Organizational rigidity and the persistent ambiguity of what agility means in practice, attempts at embracing flexibility often remain an uphill battle.

Start with the General Principles of Agility

Instead of dwelling on the methodology, companies should first understand the general principles of agility and use them to adjust their organization’s design.

These principles are concrete manifestations of the competing demands between nimble-vs.-stable and simple-vs.-complex.

The general eight principles of organizational agility

8 characteristics of an agile organization should help you reconcile these competing demands:

Stable versus nimble (the organization is PREPARED)

1. Clear and well-communicated strategic direction
   2. Disciplined, aligned and accountable executive
   3. Faster, customer-centric experimentation
   4. Small cross-functional teams empowered with transparent information
   Complex versus simple (the organization is SOPHISCIATED)
   5. Differentiated organizational choices
   6. Culture of continuous learning and networking
   7. Minimum viable bureaucracy (fewer but common processes)
   8. Minimum viable hierarchy (flatter, fewer silos, collaboration)

In the companies we have studied, principles 1-4 enabled large firms to become nimbler without becoming chaotic.

With this way of approaching what to do, companies were better prepared for an uncertain future.

Principles 5-8 enabled the firms to simplify without becoming simplistic they were more sophisticated in how they would respond to uncertainty.

Instead of a piecemeal approach, it takes a holistic interplay of strategy, information systems and processes, structure, and people elements such as accountability rules, skills and incentives to bring these underlying principles of agility to life.

Are you challenged by organizational rigidity?

For every firm, there will be a starting point to building greater organizational agility.

It will be anchored in the company’s previous choices stemming from industry dynamics, level of uncertainty, past performance and even its response to crises.

The shared goal is one of creating greater agility by enhancing the ability to adapt to fast and unexpected changes.

Priorities may vary, they will range from accelerating the pace of innovation, improving its relevance and accuracy, becoming more relevant to customers, to saving costs and boosting employees’ creativity and engagement.

The level of uncertainty and speed of change may differ from business to business, even within a given company, agility transformation itself needs to be flexible.

One way to assess whether you need to take action to resolve organizational rigidity challenges is to take the Organizational Agility Assessment Test.

It will also help you decide on the shape and form that agility should take in your organization, you may choose to take this test at the company, departmental, functional or business unit level.

Give an answer 1- 5

1 very poor, 2 poor, 3 average, 4 good, 5 very good

Diagnosis: How Nimble is my organization?
1. We make decisions quickly and we can reverse them quickly too
2. We encourage collaborators to take risks & tolerate failure
3. We continuously adapt our business practises to market conditions
4. We use and empower small cross- functional teams to self-organize and innovate
5. Our cross-functional teams innovate with and around the customer
6. We use agile processes to speed up innovation
7. In our innovation, we use small experiments, we learn, and we scale if successful.
8. Our structure is fully aligned with our customer journey & main points
9. Information flows transparently our organization
10. Our budget allocation process is fluid enough to pursue new opportunities.

Diagnosis: How Stable is my Organization?

1. We use clear, short easy-to-remember strategy statements
2. Our leaders constantly tell our strategy story to empower employees
3. Our employees have full knowledge of the company’s direction
4. We have set a few key strategic directions that provide our employees with a clear framework for innovation
5. We use an appropriate set of KPI’s to measure performance
6. Our budget processes are sound and enable the pursuit of a clear strategy and sound financial investments
7. Accountability is precisely defined and we reward accordingly
8. We pay attention to operational excellence and efficiency

Diagnosis: How Simple is my Organization?

1. We favour working product over comprehensive documentation
2. We favour customer collaboration over contract negotiation
3. We favour individual collaboration over comprehensive documentation
4. We decentralize decision making as much as we should
5. Everyone is measured and rewarded on how well they take up ownership of their business objectives
6. We reduce meetings, committees, processes as much as necessary
7. We cut down on silos as much as possible
8. We simplify the bureaucracy by limiting the number of our processes to a handful of key and effective ones.
9. “Your success is my success” is a shared, measured and rewarded behaviour

Diagnosis: How Complex is my Organization?

1. We capture data and generate insights about the evolution in our environment, within and beyond our industry boundaries
2. We use digital technologies to empower our collaborators to make faster and relevant decisions
3. We use analytics to simplify our internal functioning
4. We give our collaborators constant opportunities for learning
5. We know when and where it makes sense to apply agile processes
6. We remove hierarchical layers when it makes sense
7. We simplify our bureaucracy when it makes sense
8. Everyone gives regular feedback to each other and also absorbs it
9. Learning from retrospectives is an important process

Tailor your own approach to agility, one that reflects your own circumstances

Based on your findings from the Assessment Test, the next question to consider is:

• Which form of agility suits your needs?
• What type of architecture will be conducive to growing agility in your organization?

With an understanding of the underlying principles of organizational agility, executives can figure out both the particular form of organizational architecture and the tools that will best serve them in creating a more agile organization.

References:

1 de Smet, A, Lurie, M and St. George, A (2018) Leading agile transformation: The new capabilities leaders need to build 21st-century organizations, McKinsey & Company, 01 October. Available from: https://www.mckinsey.com/business-functions/organization/our-insights/leading-agile-transformation-the-newcapabilities-leaders-need-to-build-21st-century-organizations# [Accessed 12 May 2020]

This adapted extract from Resetting Management: Thrive with Agility in the Age of Uncertainty by Stéphane J. G. Girod and Martin Králik © 2021 is reproduced with permission from Kogan Page Ltd.