(by Martin Luckmann, Andreas Mueller and Christiane Prange; May 28, 2015)
In today’s increasingly complex and complicated world, it has become ever more challenging for firms to achieve sustainable competitive advantages. For instance, 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. And many of the Fortune 500-companies in 1970 do not exist anymore today.
To survive under these circumstances, it is expected that companies react quickly to rapidly changing circumstances and accelerate activities on critical paths. Companies are supposed to utilize highly dynamic procedures and processes in their operations to the extent that they invent themselves anew every couple of years. In short, companies need to become more agile. But agility goes far beyond speed. Agility refers to complex decision-making with the objective of increasing value. In order to increase its agility, a company does not only need to flexibly adapt but is required to orchestrate a variety of options, reflect on them, and finally decide to act – or to maintain the status quo. Agility is the freedom and the capability to “act otherwise”.
More formally, we define agility as the ongoing development and maintenance of decision-making capability under changing circumstances. A basic requirement for agility consists of clear and understandable objectives, responsible leadership, respectful communication, a suitable learning infrastructure, and the ability to experiment and play around with new ideas. As linear extrapolations of the past, with managers trying to categorize well-known problems into boxes with strategy labels, are no longer promising, the ability to increase decision-making capability is vital. This involves a higher degree of experimentation, playfulness, and tolerance for ambiguity. Eventually, agility prepares for managing under uncertainty.
Four Dimensions of Agility Management
To manage agility, we have developed the Agility Management Model, which combines the individual view with the organisational view of agility. In both realms, perception is key for later activities: we cannot consider what we have not perceived. And for both, the key driver of agility is in the dynamics of people or organization. Consequently, the Agility Management Model splits into the four dimensions identity, capabilities, mindset, and leadership.
The identity of an organization relates to its central and distinctive components. An external view of the organization‘s identity is represented in its image. If image and identity differ, problems may arise. In addition, the organizational identity can be actively construed and re-construed on a permanent basis.
Dynamic capabilities are the potential of an organization to change, to develop, and to better seize opportunities. Capabilities facilitate to anticipate environmental trends and to achieve competitive advantages.
We all have different perceptions and emphasize different aspects. Mindset describes what we are focussing on: is it about appreciation by peers, is it driven by an individual yet different perspective, is it about the search of contradiction?
How do we lead ourselves and others, how are we led? Leadership comes in a variety of forms. Sometimes it comes by the leader‘s personality, sometimes it is defined by the relations of leaders and team members, sometimes it is more systemic. Leadership implies responsibility and affects groups of different sizes and different values.
Three Orbits of Agility Management
Agility Management is different from Agile Management, as we are not focussing on the most agile way but instead on the whole range of agility. The Agility Management Model is reflecting this by three different orbits, an inner one (resilient), a middle orbit (versatile) and an outer one (transformational).
Within the inner orbit, individual and organizational values and behavior are highly stable, reliable, predictable, and fairly safe.
Within the middle orbit, individual and organizational values and behavior are characterized by adaptability, viability, and versatility.
Within the outer orbit, individual and organizational values and behavior are characterized by curiosity for change, playfulness, and ease.
The context defines, which orbits are characteristic for an organization’s agility. A higher agility index is then defined by the possibility to choose among various positions or orbits, and by the flexibility to redefine the organization’s capacity within the orbits.