A framework for organizational agility

About two years ago I developed a model to look at agility holistically (Krapf 2017). Thereby, I have summarized various concepts and theories, which have often been (too) fragmentedly considered on the subject of agility. The aim of the model was to give an overview of all aspects of agility. This is not least because at that time agility was still strongly reduced to scrum.

From agile team to agile organization

In the meantime agile teams and Scrum projects have prevailed (or at least started) in many organizations. In addition, organizational concepts became more and more well-known. For many practitioners, the question of how agile teams can be scaled to an agile organization increasingly arises after initial experiences. To answer this question, I have updated my model with the three laws of agility of Denning (2018). These have also turned out to be the three essential ingredients in my research and projects, so that companies can move towards an agile organization.

Agilitätsframework 2.0 (EN).png

A framework for organizational agility (based on Krapf, 2017)

The law of the customer

 Today’s market is complex and global. Digital transformation is rapidly changing (technical) possibilities and customer needs. At the same time, interaction between organizations and customers through social media and C2C platforms (e.g. Uber, AirBnB, Amazon) is faster and more intensive than ever before. It is therefore hardly surprising that power has shifted from producer to customer in recent years. An elementary criterion for agile organizations is therefore to place the customer at the center of their activities. Only those who can satisfy dynamic customer needs over and over again will last in the long run. This replaces the decades-old doctrine of Milton Friedman. The focus is no longer on maximizing shareholder value, but on the customer. Or as Peter Drucker said in the 1950s: the purpose of a company is to create customers.

The law of the small team

Companies that want to survive in this environment must therefore be able to respond quickly and effectively to changing customer needs. This is best achieved when a small, self-organized team is responsible for a product or a specific customer experience. This allows the team to focus its efforts fully on the customer without bureaucracy and with an end-to-end perspective. Methods such as Scrum or Design Thinking help to ensure that self-organized does not mean chaotic. Because contrary to the still widespread opinion, self-organized does not mean that everyone does what he wants. Self-organisation is based on a clear distribution of roles and responsibilities. The comparison with an organism is often used because it is catchy and helpful: Self-organized teams function when each cell knows what its task is and can implement it autonomously without bureaucratic processes unnecessarily slowing down action.

The law of the network

However, an agile team does not yet make agile organizations. And many examples in practice show: if agility is not thought holistically and scaled organization-wide, then the effect remains marginal. The biggest challenge for companies is therefore to form an agile organization from the individual agile units. As Denning (2018) or McChrystal (2015) show, this is achieved by establishing a network structure in which the hierarchy is broken up and self-organized teams stand parallel to each other and are closely linked. Sociocracy 3.0 (Bockelbrink et al. 2017), Holocracy (Robertson 2016) or other circle structures (Oestereich und Schröder 2017) are exemplary concepts of how such a network could be structured. The common denominator is everywhere that the hierarchical pyramid, previously understood as universally valid, is transformed into a network consisting of different, self-organized teams. The traditional power structure is dissolved and the organization becomes like an organism consisting of different, smaller organisms. Or in other words: The network is a team of teams. Traditional hierarchies are replaced by competence and performance differentiation

A radical change that forces to rethink

In particular, the law of the network is a radical change in the way organisations are structured today. This is probably the main reason why so few companies manage to transform themselves into a „real“ agile organization. The change from the classical hierarchy to a self-organized network only works if the top management is ready to give up the power conferred by the hierarchy. Understandably, hardly any leader does this voluntarily. This comprehensible opportunism is then often rationalised by talking about the need for a CEO respective a leader who points the way.

This heroic idea of leaders who can change complex organizations as individuals is intensively criticized in science and practice (Rüegg-Stürm und Grand 2014). While classical management theorists still teach and think that organisations are controllable, the concept of the network makes it clear that it is too complex to be driven top-down. This notion frightens managers in particular who would like to keep the idea that their decision will become law. In networks, this unilateral impact from top to bottom is no longer envisaged. However, these organizations are so radically customer-focused that they are many times more agile than traditional companies where management teams try to transform decisions into organizational realities.

Design dimensions help as an inspiration to construct agility

These three laws of Denning (2018) represent the essential criteria of an agile organization. The dimensions I already outlined in the original model (Krapf, 2017) and the concepts mentioned in it subsequently help as inspiration for a more concrete, organization-specific design. The idea is not that all these approaches or aspects have to be implemented in the individual dimensions of the model in order to be agile. All three dimensions (structure & governance, values & competencies, practices & methods) should be addressed in order to promote organization-wide agility. However, use cases from other companies show that it is not very promising to apply a theory or solution directly without adaptation. For this reason, the approaches and aspects mentioned should only serve as inspiration for developing an organization-specific solution.

Agile culture is not a lever but a product

In my opinion, the dimension of culture deserves special mention. Culture is often (mis-)understood as a lever that can be (arbitrarily) changed analogously to the strategy or structure of a company. Having dealt intensively with culture and cultural development in my dissertation, I am convinced that culture is rather a product of the other three dimensions and cannot stand parallel to them. I define culture in short as „how we do things around here“. These collective patterns of behaviour and perception are a (complex) result of how the other design dimensions are shaped. Agile culture is therefore an objective that can be achieved through various measures at different levels.

Literature

Bockelbrink, B., David, L. & Priest, J. (2017). Sociocracy 3.0. http://​sociocracy30.org​/​guide/​. Zugegriffen 07.04.2018.

Denning, S. (2018). The Age of Agile. How Smart Companies Are Transforming the Way Work Gets Done. New York: Amacon.

Krapf, J. (2017). Agilität als Antwort auf die Digitale Transformation. Synergie – Fachmagazin für Digitalisierung in der Lehre (3), 32–33.

McChrystal, S. (2015). Team of Teams. New Rules of Engagement for a Complex World. London: Penguin UK.

Oestereich, B. & Schröder, C. (2017). Das kollegial geführte Unternehmen. Ideen und Praktiken für die agile Organisation von morgen (1st ed.). München: Vahlen.

Robertson, B. J. (2016). Holacracy. The revolutionary management system that abolishes hierarchy (Penguin business).

Rüegg-Stürm, J. & Grand, S. (2014). Das St.Galler Management-Modell. 4. Generation – Einführung. Bern: Haupt.

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