The article was originally co-authored by Christian Mark Christensen.
Only 50 years ago, companies had a life expectancy of almost 40 years. Today, it is only 15 years1. It is not wrong to say that change is happening faster than ever before. The only constant we can predict is that customer behaviour and the underlying customer needs are changing rapidly, which means that organisations need to change as well. If they do not, they will become obsolete.
We must set up our organisations to manage the challenge of uncertainty and change, but how do we organise around something that is unexpected?
In this article, we will provide our view on Organisational Agility and an introduction on how to develop it.
During the last 10 years, the obvious answer to many companies has been “agile”. But when we look at how companies apply agility, we often experience that companies:
Instead of thinking about agile as a methodology to steer projects and as a way to act in them, we propose thinking about agile as a way to gather feedback. Faster.
Agile is a prerequisite for keeping up with constantly changing customer needs, and feedback is our way to handle them.
When we focus on feedback, we ensure that we are working on the right things in the right way. To make sure that we produce the right things, we work with feedback from our clients. If we produce something that does not work, we need to change it. And to ensure that we work in the right way, we work with feedback internally. If our collaboration is ineffective, we need to change it.
All parts of an organisation are integral and constant contributors to creating value for our clients in the short or long term. This means that all parts need constant focus on both the internal and external part of the feedback loop.
When the agile methodology is applied end-to-end across the entire value chain, and we are able to change direction rapidly and continuously, we call it Organisational Agility.
This means that for you as an organisation to reap the real benefits of agile, preventing you from becoming obsolete, you will have to adjust your operating model.
To develop Organisational Agility, we must set up the organisation to handle changing requirements. We create these capabilities in the organisation by developing a strong backbone to absorb constant changes and incrementally strengthen our ability to handle every change. Instead of being a victim of change, we set the organisation up to become stronger with every major feedback.
It probably sounds intriguing to have an organisation like that, but as you can probably guess, a transformation towards Organisational Agility is not something that you do overnight.
Developing Organisational Agility requires deep cross-functional expertise since such a large part of the organisation is affected by the change.
Based on years of experience from implementing new behaviour in organisations and from improving collaboration across different competences and functional areas, we have developed a model to structure the journey towards Organisational Agility.
The model consists of five activity tracks that will enable you to transform your organisation. It is developed based on Jay Galbraith’s star framework2, which we have modified to not only describe the future organisation but also to guide companies on how to identify future organisational requirements.
Strategy is the first element we want to address in an organisational transformation. In this track, we will create a strong foundation for the journey by involving and getting initial commitment from leaders. This is done by carefully identifying the agile transformation principles and clearly defining the impact we are setting out to achieve. We will also establish transformation governance, i.e. a team of people with strong insights into all parts of the organisation who can support and drive the various implementation tracks.
In the people and leadership track, we will work with people across three different layers. Firstly, this is where we communicate intensely with the organisation. To do this, we need to establish a high level of transparency regarding the transformation and involve the employees through e.g. sounding boards or hackathons. Secondly, since we are designing a new organisational setup, we also need to adjust the current roles and responsibilities. This means that we will transform the existing HR model into a new one with all the relevant elements, e.g. career progression, titles, roles and responsibilities etc. Finally, we will also develop new competences for the people in the organisation. This is done by a combination of role-specific training sessions and direct coaching in the teams.
In this track, getting involvement and commitment from leaders across the organisation is critical. Failing to get leaders on-board may slow down the transformation, and it will be harder to get commitment from the entire organisation if certain groups are downplaying or working against the new model.
Processes describe the way business units, departments, teams and people work together in the organisation. In this track, we will define a model for how to collaborate end-to-end across value streams, how to communicate priorities, how to allocate resources from a strategic level to team level and, finally, how to execute our day-to-day work in teams.
We will also develop processes that have a fixed heartbeat in decision-making and prioritisation. The overall “rhythm” must be standardised for all parts of the organisation. We develop processes to increase cross-organisational transparency of work in progress and strategic objectives and enable faster adaption to shifting priorities. Thus, the processes will enable stronger alignment and synchronisation throughout the organisation.
In the organisation track, we will design and implement a team structure that fits the processes and the defined strategy. Generally, teams should be organised as cross-functional units with end-to-end responsibility for a specific area. The teams are part of a larger value stream where they will report to the head of this area, e.g. the Head of Business Unit, and will be responsible for how to carry out work. However, the overall direction is set by the Head of Business Unit who makes sure that business unit activities are aligned with the overall organisational strategy.
Something that often receives less attention in organisational transformations is the surrounding systems or enablers. This involves the technical and IT infrastructure that we will implement to support the agile operating model and ensure cross-organisational transparency as well as the physical workspace that must allow for more co-location and creative/social spaces. These should be designed and developed to fit the organisational operating model (as described under processes) as well as the new culture that we want to implement (to be defined in the strategy and people and leadership sections).
If you want to reap the benefits of Organisational Agility, i.e. building an organisation that is better suited for dealing with uncertainty and has increased focus on creating customer value, you should be ready to address all of the above-mentioned tracks.
Starting this journey is not a simple task, but if you make sure to work thoroughly during the process with each of the above-mentioned areas, you will be one step closer to developing Organisational Agility.
We are a bunch of people dedicated to working with organisations enabling them to build organisational agility.
– between leading and lagging performance indicators.
Implement Consulting Group