Organizational agility is one of the primary ingredients to success for many organizations.
Ralph-Christian Ohr describes organizational agility as, “An organization’s ability to renew itself, adapt and succeed in a changing, and often highly dynamic and unpredictable, environment.” This is only one of many definitions, but all of them point to the same key ideas: speed, stability, flexibility, adaptation and innovation. It’s finding the balance among these concepts that presents a challenge for companies.
Those that persevere will reap the rewards for their persistence. This article will explore how organizations can build this agility into their processes and claim the competitive advantages it provides.
Understanding Organizational Agility
As Paul Hobcraft explains, organizational agility is much more than simply being responsive. He describes it as an ability to constantly adjust and be versatile, always changing to meet rapidly altering conditions. The idea is to maintain organizational stability while building agile, dynamic capabilities around that stability.
Braden Kelley explores the specific relationship between flexibility and fixedness, and how they combine to create an agile organization in his “Organizational Agility Framework.” In his article, he asks two questions:
- “Where can we stretch our existing resources and the organization itself to do new things in new ways?”
- “What should we keep the same to enable faster change inside the organization and faster adoption by customers?”
The danger lies in going too far in either direction. If you have too much flexibility, you compromise on speed because it will take too long to make decisions and effect change. However, if you have too much fixedness, you compromise on adaptation. To be agile, organizations need to find the balance between these two concepts.
Characteristics of Agile Companies
When analyzing the adaptability of their companies, how do managers know what they are looking for? What are some real benchmarks of an agile organization. Based on a survey analysis of more than 1,000 companies, McKinsey & Company have formulated 10 management practices that distinguish the most agile companies from the least:
- Role clarity
- Top-down innovation
- Capturing external ideas
- Process-based capabilities
- Operationally disciplined
- Internally competitive
- Meaningful values
- Knowledge sharing
- Inspirational leaders
- People performance-review
When reviewing these practices, you can see that they boil down to two essential elements for creating an agile environment: people and culture. By bringing together the right teams of people and by creating a culture of adaptation and innovation, you are building the foundation for an agile organization.
It All Begins With People
The biggest asset to any business is its people. From the top down, if an organization doesn’t have the right people with the right skills working, its chances of longevity diminish. Not only must employees be skilled in their fields, but they must share like-minded ideas and visions for a company.
To create an agile organization, it may be that you have to change mindsets to get everyone to be open to change. Carol Dweck establishes two types of mindsets: a fixed mindset and a growth mindset. Fixed mindset people, or those who say “This is how we’ve always done it,” are one of the biggest hurdles for organizations to overcome when creating an agile organization. These people hold back on progress and change because they are too comfortable with current processes.
For companies to evolve into agile organizations, they must fill positions with people of a growth mindset, those who support the curiosity and learning that leads to innovation and accomplishments. Growth-minded leaders can be anyone within the organization willing to open their minds to change. Dweck notes that people with a growth mindset are characterized by:
- Constantly seeking improvement
- Surrounding themselves with able and talented people
- Admitting mistakes and looking to learn from them
- Asking what skills they and their teams will need in the future
The companies that are most successful are those that have growth-minded leaders and employees throughout the organization, not just in upper-level management positions.
Even with the right people, however, you must make the efforts to create a culture that is conducive to organizational agility. That culture needs to be both adaptive and innovative.
Creating An Agile Culture
Change is not something that only happens every and now then. Change is constant, and it is disruptive. Organizations must be prepared at all times for this disruption in order to survive, and agile organizations are the best prepared for adapting to change.
One of the core tenets of any business is customer satisfaction. This is especially true for agile companies. Customers are always looking for a way to outdo the competition, and they look to their product and service providers to help them achieve that competitive advantage. Agile corporations are always looking ahead, anticipating their customers’ needs and adapting to them. They move quickly to deliver solutions to clients.
To create an agile culture, organizations must embrace the challenge of change as an opportunity to continuously improve. Part of improvement is failure, and agile organizations accept that failure is a part of learning and progress. As Sarah Greesonbach defines it, failure is “simply a temporary state occupied by an employee during the process of arriving at a viable solution.” Agile companies don’t focus on the failure; they focus on the lessons learned for forward growth from those failures.
Businesses must be able to adapt to a changing environment quickly and repeatedly. Companies must evolve and learn how to do new things to keep up with change. Adaptability isn’t a single-project goal; it is the end goal for all processes and projects for an organization. Many times, that adaptability is best achieved through innovation.
Dynamic Project Portfolio Management Can Help
As Catherine Killen points out, organizational agility can be enhanced by dynamic project portfolio management (PPM). A dynamic PPM capability enables organizations to be agile by “facilitating adjustments to the project portfolio and reallocating resources in response to the changes in the environment.”
Dynamic or agile project-based companies that use PPM have a competitive advantage because they are able to make holistic changes and adapt to environmental changes. The ability to quickly allocate resources to meet changing needs is one of the hallmarks of agile organizations, and dynamic PPM can help organizations achieve an optimum level of agility.
True Agility Cannot Exist Without Innovation
As an article on Recipes for IT notes, “Companies that foster a culture of ingenuity, curiosity, and experimentation can accelerate innovation faster than companies that don’t.” This means they can bring new products and services to market faster than organizations that aren’t focused on innovation. Organizations must seize this competitive advantage, then, by fostering an innovative culture.
Agile companies encourage their employees to step out of their comfort zones and experiment. These experiments are the foundation for innovation. Paul Sloane recommends these tips for increasing your organization’s innovative agility:
- Identify a target number of new initiatives you want to try over the course of a year.
- Ask all of your publics for ideas to improve your product or service.
- Host regular brainstorms that focus on outcomes relating to innovation.
- Be willing to spend money for prototypes and experiments.
- Give employees breathing room for innovation — empower them to try new things.
- Celebrate any success. Don’t punish failure, either; punish inaction.
By fostering an organizational culture that encourages innovation, companies set themselves up for long-term success.
Achieving Agility is an Ongoing Process
Quick response to change is the key to building adaptive and innovative culture in a company. Companies must have people with growth mindsets on board who are willing to flex the innovative power of their people while maintaining the stability of the organization. Companies that achieve agility through their people and culture are setting themselves up for long-term success and survival in ever-changing business environments.
But, as change is never-ending, so must the organization’s commitment to agility. The only way to succeed is to grow and adapt to outside influencers and innovate to stay relevant.