Why do we hear from large companies more and more sentences like “We are agile now”? What does “agile” actually mean and why do so many companies want to become and be “agile”?
First off, the Duden (dictionary of the German language) defines “agile” as follows: Able to move quickly; alert and flexible. Agile organisational structures should be flexible, adaptable and able to act rather than react in the modern business world. That’s the theory.
What does agility mean in reality and what does it mean applied to the present business world? Agile organisations are un-bureaucratic, able to react quickly and, above else, flexibly to market changes – unlike those well established companies which have been on the market with their products or services for quite some time. They have the spirit of young, dynamic, popping-up-everywhere Start Ups, that are courageous enough to try out new business models and that remarkably often push innovation. Outstanding examples are organisations like Uber, Spotify, AirBnB, Tesla, Tinder and Facebook. Let’s mention Apple in this context, too. The value of these young companies is astonishing: Uber is valued with 68 Billion Dollars (company founded in 2009 (!)), Tesla is valued with about 51 Billion Dollars depending on current share prices (10/04/2017, company founded in 2003) and AirBnB is valued with 31 Billion Dollars (company founded in 2008). What I find particularly fascinating is that all of these companies have revolutionized markets or customers’ needs. Uber turned the global taxi market upside down and created a whole new way of public transportation in the States. During my stay in New York in May 2017, I was surprised to discover that people would call an Uber to go to the next subway station. Things in the world of hotels are very similar to those in the world of taxis. They didn’t anticipate the platform-company AirBnB and have underestimated its power for too long. Last but not least: Let’s ask Nokia, Sony Ericsson and Blackberry how they felt about the launch of the first iPhone in 2007. Now we know that this device turned the entire mobile phone market on its head and created a whole new market. You’ll certainly remember that in 2007 you had no apps on your mobile phone, right?
Agile companies as the aforementioned Start Ups differ from established companies in several ways: A huge difference to established global players from Germany is the companies’ foundation date and the long history of these organisations. Due to their long company history their structures have become highly hierarchical and partly took shape of those found in public institutions. Additionally, their products aren’t located in the digital or tech environment. Nevertheless, they did establish excellent products and services on the market and they (still) play in the Champions League. Critical readers might think: ‘Hey, young man, only one paragraph above you talked about Tesla, the producer of automobiles, or Apple, the producer of smartphones, so the comparison is misleading.’ But whoever sat in a Tesla and after that in a car of a premium manufacturer, knows what I mean. The linkage of technological components with the digital world, the opportunities you obtain with the Tesla app and also the vision of the organisation do not find any valid counterpart within the established producers. But it’s not my intention to go deeper into the comparison with this blog.
What’s for sure is the fact that the declared goal of more and more traditional companies is the urge to become agile – at least that’s what I experience in my daily project consulting work. Unfortunately, in my daily work, I also experience that they often try to replace the IT-departments’ existing project management tools with the management framework Scrum. They define new roles and try to take on meetings out of the framework. However, in most cases, that’s done quite half-heartedly. You’ll find the numbers that proof how many half-hearted attempts there are in Boston Consulting’s survey. The agility of a company lies within its DNA and not in its IT-departments’ project management. It’s crucial that the management supports and carries the agile transformation as a change management with all its consequences and necessary decisions. That, of course, does not only affect the IT-departments. That affects the entire organisation, the collaboration model itself, all the hierarchical levels, and, of course, the daily business of each and every single employee. Words such as “commitment” and “self-organisation” should be understood and supported. Mistakes must be acknowledged. Further definitions like “values, management styles, and leadership” should be worked out jointly. A couple of days ago, I found an excellent example, which (hopefully) brings you closer to my understanding of agility. It also exemplifies pretty well the current situation of the mentioned traditional organisations.
Most people know the airline Ryanair. Mostly frowned at and downgraded as “discounter-airline”, it outpaced the German airline Lufthansa in 2016. The German airline carried 109,67 million passengers (incl. its subsidiaries Eurowings, Swiss and Austrian Airlines), whereas the penny pinchers from Dublin reached the number of 117 million passengers. That made them the biggest European airline. But I’d like to talk about the autumn of 2013. At its board meeting in Dublin, Ryanair had to the worst results since 2008. Among other mistakes, the management pointed out to O’Leary that the customers were being treated badly. “Have you ever purchased a ticket with us – hell!” stated a board member. Reportedly, O’Leary remained silent and announced that it’ll get better in the future. After only six months Ryanair presented their new program “Always Getting Better” in London. Out of the 70 (!) extra charges and of the regular five minutes for booking only a mere fraction of extra charges remained, family discounts were introduced, and the booking duration via app was reduced to a maximum of 90 seconds and three clicks only. Other than that it was announced that the airline would also head for major airports.
“Up to that point, we would only have installed a task force and would have decided on an agenda”, says a leading Lufthansa manager.
I have no idea if Ryanair describes itself as agile. But I don’t think they have to – because their action in itself shows perfectly what I’m talking about.
Agility is about fulfilling the needs of your customers with the entire organisation; not to forget about them and to place them in the foreground – willingly and consciously. Unfortunately, I experience it a lot that the customers are very often NOT in the centre. Politics between different departments and their leads or cost centres take their place instead. Agility is about reacting flexibly to market changes. It’s also about being an active driver of technological change and digitalisation; it’s about taking risks sometimes to inspect and adapt. And about being courageous. It’s about not having detailed plans to follow in the next five years that won’t have any value after only two years, because the world is turning faster than before. That’s how innovations can be encouraged and, at best, how new markets can be formed. That’s how you can establish a culture of constructive criticism in your company, where employees feel free and are allowed to address issues. These are all core elements of agile organisations, in my opinion. It’s not the use of different agile techniques in your project management such as Scrum or Kanban, that is important. To me, it’s absolutely crucial to establish a new agile culture and to be courageous enough to get rid of old patterns.
“Culture eats strategy for breakfast” – Peter F. Drucker
Agile organisations can handle changing requirements of the market, the society and the world more flexibly. That’s why agility is no temporary fad for me, but a mindset to be (more) successful and innovative.