3 Laws of Agile Organizations

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Hong Sun
Management Consultant, Canada

3 Laws of Agile Organizations

In the age of agile, corporations must radically reinvent how they are organized and led and embrace a new management paradigm that involves new goals, principles and values and requires continuous commitment and leadership from management.

This new management paradigm can be interpreted by the following agile principles, aka the three "laws" of agile organizations:
  1. THE LAW OF THE SMALL TEAM: work should be done in small, autonomous, cross-functional teams in short cycles on relatively small tasks and getting continuous feedback from ultimate customers. Big and complex problems are resolved by descaling them into tiny, manageable pieces.
  2. THE LAW OF THE CUSTOMER: in an agile organization, everyone is obsessed with delivering more value to customers; everyone has a clear line of sight to the ultimate customer and can see how their work is adding value to the customer – or not. The firm adjusts everything—goals, values, principles, processes, systems, practices, data structure, incentives—to generate continuous new value for customers and ruthlessly eliminates anything that doesn't.
  3. THE LAW OF THE NETWORK: agile practitioners view the organization as a fluid, transparent, interactive network of players that are collaborating towards a common goal of delighting customers. The key is to make the whole organization agile. Concerning the law of the network, one common misperception is that agile organizations are flat or non-hierarchical. But the hierarchy in agile organizations is primarily a hierarchy of competence instead of a hierarchy of authority. The organization operates in an interactive communication dynamic, both horizontally and vertically, internally and externally; anyone can talk to anyone; ideas can come from anywhere. Decisions have to be made based on who is best placed to make the decision, not their position in the formal hierarchy, hence the structure of network that doesn't have a specific shape, but adapts and evolves with dexterity alongside the business environmental changes.
It's worth noting that the law of the customer is related to the shift from operational agility to strategic agility. Most organizations implementing agile management are still preoccupied with upgrading existing products and services through cost reductions, time savings, or quality enhancements for existing customers (i.e. operational agility). They have to realize that the major financial gains from agile management flow from the practice of strategic agility—that is, generating innovations that create entirely new markets by turning noncustomers into customers, through mastering market-creating innovation.
Source: Denning, S. (2018), "The Age of Agile" – How Smart Companies Are Transforming the Way Work Gets Done, AMACOM.



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