Why Agile Is Eating The World
Image Wikimedia Commons: Brocken Inaglory
In 2011, Marc Andreessen wrote his famous essay, “Why Software Is Eating the World,” in The Wall Street Journal, leading to the cliché that “every company needs to become a software company.” (A useful update by Jeetu Patel on the situation in 2016 is here: “Software is still eating the world.”)
In one way, Andreessen’s 2011 article was remarkably prescient. In 2011, IT firms were looked down on by Wall Street. Andreessen was telling Wall Street: “Pay attention! These companies are more valuable than you think they are.” And Wall Street listened. In 2018, the five biggest companies in the world by market capitalization are IT firms: Amazon, Apple, Facebook, Google and Microsoft.
But it turned out that Andreessen was only half right. It's not that all software is eating the world: General Electric has just proved that in a spectacular fashion: It invested heavily in software and the result. After five years, the CEO and his top lieutenants were terminated. Similar developments are under way at Intel, P&G and HP.
It turns out that it’s not just software that’s’ eating the world. Firms are learning the hard way that software requires a different way of running the organization to be successful. Firms have to be nimble, adaptable, able to adjust on the fly to meet the shifting whims of a marketplace driven by the customer. This kind of management was—and is—beyond the capabilities of the lumbering industrial giants of the 20th Century. It is firms that are truly agile that are eating the world (whether or not they call themselves by the label "Agile").
In fact, many of the big successful IT firms don't use the label “Agile” to describe the way they are run. Instead they talk about "the Google way" or "our startup culture." Of the big five, Microsoft is the exception in making an explicit commitment to the label “Agile.”
But whatever label is used, the successful software firms are all recognizably implementing the substance of Agile—a focus on delivering value for customers, working in small teams in short cycles, and networked organizational arrangements rather than top-down bureaucracy and silos. It’s the firms that invest in software while retaining the top-down 20th Century management practices and structures that fail.
As a result, the world is entering a new age: the age of Agile. An unstoppable revolution is now under way in our society, affecting almost everyone. Agile organizations are connecting everyone and everything, everywhere, all the time. They are capable of delivering instant, intimate, frictionless value on a large scale. They are creating a world in which people, insights, and money interact quickly, easily, and cheaply. For some firms, the revolution is uplifting and beautiful. For others, it is dark and threatening.
Dazzling examples of the new way of running organizations are everywhere apparent. It’s not just the five biggest firms by market capitalization: Amazon, Apple, Facebook, Google and Microsoft. It’s also firms like Airbnb, Etsy, Lyft, Menlo Innovations, Saab, Samsung, Spotify, Tesla, Uber and Warby Parker. At the same time, what is lifting some companies is killing others, as the big, lumbering market=leading bureaucracies miss game-changing transformations in industry after industry.
Simply put, it’s Agile, not just software, that is eating the world. As usual, with any massive social change, there’s good news and bad news. Let’s begin with the good news.
Good News #1: Customers Take Charge
The winning firms are those that deliver instant, intimate, frictionless value for customers.. A world in which people, insights, and money interact quickly, easily, and cheaply is a world that has transformed human life—everything is easier and more convenient. It’s difficult for young people today even to imagine the world of just thirty years ago. How did people get by with no cell-phones and no Internet? It sounds downright archaic, like the world before the wheel was invented.
Good News #2: The End Of Wage-Slavery
With the great gains in material prosperity that were steadily generated by the Industrial Revolution from the late 1700s onward, it was easy to overlook the fact that they involved a dark bargain: in essence, large numbers of the human race agreed to sell themselves into wage slavery. Rightly or wrongly, they agreed to be treated like slaves while at work. While they were in the workplace, they agreed to follow orders, even if those orders were demeaning, stupid or just plain wrong, i.e. slavery. To be sure, there was some interesting work to be had in some parts of some organizations. But they were the exceptions. What was valued was diligent following of orders.
So, although slavery was abolished in the political sphere by the mid-19th Century, it continued in the workplace in the form of wage-slavery, even if few were willing to call it that. The reluctance to face this social reality stemmed from the economic fact that wage-slavery was useful: it led to a huge improvement in material prosperity for most of society, at least for most of the developed world. The fact that it led to spiritually crimped existence for much of the human race was just a regrettable side-effect of “progress.”
Wage-slavery as an economic model thus continued from the late-18th Century until the late 20thCentury. Then something went wrong. It turned out that wage-slaves could not deliver what the economy now needed. In a marketplace disrupted by globalization, deregulation, knowledge work and new technology, firms now required initiative, innovation, commitment, smarts, passion--the very opposite of wage-slaves.
As a result, a new kind of management was needed to enable this new kind of worker. Some called this way of running an organization “Agile.” Some used other labels. But whatever it was called, it wasn’t just a new process. It was a fundamentally different way of running organizations. It was economically more productive. And it has immense potential benefit for the human spirit. It can create workplaces that enable human beings to contribute their full talents on something worthwhile and meaningful—creating value for other human beings.
The end of slavery in the political sphere was a big deal. The end of wage-slavery in the workplace is also a pretty big deal.
The Bad News: A New, Darker Gilded Age
Yet as with any massive social change, there are also downsides. A summary of the issues is set out by David Dayen in an insightful article in American Prospect, “Big Tech: The New Predatory Capitalism.” He argues that “The tech giants are menacing democracy, privacy, and competition” and asks: “Can they be housebroken?”
Thus, the successful exponents of software and Agile are becoming so successful that they are now emerging as a threat to a free society, in the much same way, mutatis mutandis, that the big industrial companies of the late 19th Century (rail, oil, steel) became a threat to society and had to be broken up the trust-busters like President Theodore Roosevelt. A similar scenario needs to occur with the big IT firms. That’s a job for the public sector. Dayen's article sets out the agenda. True, it's hard to see how all this will happen in the current political environment. But it has to happen, if a free society is to survive.
Today’s Necessity: Embrace Agile
For the private sector, waiting for anti-trust action is not a solution. Continuing the management practices and structures of the lumbering industrial giants of the 20th Century won’t cut the mustard. To survive, let alone thrive, firms today must learn to embrace the new business reality: they are entering the age of Agile.
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Note: Some of the material in this article will appear in a different form in my forthcoming book, The Age of Agile
Follow Steve Denning on Twitter @stevedenning.
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