May 20, 2020

By Patrick Lucas & Janine O’Flynn, Australia and New Zealand School of Government

Overview

Synopsis

Australia Post faced both disruption and opportunity as the digital era began to shift consumer demands towards ecommerce. The government business enterprise needed to adjust to these headwinds, so in 2012, it embarked on a reinvention of how its Digital Division operated. On a quest to improve customer experience, the Division grew from 15 to 270 open and collaborative people in a couple of years. The Digital Division consciously adopted the Agile methodology in setting out on its transformation.

Introduction

Australia Post is a government business enterprise wholly owned by the Commonwealth of Australia (national government)[1]. It runs at a profit in a fully competitive market and boasts a workforce of over 50,000. Around 2012, traditional business pillars such as letters were in continued decline and they faced stiff competition from the growth of ecommerce. Cameron Gough had just started as the Australia Post general manager of the Digital Delivery Centre and saw these headwinds. He also spotted opportunity. Agile methodologies were harnessed to develop customer-centred digital products. But this new way of working would only succeed if the division embraced a customer-first culture, were willing to break down traditional silos, and were supported by the head office to do so.

The challenge

The bedrock on which the Australia Post laid its foundations on over its 200-year history is that Australians depended on it primarily for physical communication through letters. However, this assumption turned upside down as digital forms of communication took hold at the turn of the 21^st century. Letters continued to decline. But ecommerce and other business services, such as courier delivery, were growing drastically. Australia Post operates in a fully competitive market against other delivery services such as Fastway, UPS, and Transdirect. New competition, particularly servicing metropolitan businesses and consumers, were popping up fast and Australia Post couldn’t afford to rest on its legacy relationships with government, business and citizens to satisfy their needs. New sustainable competitive advantages had to be formed. Australia Post started with a reinvention of its Digital Division. But in a large government business enterprise with many stakeholders, change can be slow and resistance strong. The Division needed to garner support upwards from the CIO and COO as their ‘corporate angels’. They needed support across from other divisions to break down traditional operating silos. And they needed support from within – the division needed collaborative, inquisitive, and non-hierarchical people to develop innovative new products. Underpinning all this was a switch to a customer-focus, and the conscious adoption of an Agile methodology.

Analysis

Framing the response (strategy)

There was immediate head office support for Agile Principles to drive the development of new customer-oriented products. To kick-off the shift to agile ways of working, staff who were seconded onto ‘sprint’ teams were relieved of their day-to-day tasks for the week when the sprints were occurring, characterized as “like going on leave for a week”. Project funding reforms also occurred to enable speedier development. Traditional business cases which had fixed costs, time and scope, are a poor fit for digital innovation, which grows in environments of iteration and learning. So instead, funding was given to a broad opportunity area, such as ‘mobile/cellular’, then work would be undertaken to create improved customer satisfaction in that area. This is called “capacity funded investments.” Scope was continuously developed and was informed by customer feedback and business needs.

Identifying how Agile Principles were used

Agile Principles were foundational to achieving change in Australia Post. Australia Post’s mission is “to deliver great sender and receiver experiences that delight our customers” (Australia Post 2017). There was a relentless desire to put customer experience at the center of their products. To measure this, new products were constantly tested with customers using their feedback to shape further iterations. Speed and innovation were prioritized in forming cross-functional teams. These teams operated in flat structures across a range of subject matter experts. They were given power to succeed, but also permission to fail, and a focus on learning from this. This encouraged persistent experimentation and improvement. Organizational leaders supported these initiatives, through altered funding arrangements, freeing up resources and breaking down divisional silos so changes to products could be quickly rolled out.

Getting down to work and overcoming obstacles

A broad training strategy was rolled out across Australia Post, with four key areas emphasized across the organization. The first area was process-focused, enabling and supporting cross-functional and long-running teams. This fed into the second area, which was fostering a culture of curiosity, innovation and learning. The next area was technology enablement, and finally the system of work. The advocacy and leadership of business leads allowed for the maturation of processes and culture.

Two responses are highlighted here as to how Australia Post began shifting to Agile Principles in problem solving. The first looks at how the structure of Australia Post’s teams changed, with the second example looking at agile ways that process changed. Both of these examples are underpinned by a culture of curiosity and innovation with a focus on customer experience.

The Digital Division changed its internal structure to include multifunctional teams of six-to-ten people. The aim is to have people who have a deep knowledge in their specialist area and a solid general knowledge to assist in out ways in the team. A team usually has a business analyst, designer, tester, several developers, and an ‘iteration manager’ – who manage the workflow of the team. The iteration manager role was developed to also manage the reporting and progress components of its agile delivery. Once this role was put in place there were strong improvements in productivity as a result. Each team has a Kanban wall. These walls, also known as success walls, consist of colored cue cards. Each card is a task within a larger project and has a ‘user story’ that relates to the task, such as “add login widget to home page”. Each task is given a two-week period to go from ‘backlog’, ‘ready for development’, ‘development complete’, and ‘ready to test’. Each task has an owner in the team who is accountable to its completion. One central and ongoing challenge these teams face is maintaining continuous delivery of services while developing, testing, and implementing tasks.

The small business team kicked off with a series of four full design sprints in five weeks. These entailed putting together cross-functional teams whose sole focus was to further develop Australia Post’s technical platform aimed at assisting small businesses. They started with planning each sprint upfront in two weeks. A sprint each week followed (with one-week break), with two teams completing two sprints each. These teams consisted of six-to-eight full time members, with other key stakeholders coming in for give advice or assist decisions. Australia Post is a large and complex government enterprise, so to capture all necessary views some of these teams stretched to over 13 people. The larger-size teams can struggle with some members not being heard at the expense of internal stakeholders’ views being accounted for. Likewise, smaller teams can have improved involvement within the team at the expense of some stakeholders not being fully accounted for. This is a conscience trade-off of nimbleness for organizational knowledge that must be factored in when developing sprint teams.

Results and Conclusions

Assessing results:

A strong culture of measurement and learning was developed during these changes. Continuous improvement to maximize business and customer outcomes is at the core of using these measurements. Some of the highlighted positive results include a 100-fold increase in annual production deployments with a 98% cost reduction – this enabled an environment of iterative product development, rather than slow-moving and large-scale product development with higher risks of failure attached. Despite this iterative product development style the first-time delivery rate, that is are products delivered ‘on-time’, improved by 7%. With only a 20% increase in team size there was an increase of 400% more business outcomes. Likewise, there was a marked increase in employee satisfaction and engagement. Some lessons from were highlighted from the sprint teams, these include:

• Focus on the culture by recruiting people who are collaborative, non-hierarchical, and have a hunger to learn and improve continually.
• Recognise you will need to change the broader working environment to sustain the changes. You need to change things such as governance processes, funding models and processes to support continual evolutionary change.
• Invest in software tooling and automation to support teams working faster.
• Don’t be too ambitious with the first piece of work. It can take a while to build capability and experience in working in a lean and agile way, so start with less complex challenges.
• Don’t overthink it, just get started. You’ll learn more by doing than by planning.
• Concentrated collaboration is essential. A flat hierarchy of subject matter experts helped the pace of work and the culture too.
• Customers are the boss.
• Don’t run a sprint in a departmental silo.
• Pressure creates unity
• Hearing from the customer to create clarity on a decision. Get to the customer early.
• Fail fast – close down an idea and communicate why it didn’t work can save a lot of time.
• Get buy-in across the organization.

Reflections and conclusion

Australia Post presents as an interesting case when thinking about Agile Governance. Its primary purpose is service delivery, so in this regard it is also a useful case when thinking about Agile Government implementation. Australia Post is not directly involved in policy development or regulation. Australian Post operates quite differently to government departments, as it is government-owned enterprise focused on service delivery in a competitive market. But there are many transferable lessons for other contexts. In particular, for government organisations who operate in an environment shifting towards digital service delivery. The main success of this shift to Agile Principles can be seen in the organisation-wide to be customer-driven in everything they do. This is particularly pertinent for Australia Post as its customers have the option of using another delivery service. This change in focus also helped create shared understanding across all the internal stakeholders of Australia Post, assisting in breaking down divisional silos in the process.

Sources:

Australia Post. 2017. “Australia Post Statement of Corporate Intent 2017/18 - 2020/21,” 9.

Cameron, Nadia. 2013. “Why Australia Post and NAB Have Adopted Agile Methodologies.” CIO. June 19, 2013. https://www.cio.com/article/3492475/why-australia-post-and-nab-have-adopted-agile-methodologies.html.

Crozier, Ry. 2016. “Five Years on, AusPost Works to Keep Agile Project Agile.” ITnews. October 24, 2016. https://www.itnews.com.au/news/five-years-on-auspost-works-to-keep-agile-project-agile-439570.

Department of Finance. n.d. “Government Business Enterprises (GBEs) (RMG 126) | Department of Finance.” n.d. https://www.finance.gov.au/publications/resource-management-guides/government-business-enterprises-gbes-rmg-126#-part-1-overview-.

SAFe. 2017. “Case Study - Australia Post.” Scaled Agile Framework (blog). 2017. https://www.scaledagileframework.com/case-study-australia-post/.

Schmidt, Lucinda. 2016. “Agile Methodology: How Australia Post Gets Rapid Results.” June 15, 2016. https://auspostenterprise.com.au/insights/working-differently/agile-methodology-australia-post-gets-rapid-results.

Tait, Benson. 2017a. “Australia Post: 4 Design Sprints 5 Weeks.” Medium. March 24, 2017. https://sprintstories.com/design-sprints-australia-post-innovating-at-scale-82b7d917f2b0.

———. 2017b. “Australia Post: 4 Design Sprints 5 Weeks.” Medium. March 24, 2017. https://sprintstories.com/design-sprints-australia-post-innovating-at-scale-82b7d917f2b0.