Why do established companies struggle to become more agile?

According to McKinsey & Company, no small part of the difficulty comes from a false trade-off: the assumption by executives that they must choose between much-needed speed and flexibility on the one hand, and the stability and scale inherent in fixed organizational structures and processes, on the other.

Many organisations have successfully become more agile by redesigning themselves for both stability and speed. Companies have been able to move quickly by creating a flexible ring that’s fenced off from the rest of the organization or, more recently, self-directed team structures embodied by “holacracy.” Holacracy, exemplified recently by the online footwear company Zappos, seeks to encourage employees to behave like self-directed entrepreneurs and to instill their own sense of meaning and purpose in the workplace.

McKinsey’s Organizational Health Index

A 2015 analysis of McKinsey’s Organizational Health Index showed that companies with both speed and stability have a 70 % chance of being ranked in the top quartile according to organizational health indices. That’s a far higher proportion than McKinsey found among companies focused only on one or the other. These high-performing companies were both extremely stable, with certain organizational features that remained the same for long stretches, and rapid innovators that could adjust and readjust their resources quickly.

So, to what extent is LOW still relevant when creating organizational structures for agility and stability?

LOW in our view, is much like an operating system, the backbone or stable element in organisational design criteria. LOW, much like a smartphone’s hardware and operating system, is likely to endure over a reasonable period. It gives context to the complexity of the landscape that an organization functions in, it clarifies the levels of work aligned to the organisations strategic intent and it ensures that “the right people are doing the right work, at the right time, now and in the future”.

LOW brings stability and clarity; it helps define:

  • Structure: “The Primary home” for coaching and training,
  • Governance: Transparency of “who” and “how” in decision-making, resource allocation, and performance
  • Process: Standard language and shared performance metrics across teams

Agile is also a function of human capability, where “higher” level thinking is required from individuals to make it work. In addition, it requires individuals to be emotionally mature and have the cognitive flexibility to create simultaneously agile AND predictable approaches work.

Other points to consider regarding the application of LOW to Agile structures
  • LOW provides a framework to manage and understand complexity in organisations with agile structures.
  • Through the clarity that is derived from correctly Tasking, Tending and Trusting, the organisation’s Strategic Intent can be translated and cascaded.
  • Even in agile organisations there is still a contribution that needs to be made at different themes of work to ensure the intent is achieved.
  • LOW is not a hierarchical model; it’s about value-add and contributions at different themes.
  • In a flat structure, employees will still make their contribution at the theme they are comfortable with, regardless of reporting lines or the type of structure that is present.
  • In a holacracy for example, you may still encounter different themes of work and capability emerging within circles i.e. one circle may be making a contribution at a certain theme and another at a different theme.
  • Even in a flat structure, an element of hierarchy will develop, as well as natural leaders operating from more complex themes of work.
  • A requisite structure should result in faster decision-making, clear communication, and encourage people to use their judgement in the same way that agile structures are meant to.
  • Using LOW is a good way to determine whether there is compression or missing work themes in a flatter structure.

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