Why an agile transformation office is your ticket to real and lasting impact

Design decision one: Agree on the ATO’s purpose and mandate

Just as it is crucial to get alignment on the transformation’s overall objective, it is important to give the ATO a clear purpose that is agreed upon by leaders across the organization, with input all the way from the C-suite to the people who will play critical roles in the ATO. This step establishes the ATO’s value proposition and links it explicitly to the “why” of the transformation.

A telecommunications company, for example, set up an ATO to drive cultural shifts during its agile transformation. The ATO led the journey with a clear purpose and sponsorship, rallying the whole organization behind its goals: delivering value to customers, employees, and the business. The ATO became the central point, engaging leaders, functions, and business leads to experiment with and implement new ways of working.

An ATO’s mandate differentiates it from a traditional PMO in six critical ways:

1. Driving the transformation road map to scale agility across the organization. This responsibility includes defining when and how changes will be rolled out, along with determining how the ATO supports each phase of the transformation. Key stakeholders should agree on a defined timeline and pace.

2. Building capabilities, including hiring and upskilling talent. To transform itself successfully, the organization should build new skill sets for key roles, such as product owners, tribe1 leaders, and agile coaches (more about these roles below). The ATO helps shape the creation of the talent pipeline for these roles, both internally and externally, in collaboration with other parts of the organization, such as HR.

3. Serving as culture and change champions. To set an example for the rest of the organization, ATO members should embody the principles, behavior, and mindsets the transformation requires. They should also promote the transformation’s benefits, values, and aspirations through road shows and other forms of engagement with the broader organization.

4. Coaching senior leaders. The ATO coaches senior leaders so they can champion the transformation and lead by example. Agility is both a top-down and bottom-up transformation. Senior leaders should role model the new behavior, define the mindsets that matter, and lead by example. To serve their people, they frequently show up at agile events.

5. Managing interdependencies. Because the ATO is highly visible, it is responsible for identifying dependencies and potential synergies, serving as the final clearing point for critical decisions.

6. Creating and refining best practices. As the transformation rolls out, the ATO continues to evolve its thinking on best practices and on behavior that the entire organization should adopt.

The decision about whether the ATO should take on all six mandates or only a few of them depends on the transformation’s overall objective and the organization’s progress along its agile journey. In most cases, the ATO drives the design and execution of the agile road map and builds agile capabilities—an ATO’s top two distinguishing features.

While this is a good starting point, organizations may realize the full benefit of an ATO only when it has clear sponsorship and a mandate across all six categories. Usually, the ATO’s mandate shifts over time as the support required by the organization evolves and the transformation’s level of maturity increases. To ensure alignment and accountability, the ATO should have clear objectives or success criteria so that it can assess whether it is making progress.

Companies across industries, bent on moving from traditional, slow-moving hierarchies to flexible and fast decision-making models, have focused on agile transformations. The COVID-19 pandemic lent urgency to these efforts, creating an immediate need for adaptability, speed, and efficiency. Decision rights shifted and expanded throughout organizations, and learning took place rapidly, in real time.

Now, as companies emerge from the pandemic, some will be looking to intensify the agile journey, while others will be taking their first steps to secure its benefits. In either case, establishing an agile transformation office (ATO) can improve the odds of success. Whether your transformation aims at only part of the enterprise or across the whole of it, a successful journey should have a structured approach that can deliver value.

An ATO shapes and manages the transformation, brings the full organization along, and—perhaps most important—helps it achieve lasting cultural change. The ATO is not meant to be an oversight board or another layer of bureaucracy. Instead, it is embedded within the existing structure, pulling in the right business expertise to realize tangible outcomes.

Becoming a truly agile organization is a long-term proposition that takes place in phases. A centralized ATO can not only propel the transformation but also ensure the “stickiness” of cultural change across an organization. It helps identify and resolve issues that can slow the pace of the transformation and keeps the focus on creating value. In this article, we’ll define the mandate, structure, and reporting lines of ATOs, as well as the responsibilities and capabilities of the roles within them.

In essence, agility at an enterprise level means moving strategy, structure, processes, people, and technology toward a new operating model. It achieves all this by rebuilding an organization around hundreds of self-steering, high-performing teams (supported by a stable backbone) and by changing the organizational culture.

An agile transformation is both comprehensive and iterative. It is comprehensive because it clearly defines what the organization is trying to achieve and creates the processes and structures needed to reach these goals. It is iterative because it requires the organization to test, learn, and correct course as each part of the new operating model is implemented (Exhibit 1).

mckinsey insights