Research conducted by CEO’s Dr. Chris Worley at USC’s Marshall School of Business, in partnership with goetzpartners – a German advisory firm – and the NEOMA Business School in France, offers insights into the movement of companies’ agility levels. (A full version of the report can be found here). It extends CEO’s research on digitalization and organization design research suggesting that companies struggle to embed the routines of agility – strategizing, perceiving, testing, and implementing – within their organizations. Here, we discuss some of the management challenges to agile transformation and propose some ways of moving forward.
- First, shared leadership and executive perceptions are key to an agile transformation
Becoming agile requires management clarity. However, many C-suite leaders still overestimate their organization’s level of agility. Although the perception gap between executives and middle managers is closing, the recent flat-footed response by many organizations to the COVID-19 crisis suggests that this gap is alive and well. Successful transformations are characterized by aligned thinking among all managers.
- Second, the transformation to agility requires an orchestrated change process
Respondents in a recent global survey of over 600 executives were asked about the potential barriers to a successful transformation to agility. The results indicate several equally strong barriers and underscore the complexity of an agile transformation (see graph).
70% of participants pointed to poor people management skills, 68% saw different management styles, and 65% cited middle management resistance as key barriers. Employee’s ability to handle the transformation was not the problem! Calling out middle-management support corresponds to the first finding. Executives who believe the organization is already agile may find it too easy to point fingers at middle managers for not getting more agility out of the organization. It also underlines that agility is not just about a strategic pivot. A C-level decision will not, in itself, establish agility at the operational level. Saying you are agile does not make it so.
The data suggest that transformation barriers have a common source. Most managers and executives lack the necessary skills to initiate and sustain a transformation. Becoming agile or engaging in an agility transformation requires a diversity of management skills focusing on multiple orchestrated changes on multiple fronts:
In particular, transformation processes should address these issues:
- Top management must not only initiate and support the change, they must align the transformation by handing over to middle managers operational decision rights on key issues.
- An inclusive change narrative must be crafted that makes leadership style diversity an advantage. The transformation to agility is not a cookie cutter leadership dilemma. It requires a diversity of management styles to support the pursuit of core business efficiency on the one hand and the pursuit of innovation on the other.
- Middle managers and employees often know more about customers than executives. They must be involved in creating and designing the constellation of practices and policies that will support agility.
The complexity of the transition to agility is apparent. It must be initiated by strategic decisions at the senior management level, but the organization is not properly agile until it is able to make timely and effective change routinely. That requires a review of multiple dimensions in the organization, from a loosening of rigid hierarchical control to iterative working methods in product development to incentives for learning. Selecting the most transformative program is important but so too are the steps that will resonate with the company’s employees and guarantee their support for a successful and holistic change.