The five secrets of agile organisations

We take a look at Mckinsey's 'Five trademarks of agile organisations' to see the lessons from innovative and successful companies in planning and adapting for an uncertain future.

Business planning on a white board
As 2019 dawns, companies face unusually high levels of political and economic uncertainty. With the Brexit vote having been postponed until the week of January 14, it has never been more difficult to predict and prepare for the next 12 months.“It is hard to make predictions for 2019,” says Linda Holbeche, international consultant, developer, researcher and author in the fields of HR, leadership, strategy and change, and a keynote speaker at the Relocate Global Festival of Global Mobility Thinking in May.“The uncertainty could make things more difficult for companies who will need to be more agile, but those who are already embracing agility may be better placed to cope.”

Companies must look at trends to plan and invest in future

She said companies can benefit from more forward thinking, looking at trends, planning through a variety of scenarios and making contingency plans, rather than just retreating, trying to cut costs and not investing. While it is tempting to “wait and see”, this could be a poor business decision.“In this unpredictable future, it will help if your business is able to make decisions more quickly around your core functions,” she says. “It’s also important to ensure you are communicating effectively with staff, asking them for their input and ideas about how to innovate and push the business forward, despite the uncertainties.”Concentrating on your core functions and values will give you focus.“More agile companies are likely to be able to protect themselves in the future, whatever the outcome of Brexit negotiations,” she says.The secret to success McKinsey & Company’s new report, 'The five trademarks of agile organisations', has identified the key qualities needed to thrive in today’s business environment. The trademarks include:
  • Having a network of teams within a people-centered culture
  • Rapid learning and fast decision cycles
  • Effective use of new technology
  • A common purpose that creates value for customers and staff
The “digital revolution” is transforming industries, economies, and societies, the report says. The business environment and the expectations of investors and customers are changing rapidly, disruptive technologies are challenged established business models, huge amounts of data need to be interpreted, and demand for talented people is creating competition to recruit and retain the best employees.

The five unique qualities for an agile organisation

1. North Star embodied across the organisation: successful companies are intensely customer-focused, and seek to meet diverse needs across the entire customer life cycle. They are committed to creating value with and for a wide range of stakeholders (for example, employees, investors, partners, and communities).Companies like Amazon, Gore, Patagonia, and Virgin put stakeholder focus at the heart of their North Star and, in turn, at the heart of the way they create value.Companies like Google, Haier, Tesla, and Whole Foods constantly scan the environment and regularly evaluate the progress of initiatives. They can allocate resources flexibly and swiftly to where they are needed most.2. A network of empowered teams: Agile organizations maintain a stable top-level structure but replace much of the remaining traditional hierarchy with a flexible, scalable network of teams. These teams need to be accountable, transparent, collaborative and made up of experts. The report identifies agile organizations like Gore, ING, and Spotify which have clear, flat structures and accountable roles so that decisions can be made without the need to wait for manager approval.3. Rapid decision and learning cycles: rather than traditional annual planning, budgeting, and review, some organizations are moving to quarterly cycles, dynamic management systems like Objectives and Key Results (OKRs), and rolling 12-month budgets.4. Dynamic people model that ignites passion: An agile organizational culture engages and empowers everyone in the organization. They can then create value quickly, collaboratively, and effectively. Organizations that have done this well have invested in leadership which empowers and develops people. Rather than planners, directors, and controllers, they become visionaries, architects, and coaches.5. Next-generation enabling technology: Agile organizations will need to provide products and services that can meet changing customer and competitive conditions. Traditional products and services will likely need to be digitized or digitally-enabled. Operating processes will also have to change and incorporate evolving technology.

Weathering the storm - technological change, unstable markets and consumer confidence

“Some sectors are really suffering – retail and travel in particular,” says Linda Holbeche. “Others, like John Lewis Partnership, have been embracing the online and trying to become more proactive to withstand the lack of footfall on the high street.”She says some sectors much more likely to be affected by the combination of technological change, unstable market conditions and a lack of consumer confidence and spending.“The danger is that companies are hunkering down and not moving forward, not innovating and investing as they should,” she says. “They will be left behind when things start to improve, or more adversely affected if trading conditions worsen, as a result of Brexit, Chinese trade wars, global economic impact, or other political or economic fallout.”The new era of agility Linda Holbeche has a checklist for organisations that want to become more agile in this difficult trading environment:
  1. Ask yourself whether your models are still fit for purpose and be sure to focus on your core operations
  2. Think long term and don’t use pessimism to back away from investments
  3. Actively reach out for new markets and customers
  4. Try to find on area where you can innovate so that you are doing something to stay ahead of the competition
  5. Use this opportunity to develop quick and efficient learning processes internally and ask staff for ideas on how innovate and save money
  6. Invest in new technology – how can you optimise its implementation in the fastest way through effective training?
  7. Build strong relationships and focus on communication with customers
  8. Invite customers to co-create – what would the perfect product look like?
  9. Find different ways for the workforce to work – this might mean more virtual working
  10. Look to retain your best talent and create a community at your business with strong leadership and good communication. Make sure people know that they are valued, and update them on how the business is moving forward
Linda Holbeche will be speaking at the Relocate Global Festival of Global Mobility Thinking in May, where she will giving organisations guidance on how to become more agile in a rapidly changing business environment.
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