Leading R&D divisions in an agile way

Leading R&D divisions in an agile way

In a fast-changing world, leaders of R&D divisions are forced to think about and adapt their way of leading. Smart, fast, precise, and agile are buzzwords you may have heard often. But how does agility change leadership? What behavior can be recognized of agile leaders? And what does this mean for your role as a leader? This article will provide answers to these questions. We aim to give guidance for leading in an agile way.

Current challenges & changes that R&D leaders face

Back in the industrial economy, companies were facing just few competitors with similar business models, closed markets and merely powerless customers. Technology cycles lasted long and the competitive advantage was ensured through lower prices or better performance. Leaders were engaged with their focus on planning, directing and controlling, to maximize their business to achieve efficiency.

Nowadays in our digital economy, companies are facing open markets with competitors from all over the world, empowered and well-informed customers as well as a wide array of solutions for problems. A variety of new products is launched on rolling basis, technology cycles become shorter and government changes or new regulations are passed frequently and more unexpectedly. Leaders must act in a so-called “VUCA”- environment, shaped by volatility, uncertainty, complexity and ambiguity. To handle these new challenges, leaders of companies increasingly introduce agile methods and concepts to be able to react fast on changes, take market opportunities and build an R&D division that can adapt and steer itself. They learned that agility increases customer satisfaction (customer focus), employee’s happiness on the one side and EBIT (earnings before interest and taxes) on the other. An example of how an agile R&D division could look like is visualized in our infographic.

Changing R&D to an agile R&D division touches on all internal structures. Strategy, processes, organizational setups, products, employees and management. New roles must be established and new capabilities are to be learned by employees and leaders. Often people think agile means less leadership is needed, but the opposite is the case. In an agile R&D division, a different and more focused leadership behavior is needed *. Also, to establish an agile R&D division, success is mostly based on the transformation speed of leadership behavior. Thus, it is understood that agile adjustments must be employed top-down.

Leaders must guide the change and facilitate the new processes within the R&D division. Especially, if it comes to big changes with strong influence on culture and mindset. A guideline to what is important for a successful agile transformation can be found in our Insight “How to successfully transform from classical to agile R&D”. This article summarizes our experience from different agile transformation projects and leadership trainings on key behavior of new leaders, to establish a successful agile R&D division. It reflects on how precisely agility does effect leadership behavior. And how this leadership behavior should be ideally transformed.

How the shift to agile leadership looks like

Agile work means more than pushing new fashionable processes or working models. Agility affects the whole R&D division. In this section, we mirror six shifts by example from conservative to agile approaches. To understand these required shifts will help you to reflect and adapt your leadership style.

Table 1: Six shifts in leadership style from conservative to agile approaches.

7 Key behaviors that shape agile leadership in R&D divisions

Being in the driver’s seat to take a business on a challenging journey to agility, brings up relevant questions and fosters disorientation at first: What should you do as an agile leader? How should you behave? Where should you start? In this section, we will describe seven key behaviors and starting points of agile leaders.

Inspire and align the company vision and mission

Inspire and align employees and middle management with the company’s vision and mission is not only important when starting the agile transformation. It will be the basis for motivation, creativity and eventually minimize fear of uncertainty. Set the direction, not the destination.

Keep the big picture in focus

Since most agile methods focus on short term and midterm, you as leader should keep the big picture in focus. Since you are accountable for profit and loss, it is important to prioritize opportunities, create value and ensure organizational growth: Connect the dots to create the big picture.

Lead the change

Leading starts by challenging yourself first. Reflect your attitude towards incommodious changes. Then transform your attitude and start to employ these changes within your R&D division. This will ensure that you convey a credible message, authentic and recognized by your employees. That is leadership by example. Ensure that you find the right path to follow before you communicate the right way to go. Emphasize lifelong learning. Finally, support and stimulate the new DNA.

Develop competencies and energize your employee

In 2014, Henrik Knibert defined the formula for productivity as “effort x competences x environment x motivation = productivity” **. As an agile leader, you should focus at one hand on building up the right capabilities and people by increasing competencies to groom so called T-shaped employees (broad knowledge and one expert area). On the other hand, inspire and energize your employees by creating an environment that ignites intrinsic motivation and allows innovation and creativity.

Minimize bottlenecks – empower teams

One big challenge in classic R&D divisions is the hierarchical decision-making process and therefore the resulting bottlenecks. As an agile leader, you should minimize chokepoints by decentralizing decision-making and empower your teams as much as possible. This will increase the performing speed through merging value of teams and encourage their motivation. Furthermore, the management team can focus on other important things to add further value to the company.

Listening, learning, adapting – Continuous improvement

Continuous improvement is not only some work you play by the sideline. Listening, learning, and adapting are key feature in agile frameworks and must be part of your DNA. Continuous improvement applies not only to your employees and R&D division, it also has a tremendous impact on you as an agile leader. If you recognize an urgently required change, don´t hold on to things that don´t work. Accept the chance to change as it happens and adapt appropriately.

Shift your management behavior to enable creativity

In today’s world it is mandatory to find new ways to solve problems to discover new ideas for customer needs. Therefore, entrepreneurial thinking and acting is more needed then any expertise from the past. As an agile leader, shift your management behavior to enable entrepreneurial thinking by your employees. Be resilient, creative, and provide your employees a well-designed playground. That´s a so-called psychological safety and a handrail for all staff members of the R&D organ. Your employees will use that freedom and safety to work more creatively and efficiently.

Upfront, your new leadership behavior will affect your R&D division and yourself in various ways. First, you will recognize the positive effects of agility in your R&D division through successful transformation and consequently the continuous improvement.
Second, your employee’s passion and enthusiasm will increase. Agility will boost their self-identification with more responsibility for their work, organization, product, and team. Your employees will work happier and the productivity of their work will grow.
Last, the complexity of your work will decrease, and you will find more time to focus on strategic topics, customer needs, organizational growth or building up the right capability and resources.

New roles emerge through agile leadership behavior

In today´s VUCA environment, it isn´t enough to be efficient, as an R&D division. You also must be flexible enough to react fast on external changes, take market opportunities, and to survive in the long-term. Many businesses started originally with employing agile elements, and then later scaled or transformed to an agile R&D division.
As a leader, a new role set is required within this altering process; each role to be used in the respective situation. The goal is to use the right role at the right time. The seven key behaviors can be summarized to a set of three central roles for agile leaders: Architect, Catalyzer and Guide.

The role of an Architect is to adjust the organizational structure to enable and support agile work within the R&D division, projects, and teams. It is meant to give employees the required environment to enfold the full potential of agile workers. The architect inspects and adapts where required and continuously improves the whole system. Later in the process, employees will adjust to the setting and start working agile on their own.

The role of a Catalyzer accelerates changes. To become an agile leader, change must start with a leadership reset before starting within the R&D division. Employees will follow and start adapting the leadership per example.

The role of a Guide means guiding the R&D division to ensure that agile elements are used in a proper way. A guide unlocks the intrinsic motivation of workers and energizes employees. Therefor they will generate better results and continuously improve within and beyond their area of responsibility.

Conclusion

Every R&D division is unique and has its own processes, structures, strategies, and culture. To simply adapt best practices from well-known organizations doesn´t work. The best way to lead is letting go of what doesn´t work. Learn and adapt to get the best fit for your R&D division. Start small and improve continuously to shape day by day a better R&D division than before.

* Digital Leadership: Erfolgreiches Führen in Zeiten der Digital Economy”, Haufe-Lexware, 2016, page 201.
** Henrik Knibert (2014). Scaling Agile @ Spotify. Talks from SCRUM Alliance.

Further Reading

LeSS – Large-Scale Scrum. Management. https://less.works/less/management/index.html

SAFe – Scaled Agile Framework, (2018). Lean-Agile Leadership. https://www.scaledagileframework.com/lean-agile-leadership/

Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2)

Bolden, R. (2011). Distributed leadership in organizations: A review of theory and research. International Journal of Management Reviews, 13(3)

O’Connell, P. K. (2014). A simplified framework for 21st century leader development. The Leadership Quarterly, 25(2)

Byron Reeves, Thomas W. Malone, Tony O’Driscoll (2008).
Leadership as a Task, Rather than an Identity. Harvard Business Review article Leaderships Online Labs

Darrell K. Rigby, Jeff Sutherland, Hirotaka Takeuchi (2016).
Embracing Agile. Harvard Business Review, May 2016.

Henrik Knibert (2014). Scaling Agile @ Spotify. Talks from SCRUM Alliance.

Peter F. Drucker. California Management Review (1999, Vol.41, Nr.2): Knowledge-Worker Productivity: The biggest challenge

Jack Welch (1998). Jack Welch and the GE Way: Management Insights and Leadership Secrets of the Legendary CEO.

Author

Manuel Stephan

Manuel Stephan is a Senior Consultant at 3DSE Management Consultants GmbH in Munich. With more than nine years of experience in R&D and consulting, he has supported companies in transforming and shaping their R&D to tackle todays challenges. His core competencies lie in agile development (scaling and transformation), platform and modularization strategies, and optimization of R&D. He has acquired superior industry experience in automotive, motorcycle, agricultural vehicles and the plant engineering sector.

All Insights by Manuel Stephan
 

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