October 01, 2015

Evolve Quickly or Become History

Studies show that developing an agile culture can have an enormous impact on a company’s long-term success. Today’s market conditions and environment requires agility and flexibility that is more than an afterthought. Rather, it requires a dedicated and disciplined approach to the management of the organization as a whole.

The term “agile” has been overused and the meaning has now become diluted. The origins of agile refer to the agile methodology of project management, and specifically software development. Successful companies are recognizing that in the face of rapidly changing market and volatile demand, these principles can be applied to every other part of the business as well.

In 2013, a report by Actuation Consulting found that 74 percent of organizations were adopting and utilizing agile in some capacity. The study also revealed that 86.9 percent of agile users attributed increased profits to the adoption of agile.

Improvements from Implementing Agile Practices

Improvements from Implementing Agile Practices

Source: VersionOne

What is Agile?

The agile methodology is an iterative, incremental process. In software development, the work is done in bi-weekly or monthly sprints, and at the end of each sprint, project priorities are evaluated. These sprints allow for bugs to be discovered, and customer feedback to be incorporated before the next sprint begins. The major advantage of agile is that it lets the company move fast, and iterate as the market changes.

The principles of agile, while originally used for software development, can be applied to almost any organizational function. For example, some companies are using agile principles for their marketing initiatives, where marketing teams strive for simplicity, releasing projects early and often, and iterating based on market reactions.

Adopting Agile

According to the “State of Agile” survey conducted by VersionOne, agile initiatives often fail due to issues related to corporate culture and a resistance to change. Often, companies implementing agile focus on the tools involved with the agile methodology, such as daily stand-up meetings, story mapping, and retrospectives at the end of the sprint. However, agile is more about how the team approaches the problem, rather than the tools used to solve them.

Leading Causes of Failed Agile Projects

Leading Causes of Failed Agile Projects

Source: VersionOne

In an agile environment, workers need to communicate frequently, since internal feedback is important to improve. The constant learning and iterative nature of agile means embracing failure and allowing the learning that occurs due to it to happen.

Leaders also need to understand the challenge that is involved in the transition from traditional management to agile. While the core principles of agile can be grasped quickly, implementing them takes time.

Strategic Responsiveness and Organizational Flexibility

Many corporate managers and leaders believe that their companies are agile. They think that the company possesses the combination of speed, nimbleness, flexibility, and responsiveness that is needed to pivot as circumstances arise. However, often they are surprised when a significant opportunity or challenge presents itself and the company is unable to deliver. The issue is that these leaders are thinking of agility as an end itself instead of a means to gaining sustainable competitive advantage.

Agility can be viewed from two extremes. At one end are startups and high-growth companies that can be too agile by chasing every potential opportunity without clear strategic goals. At the other end are large incumbent companies that are slowed by lethargic corporate cultures, rigid business processes, and legacy technology systems. The sweet spot lies somewhere in between. A study by PwC found that for most companies in all industries, being agile depends on two key attributes – strategic responsiveness and organizational flexibility.

Strategic responsiveness is the ability to sense new opportunities and risks in the business environment, and to quickly build a response. The challenge is not to just change quickly, but to change profitably. Organizational flexibility is the facility to shift execution quickly. In many companies certain functional skills like manufacturing, marketing and sales, and product development are deeply entrenched. But when there is a change in strategic direction, companies need to be able to rework the most necessary activities rapidly. This requires the capacity and willingness to innovate in every aspect of the enterprise, including putting into place new organizational structures, business processes, and technologies.