For some years, inavit iQ have been using the Business Value Model (BVM) as one of the frameworks for engaging with client systems. The BVM utilises the following logic:
- The realisation of specific business benefits (such as operating profit, top-line revenue and market share);
- is dependent on the creation of customer delight (loyal and satisfied customers) which is a direct result of the delivery of value adding products / services;
- by high performing people;
- who work in a fit-for-purpose work environment (organisation capacity with respect to business process, organisation structure, human capital, information flow and technology);
- who are led and managed by capable, competent and credible leadership;
- towards a common goal and strategy; and
- that addresses the dynamics of the competitive landscape in an innovate manner that allows the business to compete in its external environment.
The Idea in Brief
Given the logic of the BVM, many enterprises are adopting “Agile” principles as a way to increase speed and flexibility in the execution of strategies and tactics. Having said this, in our experience with a number of client systems across various industries, application of the principles of “agile” also presents some specific challenges.
Although many organisations understand the need to be quick and responsive in a global economy and in markets that are constantly changing, many are not optimally structured to do so.
There is no singular “agile organisation” design. However, through changing the way that Organisation Design is done, and aligning leadership, employees, operational governance, control and management routines, as well as key support and enablement functions and practices, organisations are more likely to establish an appropriate level of agility for them to be sustainable over the longer term.
The solution to be delivered by appropriate organisation design must therefore be to leverage Agile Organisation Design as (1) a mechanism through which to create an enabling environment where agile technology deployments can succeed and realise the intended benefits, and (2), a process by which organisations are geared to become more adaptive and responsive to change.
Agile Organisation Design in Context
Key Terms: What Agile is, and what this Article is NOT About
Agile is an umbrella term for several iterative and incremental software development approaches where technology requirements and solutions evolve through the collaborative effort of self-organising and cross-functional teams and their customer(s) / end-user(s). It advocates iterative development, continual improvement, and rapid and flexible response to change. Some of the most popular Agile frameworks include Scrum, Scaled Agile Framework (SAFe), Crystal, Dynamic Systems Development Method, and Feature-Driven Development.
This article is however not about Agile software development, nor a specific Agile framework. It will position Agile Organisation Design as (1) a mechanism through which to create an enabling environment where agile software development approaches can realise the intended benefits, and (2), a lever through organisations can become more adaptive and responsive to change.
Agile Organisation Design in Context – Agile Organisations vs Traditional Organisations, and the Implications for the Practice of Organisation Design
Before going into the detail around what is meant with Agile Organisation Design, it is important to put Agile Organisation Design in context.
In simplest terms, the intent of Organisation Design is to define the requisite operating environment for organisations to efficiently and effectively function through aligning process, technology, data and information, and structure, and subsequently, aligning people (talent) with structure. Most organisations however recognise that traditional operating environments and ways of working will not enable them to be sustainable over the longer term and aspire to become more agile. It is within this context that Agile Organisation Design can be applied as a mechanism for organisations to become more adaptive and responsive as a system.
The table below illustrates the difference between traditional and adaptive / responsive / agile organisations as the context for Agile Organisation Design (Ambrose & Morello, 2004; Denning, 2018; Leybourn, 2014; McKinsey Global Survey Results, 2010).:
|Traditional Organisations||Agile Organisations|
The implication of organisations becoming more agile on the practice of Organisation Design are therefore that:
- Traditional Top-Down Organisation Design does not work anymore due to the rate of change that the agile organisation generates – once structure is done, what we do and have to do, and how we do it has already changed
- As such, structure tends to emerge from rapid changes as opposed to being scientifically and systematically designed; and it therefore
- Requires a shift in thinking from structure towards what we should do, and how it should be done.
What is Agile Organisation Design?
To set the scene for what we mean with Agile Organisation Design, the table below provides a comparison between Traditional and Agile Organisation Design. The section to follow will then provide more detail on specifically how we see Agile Organisation Design (Cantor, 2018; Dewar, Ebrahim, & Lurie, 2018; Leybourn, 2014; Thibodeaux & Faden, 1994).
|Traditional Organisation Design||Agile Organisation Design|
Agile Organisation Design at a Glance
The figure below illustrates what we mean with Agile Organisation Design.
From the above, Agile Organisation Design can be described as:
- A Top Down AND iterative Bottom-Up process, connected through business functions and process; that is
- Informed by a clear Vision, Intent and Purpose; geared towards
- Meeting end-customer requirements, AND realising key business benefits;
- Incorporating iterative changes that new technology capabilities bring, and lastly
- Considering potential legal and regulatory, financial and people implications.
The Implications of Agile Organisation Design
In light of the above, it is clear that Agile Organisation Design requires different stakeholders to actively collaborate. In the first place, to align on the upstream dependencies, and secondly, to enable and “give effect” to the design and downstream requirements for change. This section aims to outline the implications of Agile Organisation Design on (1) leadership and employees, (2), operational governance, control and management routines, and (3), key support and enablement functions and practices (Ambrose & Morello, 2004; Denning, 2018; Leybourn, 2014).
The Implications of Agile Organisation Design on Leadership and Employees
|SO WHAT?||In light of the above, we recommend that Agile Organisation Design is coupled with a Leader-Led Transformation Initiative (ideally to start before design commence), and that leadership storytelling be incorporated as a practice to enable organisational transformation.
Building individual resilience and equipping employees with the required inter-personal skills should also be a key priority, whilst at the same time focussing on building broader and “forward looking” technical and functional competencies.
The Implications of Agile Organisation Design on Operational Governance, Control and Management Routines
Operational Governance, Control and Management Routines
|DECISION AUTHORITIES AND DECISION- MAKING PRACTICES||To enable teams and organisations to be able to respond quickly, power and authority should be redistributed. Practically it means that decision authorities should be horizontally decentralised, and vertically decomposed so that people can operate with higher levels of autonomy to make decisions, and therefore also take accountability. Remove bureaucratic boundaries and reassign decision authorities.|
|SELF-MANAGED TEAMS||Collapse hierarchical levels and functional boundaries to create teams with the accountability, responsibility and authority to create a functional, intra-team structure whereby they self-organise work and members towards achieving customer-oriented outcomes. Would require a significant shift in the “management mantra” from tasking and overseeing, to enabling and contributing.|
|COMMUNICATION||Instead of one-way top-down communication, communications should be horizontal with continual feedback loops, enabled through consistent, transparent, and unrestricted flow of accurate and reliable data and
(Denning, 2018; Leybourn, 2014)
The Implications of Agile Organisation Design on Key Support and Enablement Functions and Practices
Key Support and Enablement Functions and Practices
|INFORMATION TECHNOLOGY||Should become truly business and customer centric to be able to respond quickly to changing requirements. “Collapse” and consolidate different roles into scrums (i.e. Business Analysts, Developers and Testers in one team) to minimise the number of alignment points across the IT Value Stream.|
|FINANCE||Reconsider annual budgeting and planning cycles towards a more dynamic process (enabled by Financial Business Partnering) where roadmaps and plans are revisited quarterly or monthly. Also explore venture-capital-style budgeting where minimally viable products can be launched without formal (and often painful) cost benefit analyses and business casing, and future funding determined by actual product performance.|
|SUPPLY CHAIN AND PROCUREMENT||Consider flexible supply chain and procurement strategies, processes, policies and procedures to shorten the turnaround time it takes to acquire the required capacity (whether people, tools and equipment, infrastructure etc.).|
|HUMAN RESOURCES||HR should review and redefine Capacity Planning and Learning and Development practices to become much more future oriented. Ensuring that the organisation has line of sight of future capacity requirements, how existing capacity can be mobilised, and to eventually ensure it has access to the right talent at the right time has become the critical success factor of HR.|
|LEGAL AND REGULATORY||Involve legal and regulatory expertise “before the fact” as guide / advisor, instead of “after the fact” as compliance checker / constraint. Practically, involve legal, regulatory and compliance stakeholders at the onset of any initiative in order to proactively identify and mitigate potential constraints e, and if not possible to mitigate, redirect and guide initiatives.|
(Comella-Dorda, Lohiya, & Speksnijder, 2016; Ambrose & Morello, 2004; Denning, 2018;)
Traditional Top-Down Organisation Design does not work anymore due to the rate of change that the agile organisation generates. Organisations should therefore consider Agile Organisation Design as a lever to enable them to adapt to and respond efficiently and effectively to all levels and types of change.
About inavit iQ
inavit iQ (Pty) Ltd is a South African based international business consulting professional services firm. We have a formal presence in Gauteng, Western Cape, Mauritius and Europe.
We work in a range of industries and with companies of varying sizes and in various phases of their own growth cycle. Our collaboration with clients focuses on:
- Developing insight into their external context and competitive landscape;
- Strategy formulation and alignment;
- Leadership excellence and leadership-led business transformation;
- Organisation capacity including business and operating models, organisation, work, data and systems architecture;
- People performance, engagement and commitment;
- Customer delight and brand reputation; and
- Decision-making dashboards and intelligence.
Ambrose, C and Morello, D. (2004). Designing the Agile Organization: Design Principles and Practices, January 6, Gartner Research Strategic Analysis Report.
Cantor, B. (2018). Special Report: Customer Journey Mapping., www.customercontactweekdigital.com.
Comella-Dorda, S., Lohiya, S., and Speksnijder, G. (2016). An operating model for company-wide agile development, https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/an-operating-model-for-company-wide-agile- development.
Denning, S. (2018). How To Make The Whole Organization Agile, https://www.forbes.com/sites/stevedenning/2015/07/22/how-to- make-the-whole-organization-agile/#32ad96735841.
Dewar, C., Ebrahim, S, and Lurie, M. (2018). Agility: mindset makeovers are Critical, April 30, McKinsey & Company.
Leybourn, E. (2014). How to Structure an Agile Organisation, http://theagiledirector.com/article/2014/01/07/how-to-structure-an- agile-organisation/.
McKinsey Global Survey Results. (2010). Taking organizational redesign from plan to practice, McKinsey & Company.
Thibodeaux, M.S. and Faden, S.K. (1994). “Organizational Design for Self‐Managed Teams”, Industrial Management & Data Systems, Vol. 94 Issue: 10, pp.20-25, https://doi.org/10.1108/02635579410073495.