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From Fragile To Agile – The Need To Be Nimble
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Agility – welcome to the it word on the block; the utopia every Fortune 500 company and everyone else is striving towards. The need to be agile is more important than ever. Pace of change has increased exponentially and is not slowing down. Data-driven decision making is yielding greater results and competition is at an all-time high. Since the inception of the internet economy, transaction costs have significantly decreased, increasing the sharing of information and data globally. This increased speed and nature of interactions has fueled complexity and created a fast cycle of turbulence.
There has been a paradigm shift on the business playground so to speak. Efficiency and effectiveness now play an equal role in securing organisations a seat on the road to success. This deftness, however, remains a product of the actions taken by those within the organisation. How then are soft skills harnessed and nurtured in order to stimulate the growth of measurable outputs? This concept will be explored further below, deciphering what agility actually means and how an agile culture can be cultivated as a newly adopted management model.
Essentially, the question at hand is how should companies run themselves? Organisations are the driving force behind innovation and the way our reality is defined. In a day and age where change management is key to leveraging ever-turbulent markets, there is however a misconception that speed is king. In the same breath, the red tape that accompanies bureaucracy stifles innovation in the face of economies of scale. Given these two metrics of speed and stability, companies have quickly been stereotyped into either the corporate or startup sphere. So if the race to the bottom has now been replaced by the battle of corporate vs startup, where does the notion of agility find home?
Speed represents the ability to be responsive and nimble. In today’s age this is a non-negotiable. The ability to go fast in lots of ways and in lots of dimensions is critical to managing change. It is also, however, essential to identify early on that speed does not have to translate into chaos and instability. How is this achieved you might be asking yourself? How does one nurture speed and response to market whilst establishing stability? With speed comes adaptability and with stability comes risk mitigation. Quite simply, velocity underpinned by structure can produce the stable environment required for operational agility.
Enter stability. Stability reverts back to the know-how, the area of influence where employees feel in control and empowered. Stability provides the comfort needed to make fast decisions and be confident in the course of action taken. In other words, stability removes any notion of doubt from the equation.
Various factors contribute toward a stable environment, the most notable thereof being the matrix structure. The matrix structure is representative of a holacracy where decision making and accountability is distributed throughout the company. Essential to the success of this social technology is a comprehensive understanding of the company’s mission, vision and values. In saying so, the best companies are those that know what they are and understand what they are not willing to do or sacrifice.
Given the certainty of the company vision within company culture, multi-level decision making can be adopted without the threat of counter-intuitive processes being established. An analogy I recently stumbled across depicting this concept (which is applicable to the tech industry) is that of a smartphone: the hardware represents stability and provides the unwavering structure required for operational security. Within the bounds of that structure, software is afforded the opportunity to progress and pivot at a speed tailored to the given application’s needs.
Applied to an organisation, if employees are afforded the ability to make decisions and take responsibility within defined parameters, the bottlenecks experienced in a bureaucracy can be negated. Suddenly there is accountability on multiple levels and increased decision making facilitating increased agility.
The structural stability referred to above, and required to facilitate operational agility, can be achieved through architecting three fundamental internal business processes – structure, governance and processes. Through establishing standardised business frameworks, processes and decision-making ground rules, fragmentation can be negated, with the aim of focusing energies on progress. Let’s take a quick look at how structure, governance and processes can aid toward establishing structural stability.
Organisational structure determines how resources are allocated. Structural security is essential to employees understanding their position in the company. By organising the business into primary units whilst remaining cognisant of removing silos within the company, these units will act as small teams responsible for performance management, rewards, decision-making authority and P&L accountability.
Governance facilitates the decision-making process. Having clear decision-making guidelines, governed by both business processes and structure can facilitate quick decision-making negating a potential bottleneck in action being taken. In this light, decision-makers need to remain committed to leadership efficiency.
Processes, on the other hand, determine how things get done.
Having standardised structures, processes and decision-making guidelines across the company removes unnecessary distractions from mundane tasks, allowing employees the freedom to continually improve on the service they are offering.
McKinsey & Company has conducted extensive research into the ability of an organisation to maintain a competitive advantage over a period of time. From the given studies the concept of the Organisational Health Index emerged. The Organisational Health Index is modelled on an organisation’s ability to realign, execute and renew itself faster than its competitors in order to sustain performance over time.
Four key behavioural archetypes were identified which govern the ability of an organisation to establish an agile framework, detailed below:
Within the realms of the behavioural archetypes, mutually enforcing leaps in both organisational health and progress are required in order to achieve the desired outcomes. Aspirations need to be followed by a comprehensive analysis of the environment, detailed planning, action and finally continual improvement on the preceding steps. Continual improvement cannot be realised when industry best practices are being adopted and blindly being followed. It is however no surprise how industry best practices came to the fore as a management model. With everyday being gameday in the business realm, fear of failure results in employees reverting back to the tried-and-tested. In order to attain a position as industry leader, innovation and as such operational agility is a necessity to accommodate an ever-changing playing field. The secret thus lies in the ability to manage failure within this operational agility. Failure needs to managed and experienced in small contained ways. Structural stability provides part of the framework within which to manage this failure.
Establishing behavioural norms to default to when faced with adversity is essential to cultivating an adaptive and innovative environment. What agility boils down to then is change management and how best to nurture an affinity to adopt change within company culture. The propensity to interact with change naturally can be manifested by establishing an equilibrium where speed and structure act in harmony. The stability which underpins key processes provides the freedom for bottom-up innovation. In so doing, an organisation can be created which is anti-fragile and able to resist external shocks to the environment. Speed is quite clearly not always the answer and whilst momentum is most certainly necessary to facilitate progress; good change, change that has an everlasting impact is established through finding the sweet spot of speed within stability. In the words of Steve Jobs: avoid getting caught up dogmatic structures, stay foolish and stay hungry.
