What is an Agile Organization?
An agile organization is an organization that is able to more effectively identify, refocus, and adapt to changing market conditions to improve business performance and organizational health.
The Benefits of an Agile Organization
Due to the increasing impact of technology across every industry, the business world is becoming more complex, faster, and globally interconnected. Organizations able to more effectively see, pivot, and execute this dynamic landscape will attract more customers and outpace others in their market.
Due to the increasing transparency and global opportunities, employees are finding a new voice, choosing organizations where they feel genuinely valued and respected. Organizations who better shape cultures that connect, engage, and empower workers and teams will be better equipped to innovate and deliver new products and services to their market.
The combination of a more aware, focused, engaging, and responsive organization will improve business performance for short-term results and organizational health for long-term growth.
The Difference Between Traditional and Agile Organizations
Agility is not a new concept; it is simply a re-applied concept of continuous incremental improvement that has been taking place since the beginning of organizational life over one hundred years ago. Thus, to assume that the business world contains one set of organizations who are agile and one set who are not is a fallacy. The truth is that all organizations have some level of agility.
Dating back to the early 1900s, Ford Motor company improved their performance in the market by adapting to an automated assembly line. This ability to innovate and adapt not only their product, but their processes proved critical to their success and growth. In the mid-1900s, Toyota challenged their manufacturing processes through what is now known as Lean Manufacturing, increasing their agility and quality through a more employee empowered assembly system. Today’s more agile organizations build upon these process innovations to speed the innovation process itself. Today, Tesla is as much a software company as a hardware company, adapting their consumer-purchased cars every week!
So what are the more agile organizations doing differently than the more traditional ones? The former are adapting the way they work as fast — or faster — than the products and services they are delivering. They focus more intently on their culture. They more willingly challenge their status quo. They redefine risk and their policies to mitigate it. Agile organizations also structure and empower cross-functional teams while redefining, reeducating, and rebuilding those in leadership roles.
The Characteristics of an Agile Organization
Focusing on a More Collaborative, Creative and Competitive Culture
The traditional view is that “culture eats strategy for lunch.” A more current view is that “culture is the new strategy.”
Apple, Google, and Microsoft are equally explicit about their culture to their employees and the market. Apple’s “make a ding in the universe” culture is one focused on not straight-up beating everyone to market, but rather doing so through a more innovative organization and impeccably designed and manufactured products. Google’s “don’t be evil” culture is one designed for autonomy (20% self-project time), teamwork (every line of code is reviewed), and flexibility (70% goal targets). Microsoft’s culture took an explicit 180-degree turn with Satya Nadella steering a more collaborative culture through partnerships and teamwork.
Today’s more agile organizations are, as evidenced, focusing their culture on more collaborative, creative, and competitive values.
Challenging the Status Quo
Change isn’t easy, and organizational change is even trickier. All organizations have structures, standards, policies, procedures, and measures in place to improve efficiency, quality, and repeatability. More agile organizations, however, are willing to challenge these systems of control, evaluate their impact, and experiment with new ways of working. They move this responsibility down throughout the organization so that each employee can in turn challenge their systems to be more effective in their collective work.
Redefining Risk
The status quo in organizations is primarily driven by risk and failure. Organizational culture and the systems to control it are mostly driven by a measure of risk tolerance. Traditionally, risk has been more closely associated with execution. This is primarily driven by two factors:
- Historical products and services were less complex, and
- Execution is easier to measure and manage than design and innovation.
More traditional risk management focuses on outputs including costs, scheduling, and deliverables. It takes a more assumptive position that what is defined is the “right” thing to do and, while they build in some change management, changes are often viewed as anomalies and a small “failure” of analysis and planning.
More agile risk management focuses on outcomes contributing towards customer impact. It assumes designs are hypotheses that require experimentation and testing, and the path to getting it “right” will require multiple iterations with customer and stakeholder feedback. Change is expected in the definition, design, and execution of products and services.
Structuring and Empowering Cross-Functional Teams
A more traditional organizational structure is departmentalized by function. Leadership and employees report into functional silos including Sales, Marketing, Finance, Legal, Research, Development, Operations, Support, and more. Teams are much of the time matrixed across these silos to focus on organizational goals, products, and services. Employees, in turn, are often dispersed across various initiatives. These systems optimize for functional discipline and efficiencies. However, they sub-optimize end-to-end delivery due to differing priorities, values, policies, hand-offs, and more.
A more agile organizational structure is built across functions, with an end-to-end value stream focused from market definition of value to customer delivery of value. This is obvious when looked at from a startup organization perspective, as all employees are focused singularly on a product or service to meet and exceed customer expectations. However, as companies grow, they tend to follow the more traditional path for efficiency and discipline. While there is no “right” agile organizational structure, more such organizations counter this traditional tendency by building a scaled startup culture and structures to focus, dedicate and empower cross-functional teams to operate collaboratively at speed.
Redefining, Reeducating, and Rebuilding Leadership Teams
Reading through the characteristics of agile organizations in the above sections, one will likely immediately recognize that none of it will be possible without leadership understanding and alignment.
More agile organizations recognize that organizational transformation requires leadership transformation. New risk strategies require leaders who recognize the different risk profiles in design and execution. New organizational structures require new leadership assignments and focus. And a more agile culture requires more agility in leadership with leaders willing to embrace different leadership thinking and behaviors.
