What is relevant for an agile company and what characterizes an agile organization? Is it creativity, the existence of a flat (or no) hierarchy? Or does it simply come down to agile work practices? The topic of agility is a matter for wide-ranging controversy among executives and entrepreneurs. Anyone who’s really agile is quick and makes precise decisions at high speed, in a relaxed but focused way, without time pressure or hassle.
The discussion about the concept of agile organizations in response to the challenges of digital transformation is in full swing. But the confusion about what characterizes an agile organization and how to recognize it is still being widely debated. Any executive who wants to be innovative has an opinion about this topic. But only a small number actually has definitive ideas about it and typically fall back on the benefits of sound knowledge and experience.
Each company addresses the question of how to use the ability to make quick decisions to adapt faster to ever growing and unexpected market changes (aka dynamic).
The crux of the question is about speed — it’s all about the sprint and not the marathon. If in the past companies were defined by consistency, stability and tradition, nowadays their corporate mission and the creativity of their staff, as well as their adaptability and speed in decision-making, implementing new ideas or business models and adjusting business processes are far more relevant than ever.
Speed should not be confused with rushing, restlessness, time pressure and arbitrary short-term deadlines. Those who fail to recognize this difference risk maneuvering their organization into a state of fatigue. Proceeding in this way inevitably leads to employee exhaustion, loss of mutual respect and destruction of resources.
Core types of speed
Three basic types of speed are important to our thinking model. The speed in which
- a need for adaptation and the need for change in the organization is recognized.
- the necessary measures for adaptation are defined and decided.
- these changes are implemented and the necessary effect unfolds.
The extent of an organization’s agility can be measured by how much time passes from recognition to decision-making to the implementation of important changes.
Every adaptation of the organization and its working methods leads to the fact that the current state of achieved stability must be altered. A temporary phase of instability is needed in which the previously familiar approach is replaced by another alternative that is appropriate to the need for change.
Or, an existing product or a previously provided service must be replaced with a new one. Here, too, known and familiar ways of working, cooperation and business processes definitions are temporarily destabilized until new ones are introduced and a stable status is attained once again.
In an agile organization, this oscillation between stability and instability is what is viewed as normal operational practice and will be managed naturally throughout the company.
Companies can achieve a constructive state of instability in three different ways:
a) An active state of preventive instability that can be used creatively, positively and constructively. (Section A. in the following graphic.)
b) A state of disruptive instability, in which a need for change for third parties is triggered. (Section B. in the following graphic.)
c) A state of reactive instability, triggered by factors that have already occurred, which make subsequent action compulsory. (Section C. in the following graphic.)
The main precondition for preventive, disruptive or reactive instability is the ability of the company to identify a need for action. It is decisive at just which speed and effort the phases of recognition, decision and implementation are passed through.
On the opposite end of the spectrum, a certain instability that permanently destroys the company can only be achieved in one way:
a) A state of ignorance of factors that leads to a dysfunctional instability in which the organisation is influenced but destroys itself through a lack of adaptability or stubbornness. (Section D. in the following graphic.)
Currently, companies with complex and historically evolved organisational structures are in a situation where they have underestimated or ignored the influencing factors of digitisation and digitalisation. This being the case, they also fail to recognise the creative instability of innovative start-up companies in their markets due to a lack of adaptability.
For instance, one might see this occur in banks and insurance companies compared to so-called Fintechs. Or the German railway organisation, Deutsche Bahn AG, in competition with Flixbus and Flixtrain.
Ask the right questions and answer consistently
If an organisation wants to identify the deviation between existing and necessary agility (aka ability to adapt), the described model can be applied to the following questions.
Does the organisation have the ability…
- to identify changes, and in what time and at what cost can they qualify, design and prioritise necessary adjustments?
- to develop and decide about the necessary changes of strategy, business model, processes, IT landscape, organisational configuration and financial planning?
- to implement the decisive measures to adapt the affected areas, products and services and measure their effectiveness?
Based on the findings it is possible to deduce just what degree of agility an organisation already has or what is necessary to secure its own company existence.
The answers should be used to become aware of the consequences of a lack of adaptability and to deliberately change or, if necessary, completely redesign the process, organisational and leadership model.
Gaining speed requires breaking old habits
In order to build the relaxed form of a fast and therefore agile organisation as described here, i.e. the following principles should be consistently pursued.
- Employees are adults and must be respected and treated like adults also in their business context.
- Responsibility including decision authority must be transferred from the hierarchical management structure to the individual employee.
- A consensus driven corporate culture and external influence exemptions must be prevented (keyword: company politics).
- Necessary adjustments to business models and processes must be carried out directly by the employees.
- Financial planning and strategic development need to be driven on a rolling and decentralised bases.
- The mission, purpose and goal of the company must be defined centrally, agreed with all employees and their compliance has to be mandatory.
These six principles are easier to read than to actually and consistently implement and apply in everyday life. Consequently, pursuing these principles in turn requires consistently breaking with a wealth of traditions, rituals and habits.
And just how much perseverance and pressure to act in overcoming an old habit is required will be well-familiar to anyone who, for example, has ever tried to quit smoking or do sports on a regular basis.
Those who cannot persevere and fall back into old habits will only be able to handle the changes in their environment at the previous, less progressive speed and might get Kodak’ed.
German version of this article is available here.
Andreas Slogar worked in 23 countries in the USA, Europe, the middle east and Africa and has, inter alia, as CIO gained significant expertise in strategic and operative management. He is the founder of the Blue-Tusker expert network. All fees collected by the network are donated to charitable organisations. As an expert Slogar is specialised on the transformation of entire companies into agile states of collaboration. He authored a variety of scientific articles and created the laCoCa model for agile organisations. He also wrote the book “Die agile Organisation”, which was published by the Hanser Verlag.