I was recently invited to speak to a leadership team and explain the difference between Agile and Agility.

The company is a traditional financial services company, providing trading services to other companies. New product and market opportunities, customer expectations, and global competition are all putting pressure on the leaders to move faster.

The product development area had recently adopted Agile as a way to get products and features and even fixes out to customers more quickly. It was working well and the business leaders were asking “Can’t we run the whole company this way? Shouldn’t we be using Agile as a new way of working everywhere if we want to be more nimble?”

Agile has been around since the mid-1990s in the software field. It is an effective way to empower small teams to iterate and release products quickly and with better quality and feedback. The teams work on products within an overall strategy and set of priorities, but have a high degree of freedom to organize the work within the team.

Agile comes with its own set of language and practices, including scrums, sprints, stand up meetings, and backlogs. But, at its essence, it is really just a disciplined and rigorous way to run small cross-functional workteams. The roots of Agile go back to the 1980s and experiments with self-managing teams in manufacturing environments.

My sense is that Agile has become broadly popular for a number of reasons:

  1. The prevalence of technology companies and the need for almost every company to develop some software internally has spread Agile, and related practices, widely. More people see Agile in action. At Siemens, Agile has been adopted by product teams developing medical imaging hardware to speed time to market.
  2. The principles underlying Agile can easily be adapted for a variety of initiatives that would benefit from structured, cross-functional management. Why shouldn’t HR think of the performance management systems as a product that needs frequent customer feedback and releases?
  3. Many organization leaders are frustrated with the quality of teamwork and collaboration they see. There isn’t much we need to learn new about teams, but the rigor of actually applying what we know is weak. Over the past 20 years, decision cycle times have sped up, more people need to work globally, and organizations are thinner, reducing the time to invest in the training, trust-building, and organization development support that real teamwork requires. Agile has been a way to bring this back.

And, of course, the appeal of something new and shiny, with cool terminology from the tech world is really appealing!

It is exciting to see this energy and discussion around teams. But, it is important to realize that this is what Agile is – a good way to design and manage teams. If your company makes just one product, is relatively small, and is organized functionally you could potentially run your company using Agile.

But, if you have a multi-dimensional strategy – where you are trying to deliver products, services, and solutions in markets around the world – then team design is not going to be enough.

For this situation, you need organization design. Organization design sets out the architecture of the company including relationships:

  • Between teams within an operating unit
  • Between operating units in a portfolio of businesses
  • Between business units and regional commercial units
  • Between headquarter functional groups and the business and regional units

When these are your concerns, now your interest is really Agility – how to move fast in the market while leveraging corporate assets, how to run a global brand while delivering it with local relevance, and how to build common platforms while tailoring the customer experience.

When you have multiple products delivered to serve multiple client segments around the world you need to find a way to leverage your resources and move fast. True agility allows you to easily form the teams across the global network that you need and then send those teams back to their “homeroom” functions once project work is complete.

This agility only comes through the thoughtful design of vertical and horizontal structures, governance forums and practices, and clear decision rights. The ability to set and communicate strategy (choosing what we do and not do) and priorities (setting a sequence of activity) requires a high degree of coordination across leadership. It is not a ground-up activity.

“Enterprise agility” certainly shares characteristics with “agile teams,” most notably speed and empowerment, but they are concepts at two different scales.

Good team design, including Agile, can help activate your organization design. But, if you want to be fast and nimble while a executing on a multi-dimensional strategy, then design for Agility.

 

Amy Kates and Greg Kesler

Managing Partners