Organizational Agility

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Description of Organizational Agility. Explanation.

Definition Organizational Agility. Description.

The term "Organizational Agility" can have two (confusing) meanings:

1. Broad, all-encompassing: The (overall) ability or capacity of an company or organization to quickly and consistently adapt to changes in the external environment, by identifying and capturing business opportunities in a more skillful way than its competitors. Also called: Enterprise agility.
2. Narrow: The ability or capacity of an company or organization to establish an adapting, flexible and offensive organization (as part of 1).

Agility has an active, offensive connotation, as opposed to Organizational Absorption which tries to deal with external circumstances via defensive mechanisms.

Agility is a concept that incorporates the ideas of flexibility, balance, adaptability, and coordination under one umbrella. In a business context, agility typically refers to the ability of an organization to rapidly adapt to changes in the external environment and/or market in a productive and cost-effective ways.

There are at least 3 forms of agility (Sull):

• Operational Agility
• Portfolio Agility
• Strategic Agility

See also: 5 types of Agility (Prasad)

Agile Teams

Rigby, Sutherland and Noble describe agile innovation teams as typically small, flexible, cross-functional teams working on innovation projects. Typically they enjoy a lot of organizational freedom and can be self-steering, bypassing usual layers of control and approval procedures, thereby speeding up work and improving the motivation of the team members.

They deploy prototyping and short feedback loops to (field) test solutions while constantly improving them. They are well suited for VUCA circumstances (Volatile, Uncertain, Complex and Ambiguous) in which problems are complex, solutions and project requirements are at first unclear and change frequently, collaboration with end-customers and internal customers as well as a lot of creativity and lateral thinking are needed.

From a Few to Many Agile Teams

After having launched and tested an initial set of agile teams, top management should be able to assess the operational and strategic costs and benefits of these agile teams and of increasing agility in general.

To scale up and roll out the approach of agile teams, Rigby c.s. recommend two essential tools:

1. CREATE A TAXONOMY OF TEAMS: Create a comprehensive list of all agile opportunities, categorizing them into customer experience, business process and technology projects. Such list typically contains hundreds of projects for a large organization. The reason for the taxonomy is that it helps to explore and develop a transformational vision while breaking up the strategic transformation into smaller chunks and steps. Also any obstacles, like a lack of people with agile experience are being revealed. The required hiring and training efforts become clear. The taxonomy also helps to avoid redundancy and duplication of efforts by showing who is working on what, and can contain links between the agile teams and the existing business units and product lines.
2. SEQUENCE THE TRANSITION: Prioritize and determine the order of projects to launch, considering criteria like strategic importance, availability of people, financial restrictions, return on investment, strategic risks, and interdependencies between projects/teams.

In scaling up their agile effort, companies should consider a major issue associated with going for easy wins in the form of deploying external business incubators. Business incubators do not provide the learning environment of the organizational changes that will be necessary to scale up organizational agility to hundreds of teams and even the entire organization.

Increasing Agility Across the Entire Corporation

Scaling up the amount of agile teams is a major accomplishment towards increasing enterprise agility. To involve the rest of the organization and make sure it is not hampering the strategic change effort by the agile teams, Rigby c.s. recommend companies make major updates to their:

• VALUES AND PRINCIPLES: Create a company-wide understanding of the need to change and adjust organizational values.
• OPERATING (IT) ARCHITECTURES: Modularize and define interfaces to increase the ability to accomodate very frequent changes in business processes without having to adapt complex backend systems. See Enterprise Architecture.
• ACQUISITION, MOTIVATION and DEVELOPMENT OF TALENT: Attract star performers and develop internal agile talent. Hire people willing and able to work in multidisciplinary teams. Adjust compensation systems.
• (ANNUAL) STRATEGY AND BUDGETING PROCESSES: Move towards more emergent strategy processes and fund strategic options.

Sources:

Donald Sull, "How to Thrive in Turbulent Markets", HBR February 2009

Darell K. Rigby, Jeff Sutherland and Andy Noble, "Agile at Scale: How to Go from a Few Teams to Hundreds", HBR May-June 2018, pp. 88-96

Baba Prasad, "Nimble: Make Yourself and Your Company Resilient in the Age of Constant Change", TarcherPerigee (2018)

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Compare with: Dynamic Capabilities  |  Organizational Absorption  |  Agile Absorption  |  Crisis Management  |  Strategic Risk Management  |  Scenario Planning  |  Game Theory  |  Real Options  |  First-mover Advantage

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