Organizational agility is a hot topic in business circles. But what does it actually mean? More importantly, how can your company achieve and measure it so that you're able to constantly improve and stay ahead of the competition? Keep reading and we'll answer all of these questions for you in this article!
Organizational Agility: A Definition
According to McKinsey, organizational agility is: "The ability of an organization to renew itself, adapt, change quickly, and succeed in a rapidly changing, ambiguous, turbulent environment."
The more flexible your company is and the faster it can adjust to inevitable industry changes, the better prepared it will be to win market share, improve organizational efficiency, and boost customer satisfaction and loyalty.
There are different forms of organizational agility. Here are a few:
- Operational Agility: This form of agility refers to an organization's ability to quickly adapt to new opportunities with the potential to improve operational efficiency.
- Portfolio Agility: This form of agility refers to an organization's ability to quickly move company resources to better the business as a whole.
- Strategic Agility: Finally, this form of agility refers to an organization's ability to adapt and gain competitive advantages via new innovations as quickly as possible.
A truly agile company will have mastered operational, portfolio, and strategic agility forms so that they can thrive in all situations.
The Benefits of Organizational Agility
What's the big deal? Why should your company prioritize organizational agility and work to become as nimble as possible? There are many reasons. Here are a few of the most important:
Adapt to Change
Things in business are always changing — oftentimes in complex ways. What works today, might not work tomorrow. The companies that are able to anticipate incoming changes, pivot with speed, and capitalize on new trends, technology, etc. generally have the most success.
The only way to pivot quickly is to prioritize organizational agility so that your business is properly prepared when the time comes to make a shift.
Higher Revenue Growth
Agile organizations often achieve higher revenue numbers. It makes sense: if a company is able to capitalize on new trends and ideas before its competitors, it will be able to release new products and services faster and secure new customers with less effort.
Also, organizational agility relies on clear roles and tasks for all company personnel. When you're team knows exactly what they need to do, they'll be able to do it more efficiently, thus reducing wasted hours and boosting your business's bottom line.
More Engaged Employees
Lastly, organizational agility usually leads to more engaged employees. Why? Because modern workers want to be a part of exciting companies where innovation is valued and encouraged. Agile businesses generally fall into this category.
Employee engagement is extremely important because the cost of turnover is high. The average staffer will change jobs 12 times over the course of his or her career. Every time they do, it will cost the company they leave 1.5 - 2x their annual salary. By prioritizing organizational agility, you can better engage your employees and reduce staff turnover.
How to Make Your Organization More Agile
The importance of organizational agility is clear. But how does a company become more agile? The following five steps will allow your business to become more nimble.
1. Adopt the Right Mindset
True organizational agility starts with the right mindset. You have to prioritize agility, while still maintaining stability. Referring back to McKinsey:
"Dynamic practices enable companies to respond nimbly and quickly to new challenges and opportunities, while stable practices cultivate reliability and efficiency by establishing a backbone of elements that don’t need to change frequently."
You can find the right balance between dynamic and stable practices by identifying the backbone of your organization, i.e. the things that remain steady like business structures and processes, and combining them with agile principles such as a flexible resource allotment strategy, cross functional collaboration, and employee autonomy.
2. Hire the Right People
The Human Resources department plays a large role in how agile an organization is. The folks your company hires will either make it easy to increase agility or nearly impossible. That's why it's important to hire with organizational agility in mind.
Rather than only hiring for specific skill sets like content marketing expertise, hire employees who exhibit above average creativity and curiosity and are able to easily collaborate with others as well. It will also be beneficial to employ staff members who display an entrepreneurial spirit, as they'll be more capable of working autonomously and innovating.
This hiring philosophy will ensure your team has the expertise it needs to complete its work, but will also preserve organizational agility via worker mindsets that allow for innovation. This balance within your company's workforce is essential.
3. Create a Vision With Goals
A consistent, company-wide vision that all employees can work towards using predetermined actionable strategies will help to ensure organizational agility too. In fact, this is one of the key principles missing from slow, plodding businesses who are stable, but completely unable to quickly adapt to changing environments.
A shared company vision also helps to boost employee engagement, which, in turn, increases individual job satisfaction and team productivity and reduces staff turnover.
Lastly, a clear vision, broken down into set of goals, will help you better prioritize your team's efforts and accomplish tasks that have the greatest organizational impact. By increasing efficiency, you'll also boost your company's agility.
4. Remove Organizational Silos
Most companies are structured in ways that restrict inter-departmental collaboration. Marketing, sales, and product divisions, for example, all focus on their individual tasks, only working together when they absolutely have to.
The problem is, silos restrict agility. It's much easier to react to industry changes when all teams are comfortable working together. Rather than trudging through bureaucratic red tape (e.g. getting buy-in from multiple department heads, each with their own agendas), teams can quickly make decisions because all management professionals are on the same page and working towards the same common goals, as defined by the company vision.
Unfortunately, removing silos can be difficult — especially for businesses that have used a siloed organizational structure for most of their history. It's not impossible, though.
Each of the tips we've already mentioned (and the one we'll mention in the next step) will help break down walls between departments:
- Adopt the Right Mindset
- Hire the Right People
- Create a Vision With Goals
- Iterate and Improve
Here's another tip: use the right tools. There are an abundance of technology solutions that will help you connect and collaborate with your colleagues — even if they happen to work in different departments. One of those tools is CloudApp.
CloudApp combines screen and webcam recording, GIF creation, and image annotation features into one intuitive application that can be used for free. Get started today and make office communication much easier and more enjoyable.
5. Iterate and Improve
Finally, to improve organizational agility, you have to analyze your efforts in this area and adjust them accordingly. For example, you may find that your company vision isn't understood by all team members, causing conflicts of interest amongst your staff. By simply redefining your vision in a more comprehensive way, you can eliminate this problem.
You should always be looking for ways to iterate and improve — that's what makes a company agile, after all. Without the ability to change quickly while maintaining stability, your business will remain a slow-moving machine.
How to Measure Organizational Agility
How agile is your company? You won't really know unless you learn how to measure organizational agility for yourself. Here are a couple of tips:
Understand Your Industry
Wayne Gretzky, one of the greatest professional hockey players of all time once said, "I skate to where the puck is going to be, not where it has been."
Similarly, the most agile organizations don't just react to industry changes, they anticipate them and adapt their strategies to take advantage. The only way to do this consistently is to have your finger on the pulse of your industry.
You must understand where your industry has been and where it's most likely to go. That way you can prepare your organization to adapt at break-neck speed. Then you can begin to gauge your organizational agility based on how well you've predicted change.
When you understand your industry, you can also measure agility in regards to your competition. Your company may be slow when compared to a small tech startup. But this information isn't relative if you sell health products. Instead, measure your organizational agility against similar companies in the same or adjacent fields.
Measure the Right Metrics
At first blush, the tip "measure the right metrics" seems overly obvious and unhelpful. But the fact remains, if you don't track and analyze the right figures, you'll never improve organizational agility. But here's the thing: the right metrics vary from company to company.
You need to choose important metrics for your company to measure, which can be found by analyzing your overall company vision. Which numbers will help you become more agile and achieve your goals quickly? These are the metrics worth measuring.
2 Organizational Agility Examples
Organizational agility is more than a popular buzzword in business circles. It's been used by countless companies to achieve success. Here are two organizational agility examples you can learn and draw inspiration from:
Source: Hey Gateway
In 2012 T-Mobile was on the brink of disaster. The company was losing customers, ranked last in customer satisfaction surveys, and simply couldn't keep pace with its competition in the ever-changing mobile phone industry.
Today, T-Mobile is disrupting the world of wireless devices and thriving in the process. What changed? Led by CEO John Legere, T-Mobile simply increased its organizational agility.
The wireless carrier decided to update its approach to business, become customer-centric and remove things like costly roaming fees and employee incentives that killed customer satisfaction, and embrace change rather than fear it.
Source: Business Insider
Think back to the mid 2000s when there was a Blockbuster in every town and people spent their Friday evenings perusing physical shelves full of DVDs. Netflix offered a more convenient alternative: choose the movies you want online and have them sent directly to your door.
This philosophy helped Netflix grow in popularity. But it wasn't until the company invested into streaming that it became the business behemoth we know it as today.
Netflix management saw where their industry was headed and took action. This display of organizational agility is what's made the company so successful and turned its founders into billionaires. Not bad!
Boost Your Business
Organizational agility, a company's ability to adapt to changing environments, is increasingly important. Nimble businesses experience easier transition times, higher revenue growth, and more engaged employees.
While it will take time and effort, if you follow the five steps we outlined in this article, you'll eventually see your organization increase its agility.
- Adopt the Right Mindset
- Hire the Right People
- Create a Vision With Goals
- Remove Organizational Silos
- Iterate and Improve
Looking for tools to increase organizational agility? CloudApp is the perfect solution. Use our solution's screen and webcam, GIF creation, and image annotation features to easily collaborate with colleagues and break down departmental silos. Get started today for free