Creating Agile Organizations

The cold, hard, truth is that many organizations just don’t make it. Current research shows that the average lifespan of an organization is a puny 6 years. Ahh… but you say – the big ones survive. Not the case. In the last ten years over 50% of the Fortune 500 list have fallen off the list. Some are smaller, some are struggling, some no longer exist. Remember Blockbuster? Borders? Kodak?

I had a chance to spend a week at Cape Cod Institute with Chris Worley, co-author of The Agility Factor: Building Adaptable Organizations for Superior Performance. In that week, Chris shared the result of his research, which studied 424 organizations across 22 industries that consistently outperformed their peers. Analysis was done using three profitability metrics over 32 years (from 1980 to 2012) – which is a very long time (over multiple economic downturns and innumerous technological shifts) to outperform other firms. And what differentiated the organizations that were able to thrive over a long period of time? In Chris’ words:

“Our data point to the conclusion that organizations with high levels of sustained performance have a capability to continuously adapt to their environments, see and exploit opportunities before others, and address threats quickly. Superior performance is possible only when there is a high degree of fit between the requirements of the environment and the capabilities of the firm. In increasingly turbulent environments, the fit is temporary at best. Agility is the dynamic capability that allows outperforming firms to sense and respond to their environments, and to rapidly reallocate their resources, build new capabilities, and, perhaps most important, jettison the assets and activities which no longer create value.”

Worley found that agile companies did four routines or internal capacities that allowed for a proactive, environment-sensitive, quick shift in direction. These routines are:

Strategize in dynamic ways
Accurately Perceive changes in the external environment
Test possible responses
Implement changes in products, technology, operations, structures, systems and capabilities as a whole

In a world in which stability, single-mindedness, decisiveness and efficiency are highly valued and finely tuned, agility is not well understood or sought after or practiced. Changes in direction are judged as flip-flopping, an inability to get it right the first time, or an outright failure.

In reality agility is not undisciplined flip-flopping. It requires sharp focus, strong discipline and speedy execution. This is not waiting until something fails and then fire-fighting. Agile organizations are built, by design, to change. To change fast. To change well. And not to change for the sake of change. But to change because they know what is happening in the market, with their customers, and across the globe. And they find ways to capitalize on that external knowledge by shifting what they do, quickly and efficiently, to bring something of value into that new space.

To do that, agile organizations have an underlying framework that allows for quick changes. They do the basic management practices well, and routinely – planning, organizing, controlling, and leading. However, these organizations don’t rely on good management practices alone; they merely serve as a solid foundation for everything else. These basics are in service of the higher work of the organization, but do not serve as the work of the organization.

By having this solid foundation, the organization is freed to spend time, energy and effort on other things. Like monitoring what is going on OUTSIDE the organization – rather than inside. Worley calls this “maximum surface area structures”. What that means is that monitoring, interacting with, learning and bringing back important information from the external environment is a task spread throughout the organization and not just at the tippy top of the org. chart.

Agile organizations use this outside information and perspective to test new ideas, new products, and new services. And test it is – not wholesale changing of everything. This is testing multiple options in ways that quickly discern if this is a miss or a must do. Many tests will fail. That is OK. Others will show signs of promise. That is even better.

After testing, agile organizations are able to merge what was perceived on the outside with what was tested, and quickly implement those that have promise. There are systems and structures and an appetite for introducing the new. It is expected, easy, rewarded, celebrated. Contrast that with more traditional organizations that squash new ideas as quickly as they arise – and if they dare poke their head up again, drown them in the litany of,“We tried that before and it didn’t work.”

Agile companies are built for changing quickly – and intentionally – by their own design. That means they don’t look much like our traditional view of organizations. Some of the things you might see in an agile organization are:

A change-friendly identity – changing is who they are rather than what they resist
Strong future focus – across the organization
Emphasis on innovation – and understanding of the role of failure in innovating
A robust strategy – that is dynamic, widely shared and flexes as needed
A strong sense of purpose – throughout the organization
Shared leadership – that arises as needed and is not top-down driven
The capability to learn and to change – by all
Maximum surface area structures – lots of folks interacting outside the organization
Flexible resource allocation – the right people on the right project at the right time
Transparent information that is shared up, down and across the organization
Talent that is developed and seen as an investment and not an expense
Flexible reward systems – rewarding both accomplishments and “good” failures

If you’d like to see how your organization stacks up, Worley has available an assessment called Assessing Organization Agility: Creating Diagnostic Profiles to Guide Transformation – available for a mere pittance. I’m curious to know how your organizations stack up.