(by Christiane Prange; Dec 29, 2015)
Recent studies of management fashions have contributed to our understanding of the forces underlying the rise and fall in popularity of new management techniques. As organization theorist Eric Abrahamson says, a management fashion…”is a relatively transitory collective belief, disseminated by management fashion setters, that a management technique leads rational management progress.” (1) Over the last 20 years or so, we have seen wave after wave of management fashions from business process engineering (BPR), balanced scorecards, organizational learning, knowledge management, ambidextrous organizations and the like. While these concepts generated a lot of buzz in the business world, several of them were short-lived and some became even discredited. Most of them were actually cyclical phenomena triggered by both endogenous and exogenous forces. For instance, BPR is a practice of rethinking and redesigning the way work is done to better support an organization’s mission and to reduce costs. It emerged in the 1990s as a reaction to the economic crisis and the recession of the late 1980’s and early 1990’s.
Similar triggers are likely to have been in place for the emergence of agility in management: numerous new competitors have turned up on the global landscape, starting with emerging market firms that challenge the dominant players as well as small niche market companies that enter the market with accelerated speed; new industry definitions require cross-boundary knowledge, for instance, in optoelectronics, or multimedia. Sudden shifts in market conditions, due to political or economic instability change the portfolio of target markets and make future revenues less predictable. A couple of facts illustrate these changes:
- A third of Fortune 500-companies in 1970, did not exist anymore in 1983. And many of them that scored among the top-10 in 2015, were not even present ten years ago.
- The “topple rate” at which big companies lose their leadership positions, has more than doubled, suggesting that “winners” have increasingly precarious positions.
- Product vitality rates, which measure the percentage of revenues coming from new products during a certain time, usually three years, are going up.
- Black swans: High-impact surprises that cannot be planned for because the organization cannot know they needed to plan for them, e.g., the sinking of the Titanic or the rise of the Internet
Endogenous triggers may have also spurred the emergence of agility in management. Work priorities are changing, companies are transforming employment contracts, project-based temporary work substitutes for life-long company affiliation. Hierarchies are less important than entire talent pools – inside and outside the company. And digital challenges dilute both time and space of work engagements. Companies more often have to reinvent themselves, moving away from notions of structures to focusing on processes, communication, and cross-boundary collaboration. With these developments in place, it is no wonder that companies search for recipes that help them better react to uncertainty and unpredictability, even though this involves the illusion of controlling the uncontrollable.
Another important reason for the hype of agility as management fashion is partly created and reinforced by other players in the market. Especially the notion that management discourse matters because it shapes the diffusion of management techniques has attracted attention by those who produce this discourse (2) – management consultants in the first place. Today, nearly every major consultancy firm has something to say on agility. And even though words, frameworks, and colourful graphics occasionally differ, in the end, it boils down to one thing: Agile is important these days.
While some companies simply use synonyms, like corporate, organizational, or firm agility,(3) others focus more on functional areas, like IT, marketing, or supply chain agility. (4) And what is at the core of their recommendations seems valid for most businesses today:
- Respond purposefully to short-term urgencies;
- Seek out experiences to learn from;
- Change the business models readily as needed;
- Execute strategy more quickly than less agile rivals;
- Innovate faster and in new ways;
- Quickly respond to changing customer needs;
- Be change-capable and anticipate change;
- Initiate action.
Does that mean we are all trapped into believing that the business world is in need of agile management practices while, in reality, we should be less susceptible to the crazy ideas hatched by academics, gurus and consultants? Probably no. Agile has a much longer history than that of the last five years of consultants’ attention and some of its founding fathers describe methodologies that offer promising potential for management. Indeed, agile is a sound methodology rather than just buzz.
What actually is Agile and where does it come from?
Everybody probably has a fair notion of what agility, but if asked to say what it precisely is, most of us would still struggle. A look at some selective definitions (5) illustrates that, for many people, agility has something to do with speed. However, agility goes much beyond this.
- The term agility refers to a firm’s ability to accelerate the activities on critical path, and is, therefore, a direct indicator of a firm’s time-based competitiveness (Kumar & Motwani, 1995, p. 36)
- Corporate agility, the capacity to react quickly to rapidly changing circumstances, requires a focus on clear system output goals and the capacity to match human resources to the demands on changing circumstances (Brown & Agnew, 1982, p. 29)
- Agile enterprises react quickly and effectively to changing markets, driven by customized products and services (Bottani, 2009, p. 340).
A look in the past illustrates that there are, at least, four major origins of agility: sociology, education, manufacturing, and information technology / software development with broader notions of agility that incorporate reflection, learning, and choice.
Agile in Sociology: In 1950, sociologist Talcott Parsons introduced a scheme, which is a systematic depiction of certain societal functions every society must meet to maintain stable social life.(6) He called this scheme AGIL, certainly without having in mind the major ramifications of the term at later times. However, what is striking is that his AGIL paradigm, as part of his larger action theory, represents the four basic functions that all social systems must perform if they are to persist. (1) Adaptation: the problem of acquiring sufficient resources; (2) Goal Attainment: the problem of settling and implementing goals; (3) Integration: the problem of maintain solidarity or coordination among the subunits of the system; (4) Latency: the problem of creating, preserving, and transmitting the system’s distinctive culture and values. For Parsons, society is a complex system whose parts work together to promote solidarity and stability (they strive for equilibrium), and hence he defines the social structure as any relatively stable pattern of social behavior. An analysis of the social system is thus a consideration of ordered processes of change in the interactive patterns of actors within a structure (the norms behind the goals and means). Actors have status roles or positions within the structure itself, and in relation to other actors via interactions
Agile in Educational Theory: Agile is fundamentally about learning, people, and change, the three things many companies struggle with and handle poorly at the present time. Agile methods can be a powerful heuristic to transform companies into agile organizations. Moreover, agile as a doctrine reverts back to research on education and self-organized learning starting in the late 1960s (7), where agility characterized a learner’s mindset, behavior, and reflection processes. Researchers like Vygotzky suggested a change from teacher to learner-centric and interactive knowledge development. Under the label of “agile pedagogy” a development started that has focused more on interactive content development, collaborative learning and both social and personal instead of functional learning. Some universities have even incorporated agile project management for learning where small project steps are used to acquire knowledge and apply it directly to practical problems. The most prominent representation of agile principles in universities is probably to be found in student consulting firms with direct customer relations and contracts where learning results can be immediately tested and if necessary refined.
Agile in Manufacturing: In 1991, agility became a popular concept in manufacturing, introduced by a group of scholars from the Iaccoca Institute of Lehigh University who popularized the adoption of agile manufacturing strategies as a way to ensure the competitiveness of American firms in the emerging digital and global economy. The aim of agile manufacturing in the United States was to outperform overseas competition and to help the country regain the pre-eminence it had enjoyed prior to the emergence of Asian high-growth economies. In their so-called Lehigh-report from 1991, researchers recommended a simultaneous improvement of quality, time, and costs, the enhancement of customer relationships, flat hierarchies as well as a stronger focus on human resources and innovative personnel policy. In sum, an agile system with extraordinary capabilities can emerge: A system that shifts quickly (speed, and responsiveness) among product models or between product lines (flexibility), ideally in real-time response to customer demand (customer needs and wants). Within the next few years, the Agile Manufacturing Enterprise Forum (AMEF) was established with a focus on further refining the original agility concept.
Agile in Software Development: The fourth set of ideas about agile and agile methods dates back to 2001 when several developers thought about new ways of software engineering.(8) “Agile” was seen as a set of values and principles, guided by self-directed, low-risk, and adaptable step-by-step-development for the delivery of IT projects. Instead of suffering from time-consuming, inflexible, highly complex and inefficient procedures, agile methods (such as SCRUM or extreme programming) provide more flexibility to adapt to changes over time. An agile approach is different from traditional processes, such as the “waterfall approach” which follows a step-wise linear planning sequence; it is more iterative, focused on interaction, collaboration, and continuous responses to change. The Agile Manifesto of 2001 suggests the following four principles:
- Individuals and interactions over processes and tools
- Working software over comprehensive documentation
- Customer collaboration over contract negotiation
- Responding to change over following a plan
In fact, what is new about agility is not the practices it use, but their recognition of people as the primary drivers of project success, coupled with an intense focus on effectiveness and maneuverability. This yields a new combination of values and principles that define an agile worldview. (9) Sticking strictly to the Agile Manifesto, it is also quite simple to identify what agile is and what not. Any organization or project that wishes to be agile must value the characteristics named first in each of the four values (e.g., “customer collaboration”) more than the characteristics named second (e.g., “contract negotiation”). Then, agility is one position in a universe of sixteen possible positions that is if you consider each pair of values, you have the choice of valuing the first value over the second, or not. This is the simplest and clearest way to think about agility, which avoids the problem of trying to distinguish between degrees of the concept. If the organization possesses the values, and applies those values to the way it operates, then it is agile. If it doesn’t then it is not agile. (10)
In sum, today’s discussion on agility can be traced back to several historical roots, while most of them have not been explicitly mentioned. Especially current management research focuses mainly on definitions and concepts related to flexibility, speed, and dynamism – an understanding in need of modification. To advance with an enhanced understanding of agility, some requirements can be formulated.
Towards A Conceptual Clarification of Agility in Management
In order to advance with model development, some basic building blocks need to be clarified. These relate to the level of analysis, agile as a method versus agile content, the input versus output-relation of agile principles, and the performance dimensions of agility.
Individual vs. Organizational Agility: Surprisingly very little has been said about how individual agility can be achieved and how it translates into agility at the organizational level – a topic that has been at the core of organization theory for years. (11) Despite focusing on HR- and leadership related issues, most studies do not consider the individual level of agility. The Batton Institute at the University of Virginia is one of the few exceptions that explicitly talks about workforce agility and suggests that it requires motivated, cooperative employees, and leaders who can motivate and train the workforce to master timely knowledge and skills. In addition, business leaders are required who are comfortable with chaos, ambiguity and unexpected change. (12)
Method versus Content: Some consulting firms focus on methodology rather than on content by suggesting change and assessment tools. For instance, Korn/Ferry’s new self-assessment that provides scores on change agility, people agility, mental agility, and results agility.(13) As agility is predominantly a process concept like learning or knowledge, it is open for different contents (e.g., industries, type of companies, functional areas). Both process and content dimensions need to be specified for the application of an agility model.
Input vs. Output: While there is an abundance of “fit all“-recipes, little concrete navigational support is given of how companies can turn into agile organizations. Most consulting firms revert back to the above elements of agility, but lack guidelines based on thorough as-is analysis, the required efforts to change the organization and the expected output. Especially the latter is a major flaw, as it is unclear whether agility aims at higher flexibility or adaptability, or as others (14) suggest, yields higher financial performance or sustained competitive advantage. In short, the input-output relation of agility remains fuzzy and a link to corporate values is missing.
Stability vs. Change: Several definitions and interpretations of ‘agile’ focus on speed. While an important element of agility is accelerated action to benefit from first-mover advantages and to stay ahead of the competition, the concept is much broader. Agility requires that companies to identify and to reflect on the degree of desired and appropriate change. And this involves high resilience with companies maintaining a stable identity, reliable leadership and also continuity in the types products and services they offer. As a consequence, a company’s low score of speed or change can result in a high score of agility.
Taken collectively, the four gaps identified above (individual vs. organization, input vs. output; content vs. process; change vs. stability) reflect historical developments of the concept. In the early beginnings, especially in manufacturing, the focus was more on process improvements, speed and adaptability. Agility was considered as more is better. In recent years, with the integration of leadership and soft scale organization change issues into strategizing, and the increasing insight that complexity requires different tools and methodologies from those used in the past, a new understanding of agility has emerged. Rather than running after competitors, striving to always be the first, adjusting to the hectic of daily business life, companies have now discovered what we call Agility 2.0 that takes the option of less is better into account. In line with this understanding, recent research suggests a more decision-oriented definition of agility: “Agility is not just the ability to change. It is a cultivated capability that enables an organization to respond in a timely, effective, and sustainable way when changing circumstances require it.“ (15)
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