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The age of agile
Today’s “VUCA” environment – one of volatility, uncertainty, complexity and ambiguity – is marked by rising cost pressure, rapid innovation in technology, rapidly changing preferences of digital native customers, and the fast growth of disruptive competitors. As an organizational response to the changing nature of the business environment, agile has emerged as a vital approach that embraces a comprehensive and holistic operating model for organizations complemented by the question of what is required from a cultural and leadership perspective. While businesses rely more on technology to foster innovation and stay competitive, along with the necessity of adopting new work models to be an appealing employer, agile is becoming an integral part of the operating model for companies as well as a preoccupation at board level. However, as benefits of agile are only limited without leadership and culture that align with its principles and values, agile methodologies require a shift in mindset and a supportive organizational culture.
For this report, we have surveyed over 200 corporations in German-speaking countries designed to assess whether agile is a key theme for organizations of different sizes and sectors, and to identify the extent of adoption of agile operating models as well as to identify what is working well or not.
Key findings
- 1While agile is a key theme for companies across industries, only around 30% of companies leverage the full potential of agile
- 2There is a fundamental difference between “doing agile” and “being agile”, while benefits mostly come from “being agile”
- 3Top management commitment to the agile transformation is not perceived equally across hierarchical levels, although successful agile transformation requires strong leadership commitment
- 4Establishing an agile governance is crucial to get from “doing agile” to “being agile”, yet it is precisely this layer that frequently falls short and poses significant challenges for many organizations
- 5The benefits of agile are very limited if standardized tools are implemented without tailoring them to an organization's needs and not supported by a technology foundation
The agile operating model
The agile target operating model (TOM) consists of three essential levels: agile leadership and culture, agile governance, and the agile way of working. These interconnected levels form the backbone of an organization's agile transformation.
While only around 30% of companies leverage the full potential of agile, there is a fundamental difference between “doing agile” and “being agile”. Therefore, the agile TOM serves as a “north star” for organizations seeking to harness the power of agility. It is crucial to go beyond the initial stage of simply "doing agile" and aspire to truly "be agile". While many companies may find themselves stuck at the "doing" stage, it is essential to progress beyond it in order to fully reap the benefits.
The status quo of agile transformation
Transforming to an agile organization demands a fundamental redesign of the operating model and its three levels.
While the most crucial element in this transition is culture and leadership, there is a revealing disparity in perception regarding top management commitment across different management levels.
Establishing an agile governance is fundamental to get from “doing agile” to “being agile”, yet it is precisely this layer that frequently falls short and poses significant challenges for many organizations. Transforming to an agile governance means introducing agile budgeting processes and establishing scaled portfolio management, aligning goal setting to the “new world” of agile, and updating reward and incentive programs to suit the new way of working.
The way of working level is where we find the highest level of agile adoption reported by companies, which is often independent of whether they have implemented a formalized and leader-driven agile transformation strategy. However, the effective use of these tools is often lagging behind. To fully harness the benefits of agile, organizations must go beyond the mere implementation of standardized tools, but ensure that these tools are tailored to their specific needs and are kept a jour.
Success factors for agile transformation
It takes courage and patience to stay the course as agile transformations cannot be achieved overnight. Companies should not set over-ambitious targets, and must stay realistic regarding scope and timeline. The right culture is amongst the most important elements of the transition and culture change is often slow and challenging.
The most important success factors for an agile transformation can be summarized as follows:
- Agile operating model: “Doing agile” is not “being agile”. To exploit the full power of agile, companies need to fundamentally redesign the entire operating model
- Agile leadership and culture: Agile is a means, not an end. Leaders must answer the fundamental question: "What are strategic goals to be achieved through agile transformation?"
- Agile governance: An agile governance is crucial to get from “doing agile” to “being agile”. Leaders must ensure that “formal” governance such as budgeting, goal setting, and portfolio management get transformed
- Agile way of working: Instead of blindly implementing scrum and other tools, they should be adjusted and personalized to meet the actual needs of the people in the organization
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