By: Liz Sheffield
Organizational agility is a company’s ability to rapidly change or adapt in response to changes in the market. There are many examples of how organizational agility can benefit a company. One example of an online retailer that has adapted and responded to market changes is Amazon.
In his book Think Like Amazon former Amazon employee, John Rossman1, describes how the online retailer used customer needs to drive organizational agility in its supply chain and web service offering.
“Amazon’s sophisticated logistics expertise did not come from wanting to be a supply chain company. It came from understanding that the customer experience was greatly affected by flexibility, speed, and quality of delivery. Amazon Web Services (AWS) did not come from wanting to be a cloud technology company but from needing to provide a scalable infrastructure to provide a great online customer experience.”
Clearly, organizational agility has made an impact for Amazon. It’s a company that launched as an online bookstore in founder Jeff Bezos’ garage; the company now sells more than 3 billion products across 11 marketplaces2. Amazon’s organizational agility has given them an undeniable competitive advantage. This ability has helped them successfully react to competitors, to new industry-changing technologies, and to shifts in the market conditions.
What is Organizational Agility?
At the core, organizational agility is really about how a company reacts to change. One of McKinsey’s organizational development leaders highlights two important components of agility: speed and stability.
“Agility needs two things. One is a dynamic capability, the ability to move fast—speed, nimbleness, responsiveness. And agility requires stability, a stable foundation—a platform, if you will—of things that don’t change,” says Aaron De Smet3. “It’s this stable backbone that becomes a springboard for the company, an anchor point that doesn’t change while a whole bunch of other things are changing constantly.”
With the level of change and ambiguity in businesses today, the need for organizational agility is a requirement for anyone wanting to succeed.
According to Gallup4, most business leaders surveyed said agility is required to deliver products and stay ahead of the competition; however, more than half of respondents (59% in the U.S.) said they don’t experience agility where they work.
When asked to respond to the statement, “I feel encouraged to come up with new and better ways of doing things,” only 30% of U.S. employees surveyed by Gallup agreed5.
Indeed, when looking at traditional models or legacy systems, it’s easy to see that organizational agility isn’t possible when silos exist and when human resources aren’t permitted to innovate, test, and fail. In these work environments, employee engagement solutions suffer and companies are at risk of losing top talent.
When organizations lack agility, decision-making processes are often tedious and employee engagement levels are low. In many cases, significant organizational change is required to harness the power that agility delivers.
There are many factors that need to be present to create the possibility for the idea of an agile organization to become a reality and a competitive advantage.
Harness organizational agility with three approaches
To succeed in an ever-changing business environment, organizations need to apply a more agile approach. This approach should be focused on empowering employees, embracing disruption, and experimenting with how work gets done. The ultimate goal for agile organizations is to do everything they can to help managers and employees put forth their best efforts. One employee and one project at a time, they use agile methods to support, improve, and drive overall business performance.
Success through organizational agility relies less on what’s been done in the past and instead looks to tomorrow for answers about what needs to happen. In the example of Amazon, they knew flexibility, speed, and quality of delivery were going to be paramount. They created a logistics system which allowed them to meet that customer need.
But how does an organization start to look to tomorrow for the answers that bring about increased organizational agility?
Create diverse teams and work groups to innovate throughout the organization. Inspire these teams to collaborate and create. This is a time when cross-functional teams should be created if they don’t already exist. These cross-functional teams will help remove the silos that can ruin any attempt at organizational agility.
In addition to team organization, be sure to empower decision making at every level of the organization to reduce the amount of time wasted in asking for and receiving approval. If decision making is too slow, a company’s ability to quickly take advantage of a changing marketplace suffers.
As you empower employees, be sure managers engage in frequent conversations around development and performance. Performance objectives, feedback, incentives, and workspaces must be conducive to motivation, engagement, and retention in this new environment.
Ensure that disruption is seen in a positive way. Disruption is intended to create regular change. To help transform decision making and open doors to new ways to operate, openly communicate with employees about changes and ask for their input. Start identifying key areas where you can streamline to gain efficiencies and allow more time for innovation.
Having the right talent management software will assist you in the initial transformation as well as in handling ongoing disruption. Your HR tech provides a foundation to assess and leverage everything your workforce can provide. With communication vehicles and a system for tracking the skills and abilities your employees offer, you can use change as an opportunity to use the strengths of your existing team to execute new initiatives.
Experiment with how work gets done.
Innovation is fundamental to the success of agile organizations. Don’t get too invested in specific plans for how to develop and sustain the business. Instead, identify areas that must become more agile. Restructure to minimize hierarchy and bureaucracy as well as empower individuals and diverse, self-directed teams to make decisions and get things done.
When companies work to strengthen relationships between managers, teams, and colleagues, as well as provide them with tools and opportunities to collaborate and innovate, change is possible. This new approach then enables agile organizations to drive business strategies and meet goals more effectively. In this way, organizational agility not only has the potential to improve processes and work output, it will also increase the potential for strategic growth.
Ultimately, an organization’s response to change can be found in how it responds to market changes. Organizations that empower people, embrace disruption, and experiment are likely to see change as something to use and exploit. At a minimum, they’ll see change as managemeable. This vision and approach allows them significant opportunities to stand apart from the organizations that are mired in the way it’s always been done.
Organizational agility can’t be ignored
Companies that have been around for decades, or companies that have operations around the world and employ tens of thousands of people, may struggle when it comes to organizational agility—but it’s not impossible. In fact, if they choose to ignore this need to change and adapt, it will prove costly.
Within a constantly changing business environment, organizational agility is crucial. To take advantage of opportunities and make the most of competitive challenges, organization’s must innovate and adapt quickly. By empowering employees, embracing disruption, and experimenting with how work gets done, these companies will be able to harness the power that organizational agility offers.