Business Agility: through perilous waters
2 November 2021
We often talk about Business Agility, but what does it mean? How was it born? Which are the purposes and the marking elements of Business Agility?
A little bit of history
The birth of Business Agility
The history of Agile can be summarised by three main moments:
- 02/2001 – The Agile Manifesto was born. Agile was strictly linked to software development and to the organisation of a small group of people.
- 2008 – The scaling wave. The agile principles are applied to more complex and well-structured products that need a higher number of people and so more teams; the principles of the Agile Manifesto are the same, but practices change.
- 2014 – We start talking about Business Agility. Agile is expanding to other areas, potentially to the whole company; at the same time, we witness a weakening of the principles that, back in 2001, were so strong because they were meant to a delimited industry.
There is a thread that links the three evolutionary agile waves. Business Agility represents the last extremity. Business Agility was born from a need of continuous and incessant change. It is the answer to the necessity of owning tools and a culture that promotes innovation and its opportunities.
The agile context
In general, the agile approach is used in contexts that can be summarised as VUCA, an acronym that indicates when the Volatility is high, when the Uncertainty prevails, when it shows high Complexity and when the Ambiguity reigns.
Uncertainty, in particular, deserves a deepening: the Cone of Uncertainty, a result of in-depth research made by NASA, highlights that when you start a complex initiative our knowledge is usually low and so the Uncertainty is high. It is estimated that Uncertainty produces evaluations up to four times higher or four times lower than the actual value.
For 40 years, strategies of Project Management have been applied with the purpose of foreseeing everything and right in the moment of maximum Uncertainty.
In fact, the solution to uncertainty and to indeterminateness is knowledge. With traditional approaches, some practices that aim to give us some form of control were born in situations that were out of control. An example is the Risk Management practice that allows us to calculate risks based on probabilities and impact.
Agile approaches, instead, are based on fast work cycles that, through feedback, quickly increase knowledge while reducing uncertainty at the same speed. Decisions are made after having acquired a certain grade of knowledge.
Objectives of Business Agility
We now enter the heart of Business Agility.
There are two consecutive objectives to pursue: reduce the risk and speed up.
- The reduction of risk consists of a work based on three guidelines:
- Quality, which on one side concerns the professionalism and the growth of people and, on the other side, it refers to technology, to themes of innovation and to technology research.
- Value, and so the customer centricity, a pillar for the organisation’s general wellness.
- Time, which indicates the simplification of process and of the organisational structure.
- The acceleration is characterised by a desired reduction of time-to-market. Reflections arise about 3 problems:
- Market: where can we orient the speed acquired?
- People: is the new speed sustainable?
- Eco-system: what to focus on first?
Elements of Business Agility
In order that Business Agility results efficiently to deal with change, we need to consider its marking elements: the 6 directives to face together.
- Governance: it refers to the group of actions that allow us to strategically operate on the whole organisation and its initiatives. It can manifest with short and different levels based interactions:
- the first level, the governance of the workflow, to select the most interesting activities;
- the level of beyond budgeting to overcome the main logic of budgeting and to apply a new one already codified in literature for quickly shifting the resources. – the “two strands model”, adaptive and devolved;
- the last level of planning for a general re-planning of the organisation that allows faster answers to evolutions.
- Organisational design: from a hierarchy of people and positions to a hierarchy of decisions and processes. The attention is now on the mobility of people: these must be able to participate in the initiatives and to enlarge the knowledge and the competences, in order for the people to get where their contribution is needed.
- Innovation: this is the place of the challenge, where searching for new solutions and starting to deal with the necessary evolutionary leap. The digitalisation as a change is not an asset anymore, but the heart of any company initiative.
- Leadership: it is not in the middle of decision making anymore, but “in service” of strategic company choices. Leadership is now decentralised and the focus is on the competences. The complexity of processes and the uncertainty of today’s contest need to make decisions where there is knowledge, inside the organisational magma, from below, from people.
Manager and leader constitute the company’s potential multipliers.
- Knowledge: it is the antidote to risk and uncertainty. As Peter Senge said, “The Fifth Discipline: The Art and Practice of the Learning Organisation”, we can understand that just knowledge can build that systemic thinking that considers the organisation as a whole and not as a sum of divided pieces.
Knowledge must be necessarily shared and spread to the whole organisation to create a learning organisation.
- People and corporate culture: these are the last, but not least, elements that feed each other and support the company. People determine the company culture and they build processes. At the same time, culture and processes change people that are part of them.
Agile has introduced important evolutions in this sense. In fact, the focus shifts from hierarchy to role. The person that collaborates with the organisation contributes for its role more than the hierarchical fulfilled position. This answers the recognition’s people need and this enables them to be protagonists. The paths of continuous improvement are guided by people themselves in a team dimension.
Agile Reloaded’s reflections
In Agile Reloaded, we often reflect on these topics both for our company and for our clients.
Here are some sparks developed by our reflections about elements of Business Agility.
In terms of change.
We don’t talk about “change management” anymore, but we talk about “management+change”. The matter concerns how we deal with the situation and on which ability we bring change.
In terms of people.
The responsibility for personal growth depends on the individual, but the responsibility for creating the conditions so that this growth can happen is on the company. The individual and the organisation, together, have the responsibility of performances.
In terms of methodology.
We believe that is fundamental to experiment: in Agile, as for Business Agility, we don’t have predetermined answers. We proceed by observing evidence, by formulating hypotheses, by experimenting and so we consolidate changing.
The empirical approach is the main road to deal with change.