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Building an Agile Organization in a Sustainable Manner

In today's highly technological world, innovative products emerge more frequently than ever as each one of them could be a potential market disruptor. This poses a great threat to established organizations that need to quickly adapt to changing market conditions and ensure their long-term survivability. To do that, many of them find the solution in adopting company-wide agility.

What Is Organizational Agility and Why do you Need it?

Nowadays, most businesses operate in a so-called VUCA market (volatile, uncertain, complex, ambiguous) where requirements change frequently. What customers might have deemed an exciting product functionality yesterday, it can easily turn into just a satisfier today. Furthermore, emerging startups quickly come up with new innovations, making it harder and harder for traditional organizations to keep up with their pace. As a result, those organizations risk becoming obsolete and ultimately uncompetitive on the market. 

An example is a study from Mckinsey based on the S&P 500 Index which found that the average life-span of big companies fell down from 61 years in 1958 to about 18 years in 2011. Furthermore, projections show that there is a huge risk for 75% of companies currently quoted on the S&P 500 to have disappeared by 2027.

Image Credit: researchgate.net

To try and prevent that, many of them have already turned to Agile practices and applied them on the team level, usually looking to improve product development efficiency. However, ensuring long-term business survivability asks for a scaled approach where the entire company adopts Agile ways of working, not only separate parts of it. The idea is to enable it to more quickly and effectively adapt to a changing environment, continuously improve, innovate at a faster rate, and thus better meet customer requirements. In reality, this is what can be defined as organizational agility. 

In order to achieve it, there needs to be alignment between all organizational levels, faster communication, more frequent releases of value as well as a way to ensure that the right thing is worked on at the right time.

Common Attributes of Agile Organizations

Before we dive deeper into how you can develop an Agile organization, let’s set the ground with a few common traits that those companies share. 

1. Following a Shared Purpose and Vision

One of the main attributes of Agile organizations is that they are customer-focused and committed to creating value for all stakeholders. The main idea is to shift focus to outcomes rather than simply output. That’s why there is a shared purpose and vision for everybody to follow as leaders aim to constantly communicate it while letting people decide how to best support it with their day-to-day activities.

This requires radical transparency across the entire organizational structure and a culture shift to a more open environment that encourages knowledge sharing. In practice, companies achieve that by focusing on improving collaboration between teams and setting up low-tech, high-touch tools (such as visual charts and boards) that radiate information. This helps keep everyone on the same page and increases their sense of belonging to the common purpose. 

Moreover, Agile organizations focus on seeking feedback constantly from both internal and external stakeholders to see how well they are executing on the high-level vision. This allows leaders to regularly evaluate the progress of strategic objectives and decide whether to accelerate them or shift direction to accommodate changing market conditions.

2. An Ecosystem of Interdependent Services and Empowered Teams

Agile organizations build their structures by viewing them as an ecosystem of interdependent services where each service contributes to the final customer value delivery. There is an established connection and visibility across all of them, allowing a faster stream of communication top-down, bottom-up, or sideways. This allows companies to visualize the flow of their solutions across all structures and thus focus on optimizing the entire value delivery stream.

Furthermore, the Agile teams responsible for each service within the company continuously aim to evolve their work processes in order to make them more “fit for purpose”. They are empowered to make local decisions, freely share ideas, and experiment with new things. This way, Agile organizations aim to create an engaged workforce that delivers more quality products or services to the end customers.

3. Rapid Decision-Making and Learning Cycles

Another important trait of Agile organizations is the fact they recognize that the best way to minimize risk is to embrace uncertainty. Instead of developing long-term and detailed plans which signal false security, companies need to engage in more rapid-decision making by frequently releasing value to the market.

The way Agile organizations accomplish that is by reducing batch sizes of everything from individual work items to high-level strategic objectives with the purpose to gather fast feedback from the market. Once that’s done, they engage in regular learning cycles (feedback loops) where they reflect on any new information, adapt to changes but also continuously look for improvements. 

Those principles are heavily used by startups to develop innovative products. However, even big, established businesses need to adopt them by creating alignment between all teams and seeing them as small startups that produce value to the final market offering. 

The idea is not just to make sure that the teams are developing the right product or service but also that the entire company is moving in the right direction. Through the integration of frequent “test, learn, adapt” cycles, organizations become capable of managing uncertainty, better understand complexity, and thus innovate at a faster rate. 

Developing an Agile Organization in an Evolutionary and Data-Driven Way

In order to drive organizational agility, companies need to have a complete management system at their disposal that they can leverage to build radical transparency, create a symbiosis between all structures and facilitate information flow within them. Another important part of the equation includes the organization’s ability to improve predictability and thus better balance demand with capabilities. 

But how can you tie all those things together to make your organization more resilient to changes? One way to accomplish that is with the implementation of the workflow management method Kanban that can improve organizational survivability through evolutionary change management. By focusing on visualization, data-driven continuous improvement, and engagement for all stakeholders, it is an appropriate answer to the turbulent pace of change in today’s business environment.

Let’s dig deeper to see how this can happen in practice. 

1. Kanban System for Every Service in the Organization

As mentioned earlier, Agile organizations aim to view their structures as a network of interdependent services and thus be able to see the flow of a given solution from concept to fruition. In reality, this can happen by introducing interconnected Kanban boards where the value stream of every service is visualized. 

Connect Strategic Planning and Project Execution

End-to-Еnd Organizational Visibility

 

This provides unmatched transparency and through the integration of various practices such as limiting work in progress (WIP), for example, uncovers bottlenecks and enhances flow efficiency. As a result, teams can focus on building a Kanban system for every service delivery process and then gradually evolve it to meet service level agreements (SLAs). 

Those represent commitments made to the customer regarding service delivery rate which is defined by metrics such as lead, cycle time, and throughput. It is the criteria against which we should frequently measure how “fit for purpose” our processes are and discuss potential improvements to ensure customer satisfaction. 

1.1. Managing dependencies between teams

Often in large organizations, there are different teams involved in releasing a complete service to the market, which accumulates dependencies between them. In the Lean/Agile world, those are classified as waste so companies need a clear way to manage them in order to reduce risk of delay.

To avoid any heavy disruptions of existing processes, one solution for dependency management in visualizing them on the interconnected boards and keeping track of their progress. For example, if one team is dependent on another for producing some form of value, they can create a specific column on their Kanban board (parking lot) where work items enter to signal the need for another team’s input.

This creates a queue in the work process which the dependent team needs to monitor regularly. A good practice here is to apply WIP limits on the queue in order to restrict the number of work items that reside there. This will allow you to improve their flow but also prevent the other team’s Kanban system from overburdening. 

On top of that, with the help of lead and cycle time data, you can calculate how long dependent work stays in a parking lot. Based on the findings, you can form service level agreements with the other teams (that you are dependent on) and collaborate with them in periodical intervals to gradually improve the overall service delivery process.

2. Feedback Loops to Build an Information Flow

When talking about frequent collaboration, Agile organizations aim to achieve it through regular cadences across all company levels. This contributes to the creation of symbiosis between structures and streamlines information flow in order to ensure that the right things are being executed at the right time.

In Kanban, for example, there are 7 cadences which are essentially meetings that aim to streamline communication between teams. Those include Strategy Reviews, Operation Reviews, Risk and Service Delivery Reviews, as well as Replenishment, Delivery Planning, and Daily Meetings. 

Let’s break them down into two major categories to better explain their application. 

2.1. Service delivery set

The cadences in this category are mainly concerned with pulling new work and ensuring the old one is getting done in every Kanban system across the organization. They include the Daily Kanban, Replenishment, and Delivery Planning meetings. 

For example, every single team can practice the Daily meeting where co-workers stand-up in front of a Kanban board to sync progress on projects and individual tasks. With the help of the Replenishment cadence, on the other hand, teams can discuss what work to start next, while the Delivery Planning meeting is reserved for making decisions on which items are ready for customer delivery.

2.2. Improvement/Evolutionary set

The next category encompasses cadences where the main idea is to adapt to changes both on a team and management level as well as look for ways to evolve organizational systems. Those include Service Delivery Reviews (team level), Operations and Risk Reviews (middle management) as well as Strategy Reviews (executive management). 

The Service Delivery Reviews, for example, are concerned about a single Kanban system where individual team members reflect on past events and discuss how they can do things better. Operations and Risk Reviews, on the other hand, take those discussions to a higher organizational level. They aim to reflect on the performance of multiple Kanban systems, where you review dependencies, identify risk events, and look for ways to mitigate them. 

Advancing further up the hierarchy, Strategy Reviews are concerned with engaging top-level executives (ex. CEOs, portfolio managers) who evaluate the business environment and adapt to changes. By aggregating information from other cadences including market observations, they are able to plan strategic initiatives and make sure that the company is moving in the right direction.

3. Data-Driven Continuous Improvement

Developing an Agile organization also requires improved predictability so you can better match demand with capabilities as well as meet customer delivery requirements. The way to accomplish that is by analyzing service delivery data and then derive improvements based on the findings. 

To do that, you can use metrics such as lead and cycle time, WIP, and throughput. You can measure them with the help of charts such as Cumulative Flow Diagrams (CFD), Cycle Time Scatter Plots and Histograms, WIP, and Throughput Run Charts which will help you analyze workflow stability and come up with service level agreements across the organizations. 

In Kanbanize, for example, we apply those charts but also plot our historical service delivery metrics in Monte Carlo Simulations. This allows us to forecast when and how many work items we can deliver to the end customer or shared services based on probability rather than estimation.

Analytics for Data-Driven Continuous Improvement & Forecasting in Kanbanize

As a result, you will be able to improve service delivery or project predictability and have a way to better anticipate demand. This will enable you to make the right decisions based on real data so you can continuously improve overall organizational agility.

4. Understand and Focus on Customer Expectations

Last but not least, remember that the path to organizational agility is never-ending. The ideas discussed above can help you boost it but your main target for ensuring long-term survivability should be to continuously delight your target market.  

That’s why don’t be afraid to experiment. Just make sure you collect your feedback as soon as possible, so you can better understand your customer’s expectations. This will enable you to adapt to their changing needs and innovate faster.

Organize Work, Keep Track of Projects

And Optimize Your Workflow.

 

In Summary

Achieving organizational agility requires a cultural shift to a more transparent environment as well as a mindset of “test, learn and adapt”. To create an Agile organization, you need a complete management system at hand that allows you to:

  • Achieve radical transparency across all organizational structures;
  • Build an information flow within them;
  • Improve predictability to balance demand with capabilities.

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