The Five Trademarks of Agile Organizations
Is your company agile?
The agile framework is revolutionizing how departments and entire organizations are run in today’s highly dynamic business environment, and if you want your business to remain competitive, you should also start thinking about making your organization agile.
With 20% of organizations around the United States such as Google, IBM, and Amazon already implementing some form of agile, and 65% of non-agile marketers already considering the shift, it might be time for you to do the same.
Companies that have adopted agile are already seeing the benefits of the agile approach. 67% of agile companies report that they have seen in an increase in revenue and profits after adopting agile practices.
And according to a research report by Korn Ferry titled The Agile Enterprise, companies with agile executives are reporting 25% higher profit margins compared to companies that are not agile.
So, how can you take advantage of agile so that you can also reap these benefits?
In this article, we are going to take a look at the five trademarks that characterize all successful agile organizations.
Before we get to that, however, let’s take a minute to understand what is necessitating the shift to agile.
A SHIFT FROM THE TRADITIONAL PARADIGM
The current business environment is rapidly and constantly changing, and organizations can no longer survive and succeed with the application of outdated methodologies.
Agile provides the dynamic and stable framework for organizations to prosper in the current business environment.
Specialized and hierarchical organizations worked in the past for many companies and enabled them to outperform their rivals, amass the greatest talents and dominate their markets. A good example is the Ford Motor Company.
By applying the specialized and hierarchical approach, the Ford Motor Company was able to operate with the efficiency of a machine, and in so doing, it was able to transform itself from a small automobile company to a juggernaut controlling a huge portion of the automobile market share.
Today, the internet revolution – disruptive innovation and digitization – is currently transforming every sector. Information is becoming more democratized and competition is on the rise.
What worked in the past is no longer applicable today, calling for new ways of doing things.
Some of the factors contributing to the need for a new approach include:
- The environment is rapidly changing for both customers and other key stakeholder’s, which calls for restructuring and collaboration in order to quickly respond to these rapidly changing priorities.
- The constant launch of disruptive innovations is displacing and/or commoditizing established businesses and replacing them with automation or new advancements such as robotics, artificial intelligence, the internet of things, and so on.
- The increase in transparency, volume and dissemination of information (as a result of information democratization and digitization) necessitates multidirectional interaction, and engagement with partners, colleagues and customers.
- With the boom in creative knowledge, it has become even harder to attract and retain the best talent. In order for organizations to do this, there has been a need to come up with new value propositions, leading to a new war for talent among organizations.
With these factors shaping the new environment, it has not been smooth sailing for organizations that have held on to the same specialized and hierarchical models that worked in the past.
Of the non-financial organizations that were part of the S&P 500 in 1983, only 10% were still part of the S&P 500 three decades later.
This is more than enough evidence that holding onto the outdated approaches is a recipe for disaster.
Ask Kodak, who ended up in bankruptcy because they were too slow in adapting to changes in their industry.
The key, therefore, is to adopt the agile approach which makes it easier to deal with the changes in the business environment.
At the same time, it is good to note that going agile is not a walk in the park. Organizations that have adopted agile methodologies have reported some challenges and difficulties with implementing agile within the organization.
Some reported insufficient knowledge and experience with agile methodology.
Others said that they did not know how to fuse the methodology with the broader organizational context.
Still others complained of a cultural clash of agile with their organizations.
To make sure that your organization is headed in the right direction, let’s now take a look at the five trademarks that characterize successful agile organizations.
Keeping these trademarks in mind will ease your transformation into an agile organization that will be better placed to deal with changes and disruptions.
THE FIVE TRADEMARKS OF AGILE ORGANIZATIONS
The five trademarks of agile marketing revolve around strategy, structure, process, people and technology.
While every component is separate, the success of an organization’s adoption of agile is dependent on a combination of all five.
1. A Shared Mission and Vision Within the Organization
The traditional model is focused on the belief that the shareholders are the most important people within the organization, and therefore, in terms of scarcity, these companies focus only on delivering value to the shareholders, often at the expense of customers, suppliers, competitors, employees, and other stakeholders.
Agile organizations, on the other hand, have a different approach in regards to how they create value and who they do it for.
Rather than treat scarcity as a threat, they see it as an opportunity to create value for all stakeholders – and especially the customers – and not just the shareholders.
In addition, they make all their stakeholders part of the value creation process.
Agile organizations are highly customer centric, seeking to satisfactorily meet diverse customer needs during all stages of the customer life cycle.
This focus on the customer is usually included as part of the organization’s shared mission and vision.
This shared mission and vision guides all the organization’s undertakings, and combined with a flexible approach to value creation, it allows these organizations to quickly identify and take advantage of opportunities.
Since the main focus of such organization is on its customers, the organization is always on the lookout for changes in customer needs and across the entire business environment, as well as new opportunities to serve the customers and other stakeholders better.
This is usually done by employing various tools of collecting stakeholder input and feedback and gathering customer insights, such as forums, product reviews, customer journey maps, and so on.
Once changes and opportunities have been identified, the organization quickly responds to these changes to ensure that the customer and other stakeholders are satisfied at all times.
Resources can be quickly and flexibly allocated to drive campaigns that will help the organization in its mission of providing maximum value for the customers.
The campaigns are also regularly monitored to determine whether they are working and should therefore be ramped up, or whether they need to be modified or shut down altogether.
2. Network of Empowered Teams
A common view of the traditional model is that people need to be told what to do as autonomy was thought to produce self-centeredness.
In the agile model, as long as task are delegated effectively, employees will care about each other and work together to deliver excellent results.
Agile teams retain the top-level design but replace the bureaucracy with a scalable and flexible network. Networks are an efficient organizational method as they combine autonomy with teamwork.
Creating such empowered teams calls for knowledge in human networks, specifically how to build and structure them as well as nurturing and sustaining them.
The agile teams are a skilled and empowered team that have high alignment standard, expertise, collaboration and transparency.
A stable environment is necessary to ensure that the teams operate effectively in a conducive environment.
Several elements are required to create such teams. These include:
- Flat and clear designs that support and reflect the organization’s value creation. The teams can be designed into focused groups who have a similar mission. These can vary in size, with some reaching up to 150 people. This, according to Researcher Robin Dunbar is the maximum number of people with whom a person can maintain a close relationship with. Beyond this number, the relationships between the group members will become stretched and they might not be able to effectively work together.
- Roles should be clearly spelled out. This ensures accountability and can additionally ensure that people can put all their focus into working and completing deadlines. With clearly defined roles, there will be less time wastage as people wait for manager approvals or role clarifications. The ideal agile team also separates individuals from their roles, which means that people can share roles or hold multiple roles if need be.
- Decision making should be pushed as close to the relevant as possible teams. This will not only empower the teams and speed up the decision making process, but will also free up senior leaders and allow them to pay greater attention to providing guidance and overseeing the overall performance of the team.
- Functions should be transformed into networks of practice and knowledge which are meant to foster learning, talents and skills development and the sharing of experience and information. This provides continuity and stability as people will be rotating across different teams.
- The partnership and ecosystem within the team should not be limited to within the organization. Instead, the team should also foster relationships with an external network of other stakeholders, including customers, suppliers, industry regulators, academics, and other partners. This gives the team access to new ideas, insights and feedback that will help them develop better products and services, as well as a wide pool from which the team can attract the best talents.
- The physical environment in which the team works, as well as the virtual environments where the team interacts and collaborates should be designed to empower the members to perform their jobs as effectively as possible by promoting and enhancing communication, transparency, goodwill, collaboration and serendipity.
Companies that have successfully implemented the agile framework prescribe three types of fit-for-purpose performance cells that form the building blocks of an agile team:
- Cross functional teams: These comprise members from different levels of the organization and with different skills. They work in a collaborative manner and bring together their different skills to work on specific projects, such as product development or launch. Such teams are usually dissolved after the project is completed. Such teams are typically led by a project owner to provide guidance on project vision and prioritization of work, though it is up to the team to define the best way to deliver.
- Self-managing teams: These teams are more stable in nature and work together on continuous, repetitive tasks, such as sales, customer service, and so on. They are given goals and then coordinate within themselves on how to prioritize their work and focus their efforts in order to achieve these goals. Their performance is measured against predetermined KPIs.
- Flow-to-work pools: These are teams that are assigned different tasks at different times depending on the tasks with the highest priority. In most cases, members of these teams work individually rather than as a team. These teams usually handle corporate services, such as legal, HR, and so on.
While these are the main building blocks of agile teams, other models continue to emerge as agile companies experiment with the design of agile teams and adjust to see which one best serves their business design.
3. Fast Decision and Learning Cycles
The traditional model specified a top-down kind of management. The senior and most experienced people defined the direction, detailed the plans on how to arrive there and mitigated risks as they went forward.
Agile companies, on the other hand, are cognizant of the rapidly evolving market and the uncertainty of the future.
They understand that success and risk mitigation come through embracing this environment and constantly trying out new and productive methods.
Agile companies are fast in the way they act and behave.
Speed is closely aligned with their creative process and achievement.
This kind of integration and iteration forms the building blocks of innovation and the agile framework.
Rather than focusing on long term plans formulated by the top management, they focus on quickly deploying initiatives, monitoring their performance, collecting feedback and making rapid iterations to improve the initiatives based on the feedback.
These speedy decision cycles have ripple effects across departments and functions. Agile teams quickly reimagine project management models that deviate from waterfall approaches.
They use these fast cycles to enhance strategic thinking, implementation and execution at the business level.
For instance, some companies are shifting from annual planning, review and budgeting to quarterly cycles and other dynamic management designs.
One global bank abandoned its traditional waterfall approach and instead opted for a process based on minimal viable products (MVPs).
They moved from less than five release cycles every year to a thousand plus product change cycles in a month.
Following these changes, the bank saw a 30% increase in product development, deployment and maintenance.
The rapid cycle model is characterized by:
- Rapid experimentation and iteration, where the team first works on a single minimal viable product within short periods of time referred to as sprints, which usually last about a week or two. In between the sprints, the team seeks feedback on the MVP, plans and sets new goals, and then holds another sprint to make iterations and improvements to the existing MVP. This approach reduces the work that needs to be done and saves time.
- Leveraging of standardized ways of working to promote communication and interaction among team members. This is done through the use of common language, meeting formats, process, and online platforms during the sprints. The aim of this is to foster input, creativity, and rapid iteration.
- A performance-driven approach. All activities undertaken by agile organizations are measured based on their impact on the business. They are constantly looking for new ways of doing things that will help improve performance.
- Information transparency. Rapid cycles necessitate transparency so that members can easily and quickly receive and share information with other members. Sharing information keeps everyone in the know, and makes it easier for different members to work together, discuss and find opportunities to improve the product. Transparency also ensures that all members of the team are given opportunities to give their suggestions and ideas.
- Continuous learning. Agile organizations must make constant learning a part of their culture. In teams, members should be able to easily learn from each other’s mistakes, achievements and knowledge, and build on them to become better. Learning and adjustments become part of their lived experiences which enable them to deliver quickly.
- A critical feature of these rapid cycle is the emphasis on fast, efficient and ongoing decision making. Agile organization believe that a bird in hand is worth two in the bush. Rapid decision cycles encourage making decisions now, even if the outcome is not certain, rather than delaying the decision until you can be certain of the outcome. The idea here is to make small bets, test them and then quickly adjust them as needed based on the outcome. This leads to faster product development compared to having to wait until everything has been figured out.
4. A Dynamic People Model
While the traditional model views leaders as controllers who have to direct work and steer employees and determine what tasks they should be doing at what time, agile leaders empower their employees with confidence in their autonomy and organizational goal alignment.
The people are at the center of the organizational culture of agile companies, and therefore the culture is designed to promote employee engagement and empowerment.
This in turn encourages collaboration and effectiveness in creating value.
Agile organizations are based on transformational leadership that is committed to developing its stakeholders and building a community whose commitment to the culture and goals are unquestionable.
These organizations are also committed to the skill building and entrepreneurial development in their employees.
Rather than being directors and controllers, leaders in agile organizations are more of servant leaders whose focus is developing and empowering their teams. They act as coaches who train, teach and encourage their teams.
They are visionaries who share their ambitions with their teams and give them the push to achieve the team’s goals. They boost their team’s morale and help uncover their employees’ hidden talents and skills. They have complete trust the competence of their employees.
This dynamic people model results in employees developing an entrepreneurial drive. They are confident in their abilities and the autonomy vested on them, and are motivated to own the team goals, to make choices and to improve their skills.
They also have the freedom to find greener pastures and spread their wings.
Such conditions create a conducive environment for employees to thrive and become passionate about their work, and also helps attract the best talent.
Apart from talent development, agile organizations also contribute to skills development through rotation and different experiences.
Rotation and role mobility allows the employees to take on varied roles, which in turn gives them a wide range of skills and experience as they face new challenges, make mistakes, achieve and learn. Agile organizations report this as an effective way of reducing employee churn.
5. Integrated Technology
In the past, technology was seen as a supporting asset dedicated to serving specific parts of the organization. Currently, technology is at the core of every sector and plays a huge role in unlocking opportunities, value and success.
In order for organizations to embrace agile, they must rethink how technology supports their processes and products, as well as how it can make them faster and more flexible.
The goal for companies embracing agile should be to use technology to meet changing customer demands and preferences and make their products and services more competitive.
This means evolving their operational processes and making their products and services digital or digital-enabled.
To come up with and implement new technologies that support their processes and products, agile organizations create cross-functional teams that are tasked with designing, building, testing, deploying and maintaining next-gen technologies, using tools like virtual collaboration, crowd sourcing and hackathons to gather insights on customer preferences and then quickly coming up with solutions.
This, couple with rapid cycles, allows improved iterations of the solutions to be continuously released to the market.
In a highly dynamic and rapidly evolving business environment, the only way for businesses to survive and thrive is by being agile.
While organizations cannot be certain what the future holds, agile organizations have the capability to adjust, adapt and respond to any unexpected changes in the market and therefore remain competitive.
All successfully agile organizations exhibit the five trademarks discussed above, which focus on strategy, structure, process, people, and technology.
The key to embracing agile is to start by applying these five trademarks to your organization.