Why is it challenging to achieve Organisational Agility
In our fast-changing digital economy, 'Organisational Agility' has become a buzzword and an admirable business characteristic that ensures resilience. Businesses may deploy operating practices such as 'agile development,' 'DevOps,' and lean process innovations, hoping to achieve this. However, while this approach achieves short-term improvements within an operating environment, it is not always successful in ensuring longer-term agility and prosperity. It may even result in unexplainable operating attrition.
To understand agility constraints, we need to consider the following five interrelated business characteristics: operational complexity arising from the constant business change (evolved complexity); which in turn will affect both the employees' willingness to embrace more change (change resistance) and their understanding of what needs to change (misaligned perspectives); both of which affects the scope and structure of change efforts (how, what and where to change) - which in turn will worsen the evolved complexity. We, therefore, need to approach organizational change as a science where individual change efforts are carefully planned and analysed for longer-term impacts on the organization as a whole.
If I had an hour to solve aa problem, I'd spend 55 minutes thinking about the problem and five minutes about solutions.
Let us, therefore, analyse each of the five characteristics in more detail.
1. Evolved Complexity
Businesses evolve as a result of a combination of the following:
It is under competitive pressure to align with fast-changing external environments, including changes in customer value preferences, disruptive business models from competitors, and technological advances.
Changes are constantly planned to the business, operating, and resourcing models, which can be anything from large-scale change programs to small ad-hoc change efforts. Furthermore, these changes can either have strategic, functional, or non-functional natures.
Individual changes motivated by business strategies may be well aligned if the strategic goals are well defined and driven from within a central point. Alternatively, if each functional unit has the authority to choose an independent interpretation of the strategy, the changes may be less aligned.
Functional changes relate to the organization's capabilities and mainly include operating model changes. It can also affect the architectures used in the resourcing models, such as reporting line changes, software usage changes, and many more.
Non-functional changes usually focus on the use of resources. Examples include information sharing and security enhancements; upgrading the capacity of infrastructure to support more significant transaction numbers; and enhancing development practices to improve the reliability or testability of software.
Unplanned changes occur in all complex adaptive systems (such as organizations) due to planned changes - resulting from feedback loops between entities and their relationships within the system. For example, consider the ripple effect when throwing a stone in water - no change ever happens in isolation. So, for instance, employees may bypass a new process implemented by a new line manager to limit the amount of disruption in getting their 'work' done. Unplanned changes happen incrementally and can result in the following:
Long-term achievements that do not align with those experienced in the short term.
The agility of the organization may be constrained.
Operations may experience unintended consequences, such as an increased risk profile, cultural resistance to change, and operational inefficiencies.
Therefore, it is clear that the operational complexity is likely to increase over time, impacting future agility as it becomes more and more difficult to plan any proposed changes to the environment. Employees in complex environments are less likely to succeed in delivery and may start having different viewpoints regarding operational problems needing resolution.
2. Change Resistance
Let's face it - most people don't like change. They prefer the stability and the comfort of the known. However, frustration with the status quo can motivate people to change, but such motivations need to be channelled into actions that will positively change the environment. Therefore, encouraging employees to embrace agile change need to involve conscious effort, including:
Be aware of politics.
Identify individuals using their power (achieved because of a title, a scarce skill, or detailed knowledge about a particular environment) for personal gain by establishing excessively complicated operational procedures. Such individuals restrain the agility of organizations, and their power levels should be consciously controlled.
Fear of failure can also constrain agility - supportive leadership and decision-making supported by precise authority levels and adequate information is essential.
Align change to personal achievement. Everybody likes rewards. Some people see being part of a successful entity as an opportunity to enhance their life's purpose, others may thrive on appreciation, and others seek financial reward. Regardless of the type of reward sought, everybody appreciates recognition for their efforts.
Everybody likes to be informed about changes to their environment. Communication should cover:
The reason for, and the scope of the transformation;
How they can contribute and why their role makes them essential, and
Organization-wide recognition for achievements to show appreciation for efforts.
3. Misaligned Perspectives
It is well-known that agility requires focussed effort. However, in organizations, each decision-maker considers their environment from their own experience and point of view - as in the tale of the six blind men examining different parts of an elephant while trying to identify the animal.
To exacerbate this situation, it often happens that middle management obfuscates performance problems from executive teams. Such behaviour obscures actual issues that urgently require attention. Planning an agile change in such an environment, benefitting the organization as a whole, is almost impossible.
4. Misaligned Change Focus
To improve agility, organizations need a centralized function to align the as-is state (current business performance and transformation achievements) with local change requirements before considering further changes.
Changes planned with a centralized focus create an agreement of what, where, and how to change, thereby minimising the constraining complexity effects of the unplanned modifications described above. It also allows the alignment of future-state operations to pre-defined standards and decision-making principles, both of which promote longer-term agility in an operating environment.
Finally, transformation planning should use global change scenarios that are compared centrally for impact, cost, and benefit - much like a battle is planned holistically within a particular terrain.
5. Need for Structural change
It is a common mistake to presuppose that agility requires only minor changes. Structural changes would become necessary at some point, especially if new technology implementations are considered. There will, therefore, always be a need to decide where to change what.
The easiest way to explain this agility constraint is to compare the organization with a building (or multiple buildings), each with an individual purpose and structure. Buildings comprise different types of 'layers,' not all of which are changeable in an agile manner.
We can compare the facade of a building to an organization's business model - it is its face to the world, presenting channels through which to access its products/services. It is possible to make small changes as long as the structural support of the facade doesn't need changing.
The layout of the building can be compared to the organization's operating model - the size of the rooms indicating its capacity requirements, and the flow and proximity of the rooms the cooperation and processes required for functional execution. While an optimal design may have been created at inception, it may evolve due to changes to the operating requirements. Therefore, the scope of changes will determine the agility of the execution possible.
The structural support of the building can be compared to the resourcing models used to support and enable the operating and business models - for example, the technology and data architectures employed. While it can be straightforward to make small changes to such architectures in an agile manner, its overall ability to support the business in the long term may suffer as a consequence. For example, consider the effects a lack of documentation has on the IT Ops Support function and the Transformation Design teams. Also, when continuously adding the latest and greatest technology offerings on the fly, the resulting architecture may evolve to the extent that a whole architectural redesign is needed. Unfortunately, a change to an entire supporting architecture will be cumbersome and painful and have to be planned and implemented with care – it is not an agile change.
The foundation of a building can be compared to an organization's external geopolitical environment, the practices of competitors, the needs of customers, and the internal culture of the workforce. These factors are almost impossible to change. Each building fulfils a specific role within an environment - much like an organization's brand strength is ultimately informed by its purpose and its ability to achieve this purpose. Once people in the environment no longer need a building in its current role, the building owners will have to repurpose it or degrade it into obsolescence. The same will have to be done for organizations.
Therefore, organizations need to respond to the intolerant requirements of external environments by maintaining a sharp internal focus, focussing on simplification, alignment, and risk management to minimize the effects of these five characteristics.