Building Organisational Agility

For most organisations, change is the norm: whether it is the integration of the latest acquisition; replacing legacy IT systems with modern integrated business platforms; outsourcing to an offshore provider or delivering day-to-day business improvements. As Heraclitus the Greek philosopher born in 544BC once said. “Nothing endures but change”.

Some organisations seem better equipped to change than others. They are able to evolve with the times and change is no big deal, just a part of doing business. Unfortunately these organisations tend to be the exception rather than the norm. If we choose a word to describe these organisations a good one would be agile. The Oxford dictionary defines agile as being able to move quickly and easily, or being able to think and understand quickly. But agility is a relative term; organisations can become more agile or less agile depending upon their circumstances and how they are managed and led. Agility can be created or destroyed by the choices and actions that leaders take.

If being more agile is a target organisational outcome, then what can leaders do to make their organisations more agile? What are the barriers to being agile and what are the enablers?

A good place to begin is to look at start-up companies. Admittedly they tend to be small and not constrained by the legacies that larger organisations have inherited, but they frequently exhibit the characteristics of agility. Decisions tend to be made quickly, resources are mobilised rapidly and technology doesn’t get in the way. What is more, there is a feeling that everyone shares a common purpose and that being innovative is the norm. The reality is that while much can be learned from start-ups, their practices cannot easily be transferred to larger more established organisations. For one good reason: established organisations have put in place structures, processes and governance that aim to control and optimise. The downside is that the very same structures, processes and governance can also inhibit agility.

Agile principles over practices
If the practices seen in agile start-up companies cannot be transferred directly to established less agile organisations, could the underlying organisational principles upon which the agile practices are based be transferred? I believe yes, as the principles of agility are universally applicable and it is the application of the agile principles in a specific context (ie within a specific organisation) that establishes the agile practices. As the context varies between organisations then the agile practices will inevitably differ between organisations. It is for this reason that it is always dangerous to advocate best practices over best principles as the practices are context specific.

Agile principles
Operating principles are conscious choices made by leaders that define how they would like their organisation to operate, and for each principle there is an equally valid alternative choice. Agile principles are simply those operating principles that focus on making an organisation more agile.

For example, an agile principle could be ‘each business process is defined in terms of outcomes of value delivered to the customer’, as opposed to ‘each business process is defined as a set of related tasks each with individual performance targets’. Both operating principles are valid but in our judgement the former leads to greater agility as the focus is on the customer, and as the needs of the customer change so will the process. The alternative principle is more internally focused and gives greater emphasis to process optimisation and control.

Another principle could be ‘whenever possible source all IT applications from the cloud rather than build and maintain our own’, as opposed to ‘we specify, design, build and maintain all our IT systems’. Again both operating principles are equally valid choices. The question is which operating principle is likely to lead to greater agility for the organisation – in our opinion the former.

Another example could be ‘It is safe to raise issues and trust that they will be acted upon’, as opposed to ‘don’t ever raise an issue and keep your head down’. Obviously no management team would choose the latter principle but it could easily become reality through default. Many operating principles that exist in organisations today were never declared by management, but emerged over time. They are not written down, but passed down from experienced employees to new starters.  They become the unwritten rules of how ‘things are done around here’.

The value of making the principles explicit is that they are visible for everyone to see and operate by.  In the absence of explicitly defined principles default ones, often based upon self interest and misperception, will become established.

Domains of organisational agility
Our recent research into agility in IT organisations showed that agile principles can be grouped into a relatively small number of domains and that it is possible to determine an organisation’s agility ‘footprint’ by assessing the extent to which the principles in each domain act as agile enablers or barriers. This thinking was then applied to the enterprise (as opposed to the IT organisation) and the six domains of agility described below were identified. There is no significance to their order.

  1. Technology base – the principles that define how the IT platforms, systems and infrastructure are managed. Often influenced by legacy systems developed over many years the installed technology base can inhibit agility from a ‘simply too difficult to change’ perspective. The principles of using modern package-based business platforms and sourcing services from the cloud go a long way to creating a more agile technology base.
  2. Processes and structure – the principles that define how work gets done and how resources are organised and located. Traditionally based upon functional silos the trend in recent years has been to organise around end-to-end processes and create ‘flatter’ organisations with fewer levels of hierarchy. Also in recent years new ways of organising resources have been established based upon competency centres that provide shared services to other business units.
  3. Governance – the principles that guide how decisions get taken and who has what decision rights, and the resultant accountabilities. Governance principles can either streamline decision-making or create a bureaucratic process that can take forever to reach a conclusion. Explicitly defined governance principles can also bring clarity to what can often be an unclear and confusing process.
  4. Mindset – the principle that defines how leaders would like their people to think and behave. For example leaders wanting to build an agile organisation might want their people to be enquiring, challenging, willing to learn and take personal risk. It is not suggested that making principles explicit can change mindsets but they can help people decide whether they are in the right organisation and influence recruitment policy and selection.
  5. Reward, recognition and progression – the principles that define how people are measured and rewarded. They also determine how people perceive personal success and influence their attitude to change. We know there is no point in rewarding one type of behaviour and expecting another, but all too often the reward system is not aligned with the goals of the enterprise. The words of the late Peter Drucker are as true today as ever; “people do what is inspected, not expected”.
  6. External partners – the principles that define how you work and collaborate with parties that are outside your organisational boundary. Traditionally relationships with external partners have been based upon a customer-supplier model, but in recent years the traditional organisational boundaries have blurred and moved more to virtual organisations where people employed by different organisations work and collaborate toward a common goal.

Within each of the agile domains defined above there would typically be between six to eight agile principles that could guide an organisation to becoming more agile. While most agile principles can be universally applied to all organisations, there is merit in defining ones that are most relevant to your organisation and describing them in words that can be easily understood.

Steps to becoming agile
If becoming agile is your organisational goal then below are four steps to follow:

  1. Establish the case for being agile. Define what the lack of agility means in business terms. For example, if the lack of agility means lost market share due to an inability to respond to market changes, define it in those terms. The case for becoming more agile can be made more compelling by defining the consequences of not becoming agile.
  2. Ask a number of people across your organisation for their views on:
    • How important they see each of the six agile domains described above, where 0= not important and 4=critically important.
    • The extent to which each agile domain is currently enabling or inhibiting agility in your organisation today, where -2= significantly inhibits agility and +2= significantly enables agility.This simple analysis, the results of which are illustrated in the spider diagram on the right, helps identify where priority should be given. Should the results show no alignment then it suggests more education on organisational agility is needed before further action is taken, as action without understanding often leads to confusion.(Note: If you would like to use our online assessment tool don’t hesitate to contact me.)
  3. Define between four and six agile principles for the agile domains identified in step 2 as acting as the greatest barriers to agility. While it has been previously argued that agile principles transcend organisations and could therefore be universally defined, there is merit in defining principles that are meaningful to your organisation in a language that is easily understood.
  4. For each of the agile principles defined in step 3, assess their importance and the extent to which they are enabling or inhibiting agility. This can be done in exactly the same way as described in step 2. The result of this second stage assessment will identify which agile principles need the most attention.

We have found that the beauty of this approach is that it is recursive – in that it can be applied to an enterprise, business division or department.

Our recent research has convinced us that agility can be developed as an organisational capability but it requires intent, action and practice.

I welcome your thoughts.

David Trafford

Formicio Insight Article: Building Organisational Agility

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