What is Agile and why is it important for today’s businesses?
Efficiency, optimization and attainment of KPIs targets have been the definition of success for many businesses in the past years. But, the new digital era demands a new operating model design that can withstand unexpected disruption and new market entries while delivering fast results and optimum performance.
The new digital era has brought unprecedented and radical changes to the economic and business environment. Amidst the turbulence of technological advancements, business model disruptions, market volatility and the recent pandemic crisis, organizations lay on shaky ground trying to redefine their value propositions, discover new business opportunities and unfold their innovation capabilities. Hence, modern businesses have realized that the ‘’business as usual’’ model has become obsolete and inadequate to help them survive and retain competitive advantage.
Onboarding a new operational model
In order to step into the modern digital reality, companies need to turn their focal point inside-out as a means to rethink their operational structure, set a direction towards organizational agility and resilience and escape from the standardized and linear product development and innovation management processes.
Efficiency, optimization and attainment of KPIs targets have been the definition of success for many businesses in the past years. But, the new digital era demands an operating model design that can withstand unexpected disruption and new market entries while delivering fast results and optimum performance.
According to a survey conducted by Accenture, 93% of C-suite executives claimed that their companies’ existence is jeopardized by fixed operating models that can’t keep pace, while 74% feel they will need to completely rethink their operating models to be more resilient as a result of the COVID-19 pandemic.
The Agile model: How it all started
The term “agile” originates from the software industry as a software development framework that was derived from the inefficiencies of traditional software development, when sequential, disconnected and isolated processes frequently resulted in slow-delivered solutions that fell short of expectations or failed to fulfil the needs of the end-user. In contrast, the agile methodology breaks down the development process into small iterative components that enable multi-disciplinary teams to work collaboratively, breaking communication barriers and delays, and responding quickly to adjustments. This way, agile teams can achieve fast product delivery, test and receive feedback from users at the early stages of development before investing a large number of resources on features that are not desirable or valuable, and therefore generate better solutions and product increments.
The most prevalent and common elements of the Agile framework are:
- Product Backlog: A prioritized list of tasks that need to be done.
- Sprint: The team takes a small item from the top of the product backlog and implements it in a sprint (a short completion period of time, usually 2–4 weeks).
- Cycle: The team evaluates the development progress every day to detect bottlenecks, share transparency and maintain a consistent and timely course until the task is completed. After that, the team starts new sprint with the next-in-line task of the product backlog.
It is easily identified how the Agile methodology can facilitate and support the software and digital products development and project management. But, Agile can go beyond these two fields and transform organizational structures and operating models creating a resilience and growth mindset while producing a state of constant motion against disruption.
Why is Agile so valuable?
A purpose-driven agile operational model can motivate people and empower teams to work more effectively, collaborate closely, and engage extensively within their ecosystem. This fuels the speed of response to volatile and changing markets and rising innovative business models. Moreover, flexible, autonomous and cross-functional teams are able to deliver more innovative solutions than those operating within traditional structures.
One of the most common reasons companies fail is the vague and ambiguous vision, mission and definition of each business outcome. Working in an agile environment though, the goals and purpose of each task are clearly defined and teams have the autonomy and ownership on how to deliver it. This leads to accurate and correct results and not misinterpreted deliverables causing resource waste.
The clear objectives in parallel with the team’s autonomy and ownership equip agile organizations to pivot faster when operations go out of track or new variables have entered the development equation. Teams possess the necessary competencies and information about the business objectives so they can make sensible choices about what to pursue and when to abandon activities that are no longer necessary. In this way, organizations are enabled to adjust quickly before they produce needless and obsolete results and be prepared to change direction.
The agile structure generates alignment over the business purpose and outcomes establishing parameters and limitations to the development process. As a result, teams may work iteratively without sacrificing control or resources, enabling them to unleash innovation and achieve great results through optimization based on feedback and lessons learned.
Agility is not just another buzzword. It’s a high return investment.
The Agile model has been circulating in the corporate and technology world for around two decades. Most companies though, have perceived it as a nice-to-have feature for their structure and haven’t invested enough attention for its benefits. However, when the Agile methodology is implemented and adopted correctly, it provides valuable and tangible outcomes by offering a quantum leap in performance and innovation.
As BCG reported, based on surveys, businesses that utilize agile architecture effectively have delivered three to four times higher customer satisfaction and return on digital investment, 15% to 25% cost reductions on development as well as greater than 90% employee engagement.
In addition, according to a McKinsey survey, agile transformations that were highly successful resulted in significant performance improvements as shown below:
Furthermore, agile organizations don’t just accomplish better performance, innovation and employee engagement but they have a financial impact as well. According to Accenture research, agile companies achieved an outstanding long-term EBITDA growth of 16% compared to 6% for non-agile organizations.
How to build an agile operating model
- Assemble diverse teams
The modern digital era demands businesses with access to a diverse range of perspectives, backgrounds and skills. Therefore, in order for organizations to flourish, they need to form multidisciplinary teams with an entrepreneurial mindset that are allowed to pursue divergent paths so they can become a hub of diverse knowledge and skillset for businesses to tap into.
2. Encourage ownership and autonomy
In parallel, it is essential for teams to become autonomous and gain ownership over their work. Managers should take on the role of a coach providing direction, rather than acting as a bureaucratic authority. To achieve this, companies need to set an explicit vision, mission and objectives for teams, so the latter be able to perform independently towards their goals.
3. Rethink leadership
As mentioned before, managers should undertake the role of a coach and set the right environment for team alignment, pushing them in the right direction and eliminating bureaucratic barriers. Additionally, they should pave the path toward a new way of working by exemplifying the agile model and embracing alignment and cooperation with their peers.
Where to start?
Adopting an agile operating model is not an easy task that can be implemented on day one. Big corporations with traditionally fixed and hierarchic structures need time and a structured framework to gain resilient reflexes and agile muscles and reinvent their business. This is where an agile coach steps in— someone who will monitor and guide you on a regular basis, understanding the team dynamics and increasing the adaptability of the teams inside an organization. After all, agility is all about adaptation. Ready to embark on this journey?
We, at Found.ation, take on the role of an agile coach to help enterprises adopt and integrate an agile architecture. We begin by conducting a thorough assessment of the existing state of business agility, identify KPIs and critical training needs, and eventually develop a low-risk implementation plan. Find out how we do it and how we can co-create a resilient and flexible operating model for your company.
