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Designing Organisation Agility

To go beyond the surface-level of this century’s buzziest word and design a truly agile organisation, enterprises need to understand the intricacies of agility. And beyond that, they need to examine whether an agile approach is likely to benefit their organisation at all.

01 June 2021 • 4 min read

Photograph: Chanan Greenblatt/Unsplash

“Agility” is a word every leader has heard, most likely uses, and certainly covets as an organisational capability. It is becoming one of the most used words in business and organisation design and is well on the way to becoming a meaningless buzzword, surrounded by consultants’ hype about the need for every organisation to become agile.

Agility may be jargon, it’s easy to knock the movement, but its intent is worth looking at. The model is meant to act in the spirit of the 2001 12-principled Agile Manifesto, originally devised for a better way of developing software (if you are not familiar with the Manifesto, take a look). From the Manifesto arose the agile methodology for software development.

The meaninglessness arises on two counts. First, there’s a tendency to take aspects of this agile methodology and its Manifesto principles and apply them in a wide range of situations. This is done in the hope that by applying just the selected principles the organisation will become more adaptable and responsive to the operating context (i.e. more agile). However, as a McKinsey podcast pointed out: “Agile is not a menu of things from which you can cherry-pick… you need to think of them in a holistic way. You can’t just cherry-pick a few of them; it’s a system.” Running daily stand-ups – part of the agile methodology – is not going to develop organisational agility.

The Covid-19 pandemic was a proving ground for many organisations for their operational agility. Life sciences organisations are forced to re-examine supply chains and urgently develop measures to strengthen resiliency.

Second, meaninglessness arises because too little time and reflective thought are put into defining what agility is and then what it looks like, in day-to-day practice, for a specific organisation.

What is agility?

In terms of what it is, agility usually takes one of three forms. Strategic agility involves the capacity to recognise and seize an opportunity. Perhaps rapidly closing down or scaling up part of the business, jumping into a new market or making a large-scale investment. A current example of strategic agility is Microsoft’s bid for Nuance, a speech recognition specialist focused on healthcare. It looks alien to Microsoft’s core business, but Nuance provides an infrastructure  that Microsoft can exploit, including AI expertise, Interactive Voice Response, virtual assistants, and digital and biometric solutions.

Operational agility involves the ability to capitalise on opportunities to make ongoing and rapid improvement to current operations and processes. The Covid-19 pandemic was a proving ground for many organisations for their operational agility. Life sciences organisations are an example of a sector forced to re-examine supply chains. They are urgently developing measures to strengthen resiliency, ensure local capabilities and capacity, and manage allocations of vital products. The Serum Institute of India is one of several vaccine manufacturers currently experiencing supply chain issues – both materials shortages and issues related to geo-politics.

Portfolio agility is the capacity to shift resources from one part of the business to another. A swift reallocation of resources in response to competitive or other pressures can include cash reallocation, people reallocation and managerial focus. Some car manufacturers are busy demonstrating portfolio agility. For example, Volvo is looking at direct selling to customers (rather than through dealers), and Audi is experimenting with subscription services to move customers from ownership to “usership”.

These three forms of agility are not mutually exclusive, but knowing and agreeing on what the focus is for the desired agility, and where designing for agility will bring competitive advantage, is critical.

What does agility look like?

In terms of what it looks like in day-to-day practice, it tends to reflect:

  • Self-organisation: Teams autonomously controlling their work and continuously reviewing their interactions to optimise flexibility, creativity and productivity.

  • Flat structures: Driving for an organisation that is flat and horizontal with lateral flows, rather than traditionally hierarchical structures.

  • Obvious cross-organisation collaboration: Where everyone understands decisions and choices made and, ideally, has a voice in contributing to them.

  • Nurtured culture: Where support, challenge, trust and respect go hand-in-hand and learning from experience (good and bad) is valued and communicated.

The point to bear in mind is that what reflects as agility in one organisation is not the same as in another. Agility is not a recipe. Without leadership consensus on what agility is and looks like for the specific organisation, it is not possible to design agility.

The truth about going agile

If an organisational leadership team does want to design the organisation to be “agile” then there are certain considerations to bear in mind. Already mentioned are “what is agility?” and “what does it look like?” That step gives scope for discussion on the scale of the design. For example, if the organisation has many management layers and is command-and-control in its approach, how likely and feasible is it to become flatter with more autonomous employees?

Sadly, it is unlikely as factors related to power, status, inertia and an unspoken desire to maintain the status quo mean the path to flattening an organisation is complex: concepts of path dependence come into play.

Path dependence means that the way the organisation was originally established – its purpose, function, operational attributes – limits its design and change possibilities for current and future action. Put simply, established banks can never develop enough agility to compete on the same field with new challenger banks, Volvo may never be agile enough to compete with Tesla, TV stations will not be able to compete with streaming services, and so on.

Factors related to power, status, inertia and an unspoken desire to maintain the status quo mean the path to flattening an organisation is complex.

That does not mean to say that organisations cannot become more agile. It is not a hopeless task. Corporate Rebels suggest five progressive steps that could be taken:

  1. Invert the pyramid

  2. Introduce autonomous teams

  3. Extend autonomous teams across the whole organisation

  4. Organise the autonomous teams into networks

  5. Encourage the networks to become an ecosystem of companies.

One organisation, Haier, has progressed through all five steps. It has taken them over 30 years, and throughout, the same CEO, Zhang Ruimin, has been leading the journey.

Very few organisations are like Haier. Be aware, there are no silver bullets or quick routes to achieving agility. It takes time and sensitivity, and it requires critical thinking, assumptions testing, identifying what is possible, agreeing where becoming more agile would add real value and proceeding with awareness. Most importantly, it also requires not succumbing to all the hype around the word “agility”. In my experience, the critical first step is to agree what agility is and would look like in practice for your organisation.

Operational agility Organisational design Shaping culture Strategy

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