Without traditional organizational hierarchies and systems, it is all too easy for communication to break down and for misalignment to grow across teams and leadership. 

From a leadership position, transparency provides the foundation for building trust and enabling a collaborative environment built on a shared vision. And at both a team level and an organizational level, transparency improves accountability, feedback culture, and innovation.

So if you’re not achieving your agile goals, pay attention to how you communicate. Are you open with your employees about goals, plans, and values? Do you encourage feedback and make it safe for people to give and receive constructive criticism? 

Lack of transparency—at any level—obstructs progress and can impact the quality of your product. That’s why it’s essential for leaders to make things visible like work in progress, mission and vision statements, and value flow. By sharing and revealing these insights and direction, your teams can align themselves successfully and course correct when roadblocks arise.

Reason 4: A funding model that doesn’t support agile delivery

Another reason your agile transformation is falling short could be the way you fund it. Traditional funding models are far from agile, and this can create a disconnect between the teams doing the work and the teams allocating the budget. 

For instance, traditional funding focuses on outputs in a project-based model. This means funding tends to be planned annually, with fixed scopes, budgets, and timelines for predetermined projects.  

But agile delivery puts the focus on outcomes, rather than output. And this requires much more flexibility to adapt to changing priorities, market needs, and new information. Instead of working towards a fixed plan created at a point in time, agile delivery allows for iteration and continuous improvement towards a clear goal (or outcome). 

This means funding must be able to adapt with the agile projects. Otherwise, you’ll end up with wasted time, effort, and money. But shifting to an agile funding model is easier said than done. 

Gartner found that 55% of organizations cite funding as a top challenge. That’s why leadership is so important. Strategic leadership can bridge the gap between teams making decisions and teams executing the work and help create a new product-based funding culture.   

You can do this by moving from an annual planning cadence to a more frequent strategic planning review, adopting more frequent budgeting cycles, and mapping value streams so you can more accurately assess when and where your funds should go.

Agile funding helps organizations put the right resources towards the right initiatives at the right time. But it takes the right leadership to make it happen.

Realizing your agile future

If you haven’t yet achieved your agile transformation dreams, you’re not alone. Implementing agile at scale across an organization is a huge undertaking—made all the more difficult by hidden roadblocks and stubborn cultural norms (from leaders and employees) that are hard to shake. 

But if you’re up for the challenge, you can reap even bigger benefits, including:

• Increased customer satisfaction
• 5-10x decision-making speed
• Increased innovation and employee engagement

And recognizing some of the main obstacles to success can help you right the ship and get your momentum back on track. 

Address these challenges head-on, so you can better empower your people to realize the potential of a fully agile organization and the benefits that come with it.