Across industries and regions, the concept of organizational agility is catching fire as companies scurry to deal with rapid change and complexity. Yet, achieving the ability to reshape themselves quickly is proving elusive for most.
The findings of McKinsey’s first global research study of agile organizations underscores the difficulties in achieving their desired nimbleness. But it also illuminates that getting agile right delivers substantial rewards ranging from efficiency improvements and improved customer satisfaction, to faster time to market.
We cast a broad net in our research, and it delivered some major surprises in identifying key success factors for becoming agile. Among them:
1. An organization must excel at all the 18 identified key practices to achieve agility. Our research finds that doing a few of the key practices well is not enough, all 18 must be embraced. The 18 include some basic elements – such as standardizing ways of working and sharing access to unfiltered data – and several more advanced techniques, such as having an open talent marketplace where people move regularly between roles and teams. You must address the holistic set of levers to scale organizational agility across most or all of an institution.
2. Speed is central to becoming agile, but so is stability. Organizational agility requires a core set of organizational elements that don’t change a lot, such as a platform to build and launch fast, dynamic capabilities. Even if your company is stable, you need to determine how it is stable. Most global enterprises possess the wrong type of constancy; instead of a launching pad for dynamism, most big companies today have stable elements that are bureaucratic “speed killers,” such as rigid organizational structures centered on hierarchy and control.
The research identified six stable, foundational practices among the 18 key elements upon which to build and scale agility, such as a shared vision and purpose that establishes a North Star for the entire organization.
3. An organization must deal head-on with the No. 1 agility challenge: culture and leadership mindsets. They surpass insufficient resources, lack of leadership commitment and system limitations as the biggest barriers to becoming nimbler. To solve them requires abandoning many basic assumptions about how organizations can and should work, including that senior leaders must maintain control. Letting go of control is vital to becoming agile.
Amazon’s CEO Jeff Bezos gets it. In a 2016 letter to shareholders, he maintained that the company must treat every day like it’s Day 1. “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1,” he wrote. To keep that Day 1 energy, he says, requires being extra fast on making decisions, even if they must later be reversed or are made without having full information. And, he said, senior leaders must feel free to disagree with a decision, although they must fully commit to it if they’re outvoted.
Understanding these three insights from our research into how to become agile will especially benefit organizations starting or still in the early stages of their journey to agility. In subsequent blog posts, we will explore other essential ingredients for achieving an agile organization, including a deeper examination of the 18 practices considered essential to adopt.