This is a verbatim transcript of the first video on XSCALE’s principles of agile organization, available on Youtube.

Hello, everyone. Welcome to XSCALE’s webinar series on the principles of agile organization. This is our first session.

Peter Merel

A lot of my clients these days are interested in taking agile to places it hasn’t been before and we have a whole bunch of people talking about large-scale agile and business agility. What are these things?

In XSCALE, there are six fundamental principles you can’t do without if you’re going to be an agile organization. So we’re gonna deal with them one at a time, and that’s pretty easy because XSCALE itself is an acronym for these principles.

The X stands for exponential return on investment. Now, that’s a wonderful aspiration and if you are a startup it’s essential to attracting investment. No one is going to invest in a risky proposition without this kind of idea in the Powerpoint.

Any startup would be delighted with a single one of these hockey sticks.

The real question is if you are a going concern, a small to medium, or even large, corporation, is exponential growth something that’s possible for you? On the other hand, in a time of peak disruption - if you’re trying to do a “slow and steady wins the race” there aren’t too many examples of businesses that have been able to carry on like that for very long.

There’s an American initiative that comes out of Google and Darpa called Singularity University. They have the idea that exponential growth is now the norm that all organizations should be targeting. They say you should be expecting to grow a billion-dollar business in about nine months.

The example they like to use is Kodak, which invented the first digital camera in 1975. They patented them, sat on the patents and wouldn’t let go of the idea that cameras had to be linked to a chemical film business.

Eventually the cameras became quite practical. One, two, four megapixels, maybe no more than half a second between pressing the button and hearing the click …

Meanwhile Kodak focused their efforts on chemical cameras. In 2012 the point of disruption came and Kodak filed for bankruptcy.

These devices started getting built into phones. The competition narrowed to the phone manufacturers that were able to compete. These days, most phones have cameras that are perfectly adequate and people will not pay you very much more money - or possibly any more money - for a phone that has more megapixels.

Once money leaves the equation a bunch of people start building services that simply assume that these devices are ubiquitous. Snapchat, Instagram - these companies made billions on the proposition that everybody has a digital camera in their pocket.

That’s a lovely proposition for exponential growth, but it’s not exponential Growth of a business - it’s exponential Growth of a market. What’s the difference?

There’s a bloke named Kano who came up with this. Kano’s idea was if we were to graph the customer satisfaction versus the investment required to achieve that satisfaction, we see different behaviors for different kinds of products.

There is some like a milk carton. If your milk carton doesn’t keep the milk in, it’s not satisfying basic expectations. You will not sell many of them. If you clad it in lead and keep the gamma rays out you’re not going to sell any more of them.

On the other hand if we think about the early days of digital cameras, just small, incremental improvements in the shutter speed, or the number of megapixels, or the color quality were enormously delightful and would sell you huge numbers of devices.

Well, Kano’s insight was that over time, all delighters become basic expectations - and that makes a bit of a mockery of the Singularity University exponential curve.

If we plot its states, obviously you’ve still got all the disruption working exponentially. That’s great, but once things dematerialize you’re only getting linear growth in the return on investment.

Once the money goes out of the equation you have to provide an adequate quality digital camera in your mobile phone, or you won’t sell your mobile phone.

Then there is a new growth curve, and if you aren’t already on it, then you are already behind the eight ball. So that means these curves look more like sigmoids, S curves.

You’re always going to hit some sort of constraint whether it’s in the market, or in the technology, or in the behavior of your own company. So the question is always: how do we bake the next curve into our activities? But even if you plan it in, if you were to string your sigmoid curves together one after another - like this - well you’re only going to achieve linear growth.

Apple had a different idea: stack the curves one on top of another. You’re going to get exponential growth in a mature organization. This strategy - which we’re calling extropy - is the only way we’re going to do it.

Apple have not stopped growing just because Steve Jobs passed away. But they have changed their behavior. It’s true they’ve doubled and redoubled in size since Jobs died. The market cap is really worth more than the country of Russia.

But this is the only new product that Apple have released under Cook. So it begs a question: if Jobs was still alive and wanted to keep on stacking sigmoids … How would he go about it?

I think we’ve got a concrete answer to what jobs would have done.

This is something that builds on existing Microsoft technology. It’s an augmented reality visor, it’s got a Kinect built into it.

Do you hear the reactions of the crowd? That is the sound of a delighter.

Microsoft bought Minecraft to generate an augmented reality experience that no one else can match. Jobs would have called it iReality, but that wasn’t to be.

This is a Google trends picture of Apple today. It looks pretty disheartening until you realize the scale - that’s not like Apple’s about to go broke. iPhone sales continue linearly and even though revenues have dropped, iPhones have at least one more generation before augmented reality obsoletes them forever.

Extropy doesn’t mean you magically morph into Steve jobs, but if we don’t have the intent we can’t realize it. Extropy isn’t just about products.

It is something an agile organization has to apply every day. At an epic level, at a per feature level - that’s very different to what we usually do in product management.

This idea of leapfrogging,stacking the sigmoids, requires agility and more agility than just agile delivery teams. It requires

• Simple design
• Continuous optimization
• Autonomous teams
• triple loop Learning
• Ecosystems thinking

In the next part of our a webinar series on the principles of agile organization, we’re going to look very carefully at design.

Not just design thinking, but designing for simplicity. What Frank Lloyd Wright called “form and function as one”.

If you’d like to investigate these ideas further try, xscalealliance.org. We look forward to seeing you next time!