Agile organization. If you’re here, you’ve likely heard this term. It has floated around virtual meetings. It’s been blasted from stages in conference centers and hovered in strategy meetings.
But what does it mean to be an agile organization?
Of course, to be agile means that you’re limber, flexible, and adaptable. To be agile means that you can adjust quickly to things that are thrown at you. In the context of business, agile teams are ones that can embrace change because they’re built for it. Developing agility in organizations is the difference between resilience and resistance.
Today, we’ll talk about what it means to be an agile organization. We’ll also talk about how to implement agility into your organizational structure — and why it matters now more than ever before.
What is an agile organization?
First, let’s take a minute to define what we mean by agile organizations.
What is an agile organization?
An agile organization is an organization’s ability to adjust its strategy, structure, processes, and people to achieve value and opportunity.
According to McKinsey, agile organizations adopt this idea of continuous improvement. Agile organizations empower transformation and growth. From product development to meeting customer needs, agile transformation is needed in every aspect of an organization’s operating model.
Agile ways of working are going to look different for every company. After all, every organization has its own set of deliverables, decision-making processes, and key initiatives to help drive performance.
But at the core, organizational agility is about a key set of characteristics that can be applied to any business. It’s a way of implementing a different type of mindset to influence how processes are done and how products are built.
Let’s talk more about why agile companies are important — and how to transform your organization.
Why are agile organizations important?
First, let’s talk about some of the trends that we’re seeing across agile organizations. This will help to introduce the importance of agility within organizations.
- Design thinking and thinking outside of the box
- Scaled agile scrum and scrum approaches
- Change management with supported training tools
- A keen focus on customer needs and customer-centric development
- Distributed teams across regions and geographies (especially in development roles)
- A focus on scalability across processes, structure, and product development
Many of these trends seem focused on software development. For example, agile scrum and advancements in how people build products are pertinent to the tech industry.
But if you look one layer deeper at these trends, it’s about mindset and behaviors, too. It also requires leadership support to keep these trends emergent in organizations. And when employees believe their organization is agile, it has positive impacts. One survey by Gallup found that workers who perceive their organization as agile are more likely to have confidence in their organization’s success.
After all, agility is about building resilience to change. If direction, priorities, technology, and external factors are all components of change, companies need to stay agile. At the end of the day, agile companies are better equipped to pivot in the face of change.
Agile companies are more likely to scale and grow their development as opposed to traditional organizations. And agile organizations are better equipped to provide their people with the training, support, and employee coaching they need to succeed.
How to identify agile organizations
So, how do you know if an organization is agile? What are some identifiers of agile organizations? Here are five things to look out for.
Diverse talent that excels in change
Companies are about people. It’s the employees an organization employs that drive change, make an impact, and deliver value.
So, what’s the best way to reach optimal organizational performance? Having a diverse, talented, and resilient workforce that excels in the face of change.
Leaders who make timely and smart decisions
Another trait of an agile organization zooms in on leadership and decision-making. Especially as organizations grow, decisions become more complicated.
A customer-focused organization
One key identifier of an agile organization is the focus on the customer. Especially in volatile market conditions where change is ever present, customers still need to remain king.
If an organization isn’t creating value for its customers, that’s a huge problem for organizational performance. The entire organization needs to be customer-centric.
Technology that enhances processes and the employee experience
Every digital transformation strategy will have its hiccups. But an agile organization takes special care in the types of technology that its employees and customers use.
After all, technology plays a part in engaging employees and the overall employee experience. If employees are having difficulty doing their work because of gaps in technology, you’re likely to lose their engagement.
Dynamic teams that collaborate effectively
Lastly, an important factor for agile organizations boils down to teamwork. Agile organizations don’t work in silos. They promote open communication and cross-functional collaboration.
Teams that collaborate effectively and are quick to adapt to change are ones that will succeed in agile environments. Cross-functional teams empower continuous learning and work toward a shared purpose or goal.
10 benefits of being an agile organization
There are plenty of benefits to an agile organization. We’ve outlined ten benefits that you can expect to see by adopting agility into your organizational structure.
1. Higher revenue growth
One of the biggest benefits of organizational agility comes down to dollars. McKinsey studied the impact of organizational agility on revenue. The results were pretty astonishing.
The report found that successful agile transformation led to a 20-30% increase in financial performance. An agile approach to business leads to better business outcomes.
2. Continuous learning and feedback
Agility isn’t just about being fluid and flexible. It’s about learning and growing as processes adapt, change, and grow.
So, one of the core components of agile ways of working means that organizations are continuously learning. This unlocks feedback mechanisms that help to further agile practices.
3. Increased employee engagement
McKinsey also studied employee engagement as it relates to agility in the workplace. The same report (cited above) analyzed 22 organizations in six different sectors.
On McKinsey’s point scale, they measured outcomes of agile transformations, including employee engagement. The results found that after agile transformation, employee engagement increased by 20 to 30 points.
We know employee engagement is a struggle for all organizations, especially now. There’s long been an employee engagement gap in today’s workforce. Adopting agile practices can help increase employee engagement in your organization.
4. Increased visibility and transparency
Another benefit of agility is increased visibility and transparency.
Agile methodology is built on this idea of cross-collaboration. It means team members are working across functions and departments and breaking silos. It leads to transparent project management where team members are able to work together toward a shared goal. It also helps to promote open communication, too.
5. Increased resilience
Change is here to stay. And at the pace at which change is accelerating, it’s important that organizations are making systemic changes to help adapt to change instead of fighting against it.
Agile organizations are more resilient and adaptable when it comes to change. As McKinsey cites, resilient organizations don’t bounce back. They bounce forward. Instilling agility is the key to building resilience, though it starts at an individual level.
6. Better innovation and problem-solving
Agile organizations are better equipped to solve tough problems. Why? Agile teams are dynamic, responsive, and collaborative. Agile teams rely on iterations to help unlock the best outcome for a problem.
An agile organization is also a diverse organization, one that empowers new ideas, perspectives, and ways of working.
7. Increased productivity
Another benefit of agile organizations is increased productivity. McKinsey (cited above) studied productivity as it relates to agility. The results found that operational improvement increased by 30-50% after the agile transformation.
This means that teams were hitting targets, increasing visibility, and getting real-time results.
8. Increased customer satisfaction
As we’ve discussed, one key trait of agile organizations is being customer-focused. When organizations focus on what the customer wants, customer satisfaction increases.
9. Ability to learn from failures
To go hand-in-hand with continuous feedback and improvement, there’s also a level of self-reflection happening in agile organizations.
There are plenty of mechanisms to help teams learn from their failures. For example, at one agile organization where I worked, we used to do something called a SWOT analysis. It stands for strengths, weaknesses, opportunities, and threats.
After every big project or cross-functional initiative, we conducted a SWOT analysis. It was a retrospective way of looking back at where we could’ve improved. Every SWOT left me with learnings to take into the next project.
10. Better collaboration across team members
Lastly, another big benefit of an agile management system is increased collaboration.
The nature of agile organizations is collaborative. Teams are working together cross-functionally. Team members each have their respective roles yet they still rely on each other to get work done. Agility helps people learn how to work better together. Yes, it can point out pain points. But it also helps to iron out the kinks in the collaboration process.
How to become an agile organization
If you’re looking to become an agile organization, follow these five steps.
1. Adopt a growth mindset
First things first, you’ve identified that your organization needs to change. If you’re a traditional organization, change might be harder than you think.
This is where it’s incredibly important to adopt a growth mindset. And truth be told, it’ll be challenging. But evaluate your end goal and why you’re looking to implement an agile transformation.
Remind yourself — and your leaders — the importance of growing, learning, and developing. After all, your end goal is for your organization to reach its full potential. That starts with the willingness to grow in the first place.
2. Evaluate what you’d like to change
This is a more tactical and logistical step than others. And it’s going to look different for every organization, especially dependent on the product.
But take an audit of where you’d like to implement changes. For example, are you using objectives and key results (OKRs) to set company-wide goals? Do you want to implement new systems and technologies, like project management software? Are you a startup that needs to invest in new products? What’s your reporting structure look like? Does it allow for the development of dynamic teams?
Whatever it is, consider the processes and structures that need to change.
3. Invest in developing resilient leaders
Your leaders will play an integral role in your agile transformation journey. How are you encouraging professional development within your leadership team? Do you invest in things like new manager training?
Do your leaders have opportunities to grow the key skills and capabilities they need to stay resilient in the face of uncertainty? Are you building future-minded leaders within your teams?
Access to coaching is one way you can help develop resilient and future-minded leaders. In fact, data backs this up. Leaders who went through four months of leadership training and coaching reported lower stress, higher purpose, and higher resilience.
4. Encourage collaboration
In order to optimize the benefits of agility, your teams need to collaborate effectively.
How are you encouraging collaboration in the workplace? Are your employees building the skills they need to work together well? How can you better encourage collaboration, especially to help break silos?
5. Gather feedback
Last but certainly not least, feedback is a critical part of building an agile organization. After all, agility is about adapting to what’s working and what isn’t.
Make the space to gather feedback from your employees. Encourage your managers to ask for upward feedback. Create platforms and vehicles for real-time feedback to better deter problems before they spiral out of control.
2 examples of agile organizations
Let’s take a look at some examples of agile organizations.
Spotify famously coined what is now called the Spotify model for agile organizations. But what exactly is it?
It’s a people-driven, autonomous approach to agility. The goal? To scale agility across the organization to better serve its customers, employees, and stakeholders.
The Spotify model operates with some key elements:
- Squads. Similar to scrums, squads are cross-functional, autonomous teams.
- Tribes. Tribes are when multiple squads — or teams — work together toward a shared goal or purpose.
- Chapters. Chapters are essentially the family or the category that tribes or squads fall under. For example, “software engineering” or “marketing” can be considered a chapter.
- Guilds. To help support employee development, guilds were formed so employees could pursue their passions. For example, a software engineer could join a guild focused on writing if that’s what they wanted to help build a key capability in.
Amazon is another organization that embarked on an agile transformation journey. To this day, I still think it’s pretty magic that I can order something and it can show up on my doorstep as soon as a couple of hours later.
Amazon needed to scale its business — and fast. It also is obsessed with the customer. As a customer-obsessed organization, Amazon used that customer-centric approach to bring agility to scale.
Leaders are also owners at Amazon. If a leader is in charge of a certain workstream, they own that product and responsibility. It helps to drive productivity, ownership, and autonomy within teams.
Unlock agility in your organization
No matter where you are in your agile transformation journey, you can unlock your workforce’s full potential.
Start by looking at the key capabilities, skills, and mindsets you want to grow in your workforce. Then, figure out how you’re going to get there. Your HR, business strategy, and software development experts can help build a roadmap for success.
BetterUp can also help to build an agile workforce that’s prepared for what the future holds. With coaching, you can provide your organization with personalized support to help nurture and grow in a continuous learning environment.