Organizational Agility

The Business Issue

In the twentieth century, the organizational focus was on size, efficiency and economies of scale. The zenith of this was the concept of zero defects which was one of the big management ideas of the tail-end of the century.

It should not be dismissed, but time moves on and so, too, does organizational best practice. We have moved from the era of zero defects to one of what Zhang Ruimin, the inspirational CEO of the Chinese company Haier, calls, “zero distance”.

To achieve zero distance with your external and internal customers requires a very different sort of organization: one that is fundamentally agile in its thinking and activities; one that is willing to change and able to change as markets dictate. Agility is the new organizational benchmark.

So, companies are fascinated by the promises of agile and they must change because we live in a different world. Unfortunately, only 10% of companies have moved beyond the implementation of agile as project management practice in IT or product development  – what we call “Level 1 of agile ambition”. There are many barriers and implementation challenges hindering a company’s ability to fully transform its organization and move to “Level 2 of agile ambition”. Level 2 brings most of agile benefits into reality.

 

The Management Idea

  • Organizational Agility is a daunting change. It entails a deep, pervasive transformation in how an organization is structured and managed; but also, in how people think and interact.
  • There are four components that need to be changed in sync for an agile transformation of your organization: agile leadership; team-based organizational structure; people skills; enabling processes (see graph).
    • Agile Leadership and Culture: Start from changing leaders’ behaviors, and create a leadership social contract on agile values to be disseminated and institutionalized. Communicate the “Why” of the change to all employees.
    • Team-based Organizational Structure: Use a selective approach about what to “Agilize” and what not. Design a super-flat organization based on project teams as well as permanent teams working agile. Evolve the control model to truly empower employees.
    • People: Train all your team on agile methods. Redesign your company’s capability sourcing strategy and workforce planning model to create flexibility in the supply of talent.
    • Enabling Processes: Assess your company’s processes (focus on strategic planning, budgeting, goal setting, performance management and procurement processes) and identify the critical ones that need to be re-designed to avoid they become a barrier to the agile change.

    The Results

    • An organization designed to better respond to changing markets and able to rapidly pursue new opportunities.
    • Productivity improvement of 30% or higher.
    • Cycle time compression on new product development of 25% or higher.
    • Improved Net Promoter Score or customer satisfaction of 40% or higher.
    • Improved employee engagement of 30% or higher.

     

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    Alessandro Di Fiore

    Alessandro Di Fiore

    Founder & CEO