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Chris Gagne, an Agile Coach, explains the importance of a working agreement for teams to improve productivity and happiness. The agreement consists of documented ground rules created by the team. To develop a strong agreement, teams should brainstorm potential failures, prioritize risks, and create specific rules to prevent them. Examples include limiting distractions in meetings and ensuring everyone is on time for stand-ups. Creating a working agreement using reverse psychology can help teams identify and address potential obstacles effectively.