Defining the Truly Agile Organization
Nearly every company claims to be agile (and innovative). But the reality is that most people don’t truly understand these terms. In this chapter, we examine how the term agile — which became popular through the agile engineering processes and the lean startup — can be used to describe a certain class of companies.
We asked five global leaders to identify the essential characteristics, behaviors, and cultural elements that make a company ‘agile’ and explain how ‘being agile’ brings impact to the business, employees, and teams. Frederic Laluyaux, Tony Ulwick, Johanna Rothman, Adrián Heredia Iglesias, Isaac Sacolick, and David Blake shed light on one of the most popular business buzzwords of our era.
“How would you define the truly agile organization?” — excerpt from 60 Leaders on Innovation (2021)
Frederic Laluyaux
President and CEO — Aera Technology
No matter how you slice it, organizational agility depends on one thing: a strong culture backed by modern technology. I define a strong culture as an environment where there is a consistent process in place for making business decisions quickly and efficiently. It’s really that simple. Leaders need to constantly encourage brainstorming and ideation across the organization. They need to always strive for the ability to bring products and services to market quickly without unnecessary hurdles. And they must be able to quickly shift gears when business, market, political, social, environmental, or other forces indicate it’s time to do so. A strong culture enables all of that.
Leaders must encourage brainstorming and ideation across the organization. - Frederic Laluyaux
Truly agile organizations also tend to be flatter, running with fewer levels of hierarchy. By removing layers of bureaucracy and eliminating internal hierarchies, people are empowered to think and act more freely and proactively. They can stop spending so much time on internal justifications, and actually look outside the company to see what’s happening in the market and world at large. They’re also able to detect signals that might advise them on where the company should or should not go — and then potentially lead it in the right direction.
Agile companies are built this way. People are encouraged to look and think outside the box and to pursue projects that could wind up being the next big thing. They are rewarded for their ingenuity and for staying connected to ecosystems outside of their companies.
Sure, the lion’s share of this work might end up on scrap room floor. But innovation isn’t a one-shot deal. It’s a numbers game. For every 10,000 interesting ideas, you may only end up with about a dozen that are worth pursuing and just one or two worth an investment. More conservative leaders might look at those numbers and say, “ I don’t like the odds. We’re going to continue selling the same way we always have and protect our revenues.”
Leaders of agile companies, on the other hand, know they must be culturally and organizationally ready to make innovative decisions at a moment’s notice. They recognize change is accelerating and that customer preferences are constantly shifting while channels are rapidly evolving. They know it only takes one Netflix, Uber, or Zoom to completely displace tried-and-true products or services. And they recognize innovation success depends on rapid decision making.
Agility also relies on technology, such as Artificial Intelligence, Machine Learning and Cognitive Automation. - Frederic Laluyaux
That said, in the near future, agility will not only depend on the ability of people to keep pace with change. It will also rely on automated technologies, such as AI, ML, and cognitive automation. Tech vendors are fond of saying 90% of the world’s data has been created in the last two years alone[1]. While a suspect statistic (for so many reasons), it is undeniable that the amount of data organizations are capturing when searching for insights to inform decision-making is spinning out of control. It’s too overwhelming for mere mortals to evaluate. So, they either prioritize making only the big “strategic” decisions or attempt to make as many decisions as possible without the requisite assessment and analysis. Neither of these choices is ideal.
But by turning to technologies capable of mining, organizing, analyzing, and making recommendations for actionable decisions by using this data, everything changes. Suddenly, organizations become vastly more agile. They’re able to draw conclusions in minutes — on what might have taken weeks or months otherwise. That’s the power of blending strong cultures with automated technologies, and I am certain this will be how decisions regarding innovation will be reached before too long.
Frederic Laluyaux is an entrepreneur at heart, Fred founded his first company at the age of 23. Prior to launching Aera, Fred was the CEO of Anaplan, which he grew from 20 to 650 employees, and a $1B+ valuation. Before that, he held several executive positions at SAP, Business Objects, and ALG software.
Tony Ulwick
Inventor, Founder and CEO, Author and Innovation Thought Leader — Strategyn
The truly agile organization does two things. First, agile is all about doing things right. In my experience, companies do a lot of things well, especially when it comes to product development. They’re developing products all the time. Developers develop code very efficiently. Hardware producers develop hardware very efficiently. That’s the first part of the equation.
A truly agile organization is not just failing fast and iterating because they got it wrong in the first place. - Tony Ulwick
But a truly agile organization also has to do the right things. For example, they don’t just create products — they create products that will win in the marketplace. And they know that they’re going to win before they even start developing them. The truly agile organization is not just failing fast and iterating because they got it wrong in the first place.
One of the biggest problems is that companies need to separate what I call the innovation process from the development process. The innovation process is all about coming up with the right product concept. This product concept should be finalized, with evidence it’s going to win in the marketplace (it will get the job done 15–20% better and/or cheaper than alternatives), before development begins. That’s a dominant strategy that always wins.
If you can bolt this innovation process onto the front end of your agile development, then you’re a truly agile organization. But many companies are intertwining innovation and development, not finalizing the product concept until development is well underway, then getting stuck in rounds of iteration.
Companies need to separate the innovation process from the development process. - Tony Ulwick
If you want to unlock your business’s innovation potential and leapfrog the competition, you need to understand the full agile equation — not just the first part of it. If you can do the right things, to begin with, you’ve just eliminated a ton of need for agile downstream. One of my projects with Pratt & Whitney aircraft provides the perfect example.
We were looking at engine materials that could potentially be used to hide under radars. At first glance, these materials would require a significant amount of experimentation to see if they would achieve the goals. But once we figured out what outcomes the pilots were looking for and which ones were most important, we were able to reorganize the order in which the tests would occur. We executed the test to predict failure along the key outcomes first, which allowed us to cut testing down from a couple hundred tests to about 80. We also reduced test time from a couple of years to about six months. Pratt & Whitney was conducting tests correctly — but they weren’t conducting the right tests in the right order. That’s the kind of inefficiency a truly agile organization roots out and corrects.
Tony Ulwick is the pioneer of jobs-to-be-done theory and the inventor of Outcome-Driven Innovation. His work has helped the world’s leading companies launch winning products and services with a success rate that is five times the industry average. His best-selling book, “What Customers Want,” and his articles in the Harvard Business Review and MIT Sloan Management Review have been cited in hundreds of publications. His work has defined a new era in customer-centric innovation.
Johanna Rothman
Consultant, Speaker, Writer — Rothman Consulting Group, Inc.
Agile organizations share several characteristics:
- The people collaborate at all levels to achieve an overarching goal.
- The organization rewards experimentation and collaboration.
- Managers trust people to do their jobs.
While these three characteristics are easy to describe, they might be impossibly difficult to achieve. That’s because they require a total behaviour change on the part of managers.
Agile organizations create overarching goals. - Johanna Rothman
Many managers say they want people to collaborate in teams. However, the reward system and culture reinforce individual work. HR asks managers to isolate each person’s work and to reward the person. Managers attempt to isolate the work by taking some corporate goal and cascading down outputs to each person. Have you noticed what I’ve noticed? All those outputs rarely create that overarching goal that the organization wants.
Aside from a focus on outputs, we create other problems. When we reward people for individual work, we are less likely to see long-term collaboration. We might see short-term collaboration — only until the managers give rewards. As soon as people realize they need to work alone to maximize their salary and any bonus, they stop collaborating. Worse, when managers assign outputs, people don’t see how their work connects to that goal. When people no longer connect to a goal, they optimize for their own careers, salaries, and bonuses.
Agile organizations create overarching goals. They ask teams at all levels to achieve those goals. In my experience, it’s even more important for managers to create collaborative teams. When managers focus on collaborating and reward teamwork, the entire organization coalesces around a larger goal. Very few reward systems work this way right now.
One way to change the reward system is to encourage experimentation. If organizations reward predictability, they won’t get short experiments. That’s because it won’t be safe for people to experiment. Instead of trying something small and assessing how well it works, we ask people to predict lots of work. Then we reward them based on their adherence to a schedule. That kind of predictability is anti-agility.
I’m not saying we don’t need gross predictions of the investment we might want to spend on a piece of work. However, detailed estimates and predictions are not useful if we want experimentation. Instead of detailed estimates and predictions, we can reward the speed of learning (experiments). And we can reward collaboration to help us learn faster as a team. If we want to reward fast experimentation and collaboration, managers must not micromanage. That means we need to trust people to do their jobs.
Instead of detailed estimates and predictions, we can reward speed of learning. - Johanna Rothman
Many years ago — with the emphasis on many — I was a great programmer. I chose several ways to prove my competence. I showed demos of my work as I finished it. I asked for review and help when I was stuck. I used transparency to show my team and my manager what I did and when I needed help or support. That’s how agile teams work now. This means that managers should not micromanage people. Especially if the people collaborate as part of a team. Yet how many managers still try to direct each person’s work in supposedly agile organizations? In my experience, too many.
When I work with managers to understand why, they tell me that they, as a manager, have the team’s deliverable as their deliverable. Yes, their salary or bonus depends on the team finishing the team’s work. Even if the organization asks the team to do too many simultaneous projects. Or if the organization decides a different project is more important.
The manager’s salary and bonus are at risk if the team doesn’t deliver. How can a manager trust the team to deliver when the organization doesn’t trust the manager? That’s why I say that organizational agility requires a culture change — especially around what the organization rewards. If you want an agile organization, ask these questions:
- How well do we collaborate at all levels to deliver our overarching goal?
- How well do we reward experimentation and collaboration?
- How well do we trust the people to do their jobs?
The answers to these questions might show you how far you are on your journey to be an agile organization.
Johanna Rothman, known as the “Pragmatic Manager,” offers frank advice for your tough problems. She helps leaders and teams do reasonable things that work. See her 18 books, blog, and other resources at jrothman.com and createadaptablelife.com
Adrián Heredia Iglesias
Founder & CEO — Byld
An organization is truly agile when it acts like a living organism, where different teams make decisions quickly thanks to technology, a strong people-centered culture, and a powerful purpose and leadership.
Although traditional organizations are built for stability, they usually have complex governance structures that take slow decisions top-down. Their teams are structured in deep silos, a condition that creates difficulties to compete in complex, uncertain, and VUCA[2] conditions. The world has changed, and the revolution that came with technology has transformed economies, societies, and the way we do business and build teams in every organization. This is reflected in two big trends:
- The environment changes fast. Not only customers are evolving rapidly, but partners demand quick actions due to the fast pace of competitors’ innovations. Commoditized and established businesses are replaced by faster companies that have agility and technology in their DNA. The enormous amount of knowledge easily accessible for anyone and the “simplification” of technology (meaning its use) demands that organizations adapt quickly and become faster in communicating across their stakeholders.
- Talent is selective. A colleague told me the other day about this quote from Santiago Ramón y Cajal[3]: “The one who observes from afar that seems to be squandering and dispersing his energy, when in fact he is channelling and strengthening it. […]”. He was clearly talking about the “learning workers”, those who look for organizations in which they can develop themselves in a creative, learning-based and challenging environment. It is difficult to attract and retain this kind of talent for traditional, slow, non-agile organizations.
No company is going to be truly agile if the management does not believe in it. - Adrián Heredia Iglesias
That is why a small number of old companies have survived over time: less than 9% of listed companies in the S&P 500 in 1983 are alive now. So, what does it mean to be agile? We can clearly detect four main characteristics in truly agile organizations:
- Clear, strong, and shared purpose and vision. In these companies, strategy is at the center of everything they do, it is shared amongst the employees, and actions are guided by the “why”.
- Entrepreneurial team. The team shares the same values and has a clear vision. People are committed to the vision and are driven by an entrepreneurial spirit.
- Rapid decision-making processes. Following the lean startup[4] mantra (Build, Measure, Learn) with quick validation cycles, these companies measure their evolution with the validated learnings from the previous cycles; they value performance over deliverables.
- Agile structures. Accountability, transparency, and communication powered by systems and tools, are typical in truly agile companies.
We are talking about big, old organizations, but what is the take for startups? While it is common to think that agile means chaotic, with the appropriate execution and strategy it is not. For a startup, you need to shift from “frenetic” to “responsive”, from “losing focus” to “learning from failures” and from “uncoordinated” to “collaborative”. Add some stability to agility. But there is one thing staying above all those characteristics: leadership. No company is going to be truly agile if the management does not believe in it. So many organizations have created big, enormous agile teams, purchased expensive tools, and hired amazing scrum masters. But again, it does not matter, as they don’t know where the ship goes.
Adrián Heredia Iglesias has a deep knowledge of how technology is disrupting business models thanks to many entrepreneurial battles over his shoulders. He founded Byld after 6 years involved in the design, launch and consolidation of Sonar Ventures, one of the first venture builders in Spain. He is also a mentor and professor in different business schools and universities, and advisor to different public and private organizations (e.g: EIT Urban Mobility, a public body of the European Union).
Isaac Sacolick
President • CIO • Digital Transformation • Founder • Author — StarCIO
Are you practicing Scrum, Kanban, or a mix of agile methodologies? Are teams prioritizing backlogs, writing user stories, conducting daily standups, demoing results, and using retrospectives to prioritize process improvements? While agile practices are instrumental to delivering innovation, product improvements, insightful analytics, and customer experience enhancements, they are just the building blocks to a truly agile organization. Agile organizations exhibit the following behaviors, characteristics, and cultural elements that they develop and mature:
- Apply agile methodologies across the whole organization, not just in one function or department.
- Drive agility at the leadership level by communicating strategy, driving transformation, and overseeing initiatives following agile practices and cadences.
- Define agile principles and a standard operating model, so people understand their roles and responsibilities, process standards, planning requirements, and delivery expectations.
- Promote agile mindsets and behaviors, including market and customer obsession, user experience, feedback-driven prioritization, speed to market, minimally viable deliverables, experimentation, data-driven, intelligent risk-taking, blameless postmortems, diverse team mindset, learning passion, and inclusive behaviors.
- Seek feedback, especially from customers, perform market research, establish meaningful KPIs, promote data-driven decision making, and accelerate the adoption of low-code and self-service technologies.
- Establish and document quality expectations, security non-negotiables, data governance policies, rules on addressing defects, prioritization standards, and other constraints that establish guidelines for agile teams.
- Leverage flexible sourcing models by partnering with outside experts, co-creating with service providers, engaging freelancers, and investing in employee skill and leadership development.
- Obsess on using digital tools for communications, collaborations, documentation, knowledge sharing, learning, and networking.
Agile organizations use these elements to drive smarter, faster, safer, and more innovative digital and business transformations. But this isn’t an easy list to check the box, nor is it complete. For example, there are also industry-specific agile organizational principles such as editorial excellence in media, customer service in retail, or worker safety in manufacturing. Agile organizations determine what it means to demonstrate business agility and formally recognize the drivers and tradeoffs so that the entire organization collaborates on driving change.
Truly agile companies apply agile methodologies across the organization, not just in one function or department. - Isaac Sacolick
Truly agile organizations define simple one-page vision statements that enable teams to align on planning and execution. They run agile program management offices and recognize that prioritizing and aligning to a few meaningful initiatives yields more significant impacts — they understand that spreading the organization across too many priorities is a recipe for poor performance. They reward teams, not just for results, but for how teams accomplish their goals and follow agile principles that yield sustainable results. Here are some of the things that inhibit agile organizations
- Enabling leaders who buy into agile concepts but don’t practice the working principles. These leaders demand a fixed scope delivered on a timeline, specify the solutions they want teams to implement, and blame teams when there are issues. These are not behaviors of an agile organization and can ripple down into the organization if left unaddressed.
- Allowing the tail to wag the dog — by that I mean, allowing accounting reporting functions, quarterly financial results, and micro-managing people’s time to govern how leaders manage initiatives, teams, and people. These management practices are outdated, especially for organizations that are driving digital, product, and organizational transformation.
- While agile is a framework for using feedback to prioritize and pivot initiatives, it is not a license to start and stop initiatives on a dime, overload the portfolio with too many initiatives, or chase after every techno-squirrel that appears on the horizon. Agile organizations are disciplined and select the right timing, data, and decision-making process for resetting strategy and realigning priorities.
Leaders driving agile organizations are more likely to see sustainable business impacts than those that follow rigid top-down, command-and-control management practices. That’s because agile organizations aim to get the whole company on teams and with defined roles in a feedback-driven transformation process. When new opportunities, risks, and new choices appear daily, an agile organization has the culture, processes, learning mechanisms, and technology to listen, align, and deliver business impacts.
Isaac Sacolick (@NYIke) is StarCIO’s President and guides business leaders on succeeding with data and technology while executing smarter, faster, safer, and more innovative transformation programs. He authored the Amazon bestseller, Driving Digital: The Leader’s Guide to Biz Transformation Through Technology, has over 700 articles published, and keynotes on digital transformation topics.
David Blake
Co-author, The Expertise Economy — Degreed, Learn In
Agile = ability to adapt. Thomas Friedman asserts the rate at which technology is scaling outpaced the rate at which humanity can adapt sometime circa ~2007[5]. That has led to a world in which advantages are compounding; and the gulf to overcome disadvantages is widening. As an organization, that means the stakes are getting ever higher. The constraint to agility is speed of learning. The organization that can outlearn its competitors will accrue compounding advantages. In a world of a growing skills gap, lifelong learning carries an increasing premium; expertise carries an increasing premium; experts carry an increasing premium. So, to be truly agile, get insanely good at learning and creating a culture of learning at scale within your organization.
To be truly agile, get insanely good at learning and creating a culture of learning. - David Blake
In the past, learning at any level — university or corporate training programs — looked akin to building a railroad. It was a heavy infrastructure project. You could lay tracks between a few destinations, but you had to choose carefully, and were ultimately, very constrained. The choices were optimized for the masses — what routes would get the most amount of people from some central point to another central destination. Railroads are blind to where your journey actually begins, and where you are actually trying to get.
The future of learning will reflect the present reality of transportation today, with the GPS on our phones, which pinpoints exactly where we are, after which we can identify any destination, and Google Maps will create multiple routes between those points, using any combination of modes of transportation. That is learning agility at scale.
To do that for our organizations we need to build the capacity to measure individuals skills in real-time, to be able to reflect any objective back in terms of what skills are required to accomplish or unlock the objective; then present the routes between those points, using the many pathways and combinations of learning resources and programs to close that gap. To quote Eric Hoffer[6], “In a world of change, the learners shall inherit the earth, while the learned shall find themselves perfectly suited for a world that no longer exists.” Here is to a future where learning can take us anywhere, everywhere, with infinite agility.
David Blake is the creator of The Future of Work Studios and the CEO of Learn In. He is a Sr. Advisor to McKinsey. David is also the Executive Chairman and Co-founder of Degreed. Prior, he helped launch a competency-based, accredited university and was a founding team member of university admissions startup Zinch (acquired by NASDQ: CHGG).
Excerpt from 60 Leaders on Innovation (2021) — the book that brings together unique insights and ‘practical wisdom’ on corporate innovation. Created and distributed on principles of open collaboration and knowledge sharing: Created by many, offered to all; at no cost.
