What the C-Suite Must Do to Make the Whole Firm Agile

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September 11, 2018

By Steve Denning

Business agility is a key C-suite responsibility.

When Agile management was seen as something happening in the basement of an organization among software developers and their unintelligible computer codings, the question of the role of the C-suite in Agile didn’t arise: the C-suite generally had no larger role than it had in the supervision of the firm’s plumbing or its electrical system.

Indeed, the C-suite was often relieved that it didn’t have bother, even as it became steadily more apparent that software was not only eating the world: the future of all firms was increasingly bound up with how they managed software. In a prescient sign of the times, in 2015, Bloomberg’s Businessweek devoted a whole issue—38,000 words—to managing computer coding and coders.

As it became apparent that the pace and complexity of change in the marketplace required the whole organization to become more nimble and more innovative, “Agile software development” began morphing into “business agility” and “organizational agility.” When that happened, it was obvious that the role of the C-Suite was central. It had to get involved.

Thus, McKinsey and Company now defines “organizational agility” as “the ability of an organization to renew itself, adapt, change quickly, and succeed in a rapidly changing, ambiguous, turbulent environment,” or even more broadly as “the ability to quickly reconfigure strategy, structure, processes, people, and technology toward value-creating and value-protecting opportunities.” So defined, “organizational agility” necessitates the active involvement of the C-suite.

Progress towards business agility

And executives have gotten the message. A recent survey by Deloitte shows that more than 90% of senior executives give high priority to becoming agile. This in turn reflects findings by McKinsey and others that firms and units implementing Agile do better financially than those that don’t. Yet success in implementing business agility is still slow: less than 10% currently see their current organization as “highly agile.”

A just-released report entitled “The Business Agility Report (1st Edition, 2018)” by the Business Agility Institute (BAI) illustrates some of the dimensions of the changes under way, particularly the role of the C-suite and the progress towards implementing organizational agility. (For the methodology of the survey, see below.)

Agile progress correlated with the level of leadership

The BAI survey shows that progress towards business agility correlates positively with the level of leadership of the Agile journey. Not surprisingly, the higher the level of leadership, the greater the progress towards business agility. (Figure 1) (To view the figures, visit https://www.forbes.com/sites/stevedenning/2018/09/09/what-the-c-suite-must-do-to-make-the-whole-firm-agile/#4cf4ed1156ce.)

In the BAI survey, leadership is perceived as the top implementation challenge for business agility (Figure 2). This is also not surprising: if we are talking about “reconfiguring strategy, structure, processes, people, and technology toward value-creating and value-protecting opportunities,” leadership must be central.

What is surprising, though, is that “customer alignment” was seen by survey participants as the least important challenge. This is hard to reconcile with the fact that one of the most common leadership shortfalls observed in specific Agile implementations is the failure of leadership to focus the whole organization on delivering value to customers, and to give everyone in the organization a clear line of sight to the customer. Is it possible that the survey participants missed this vital connection between leadership and customer focus?

Agility correlated positively with duration and scope

A frequent early critique of Agile management was that it couldn’t scale and wouldn’t last. The BAI survey suggests the opposite. According to the survey, the success of the Agile journey correlates positively with the duration of the Agile journey (Figure 3) and with its scope: the more areas covered, the greater the success (Figure 4).

Big firms are making slower progress towards agility

According to the BAI survey participants, big firms are making slower progress in implementing business agility. In the survey, organizational size correlated negatively with business agility (Figure 5).

This finding needs to be viewed together with the fact that when large firms have mastered Agile management practices, they have become the most valuable and fastest growing firms on the planet: Apple, Amazon, Facebook, Google and Microsoft. Organizational agility may be hard for a large firm to embrace, given the deep change in mindset that it involves, but when it is mastered, the gains can be extraordinary.

The BAI survey methodology

The BAI survey included 394 participants in firms of all sizes (Figure 5) and from all parts of the world (Figure 6)

The participants came from all levels of the organization and their opinions did not significantly differ according to organizational level (Figure 7)

The survey used a rating scale from 1 to 10 (Figure 8).

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