Home > Agile, Business, Leadership > Bringing agility to the organization

Bringing agility to the organization

These days, which some even call post agile in software development, McKinsey Quarterly publishes a report by Don Sull: Competing through organizational agility (you need to register to be able to read the complete report.

I believe it’s an interesting article. Now as agile almost is a common boardroom term, I think we must clarify what we mean with agile. Also, it points to the whole organization. It is not enough just to have the software developers embracing agile values if business is as usual for the rest of the crew.

Sull points to studies showing that between 1970 and 1990, firm level volatility has at least doubled and firms that lacks agility perish or are at least not as successful as agile companies.

Sull has also identified three distinct types of agility and what is interesting is that his study shows that many companies relies on only one type of agility; they feel agile since they’ve embraced one of the forms. I will here only list the types and point to the article for examples and more details.

Strategic agility is the possibility to act on those rare chances to create significant value. This require a combination of patience and boldness. This is not to be mistaken for recklessness. Successful strategic agilists systematically minimize the downside risks. Sull also stresses the perseverance; one key is staying in the game until the big chance emerges. This often require cash, size and a powerful patron.

Portfolio agility is the ability to shift resources from less promising to more promising. Many managers in organizations that lack portfolio agility, according to Sull’s study, rarely recommend ending projects that might damage their reputation or risk their and their subordinates work. Uniform set of objectives (for example fixed gross-margin percentage) can also decrease portfolio agility. As a contrast, embracing new blood in the management increases portfolio agility since new managers are not as likely to protect established businesses they themselves has built. Sull’s study shows that many companies rely on disciplined processes for evaluating individual business units lead to portfolio  agility, but this is incorrect. This might lead to the data being available, but the decisions might be hard to take anyway. When emotions and politics rather than logic and data controls these decisions, portfolio agility can be maintained. Its is especially important for managers to kill their own darlings, should they prove non promising. Portfolio agile companies uses crisis and changes to renew processes.

Operational agility is when an organization can exploit revenue-enchancing and cost-cutting opportunities in its core business in a fast, effective and constant way. According to Sull, there are many ways to increase operational agility, but he points to two: having systems to spot these occasions and having processes to translate priorities into focused actions.

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Categories: Agile, Business, Leadership
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