The Responsive EnterpriseHow do you make a large organization just as quick on its feet and effective as a start-up?

Pattern 3: Make every aspect extremely transparent

By Vikram Kapoor and Rini van Solingen

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How do you make a large organization just as quick on its feet and effective as a start-up?Large enterprises have often lost much of their responsiveness in comparison to smaller enterprises or start-ups. This despite the fact that today, being responsive might be the most important quality an enterprise can have, as the ability to swiftly respond to changes can help an enterprise survive in the long term. This whitepaper covers one of the nine patterns from the book The Responsive Enterprise, written by Vikram Kapoor and Rini van Solingen. In this book, the authors explain the nine patterns – each of which have four sub-patterns – that help to greatly increase responsiveness. The story is written as a dialogue between two main characters, Mark and Ron. A separate whitepaper, containing concrete tips for implementation and areas for attention, has been written for each of these patterns. Responsiveness is a journey that doesn’t end once the nine patterns in this book have been implemented. The world will continue to change and, as a result, so will responsiveness. There is no reason to put off becoming faster and more responsive. Start today by making client impact a priority and using mini-companies to experiment in order to realize your higher goal.

Pattern 3: Make every aspect extremely transparentComplete transparency is necessary for building trust and ownership. It also ensures a comprehensive overview, leaving no place for secrets, taboos or unpleasant surprises.

This whitepaper is part of the book “The Responsive Enterprise” by Rini van Solingen and Vikram Kapoor, and offers additional details and information for practical implementation.

The four underlying principles

1. A culture of complete transparency, without secrets and where no question is out of line.

2. Clear, unambiguous performance measurements that are publicly available to all.

3. An infrastructure for the transparent exchange of information is in place and is kept up to date.

4. Finding fun and energy in ownership and accepting responsibility.

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During the third hole, Mark and Ron arrived at a discussion on the importance of transparency. In order to make decisions on a daily basis, it is important that everybody has access to all information. This means that nothing can be kept secret. You never know what information you might need, and if you have to go looking for it, you probably won’t find it in time. Ron points out that transparency would only complicate operations and cause hassle in his company. The idea of everybody knowing one another’s salaries (if they are posted on a bulletin board for instance) would in his opinion only lead to problems. They also talk about how transparency requires a culture in which there are no surprises: everybody knows on which criteria they will be judged, and what the current state of affairs is. All decisions are based on that information and as a result are unlikely to surprise anyone. Ron feels this idea is at odds with agility, but Mark explains to him that the only path to being responsive to your market and your clients lies in fully including your team (and the organization as a whole) in how you do business and never leaving anything up to chance. They conclude their discussion by agreeing that you will always be able to do more than you thought possible, and you can start increasing your transparency today by posting the most basic information on your bulletin board.

The four underlying principles of extreme transparancy

The dialogue about extreme transparancy in the book

The Responsive Enterprise

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A culture of complete transparency, without secrets and in which all questions are welcome. Being able to adjust and respond quickly is essential, and the ability to do this depends on the right information. This information has to be available, accurate and accessible. In order to prevent vital aspects from being overlooked, one needs to have full transparency. Everything should be subject to questioning, all numbers and figures should be visible and accessible to anyone, nothing must be hidden. Personal – and possibly sensitive information – should also have the potential for free and open exchange in such a culture. This applies to salaries, bonuses, vacation days, rankings, personal development plans, revenue and sales results, liquidity, outstanding invoices, and so on. There is no room for surprises. And any question may be asked, no matter the subject. Transparency is essential to building trust; it helps in distributing responsibility and gaining commitment.

Clear and simple performance indicators that are publicly visible to all. The ability to react and deal with any eventuality quickly depends on autonomy. In other words, everyone should have direct influence on their own success or failure, as that is the only way to allow and enable them to respond rapidly. A precondition for this is that it should be completely clear when an effort has been successful and there must be clarity regarding the current status. To achieve this level of clarity, dashboards are utilized at the level of the individual, team and organization. This can be done digitally or using a bulletin board, as long as the information provision is transparent and available to everyone.

Measuring and rendering aspects quantifiable is crucial. This applies not only to the measurements themselves but also to the accompanying value thresholds. When is something subpar, when is it good, and when is it excellent? The answers to these questions should be clear for everyone – only then will the team be able to help each other or ask one another questions. The availability of an infrastructure for the transparent sharing and upkeep of information. In addition to the cultural aspect of extreme transparency, there is also a logistical dimension: the location where the information can be displayed. A need for a transparent, consistently maintained infrastructure ensues. Typically, such an infrastructure relies on both digital and fiscal aids: video screens with dashboards, combined with whiteboards and sometimes even complete walls of information and status reports. The information within this infrastructure should be not only insightful and accessible but up-to-date as well. This requires establishing processes, activities and agreements for its upkeep. If figures are not kept up-to-date and are therefore obsolete or outdated, there is no transparency. There is more involved here than the regular exchange of reports: it is about providing total transparency regarding achievements, at any interval, to anyone at any time.

Fun and energy are gained from ownership and responsibility. A proactive attitude is a necessity for achieving a Responsive Enterprise. “What are you/we going to do about it?” is a frequently asked question. Transparency naturally leads to this kind of question. People within a Responsive Enterprise gain energy and fun from taking ownership and do not hesitate to take on new responsibility – even when success is not guaranteed.

Everyone is expected to take responsibility and show ownership, good or bad. A daily, weekly, monthly, quarterly and annual rhythm guides that ownership. At these intervals, current standings are explained by people or teams and responsibility is taken, allowing them to improve and move forward towards the future. After this, the gauges are reset and the next round begins. Extreme transparency removes insecurities and taboos; it is therefore an effective tool for building trust, responsibility and achievements.

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Step 1: Design a dashboard for achievements with interconnected standards.

• Create a clear overview of KPIs for every individual, team and for the organization as a whole. At any given moment of the day, the results should be completely clear: what they should be and what their current status is.

• Include standards for each KPI that create clarity as to what is going wrong and what is going right. Think about a “floor” and “ceiling” to indicate normal, bad and good. This offers clarity on the status of a KPI and provides direction to any discussion that might arise.

• The most crucial indicators can contain expanding or mitigation measures. If an important indicator is low or high, these measures allow you to have less or more space for decision-making. This way, teams are assigned to one of 3 categories: Category 3: stands for being under receivership; team must go “back to basics” and first show results. The team cannot add new members and extra activities are limited. Category 2: carries on within established limits; the team is allowed to continue the path that has been set and has an average amount of freedom to do as they see fit. Category 1: accelerates beyond borders; the team is clearly “in the zone”, they are given extra freedom to grow and become entrepreneurs.

• Make sure the dashboard is updated on a regular base, so it always displays the actual status. The accuracy and completeness of the dashboard is procured.

Step 2: Establish an infrastructure for transparency – digital, analog and temporal.

• Make sure there is a place that is accessible for everyone where you can place accessible information. Appoint an administrator to keep it organized and up-to-date.

• In addition, try to create a physical location for sharing information. For instance, a “wall of transparency”. The salaries, bonuses, quotas, strategic enhancement themes, etc. should be displayed on this wall.

• It should be clear to everyone in the organization where the most recent information is to be found. People must also be able to trust that the information is accurate and up-to-date.

• Use the infrastructure for transparency as a meeting point. It can be either virtual or physical. Make it a meeting point for substantive discussions, but also a place where people meet for a cup of coffee. Somewhere near the coffee machine is a good location.

Case study 1: Publishing each employee’s impact on the websiteIn a consultancy organization where consultants try to affect changes on behalf of clients, the goal is extreme transparency. An important indicator for a consultant is, after all, client impact. How responsible are you, the consultant, for the impact that has been realized? Have many changes taken place and are these changes noticeable? Client impact is tough to measure in many cases. Take the example of the company that decided to measure client impact on a scale from 1 to 5, and to collect impact grades from the most important contact person at the client each month. Initially, the plan seemed to be working well. That is, until the director of this organization had the brilliant idea to expand his commitment to transparency. He wanted to share the consultants’ impact grades on our website. That way, everyone (customers, colleagues, competitors, applicants, whoever) could see the impact numbers from each individual consultant. Including the times when things went wrong. Most consultants wanted no part of this plan. Many said that the numbers weren’t objective, that the story behind the grades is more important than the grade itself, that the system was overly dependent on the clients’ opinions, etc.

In short, that was an extreme step towards transparency that resulted in resistance. Do you agree that making these numbers public was a good decision? Why, or why not? What would you do to get the consultants on your side?

Take a moment to think about your actions before you continue reading.

Transparency is always good. Even when it hurts. It’s just like a full physical or – to give an even more direct analogy – like looking in the mirror. You might not like what you see, or the results, but the situation was already there. Making things transparent doesn’t worsen a situation. The only thing that has changed is that now everyone is aware of the situation. In the previous example, the choice was made to sit down with the individual who had been the fiercest adversary, and to conduct a couple experiments. Measuring, sharing and discussing the thoughts of clients eventually convinced this person things weren’t as bad as he had predicted. Often, the fear of transparency is greater than the pain of transparency itself. Just like in a locker room: the moment you take your clothes off is a little uncomfortable, but this feeling soon disappears. Hanging out in the locker room with your clothes on is a lot more awkward and uncomfortable.

How do you accomplish this?

How do you create a company that is extremely transparent?

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• Organize a rhythm of “acknowledgement moments” for periodically taking responsibility for results and actions in order to determine a direction for the future. After such an acknowledgement moment, the gauge goes back to zero and a new round can begin. The first day of the month is a good time to do this, but every Monday morning at 9 is also fine.

Step 3: Take step-by-step action to make everything that is not transparent clear.

• Make sure that even those things that are usually kept hidden are also transparent. You will achieve this goal if you share reports via the aforementioned infrastructure.

• Get there step-by-step. Be clear about the end goal of complete transparency, then assign priorities in terms of most serious or biggest taboo. In the end, nothing is worth being kept secret; this makes a discussion about transparency for its own sake relevant.

• Experiment with the format through which information is shared and achievements are made visible. The important thing is the actions informed by the information. Don’t assume that the first type of overview you try is going to be the best course of action. Allow yourself time to discover what is and isn’t effective.

• Resistance to transparency is also welcome. This resistance reveals fears and possible risks, so don’t sweep people’s concerns under the rug. Engage in the discussion head-on and find out if their arguments are well-founded, or if they are merely symptoms of an underlying fear.

Step 4: Try your hardest to be the most transparent person within the organization.

• Take control of the transparency venture. Answer all possible questions, be open and painfully honest about your own points for improvement and growth path. By going first and setting an example, you make the journey easier on others.

• Be a stickler about the accuracy of information. And try to be best-in-class when it comes to updates, supply and maintenance of information at the appointed times.

• Maintain the rhythm of acknowledgement moments; don’t make any exceptions by skipping out or rescheduling, however painful these things may be. In fact, those times when acknowledgement is embarrassing are when transparency is most important.

• Discuss taboos regarding transparency, identify your own limitations in making information transparent and then experiment with them. Striving for complete transparency is, in the end, a means to get everybody on board in chasing a common goal. Demonstrating exemplary behavior is crucial.

Case study 2: The most transparent company ever?Many companies struggle with such a high degree of transparency. Sharing successes with the public is easy; sharing your failures is much more difficult. This is apparent in the number of comparison sites on the internet. Whether they are for comparing stuff to buy, restaurants, retailers, movies, or potential employers, there is always a comparison site aimed at pitting a given company against its competitors and allowing the clients to judge. This illustrates how true transparency is harder than it looks. While researching this book, we failed to find a single company that follows through in its commitment to extreme transparency. If you know of such a company, could you let us know? There will likely be a second edition of this book and we would love to include an example!

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Things to keep in mind:

1. Complete and up-to-date information. Make sure that all figures and data that are made transparent are accurate and up-to-date. At some point, decisions will be made based on this information. If the information isn’t correct or is not absolutely current, there is no true transparency. Be vigilant for discussion on the validity of figures as well. You will undoubtedly hear – mostly with figures that are too low, for some strange reason – people expressing doubts of a figure’s accuracy when they are asked to take responsibility for it. This is merely a ploy to avoid the question. The bottom line is: your figures must be correct, and always taken as such. Don’t be drawn into a discussion on the accuracy of the figures, as it trivializes the real issue at hand.

2. Sensitive subjects and taboos. Not everyone finds it easy to adopt total transparency. Sometimes there are obstacles, sensitive topics or taboos lurking in the waters, such as when making personal achievements transparent within mini companies. Is it about the individual or about the team? It is ultimately about the team, of course -- but that doesn’t mean that the transparency of the effort or input from every member shouldn’t be fully transparent as well. Be mindful of these sensitivities and taboos. They can show you what your next step towards full transparency should be. Adopt transparency and these taboos will disappear like snow on a sunny day.

3. Use information carefully and with integrity. Because everything is transparent, you are also making more sensitive information public. This information must be handled with care and integrity. Personal development plans, for example, should be treated carefully if they are visible to all. A careless remark is easily made, which might cause the subject of the remark to see transparency as a bad thing. Complete transparency is only possible when all information is handled with care.

4. Helping each other and keeping one another focused on the task at hand. Adopting transparency is only the first step; action toward transparency should lead to other actions as well. Individuals will be confronted with their own work, for example: Why is this number x? Why isn’t it higher?

5. What did you do differently this time in order to achieve such a good result? What can the rest from us learn from you? Helping on another when “stuck” is another kind of action. Be aware of these actions; challenge other people to act as well. What is your own reaction to your grades and those of others? Do your colleagues support you in your decisions? Do they offer you advice on what to do next?

6. Adapt and expand where necessary. The idea that achievement indicators are forever and that standards are static is a utopian one. An amazing achievement today sets the bar for tomorrow. Even a seemly unimportant indicator can change through time and evolving circumstances. Don’t assume that dashboards are stable – assume they will change with time. Indicators come and go, as do the standards for success. They change as you grow. Because nothing is set in stone and things will always change, make sure that all aspects can be adapted and expanded easily.

7. Rhythm of acknowledgement moments. It is crucial that numbers be translated into learning moments and actions. You must make time for these learning moments, however. An effective rhythm involves acknowledgement moments in which the responsible parties are asked for further explanation. In front of their peers, they are then given an opportunity to shine a light on what happened. It’s better to spend more time focusing on the success stories than on the mistakes, because you can learn the most from them. Keep in mind that after this acknowledgement moment all gauges will be reset to zero, which means everybody has an equal opportunity to be amazing once again.

8. Success opportunities for everyone. Every member of an organization has the right to be successful. Everyone also deserves, as an individual and as a team member, to be asked to acknowledge their achievements from the previous sprint. Everyone should have the opportunity to choose their own path and face the consequences of their actions. If the only indicator of success is “doing your work”, this is a sign that indicators have yet to be identified or that the tasks should be expanded.

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Summary of the book

The Responsive EnterpriseIf they are to effectively cope with the speed of change in the future and the ever-more-dynamic marketplace, the responsiveness of businesses will need to increase. In those terms, responsiveness is a characteristic or skill an organization possesses. A Responsive Enterprise is capable of managing delivery and innovation at the same time. This kind of environment is able to achieve results and finish tasks quickly – meaning they have time left to make adjustments when necessary.

The patterns and principles that play an important role in responsiveness have been expressed in The Responsive Enterprise by means of a narrative. They can be summarized in the adjacent model.

The client comes first: everything the company does is in service to the top priorities of client impact and client value. Alongside those efforts, employees use experimentation to identify new solutions. The learning interval is the most important indicator: the faster employees are able to learn, the faster they can create solutions (and the better those solutions will be). This means that instead of standing around thinking and planning, they must try new things without hesitation – and then see what works, and how. The cycle goes: Sketch, Make, Learn and Respond. It’s not like chess, where a player must try to think six steps ahead—and hope his or her opponent does what is anticipated—in fact, it’s the complete opposite. Think of Angry Birds: let them fly and see what happens. Try, learn and begin again.

• Setting up teams that are autonomous to the point of being mini-companies and are self-guided in serving a fixed client group (as determined by geography, for example).

• Ensuring an ambitious higher goal to inspire employees.

• Examining real data and attempting to automate as many aspects as possible, in order to scale up and grow quickly.

• Working in a fixed rhythm of delivery that effectively sets the tempo for the organization.

• Implementing a culture of total openness and extreme transparency.

• Making individual mastery and entrepreneurship concrete aspects and areas of constant growth.

And finally, we come to the outermost layer: anchoring the organization via a self-scaling culture propagated at the group level by teams through the growth and division of these teams. This enables culture, points of view, attitudes and behavior to be passed on in a scaleable fashion and at a group level.

Self-scaling Culture

Self-scaling Culture

ClientImpact

Rapid learning

Experimentation

Make

Sketch

Learn

Respond

and

Mas

tery

ExtremeRhythm

and Data

higher goal

(Mini-co

mpanies)En

trep

rene

ursh

ip

transparency

Software

AmbtiousAu

tonomous Teams

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1. Form autonomous teams (mini-companies)

• Everything is built around cross-functional teams with end-to-end (P&L) responsibility.

• The key concepts are client impact, client satisfaction and a focus on the client.

• A clearly demarcated client area for each mini-company prevents them from competing with one another over clients.

• Mini-companies compete in achieving performance targets along a simple KPI ladder.

2. Set an ambitious higher goal

• Attempting to reach a higher, valuable goal that is both ambitious and inspiring.

• Working together with the very best people to achieve complex and valuable objectives.

• Growing side-by-side with a permanent, stable team: experiencing growth both individually and as a team.

• Celebrating successes and learning moments with great frequency.

3. Make every aspect extremely transparent

• A culture of complete transparency, without secrets and where no question is out of line.

• Clear, unambiguous performance measurements that are publicly available to all.

• An infrastructure for the transparent exchange of information is in place and is kept up to date.

• Finding fun and energy in ownership and accepting responsibility.

4. Put the client(s) behind the wheel

• The goal is to deliver value through spontaneously developed solutions, working in close cooperation with the client.

• Because they are best-informed, employees with direct client contact will make their own decisions.

• Delivering client value at all times, even when there’s no profit in it (yet).

• The client principles will be made explicit and are geared towards trust, success and impact.

5. Conduct plenty of experiments

• Managers should focus constantly on removing fears: on any subject and from every employee.

• Decisions should be made based on data gained from experimentation and actual use.

• The organization should design an infrastructure in

The nine components of the model, and the four underlying patterns for each of them:

which employees can experiment with ease.• They should nurture a healthy tension between

innovation and profit.

6. Encourage individual entrepreneurship and mastery

• Each individual person is an entrepreneur and has the right to achieve personal success.

• Entrepreneurship knows no boundaries and grows right along with a person’s success and impact.

• Personal mastery is directly linked to client impact and operating results.

• Freedom, space and the desire to be the best: these things are both a right and a duty.

7. Create a self-scaling culture

• Values and principles are explicit, pro-active and client-focused.

• It uses autonomous teams that grow and develop on their own and can split off like bee colonies.

• Models for operations and growth are highly elaborated and aimed at self-direction.

• The goal is growth as a necessary precondition for energy.

8. Design a strict rhythm for delivery

• The daily rhythm comes from delivering valuable results in short cycles.

• Finishing tasks quickly is key: deliver results, learn from them and start over again.

• A structured rhythm that is able to accommodate unexpected developments.

• In other words, a heart that beats in short cycles, much faster than that of the market or the clients.

9. Make your business software-centric and data-driven

• The most valuable products and/or services must become fully automated.

• Design an infrastructure to support the automated delivery of products and services.

• Log all data involving client behavior and system usage and apply comprehensive data-driven monitoring.

• Focus on solutions that offer the most impact and pose the greatest technical challenge.

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Where to find more?• Steve Denning, The Leader’s Guide to Radical Management:

Reinventing the workplace for the 21st century, Jossey-Bass, 2010

• Warren Bennis, Daniel Goleman, James O’Toole, Transparency: How Leaders Create a Culture of Candor, publishing office Thema, 2009

• Piet Hein Coebergh and Edi Cohen, Balancing transparency, Business Contact, 2009

• Eckart Wintzen, Eckart’s Notes, Lemniscaat, 2007

• Accelerate: Building Strategic Agility for a Faster-Moving World, Business Contact, 2014

• Charles Duhigg, Force of habit, Ambo, 2012

• Patrick Lencioni, Getting Naked (Engels) - A Business Fable About Shedding the Three Fears That Sabotage Client Loyalty, John Wiley & Sons, 2010

• Jurgen Appelo, Managing for Happiness: Games, Tools, and Practices to Motivate Any Team, Wiley, 2016

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Did you enjoy reading this whitepaper? There are eight more: for each of the nine patterns from the book The Responsive Enterprise, there is a separate whitepaper.

Curious about the conversations between Ron and Mark on the green? Do you want to know their thoughts and understand their arguments? Buy the book! The Responsive Enterprise is available through all the usual channels including Bol.com, managementboek.nl or your local bookstore. It is also available in Dutch, German and e-book format.

About the authors

Vikram Kapoor CEO of Agile Cockpit

Rini van Solingen CTO of Agile Cockpit

Vikram Kapoor is a born entrepreneur. As founder and CEO of Prowareness, he helps large and well-known organizations to become software-driven Responsive Enterprises. Prowareness is growing rapidly and currently operates in the Netherlands, India, Germany and the United States. Growth is important to Vikram; he prefers to work on the outer frontiers – in “no man’s land”, as he puts it. As a serial entrepreneur, Vikram is always in search of new business ideas. Before starting Prowareness, he founded two other companies and made them successful: Silverside and iSense.

In 2013, Vikram was selected “CEO of the Year” by the readers of Computable web platform. He has also published several books as a result of his work with Prowareness and his previous enterprise, iSense. The Cheerleading principle, for example, is about how a team is influenced by culture. Responsibility, self-development and trust are important aspects within a team. This book gives tips on how to achieve those things. Kapoor’s second book, Engaging offshore teams is child’s play, focuses on the cultural differences that can affect the offshoring process.

Vikram enjoys providing those around him with opportunities to develop as entrepreneurs. He invests in a number of businesses and has created some remarkable possibilities within Prowareness, including the possibility for employees to become partners in the company. The culture at Prowareness is energetic and challenging. Making mistakes and providing feedback are encouraged: according to Vikram, these are ideal opportunities for growth. If you would like to exchange thoughts or ask Vikram a question, don’t hesitate! He enjoys sharing his ideas with others. You can e-mail him at:

v.kapoor@prowareness.nl

Dr Rini van Solingen is CTO at Prowareness and part-time professor at the Delft University of Technology. At TU Delft, he leads teaching and research concerning globally-distributed software teams. In his work at Prowareness, he helps clients’ organizations to deliver valuable software that works in a fast and agile manner. Leading large-scale transformations to extensive responsiveness and designing Agile operations on a major scale, involving dozens to hundreds of teams, are his areas of expertise. To that end, he also provides training and consultancy to management teams and executive boards. See his master class, for example: www.leading-agile-transformations.com

Rini published the book The Power of Scrum together with Eelco Rustenburg in 2010. The book, which became a bestseller, describes the principles of Scrum in the form of a novel. In 2014, together with Rob van Lanen, Rini wrote Scrum for Managers; this second book was aimed at helping managers guide their Agile organizations effectively. His latest book—De Bijenherder (The Bee Shepherd) — is about providing leadership to self-steering, responsive teams and is currently in its third edition.

Feel free to e-mail Rini with questions or to discuss his work. He enjoys sharing his ideas with others. If you really want to do him a favor, invite him to give a reading, training course or workshop at your company: those activities are where his passion truly lies.

r.vansolingen@prowareness.nl

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