Agility is currently on everyone’s lips. Companies and organizations are asking themselves – what is this trend all about? What is agility anyway? What makes an agile company? How do we become agile?
Agility: What makes an agile company? Definition, background and implementation
Why agility?
How to deal with the VUCA world?
Digitalization, demographic change, globalization. – We all realize that our world is changing. It is changing in many places at the same time, usually unexpectedly, and there is no end in sight to this permanent transformation.
The acronym VUCA describes the challenges that our ever-changing world poses for companies:
It stands for
- Volatility/ variability
- Insecurity/ uncertainty
- Complexity
- Ambiguity/ ambiguity
Making decisions in an uncertain environment
No one can predict with certainty how markets, competition, technologies or other factors will change in the future. The only certainty is that they will change. – And we can already see that we as a company will have to react quickly to changes in order to remain successful. But how can we prepare ourselves for tasks that we don’t even know yet? Worse still – to challenges that we will only recognize when they have already occurred? One thing is certain: the individual and collective ability to make decisions in an uncertain environment is one of the key core competencies of the future.
If you would like to find out more about the VUCA phenomenon, we have described it in detail in our article “Change management in our VUCA world”.
The definition: Agility – what is it?
Classic management
We can respond to constant challenges with defined strategies, structures and processes. This is the way traditional management works: developments are largely predictable, management sets clear goals, specifies strategy, structures and processes top-down – and the employees implement them, perhaps with a “bottom-up feedback loop“, but then things take their course.
Agile management
However, in order to overcome unknown, changing challenges, we need the ability to adapt our strategies, structures and processes to the actual circumstances at short notice. Maintaining a balance between dynamism and stability in a changing environment in such a way that the business mission can be fulfilled in the long term requires a new way of thinking and working at all levels of the company. In our understanding, this process is appropriately described by the term agility.
Definition of agility in a nutshell
Agility is the ability to adapt strategies, structures and processes to actual circumstances at short notice.
Agility, change and flexibility – the differences
Agility is a way of thinking and acting that differs from change and flexibility:
Difference between agility and change
Change is a process of transformation towards a defined goal, whereas agility describes constant change that does not have a defined goal – here, the ability to change is a core competence.
Professors Dr. Günter Schnabel and Dr. Kurt Meinel define adaptability as the ability “to adapt the action program to the new circumstances during the execution of the action on the basis of perceived or foreseeable changes in the situation (…) and (…) to replace it with one that is more appropriate to the situation and thus to continue the action in a completely different way.”
The difference between agility and flexibility
Wouter Aghina, a McKinsey expert in organizational design, explained the difference to flexibility in an interview: “A rigid unit – such as a glass, for example – is best kept in a rigid state, because if its environment changes quickly, it will break. Now one could assume that an object made of flexible material, for example rubber, is the opposite of a rigid object – but this is not the case, according to Aghina – because the flexible object always returns to its original state and ultimately does not change. The opposite of rigidity is agility – the ability not to be broken by change, but to become stronger, to learn, to change.
This comparison can be applied very well to companies, because an agile company is always a company that is constantly learning.
Agility in companies: The state of play today
Many, if not all, companies know that they need to be more agile and react more quickly to change.
Surveys also indicate that productivity increases significantly in agile companies. According to a McKinsey survey, respondents in agile units are 1.5 times more likely to report financial outperformance compared to respondents in non-agile units.
So far, however, only a few companies have made the transition to an agile organization. Around 60% have not yet taken any steps or have only changed some areas, mostly those that are very close to the customer.
Agile structures and approaches can already be found more frequently in project management. We went into this in more detail in our article “Agile project management and agile leadership”.
In principle, companies have a great need to introduce agility into their organizations.
What makes an agile company?
As mentioned above, agility is not a strategy or structure, but a way of thinking and acting, which means that first and foremost, the people in the company must be empowered to think and act in an agile way. This requires room for maneuver for individual employees.
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Flat hierarchies instead of top down
Flat hierarchies are needed instead of directives and controls from management. Employees should be given enough authority to act and make decisions independently and on their own responsibility so that they are able to react quickly to changes. If decisions first have to be passed through several hierarchical levels, the reaction time may be too long and the company too sluggish. Personal responsibility ensures that employees think for themselves and get involved instead of doing things by the book.
If you focus on the market and adapt agilely to customer wishes and needs, this means that the customer is the boss. If you take this idea a step further, it automatically changes the hierarchies; the company organizes itself from the outside in.
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Agile corporate structures
The aim of an agile transformation is to dismantle hierarchical structures in favour of a lean, project-oriented organizational and operational structure. Like different organs within a body, the teams act autonomously, are connected in a network-like architecture and pursue the goal of maintaining the organism – i.e. the company.
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Agile understanding of leadership
Of course, this requires a different understanding of leadership. Instead of controlling, pressurizing superiors, managers are needed who encourage their employees to be curious and take different paths than previously known. Managers in an agile company support their employees in acting independently in the interests of the customer. She puts herself at the service of the team instead of monitoring the achievement of target agreements.
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Experimental attitude and dealing with errors and risks
When you do something for the first time or when you try something out, mistakes are to be expected. They are part of the learning and development process. In an agile organization, mistakes are welcomed as an opportunity to learn. Risks are taken because the associated potential failure is acceptable. This allows employees to dare to try something new and look for new solutions. With such an experimental attitude, they also recover more quickly from setbacks, and we are not talking about “error-friendliness” here, which is a completely misleading term. We all don’t want to make mistakes. The way we deal with it should only change radically.
Please also read our article Error culture before error management! How your company learns from mistakes!
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Transparency
In order to give employees the opportunity to react quickly and find new solutions, it is necessary to make all relevant information available to them. In a survey, 90% of all respondents from agile companies stated that their employees have access to all information (“pull principle”) – from customers to finances. A permanent active provision of information (“push principle”) tends to lead to an information overflow, which many companies complain about.
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Dialog/ Feedback
An agile company is a company that is constantly learning. To ensure that everyone can learn from their successes and mistakes, dialogue and feedback in all directions are fundamental in agile organizations. Dealing with mistakes and criticism should be constructive for both those giving and receiving criticism.
- We have described in an article how a culture of innovation and trust can be established in order to survive in times of change: A culture of innovation and trust in times of change
- Read here how to give constructive feedback: Giving feedback: 10 rules for successful & constructive feedback
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External exchange
In order to be aware of emerging trends, customer requirements and other information that could form the basis for changes in good time, it is important for the company to be networked in all directions. The company encourages its employees to maintain contact with customers, suppliers and stakeholders and to remain in dialog with them, which makes it essential to critically scrutinize internal regulations, reports and meetings. Otherwise, this approach remains a pipe dream due to a lack of time.
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Diversity
If the workforce is heterogeneous, more creative ideas and solutions can be found than a team of people with the same mindset could. A mixed workforce better reflects different lifeworlds and perspectives.
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Images of the future
As things can change quickly in our VUCA world, it does not make sense to commit to a single blueprint for the future. Nevertheless, it is important to analyze development opportunities, think through various future scenarios and develop plans.
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Focus on your own strengths
Reflecting on professional expertise, unique selling points, values and corporate culture and dealing with past crises strengthens the company and encourages it to see change as an opportunity.
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Fuzzy targets
As it is not possible to predict future circumstances and conditions, it is also not possible to clearly formulate goals. Agile companies work with fuzzy target images that are adapted to the actual situation that arises: instead of defining strategic targets in terms of percentage market share in 2020, which is nothing more than reading coffee grounds, market conquest scenarios can be developed for the next 12 months.
Video How we shape an agile corporate culture
Oliver Grätsch from berliner team explains in 2:30 min which approaches are the most important for creating a sustainable basis for cultural change in the company.
Agility and agile organizational development: The tutorial
Trend term agility
Sooner or later, the question “How do we become agile?” comes up in almost every inquiry, in almost every initial meeting we have. We want to move away from the fashionable concept of agility: simply wanting to become agile sounds nice, but it won’t work. It is not enough to introduce a Scrum Master or to work with Design Thinking. While this can make perfect sense – and is certainly fun – it alone does not ensure that an organization can call itself agile. Introducing agile methods without the corresponding culture is usually described by employees, and rightly so, as the famous “new sow” being driven “through the village” on well-trodden paths.
If a company wants to become agile, the first step is to want to understand:
- Where do we stand today in terms of agility?
- Why do we actually want to become agile?
- What is the point?
Because in order to develop a strategy here, we need to know where we are starting from and what drives us.
Tutorial Step 1: How agile are we?
In order to be able to define your own location, we suggest two perspectives for orientation:
- Flexible, dynamic factors
- Controlling, stabilizing factors
We can imagine these values on an x/y axis:
Being agile: Finding the balance between stability and flexibility
In order to develop agility, we should analyze how our company is positioned in terms of flexibility and stability.
Both elements are important; if one is predominant, a company will be in trouble in the long term:
- Control and stability alone make an organization bureaucratic;
- However, if a company has only flexible and hardly any stabilizing elements, chaos quickly breaks out.
Ensuring a balance between these two poles is the major challenge on the path to an agile organization. Under no circumstances should this be confused with the so-called “middle way”. Based on the precise analysis of both factors, we can define key areas for action, and this is where we can start. So there is no ready-made recipe, but the ingredients are known.
First of all, you need to analyze and understand that it is about actively creating a balance and not simply changing the principle of agility for the sake of it. And striking this balance between the mainstay and the supporting leg, based on the current situation – that is the decisive step on the way to becoming an agile organization.
Tasks on the way to becoming an agile company
In traditional companies, it is often a matter of adapting and developing the stabilizing elements (e.g. “reporting systems”) and allowing the dynamic ones (e.g. “flat hierarchies”) to develop.
In start-ups, which we often accompany in their development, it is more a matter of preserving the dynamic elements that shape the culture while at the same time developing stabilizing elements (e.g. “standards that promote efficiency”).
This distinction is, of course, quite simplistic, but it may provide an initial orientation.
How do we find out where we stand in terms of agility?
Both perspectives, dynamics/flexibility and control/stability, each contain various sub-items – i.e. different areas that can be used to analyze the current situation in the company in detail.
In the area of controlling and stabilizing elements, the main sub-items are as follows:
- Shared values and vision
- Supportive, entrepreneurial leadership at eye level
- Standards that promote efficiency
- Measurable and assignable performance (by person and area)
- Clarity about decision-making channels, responsibilities and powers of the respective unit
- Selection of innovative employees
These areas exist in the area of flexibility and dynamics:
- Structures/ Roles
- Transparent communication
- Find and try out possibilities
- Flat hierarchies and personal responsibility
- Free access to tools and systems
- Lifelong learning
- Networks and partnerships
- Rapid testing of new ideas (80%/MVPs)
- Working environment (“New Work”)
We will discuss some of these sub-items in the following as examples.
Control and stabilization
The controlling and stabilizing elements do not necessarily stand in the way of agility.
On the contrary: stability is the backbone of the organization. This means that the aim of corporate development cannot be to become flexible and agile as quickly as possible while robbing the basis of stability. The controlling or stabilizing elements must be further developed and adapted to the new circumstances – but not omitted!
Ask yourself:
To what extent are there controlling and stabilizing elements in our company?
Controlling or stabilizing elements are for example:
- Do we have a common vision? Which one is that?
- Are there common and shared values? What are they?
- Does our company have standards that promote efficiency?
- Does the management lead in such a way that it is entrepreneurial – i.e. supportive?
Or is the management more of a controller and demands reporting from the employees? - Is there clarity about decision-making channels, responsibilities and powers of the respective unit?
Let’s take a look at what individual controlling elements can mean in terms of agility.
Efficiency-enhancing standards
Every company needs standards that promote performance and efficiency.
Ask yourself:
Do we live them and do they ensure that we are well on the way to fulfilling our business mission?Or are they more of a hindrance?
Companies that exaggerate or overdo the controlling and/or stabilizing factors – i.e. bureaucratic organizations – head in the direction of stagnation and sooner or later fall into disuse.
Efficiency-inhibiting standards
I have just personally experienced an example of efficiency-inhibiting standards:
Eight weeks ago, my debit card was damaged and I asked for a new card. My bank also has it as standard – and this is probably unalterable – that I receive a new debit card every three years. The time has just come: although I received a new card eight weeks ago, I have now received another new debit card – a completely unnecessary process. Not keeping standards flexible, but promoting and allowing them as immutable laws in the company, means supporting stagnation. This is the best way to achieve a bureaucratic organization. Check which standards make sense (increase efficiency) or are necessary (legal framework) and which have “grown over the years” and only result in pointless activities.
When stability becomes bureaucracy:
Supportive, entrepreneurial leadership
In many companies, we tend to experience management as controlling. There are so-called reporting lines, which means that the management checks whether the employees are doing their work properly. The alternative to this is supportive leadership that helps employees to do their work as well as possible, provides resources and information and removes any obstacles.
This can involve turning reporting lines into so-called supporting lines in the development of an agile organization. This is often a radical intervention in the corporate culture – resistance is to be expected. This makes it all the more important to make the meaning and purpose of the change clear.
To cut a long story short:
The first step with the controlling elements is to see to what extent the stabilizing areas are business-enhancing and supportive – and where they may create rigidity.
- Our blog post on agile leadership is about how to change the various elements of management in order to work towards an agile organization. Agile leadership: What is agile leadership? The 10 principles.
- Find out how an agile transformation can be designed here: Agile transformation in 22 steps: Definition, basics & tutorial
Flexibility
The second axis, the flexible or dynamic axis, is more concerned with elements that ensure that experimentation, entrepreneurship and flexible role and team behavior are possible in organizations. Not so much as an end in itself, but rather as a simple necessity in order to survive in a rapidly changing environment.
Here, too, we would like to take a closer look at the flexible elements using a few examples:
Structures and roles
Rigid organizational charts essentially contradict structures and roles that ensure flexibility.
Questions you should ask yourself in relation to your structures:
- Are there teams that only work in their department or in your team?
- Or is there a possibility/necessity for cross-departmental projects?
- Is it possible to integrate employees, at least temporarily, in a parallel organization?
- So are roles and structures fluid and movable or are they rigid?
The aim here is to find a form of organization that allows people to be flexible and makes the company attractive to employees. An obsessive “From now on we work in a swarm” only causes frowns or amusement in the company.
Rapid testing of new ideas
Developing new ideas and being able to try them out quickly and easily is essential for agility. In this respect, check whether this may already be the case in your company. Ask yourself:
- Is there already a culture of rapid testing?
- Are new ideas even permissible?
- To what extent can we present new ideas within the company without them being perfectly worked out?
- Or do you even have to present a perfect PowerPoint in internal meetings?
Ideas that have to be perfectly worked out quickly disappear again. An idea is not a concept, let alone a plan. And what for? The question here is to what extent it is already possible to offer 80% solutions – so-called mvp (minimum viable products). This is the preliminary stage to something called a beta version.
An example of agile handling of new ideas
If I want to present to my team what an app that we are currently developing could look like, then I just program the interface. This gives viewers an idea of what the product could look like. To do this, I first present a sketch, get feedback and then continue working on it.
In our small company, for example, there is a “ban” on presenting ideas that are initially only presented internally on PowerPoint. My God, what a hassle it used to be, do you know?
Presentation of ideas in the Start Up:
Lifelong learning
Becoming and remaining flexible is not possible without lifelong learning. External circumstances change quickly; this can mean that the job we are doing today will look completely different in a few years’ time or can even be done better by a machine. But the employee as a person remains important. If we continue to train and develop ourselves, we can adapt to changes and provide meaningful support within the company.
Ask yourself:
- How much does my company support its employees in learning?
- How do we deal with mistakes?
- What is the attitude of employees towards further training and learning?
- What do we need to learn in order to be fit for an as yet unknown future?
Free access to tools and systems
If new ideas are to be developed, it is essential that information is easily and quickly accessible and that decisions can be made quickly. Application approval processes are often as terrible as the word itself. Lengthy searches for information and resources prevent employees from developing ideas quickly and easily. Check in your company:
- Do our employees have free access to tools and systems?
- Is relevant information accessible to everyone at all times?
- How many levels should be consulted for important decisions?
Sharpening the mind for flexibility
Highlight and analyze the factors that make up flexibility:
- To what extent are we already well on the way?
- Is our culture already characterized by these factors?
- Or are such concepts completely alien to us?
- What resistance do we have to overcome?
In many traditional companies, the aim is to sharpen the awareness that flexible factors not only make the company more successful in the long term, but also make it faster in the first instance. – And speed is one of the foundations of agility:
Becoming agile means being able to make decisions and act quickly in a rapidly changing world. And it also means allowing yourself to fail quickly in order to then choose a different, new and possibly successful path.
At the same time, the stabilizing elements that form the backbone of a company must be preserved and further developed.
Tutorial Step 2: Agility – focus on your own strengths:
Once you have analysed where your company currently stands in terms of control and stabilization, the first step towards agility is to consider: “What should we keep?” These core elements are what works well, something like the DNA of your company; they characterize your company. And that’s not all: if a company wants to be agile and flexible, it needs the stable elements, just like an athlete needs his backbone.
But we also need to decide: “Where do we need to cut out old habits?” – Because there are certainly some things that are no longer up to date and prevent mobility. This balance between “What do we need; what sets us apart?” and “What is holding us back?” must be found, because you can’t reinvent everything. That is crucial. – Concentrate on the strengths of your organization!
Therefore: away from fashion agility. Not everything has to be agile! No: stabilizing elements must remain, because what distinguishes the company’s DNA must endure. The stabilizing and controlling elements must be adapted, but not omitted.
Tutorial Step 3: Implementing agility means allowing
Once you have identified the strengths of your company, you need to focus on the elements that make it more flexible and dynamic: These must either be promoted more or be considered permissible for the time being. Sometimes it’s not that easy: if you bring up the topic of flat hierarchies in traditional companies, for example, the first response is often: “What? Are we going to abolish the bosses here? – That doesn’t work.” And here, too, you have to act individually with a sense of proportion in order to find out: What exactly does this company need? How much or how little hierarchy is needed here? And allowing these thoughts, this possibility of reorientation without prejudice and with an open mind, is a challenge from which a new culture can emerge.
Stability or flexibility – which is more important?
In our experience, it can be said that neither stability nor flexibility is the ideal way to transform into an agile organization.
The decisive factor is always where the company currently stands:
The more traditional a company is, the more the controlling elements seem to be a central part of its DNA. This requires an eye for where the control system brakes.
The younger a company, the greater the need to introduce this stability and control in the first place. This is because young companies often do not yet have anything like structures or regular communication, and they shy away from the topic of stabilizing elements like the devil shuns holy water. And this lack of stability is often the reason why many a young company goes down the drain within two or three years.
Only after you have taken a close look at your organization with regard to the points mentioned above and know your starting point can you take the next steps towards agility. We write about what this can look like in our article Agile transformation in 22 steps: Definition, basics & tutorial
Interesting links on the topic of agility:
Would you like to read a little more about agile companies?
Then we recommend the following articles:
- A very detailed publication on the topic of agility from the DGFP-PraxisPapiere publication series of the Deutsche Gesellschaft für Personalführung e.V. (German Association for Personnel Management).
- Interview with McKinsey’s Aaron De Smet and Wouter Aghina: The keys to organizational agility
Our articles on agility and agile organizational development:
- Agile leadership: What is agile leadership? The 10 principles
- Agile transformation in 22 steps: Definition, basics & tutorial
- Agile as a trend: The emperor’s new agility
- Agile product development: what is it and how does it work?
- Lateral leadership – tips for leadership without power
- Become agile? Oh no. 13 tips on how to successfully prevent agility
- Agile methods: Design Thinking, Design Sprint, Lean Startup, Scrum
- Agile tools, agile project management & agile leadership
Photos:
Štefan Štefančík, unsplash.com
rawpixel.com, unsplash.com
Nik MacMillan
Climate KIC, unsplash.com
