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Agile organisations - taking risk and achieving reward, quickly and effectively
Date of Issue: Thursday, 21 March, 2019
By Steve Fowler MIIRSM
The finest hit factory in the world was founded in the early nineties by Swede, Denniz Pop, who propelled Swedish pop band Ace of Base to global fame with ‘All That She Wants’. Denniz was a real innovator: to test his songs, he'd play different versions of them in packed clubs to assess their dance-floor effectiveness. The best received versions went on to be released. This approach gave his style of pop, an unforgettable immediacy.
Denniz and his team, including Max Martin, the most successful (and still relatively unknown) song writer of the past 20 years, went on to write or produce many of today’s most successful songs, such as Taylor Swift's ‘Shake it Off’ and Katy Perry's ‘I Kissed A Girl’. Their production style, involving iterative testing in clubs is a classic example of one of the best-kept management secret of modern times: agile management.
Whilst agile project management has been in use for over fifteen years, most CEOs have never heard of it. However, agile methodologies applied to whole organisations —involving new values, principles and practices - are today becoming a radical alternative to traditional ‘command-and-control’ management and, as a result, are spreading fast across business.
So what is an agile organisation?
Organisations today face a huge range of challenges in both sustaining and growing their proposition, including:
- Temporary competitive edges
- Competitive pressures
- Establishing alliances and partnerships
- Economic instability
- Regulatory changes
- Rapidly changing customer expectations and needs
- Disruptive technologies
- Democratisation of information through social media, and
- The continuing war for talent.
When traditional organizations have tried to compete in this new environment, it has not always worked out. So-called agile organisations, by contrast, have thrived.
To help provide guidance on the application of business agility concepts at both strategic and operational levels, British Standards Institution (BSI) has recently released PAS1000:2019 ‘Business agility – Concept and framework – Guide’. This document is designed to complement and support BS65000:2014 ‘Guidance on organisational resilience’, and is therefore highly relevant to all risk professionals.
Principles of business agility
Historically, business practices such as risk management, business excellence and corporate governance have failed to ensure organisational success at times of major change. Organisations have typically failed through not having a sufficient level of agility to cope with threats and to take advantage of opportunities. Business agility is designed to overcome these traditional failings through addressing both organisational flexibility and organisational speed. Flexibility entails synergy between strategy and operations, coupled with diversity and reliability. Speed entails being able to analyse information and take action effectively at the right time.
These are underpinned by:
- Understanding probable futures
- Having agile capabilities, and
- Having an agile culture.
In practical terms, these factors are typified by characteristics such as:
1. Intense customer and stakeholder focus, with a shared purpose and vision
Agile organisations are clear about whom they create value for, and how they do it. They are intensely customer-focused, and seek to meet needs across the entire customer life cycle. Further, they are committed to creating value with, and for a wide range of stakeholders, including employees, investors and communities.
To meet the continually evolving needs of their stakeholders, agile organisations design distributed, flexible approaches to creating value, working closely with external partners. Examples include modular products in manufacturing; agile supply chains in distribution; distributed energy grids in power; and platform businesses like Uber and Airbnb. These innovative business models enable both stability and unprecedented variety and customisation.
Agile organisations also form a shared purpose and vision, helping people feel personally engaged with the firm, whether they are employees or customers. Companies like Amazon and Virgin put stakeholder focus at the heart of their firm and, in turn, at the heart of the way they create value.
2. Network of empowered teams
Agile organizations maintain a stable top-level structure, but replace much of the remaining traditional hierarchy with a flexible, scalable network of teams. Networks are a natural way to organise work because they balance individual freedom with collective co-ordination.
These teams operate with high standards of empowerment, alignment, accountability, transparency, and collaboration. The company must also have a framework in place to ensure that these teams are able to operate effectively.
An agile organizational culture puts people at the centre, engaging and empowing everyone in the organization. They can then create value quickly, collaboratively, and effectively. Organisations which do this well, empower and develop their people, have a strong community which supports and grows the culture, and have underlying people processes which foster entrepreneurship and the sort of skills needed for agility.
Agile companies also allocate resources flexibly and swiftly to where they are needed most. They constantly scan the environment, regularly evaluate the progress of initiatives and decide whether to ramp them up or shut them down, using standardised resource-allocation processes to shift people, technology, and capital rapidly between initiatives, into areas of growth.
3. Rapid decision and learning cycles
Agile organisations work using rapid cycles of thinking and doing that are closely aligned to their process of creativity. This way of working can affect every level. At the team level, agile organisations radically rethink the working model, moving away from traditional ‘waterfall’ approaches. At the enterprise level, they accelerate strategic thinking and execution.
There are several characteristics to this way of working:
- Focus on rapid iteration and experimentation.
- Leveraging standardised ways of working.
- Performance oriented
- Transparecy of information, so that every team can quickly and easily access the information they need and share information with others
- Continuous learning where everyone can freely learn from their own and others' successes and failures
- Quick and efficient decision making, prefering 70% probability now, versus 100% certainty later.
4. Enabling technology
In order to design, build, implement, and support the principles set out above, agile organisations use a range of next-generation technology development and delivery practices. Business and technology employees form cross-functional teams, accountable for developing, testing, deploying, and maintaining new products and processes. Technology tends to be seen as an enabler, rather than a ‘hygiene factor’.
Agile business management is likely to become a key theme for all organisations in the coming years in response to the rapidly changing environments we all now operate in. This short article provides a resume of its key features. The challenge now is for risk and safety professionals to evaluate how our approaches should change as a result.
Steve contributed to the development of PAS1000:2019 and leads representation of IIRSM at BSI.