The 5 Trademarks of Agile Organizations

 

The traditional organisation is static, siloed hierarchy, decision making, goals flow from top to bottom. The structure is sturdy but rigid and slow-moving.

An agile organisation is a network of teams with a people-oriented culture that operates in fast decision cycles and rapid decision making enabled by technology and guided by the purpose to co-create value. This operating model can quickly and efficiently reconfigure strategy, process, people, creating a competitive advantage in VUCA (Volatile, Uncertain, Complex, Ambiguous) conditions. 

Organisations as machines

The traditional model of organising work By departments, silos led to effectiveness as well as the efficiency of resources. They are hierarchal, specialised and with an overlay of scientific management dominated the markets. 

Trends challenging the old paradigm.

Quickly evolving environment- every stakeholder customers, investors, partners, regulators have pressing needs on one side. Also, the competitors and collaborators demand action on the other side.

Introduction of disruptive technology: Established markets have been commoditised through technology, automation. Machine learning, IoT, robotics have taken over routine work.

Acceleration of digitalisation & freely available information: The increased transparency and distribution of information require companies to effectively communicate and collaborate with customers, partners and colleagues. 

The war for new talent: As knowledge tasks become more important companies have to acquire the best talent. These new-gen employees may have diverse origins, thoughts, experiences that need to be accommodated. 

The new paradigm: Organisations as living organisms.

The current trends are changing how companies and employees work. will companies balance stability and dynamism? They should design a stable backbone that will evolve slowly and support dynamic capabilities that will support new opportunities. They should be capable of mobilising quickly, are nimble, empowered.

The five fundamentals of Agile organisations are discussed below.

Five fundamentals of Agile organisation

Strategy: North Star across the organisation

Agile organisations are intensely focussed on the customers and seek to meet the needs across lifecycles. They create value with a wide range of stakeholders. 

Agile organisations are flexible and distributed to meet the evolving requirements of the stakeholders. To have a focus on their value creation, they set a shared purpose and vision known as North Star to guide and help people feel emotionally connected. This serves as the reference when interfacing with its diverse stakeholders. 

This vision is deeply embedded into the organisation and it is used in combination with a flexible approach to seize opportunities. Employees across the organisation constantly look for changes in customer behaviour and external factors to act upon them. They seek stakeholder feedback and input, use various tools to identify new opportunities and gather insights that help in initiating and managing new initiatives.

They allocate resources flexibly where it is required most. Companies constantly the environment, evaluate the progress of various projects and decide swiftly to ramp them up or close them down using quick processes to reallocate manpower, technology, capital to other projects. 

Senior leaders act as integrators, bring clarity and provide guidance on priorities and expected outcomes. They ensure focus on delivering tangible value to customers, provide feedback and coaching to enable people to work towards outcomes.

A network of empowered teams.

In an Agile organisation, the top leadership remains the same but most of the remaining traditional structure is replaced by flexible network fo teams. Leaders need to understand human networks, how to design and build them, collaborate, nurture and sustain them.

The Agile organisation consists of a dense network of teams, empowered, operating with high standards of accountability and collaboration. Companies must have a stable ecosystem to ensure that these teams can operate effectively. There are several elements:

• Implement clear, flat structures that support how the organisation create value.
• Ensure clear, accountable roles so that members can focus on getting work done and not on clarifying roles. 
• Focus on hands-on governance where decisions are taken close to relevant teams.
• Evolve functions to become centres of knowledge and practice with responsibilities to develop talent.
• Create an active ecosystem and environments to extend the internal network to the external network to access the best talent, ideas.
• Design and create open environments to empower people to work effectively in environments conducive to them.

The basic building blocks of Agile organisations are small teams, having great autonomy, more multidisciplinary, focussed on value-creating activities. The most commonly observed types of teams include

• Cross-functional teams
• Self-managing teams
• Flow-to-work team

Rapid decision and learning cycles

Agile organisations work in rapid cycles of thinking and doing. this integration and continual iteration determines the organisation's ability to operate in an agile way. 

At the team level, they rethink the working model away from traditional project management methods. At the corporate level, instead of annual budgeting, many companies are moving to quarterly cycles and rolling annual budgets.

This can significantly impact performance. There are several characteristics of this model.

• Agile teams can focus on rapid experimentation. Teams hold daily meetings, share progress, solve problems and ensure alignment. In between, they review and plan the next stage with timelines. 
• They leverage standardised ways of working to facilitate communications between teams. It ensures rapid iteration, input and creativity.
• They are performance-oriented by its very nature. They explore new approaches based on shared goals and measure impact rather than activity. These are reported to the leadership using formal and informal feedback and open discussion of performance against goals.
• Agile organisation require total transparency of information so that teams can quickly access the required information. This requires team members to be open and transparent with one another to ensure psychological safety to discuss issues openly.
• they make continuous learning ongoing. Everyone freely learns from successes and failures of self and other members and build on the new knowledge they develop in their work. They spend time in finding ways of improvement.
• They emphasize quick and efficient decision making. Instead of big bets once in a while they continuously make small decisions rapidly, test and adjust as required for further work. They do not seek consensus decisions but once the team leader takes the decision they learn to disagree and commit to enabling the team to move forward.

Dynamic people model ignites passion

The agile organisation puts the people in the enter, engaging and empowering everyone. They can then create value quickly together. They invest in leadership which empowers and develops its people fostering the skill building needed for agility. 

These leaders become catalysts that motivate team members and become involved in making strategic decisions. They also create a cohesive community with a common culture where the norms are reinforced through positive peer behaviour than through rues and processes. 

People processes help sustain the culture including accountability with autonomy and freedom to pursue opportunities. Employees take ownership of team decisions and performance. The member proactively pursues new opportunities and skills in their daily work. They attract people who are driven by an intrinsic passion for their work.

Also, it is about building new capabilities through varied experiences. They allow mobility where members move regularly between roles and teams. 

Next-generation enabling technology

For all these to come together, many organisations need to rethink the underlying technology that enables their products and processes as well as practices needed to support flexibility and speed.

Agile organisations need to provide products that meet customer needs and exceed competitive offerings. Operating processes will have to continually evolve which may require different technologies, systems and tools. 

Also, Agile organisations need to leverage new real-time information and work tools. To design, implement these new technologies organisations need to integrate next-generation technologies and development practices into the business. Extensive use of automated testing and deployment enables lean, continuous releases of new features into the market. Different disciplines must work together to offer streamlined, handover free practices.

In summary, companies have t become more Agile to survive and prosper in today's dynamic environment. The various aspects discussed above enable organisations to balance stability and dynamism and thrive in an era of opportunity. 

The 5 Trademarks of Agile Organizations

Written collaboratively by the McKinsey Agile Tribe

McK 2017/12