But leaders must be realistic. Not every function needs to be organized into agile teams; indeed, agile methods aren’t well suited to some activities.
Agile companies: Looking at the smallest unit, the point is that small teams are given extensive decision-making freedom, implementation competence, but also responsibility in their tasks. These teams work in network structures. They don’t work linearly or hierarchically.
Do 100% agile companies make sense?
For managers, this means, among other things, “continuously working on the framework conditions that make agile teams possible” (Agile Teams need strong leadership, Bianca Fuhrmann). Already here it becomes clear that the demands on members of agile teams are very high. Professional competence, self-organisation, the ability to work in a team, but also characteristics such as the ability to criticise, intrinsic motivation and self-reflection play an important role.
So how realistic are agile companies? The answer first: With the exception of small companies with 2 to about 150 (possibly 250) employees, a fully agile organization is unreasonable. Why?
In essence, there are three factors:
1. employee: personality and qualification
2. organisation: hierarchical, functional and regional control and steering structures
3. economic efficiency
Employees and Management
The employee is at the forefront. There are a large number of employees in need of leadership and managers who are not willing to lead. At the same time, there are numerous activities in which an agile approach is not desired or necessary. Assembly line work, cleaning activities, warehouse work, onsite service, finance department are just a few examples (quotes from: Roland Jäger, Only clear instructions are effective). In addition, there is the attitude and motivation of employees. Especially those with average or low competence, up to unskilled workers, who as a rule of thumb are not performance-oriented and not intrinsically motivated. Bottom line: a large proportion of employees is simply unsuited for agile methods.
Frustration is also common. Designing the organization of the future is a difficult, sometimes messy project of trial and error, not an exercise on paper. It is a continuous, dynamic, and, in a sense, never-ending process. Yet for companies that rise to the challenge, the payoff can be immense in terms of financial performance, productivity, employee engagement, and a host of other benefits.
Organization sets clear requirements for core processes to create value: “disciplined, repeatable and goal-oriented communication to enable or implement a goal” (Meyers Lexicon). In addition, assigning areas of responsibility to a management body forces hierarchical structures for core processes that simply cannot (or do not want to) provide the necessary framework conditions for agile teams. Classical organizational structures therefore still have their raison d’être and serve a clear purpose. This is completely contrary to a network-based, 100% agile company organization.
Last but not least, agile teams in clearly defined and structured environments do not make economic sense. This is especially true in the area of corporate finance/accounting, but often also in service delivery and production. This is where the experience from organizational theory comes in: networked, agile structures lead to increased communication and coordination costs. A lack of coordination almost automatically leads to duplication of work and to “agile silos”.
So it remains to be said that 100% agile companies are an unreasonable goal from a critical size on. Experience shows that this critical size starts at 150-250 employees.
Use of agile methods
Agile methods appear to be very useful in other areas and are already applied there in many companies with restrictions – long before the keyword “agile” was used. At the same time, agile methods are also useful for adapting core processes, i.e. precisely those areas which are unable, should not or do not want to work in an agile manner. Examples:
It’s always about the people.
So why aren’t there more agile companies?
In case all the above makes sense, why don’t all companies work like this? Reasons for failure:
- communication and resulting coordination is lacking
- organization – embedding agile teams into the organization
- economic efficiency – it is not possible to quantify the ROI right from the start (for example for a fully agile sales organisation)
- (management and employee) mindset – the will to create the necessary environment for agile teams
It is exactly these four points which we will address in the next blog entries of this article series.