Some century-old common traits in the management of companies, like intricate reporting lines, rigid annual budgets, a culture that is excessively compliance-oriented, and more recently the disconnect between business and technology, end up giving rise to a paradigm of inertia and too defensive and sometimes crippling management.
Agile organizations understand that being able to harness change is more important than sticking to rigid plans, engraved in stone, and that relationships with customers, suppliers and partners are just as important as procedures and tools.
Organizational Agility (as a broader concept than Agile) has an intrinsic value that can be defined as the ability of companies to swiftly and efficiently respond to their context and to the changes they face,regardless of their practices, methodologies and processes, which should be leveraged rather than become an obstacle…
A recent McKinsey report sheds new light on the subject of agility. The company conducted a survey of over 2190 respondents from different industries and geographies with the objective of understanding the real impact of agility and documenting the best practices in five quadrants: strategy, structure, processes, people and technology.
Several interesting conclusions came out of the study. First, agility and the implementation of agile practices have a radical impact on performance, resulting inefficiency, customer satisfaction, and operational performance gains of about 30%.
“Imagine working on such a team—having the right people working together, all with different capabilities, enables organizations to move with unprecedented speed”
The decision speed increases by 5 to 10 times due to simplified operational models, improved processes, mitigation of redundancies, and elimination of unnecessary checks. For these reasons, and as a result of greater clarity and autonomy in their roles, employee engagement also improves by about 30%.
Innovation capabilities are also exponentially enhanced through agile practices, with more innovation found in the services and products of the top-ranked companies.
In other words, by establishing itself as a safe space for experimentation, with delegated and disseminated authority, and with the availability of funding, the Organization enables and streamlines Innovation. At the same time, the teams feel more committed and enthusiastic, with a clear and mobilizing purpose.
Analysis of the survey data also reveals that rather than waiting for change to come from the grassroots, leaders in the most agile companies knew how to make it happen. These are the 4 practices that guaranteed a success rate of about 75% in organizational transformations:
- Ensure that the Top Management is on: Before the launch you need to obtain the buy-in from the project leaders, who should invest enough time in sound preparation, so that they become the “Top Team” that really leads change. Meetings with peers from other companies and visits to agile organizations, for example, are recommended.
- Be intentional and seek value: Make a concerted and sustained effort to understand how the organization creates value throughout its structure, from top to bottom. Senior leaders have to be role models for the new behaviours and mindsets to be implemented.
- Go beyond “Agile Teams”: It is essential to reconnect the elements of the operating model, creating a unifying fabric that brings together strategy, structure, processes, people, and technology.
- Maintain high speed and use front-runners: The most successful transformation processes complete their key phases within the first 18 months of the project. Front-runners must be more than just pilot projects. These are the areas that advance first and allow tangible results to be achieved, keeping alive the aspiration for organizational change.
On the other hand, the study shows that the least agile organizations scored worst in all 5 quadrants—strategy, structure, processes, people, and technology. The main reasons given by these organizations for not implementing transformation projects and agile methodologies are: other priorities to which they need to pay attention, lack of knowledge of agile concepts and practices, insufficient resources, and resistance from leaders and employees.
Anyone who still thinks that focusing on one issue means not focusing on others, as, for instance, believing that to devote resources to a cost reduction project will result in lower customer satisfaction, or that focusing on employee motivation will lead to lower operational efficiency, is making a damaging mistake. In Organizational Agility, transformations are also virtuous because improvement in one of the dimensions reinforces improvement in other dimensions. The most successful transformations result in cross-impacts, on average, on four of the five dimensions.
Looking into the future, make agility your advantage. For those who have not started yet, we stress the importance of sound preparation. For those who have already started, it’s time to look around and assess the situation. For those who are not experiencing improvements in performance, we encourage you to think about why. For those who are almost finishing and already looking ahead, how can you improve?
At TOWS & TOOLS we know that the day-to-day management routines sometimes leaves managers with limited time and energy to find answers to each and every business challenge. On the other hand, no organization should be an “island”—our mission is to provide fertile ground for creative thinking and dynamic repositioning of Business and Innovation Models.
“The essence of an agile transformation is reimagining the organization as a network of high-performing teams, supported by an effective, stable backbone of strategy, structure, processes, people, and technology.”
