Business leaders have always worried about their competition, but now they worry less about their traditional rivals and more about the “Amazonification” of their industry.
The threat from disruptive innovators has focused minds on how incumbent businesses can get technology into place more quickly and effectively. Agile methods are well recognised as the solution across IT, but agility is now increasingly being seen as a requirement for the wider organisation.
Research by PA Consulting shows that nearly three-quarters of industry leaders put improving organisational agility as a top strategic priority. As a result, the ideas rooted in better software development are beginning to take hold in the wider enterprise, and there are real similarities between agile adoption in IT and its use across the broader organisation.
The conditions that led to a rejection of traditional software development methods and the move to agile are well known – lack of predictability, significant complexity, changing requirements and a lack of end-to-end quality focus. These same conditions apply more broadly across businesses, alongside the additional challenges of rapidly changing customer needs and expectations.
That makes it vital that traditional operating models, product development frameworks and customer experiences are adapted to use experimentation and feedback to iterate an organisation’s products and services. Iteration and experimentation are central to agile techniques and are the most powerful way to meet changing market needs.
Decades before the term agile was defined, iterative techniques had been used to deal with uncertainty and respond to customer feedback. Yet even in the heartland of IT, these agile methods have taken a long time to catch on, mainly because it is difficult to change many years of established management practices and to change a deep-rooted culture.
However, there are a number of lessons that the wider organisation can learn from this experience and help it become agile more quickly.
The first is that a focus on leadership, culture and behaviour is essential. The 12th annual State of agile report, published by VersionOne, underlined yet again that organisational culture is the critical factor in the success of agile adoption in IT. It is clear that traditional forms of control and management heavily undermine agility and the research found that 68% of the most agile companies recognised that agility is about shifting a culture, not just implementing a process.
The second lesson is that speed matters. On average, business leaders estimate that in five years, their companies will need to operate almost one-third more quickly than they do today to remain competitive. Most IT-focused agile transformations aim to reduce the cycle time for releasing software. In the wider business, the focus needs to be on reducing the time to market of new products and services and responding rapidly to customer feedback and innovation.
Importance of moving rapidly
Business leaders are very aware of the importance of moving rapidly, with 72% of respondents to the survey report The evolution of the agile organisation saying their company’s ability to respond to change quickly will make the difference between success and failure. The challenge is to get the structures and skills in place to make this happen.
More agile approaches are also needed to deal with increasing automation. There is growing use of robotics, reconfigurable production facilities and the creation of simpler structures in areas such as research and development. Managing these developments effectively requires cross-functional teams that are orientated to the customer, which means focusing on organisational simplicity.
Organisations that retain complex structures with too many layers of management will face real barriers to speeding up change and will be unable to seize the advantages of automation.
The research has shown that another essential factor in organisational agility is responsiveness to change. The most successful businesses respond to developments by adopting flexible systems and processes, non-linear development cycles, and they make sure they have the right people with the right skills.
In IT, the focus has been on tailoring various codified agile frameworks and creating teams with both deep expertise and the ability to share those skills across disciplines. Those same principles are equally applicable to teams in the wider business.
There are clear parallels between the conditions that led the IT industry to adopt agile approaches and the challenges facing business today. Speed, flexibility, simplicity and a responsive culture are all needed to make organisational agility the new reality.
It is clear that the benefits of organisational agility are worth it. If your company is 30% more agile, you are more likely to be in the top 10% of financial performers. IT has shown the way – it is now time for the rest of the business to catch up.