Organizational agility has become a popular topic at least in the Finnish media. Oddly enough, it seems that the layoff news is the main channel for organizations to communicate about their ambitions to become more agile - to achieve almost any strategic target one could possibly imagine. It seems that agility is often linked with targets which have nothing to do with agility.
There's nothing wrong or bad in aiming for agile organization - quite the opposite. If an organization succeeds in scaling the agile philosophy across the whole organization, it's very likely to be able to change direction and develop new products or services very smoothly.
Still, the way organizations communicate about the quest for agility makes you wonder, have they really understood organizational agility correctly?
In addition to the press releases, annual reports are common channel to highlight targets related to agility - often without any concrete achievements or actions.
All of the quotes above have been taken from real press releases and annual reports of listed companies at NASDAQ Helsinki.
The risk with unrealistic and irrelevant goals related to agility, is that the benefits are not reached and the ways of working become a mess; agile organization actually becomes fragile. To prevent agility to become a common joke or a buzzword that would solve everything, the following 3 aspects should be kept in mind.
1. Small is not automatically agile and big is not automatically stiff
Agility is very often linked with small organizations. Perhaps at least partly because companies mention agility so often in the same sentence with organizational changes - and therefore layoff's. Still, being small does not equal being agile. Even small companies can be slow and hierarchical while big organizations can be agile.
Take the Scaled Agile Framework (SAFe) for example. It has been develop for the large organizations in the first place. One guiding principle in SAFe is that development organizations less than 50 people shouldn't even bother using SAFe.
2. Agility does not guarantee customer oriented approach
In addition to agility, the customer oriented approach is veeeery often mentioned as target - especially when talking about organizational restructuring. But do you really have to be agile for being able to be customer oriented? Does agility turn your company into customer oriented? I doubt.
For sure, the organization can improve its capabilities to build new products and services in an iterative way, and therefore demonstrate them for customers more rapidly. But being customer oriented takes a lot more - for example identifying weak signals, trends and market changes. And agility itself is not a solution for that. You still need to listen to your customer carefully.
3. Agile does not equal speed
The primary aim for agile development methods is neither to be able to deliver as fast nor as efficiently as possible. The primary target is to deliver maximal value to the customer. Obviously agile development has often increased organizational efficiency but that's still not a good reason to go agile.
In a nutshell, the success of organizational agility depends on how well the development work (using agile methods) is linked to corporate strategic planning. The strategic targets give guidance for development while the deliverables and customer feedback give guidance for strategic planning. In addition, the development team independence is crucial for success for being able to keep decision-making - and especially waiting time related to it - as short as possible.
From communications perspective it's clear that there's a lot of room for concrete success stories, learnings and experiences related to organizational agility. Technology is becoming the business in growing amount of industries and therefore success stories - even small ones - without difficult jargon, would help companies differentiate from competitors - also in the eyes of the rare talents.
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Why certain organizations seem to master digital transformation lightyears faster than others? Over the last few years I've seen the whole range of digital development from different industries ranging from enormous leaps into complete stagnation. Reasons behind differ for sure, but there are still similarities to be recognized. One of them is to be closely related to the industry where the organization is operating. It seems that the more regulated the industry, the slower the digital transformation.
In practice, if a company is operating in an industry with much regulations, directives and control requiring a lot of reporting, inspections and insurance, the so-called culture of caution evolves easily. And as it does, the majority of time is spent on creating reports or other evidence to prove, that one can be absolute sure no mistakes have been done. With the core business that isn't a major problem - since that's what required for operating in the industry, right? But as employees are often involved in projects related to both core business and other functions, the same culture quickly affects all parts of the organization - including IT and digital development.
I've found real life Finnish examples from industries like insurances, transportation, medicals and pharmaceuticals. Obviously regulations as such are not to blame - we wouldn't want to have our pension funds invested recklessly. However, as the same practices reach the parts of the organization that wouldn't necessarily need it, the speed of development decreases at the same pace as the amount of pages in procedures, manuals and reports increases.
Recently BCG listed industries that are at different stages in adopting digital technology. According to their study, heavily regulated industries like energy and health care seem to progress rather slowly globally as well.
How to keep the culture of caution out of the operations where it's not needed?
Obviously neither IT nor other digital development can't work without any rules or guidelines at all - especially in large organizations. A clear decision-making framework is an essential for defining which decisions can be done independently and by whom. That lowers the need for unnecessary double or triple checking. While planning an Operating Model for IT and digital development, one should take carefully into consideration, which operations need to be managed by the book, and which can allow more room for experiments, creativity, agility - and therefore innovation.
"Who owns digitalization at our company" is becoming a common question among executives and managers while the focus of digitalization is slowly shifting from what to how. To accelerate digital transformation, Chief Digital Officers (CDO) are joining management teams to focus on customer dialogue, digital content and customer experience. Still, often the total ownership of digitalization seems to be missing - which actually slows the development down instead of accelerating it.
Especially in large companies at least three functions are involved in developing new digital services. The R&D is in charge of research and development while IT ensures that the new solutions fit to other solutions and systems.
Business is often the source of the actual need and on the other hand the end user as well as responsible for generating profit with the new solutions. Often the stakeholders have a clear view of their own responsibility, but no one is in charge of the big picture. In addition the deep understanding of customer experience and customer dialogue are missing.
To add the customer point of view and to speed up digitalization, CDO's have joined various companies lately. How does that affect the ownership? That depends on the role of the CDO.
In case the CDO becomes another stakeholder next to IT, R&D and the Business, the company surely gets the required capabilities to support digital service development. But the total ownership of digitalization is still not solved.
Another position for the CDO is in the center of the development. With proper mandate from the top management the position can be ideal for digital development. On the other hand if ownership is not clear, the CDO becomes a coordinator or a facilitator without true possibilities to affect the development. And in worst case (s)he won't even have enough time to bring the digital insight to the table.
Obviously the CDO as such is not necessary in every company and it's not required for the CDO to take the ownership of digitalization - other stakeholders can take the same position. Who ever takes the ownership should have (1) the required skills, (2) enough time to truly push digitalization forward and (3) proper mandate from the top management.