Assessing Organization Agility

Creating Diagnostic Profiles to Guide Transformation

Christopher G. Worley, Thomas D. Williams, Edward E. Lawler, III

• Publisher: Jossey-Bass
• Year: 2014
• Print ISBN: 9781118847114
• eBook ISBN: 9781118847053
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

In-depth agility evaluation for a more efficient response to change

Assessing Organization Agility provides a clear, concise roadmap to improved implementation of change. Written by two organizational researchers at USC's Center for Effective Organizations and a management consultant with Strategy& (formerly Booz & Company), this book provides the means for assessing an organization's agility and formulating an improvement plan. Beginning with a discussion about the meaning of "agility, " the authors enumerate the various contributing factors that affect how quickly an organization responds to change, and the efficiency of the response. An agility survey shows readers how their own organization compares in terms of both perception and implementation, allowing the formulation of an "Agility Profile" that can point out strengths while highlighting areas in need of improvement. Case studies demonstrate the real-world impact of effective agility strategy, and example scenarios illustrate improved responses by each agility "type."

Eighty percent of large-scale organizations fail to meet their objectives, and poor agility is often to blame. Organizations respond to changes in the marketplace, economy, and society by implementing changes in their processes and procedures, but planning and implementing change takes time. During that time, the context of the initial decision frequently evolves, leaving the organization one step behind. Agility is the ability to quickly implement change without sacrificing strategy, and Assessing Organization Agility helps readers to:

• Discover the organizational/operational factors that contribute to agility
• Assess current agility from all perspectives, highlighting areas for improvement
• Implement processes and procedures that streamline change events
• Maintain forward trajectory with adjustments to strategy and implementation

The current pace of technical, competitive, and environmental change is faster than ever before, and response requirements are far more complex and sophisticated. In this turbulent environment, agility can mean the difference between success and stagnation. Assessing Organization Agility asks the questions and provides the answers that lead to better organizational reflex and more effective response.

Chapter 1
What Is Agility?

Organization agility is a deliberately cultivated capability. Many organizations founded over the last ten to fifteen years have benefited from the experience and knowledge of others and are often more agile than older firms. The usual suspects of agility—Google, Apple, Microsoft, Cisco—are all great companies, but even some of them fail to meet the agility standards we believe are appropriate. What we found most interesting in our research was that there are organizations—often twenty, thirty, fifty, or more years old—that do meet the organizational and performance criteria for agility.

Agility allows an organization to respond in a more timely, effective, and sustained way than its competitors when changing circumstances require it. The management literature now increasingly refers to this ability as a “dynamic capability” that senses opportunities and threats, solves problems, and changes the organization’s resource base.¹ While agile organizations often change, they do not pursue change for change’s sake and are not overburdened by it. Unlike regular capabilities whose value can wither over time, dynamic capabilities allow sustained high performers, such as Limited Brands, Honda, and Campbell’s, to maintain or enhance their relative performance advantages in ways their competitors fail to see or do not fully implement.

Defining agility as the ability to make timely, effective, and sustained change has two implications. First, agile organizations ought to post profitability rates that are (1) higher than the average of their competitive group and (2) that above-average performance should be sustained. Survival is related to but not the same thing as agility. Organization agility results in sustained high performance. Thus our research asked the question, “Are there organizations that have demonstrated sustained high performance?” The answer is “yes.”

We studied the performance patterns in more than twenty different industries, ranging from specialty retail to regulated utilities, over a thirty-two-year period (1980 to 2012). In every industry there were three patterns of profit performance.² There were firms whose profitability was consistently below industry average, firms whose profitability thrashed below and above average over time, and firms that consistently outperformed the industry. When a firm’s annual profitability exceeded the industry average more than 80 percent of the time, we considered it an agility candidate.

The second implication of our definition of agility is organizational. Agile companies ought to have a set of strategies, structures, and systems that distinguish them and drive their sustained high-performance pattern. Our research asked, “What’s different, organizationally and managerially, about the outperformers compared to the thrashers and the underperformers?” Using the survey described in Chapter Two, we found that four routines of agility, summarized in Exhibit 1.1, distinguish the high-performing organizations from the thrashers and the low performers. The high-performing companies have the ability to strategize in dynamic ways, accurately perceive changes in their external environment, test possible responses, and implement changes in products, technology, operations, structures, systems, and capabilities. Individually, these routines may simply seem like basic practices of good management. However, the hard work and expertise necessary to implement and orchestrate them in ways that produce consistent high performance are advanced and uncommon. By executing these routines in concert, over and over again, the agile organizations consistently outperformed their competitors.

Exhibit 1.1 The Routines of Agility

Routine	Description
Strategizing	How top management teams establish an aspirational purpose, develop a widely shared strategy, and manage the climate and commitment to execution
Perceiving	The process of broadly, deeply, and continuously monitoring the environment to sense changes and rapidly communicate these perceptions to decision makers who interpret and formulate appropriate responses
Testing	How the organization sets up, runs, and learns from experiments
Implementing	How the organization maintains its ability and capacity to implement changes, both incremental and discontinuous, as well as its ability to verify the contribution of execution to performance

Strategizing

The strategizing process is how executives manage purpose, strategy, and the capacity of the organization to execute. Few would argue that having a clear, relevant, and shared strategy is an important, well-accepted contributor to organization effectiveness. However, agile organizations don’t define strategy like other firms. For them, strategy has three explicit parts: a sense of shared purpose, a change-friendly identity that is nonetheless stable enough to ground the organization, and a robust strategic intent that clarifies how the firm differentiates itself. Thrashers and underperformers lack one or more of these. Either they have no clear or shared purpose and no integrated view of the central, enduring, and differentiated reasons for their success,³ or they embrace outdated notions of “sustainable” competitive advantage.

Perceiving

The perceiving process is about understanding the context in which the organization operates. Agile companies take special care to accurately sense what is going on in the environment, through multiple touch points, structures, and practices that put managers and employees in direct contact with the business environment, including customers, regulators, and other stakeholders. Employees are skilled at communicating their perceptions of the external world in unbiased and unfiltered ways to company decision makers. They also have the knowledge they need to interpret those messages as important or unimportant, opportunity or threat. All three elements of perceiving environmental change are essential. Sensing without communicating is wasteful; communicating without interpreting is noise.

Thrashers and underperformers are often inward-looking and politicized. They find a high level and intensity of communication and transparency congenitally difficult. They are too busy vying for turf, resources, and position to consider dispassionately the implications of outside signals. In contrast, the external focus of agile companies enables them to face up to brutal facts and embrace versatility.

Testing

An important part of successful innovation is setting up, running, and evaluating tests of new ideas, products, capabilities, or businesses. Agile organizations test and refine their insights from the perceiving process with relatively low-cost experiments. They encourage innovation but also tolerate a good deal of the right kinds of failure. Effective testing and innovation activities range from gathering intelligence, to trying out new ideas on a small scale, to launching full-scale product development programs. In most cases, there are explicit risk management processes with valid success criteria so the plug can be pulled if the test fails. There also are continuous learn...

Table of contents

• Cover
• Contents
• Title
• Copyright
• Introduction
• Chapter 1: What Is Agility?
• Chapter 2: The Agility Survey
• Chapter 3: Scoring Guidelines
• Chapter 4: Agility Profile Interpretation
• Chapter 5: Agility Assessment Applications
• Conclusion
• About the Authors
• End User License Agreement