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How do organizations adapt to changes in their external environment? Research demonstrates that organizations become increasingly inert as they age and frequently fail to adapt effectively. Famous examples of this phenomenon include Blockbuster, Kodak, Nokia, Polaroid, PanAm. It is also know that such failures are particularly prevalent when the frequency and magnitude of the external change is bigger.

In order to meet the challenges of disruptive change, firms need to both explore and exploit. However all established organizations are more focused on exploitation, and struggle to explore. Exploration requires a distinct set of dynamic capabilities, which are considerable different than the ones required in exploitation.

As I tried explain in the previous articles (What is Organizational Ambidexterity? What is Organizational Agility?) agility and ambidexterity at organizational scale are two overlapping concepts. Organizational ambidexterity is defined as the ability to exploit and explore simultaneously. Organizational agility is not a clearly defined concept. However most definitions run around the keyword of “adaptation”. So an encompassing definition can be the ability of an organization to adapt quickly and succeed in the face of changing environment. Adapting to change requires:

  • Sensing the treats and opportunities that the environmental change creates
  • Identifying the right opportunities and treats
  • Acting on the most promising or vital ones by reconfiguring the organization

So this is basically the same thing that organizational ambidexterity concept propose by the “exploration” term. In other words, organizational ambidexterity concept encompasses organizational agility. A start-up can easily be agile, since the entire organization’s mission is exploration. However, for most established organizations, the situation is quite different. While exploring to ensure their future viability, they must simultaneously maintain their focus on existing core businesses to ensure their current viability. As a result, organizational agility translates into organizational ambidexterity for established organizations. How they can be agile while continuing exploitation?

Below, there is a definition I forged according to the above mentioned perspective.

“Organizational Ambidexterity / Agility (OA)” is the ability to

– continuously explore high value opportunities,

– quickly reconfigure strategy and the organization (structure, processes, people, and resources) toward high priority ones and

– realize them efficiently

under uncertainty, while exploiting existing opportunities.

Values and Principles of OA

Software development world translated agile purpose into 4 values, 12 principles and various practices. Initially, software world’s understanding of agility was mainly at project scale; but later their ambitions evolved and new frameworks (SAFe, DAD, Nexus …etc) emerged to achieve agility at organizational scale.

In other industries, some companies (such as Haire, Nucor, W.L. Gore..etc) have taken the lead by experimenting with different practices and adopt an agile operating model. Thanks to the studies of the researchers in this domain (like Gary Hamel and Frederic Laloux) we now know quite different set of practices in different industries.

After analyzing all these studies, I arrived at the list below for OA.

Underlying Values

Accountability, Adaptability, Autonomy, Commitment, Competence, Collaboration, Courage, Customer Value, Devotion, Discipline, Efficiency, Exploration, Experience (Empiricism), Focus, Growth, Learning, Openness, Optimism, Ownership, Purpose, Quality, Respect, Responsibility, Simplicity, Transparency

Principles

  1. Value exploration: Establish mechanisms to continuously explore and bring high value opportunities to the attention of the organization. Maintain a portfolio of high value exploration jobs.
  2. Value driven short PDCA: Plan, do (build), check (review), and act (adjust/pivot) iteratively and in short cycles — at both job portfolio and job level — in order to ensure delivering max value and minimizing waste. Plan: Assess value and resource requirements of the jobs to be done frequently. Plan work and resources in short cycles and ensure maximizing total value for customer (minimizing cost of delay (CoD) in value). Value is created when customers use and benefit from a product or service. Do: Build iteratively and in short cycles in order to minimize risk of scrap or rework. Check & act: Frequently review the output with customers and consider changing direction whenever it is evident that the final output will create less or no value. Scrapping the initial work done is better than scrapping all the work.
  3. Dynamic structure: Every organizational structure enables certain goals and undermine others. Therefore fixing the structure of an organization downgrades its capability to handle certain types of problems just to increase the capability of handling other types. In other words, it trades one set of problems for another. While a structural choice may be right on average along a certain period, it won’t be right in every circumstance. Frequent governance review: Tensions that people sense can be a sign of how the organization could evolve in order to better express its purpose. Collect, review and process reported tensions, evolve team structure and roles accordingly. Segregation of roles and people: In traditional organizations, both roles and people occupying these roles are relatively stable. Most of the time there is a one-to-one relationship between roles and people, which creates people fused with their roles. Establish mechanisms to enable people assume multiple roles and change roles frequently.
  4. Dynamic and servant leadership: Traditional manager role is good fit for fixed structures operating with certain level of stability; however it is a big handicap for agility. Helix leadership: Disaggregate the traditional manager role into two separate and parallel roles, one of which helps develop people and capabilities, sets standards for how work is done, drives functional excellence, and the other set priorities, exploit people and capabilities in line with the priorities (including overseeing their day-to-day work), creates value, helps deliver a full and satisfying customer experience. Dynamic hierarchy: Wisdom is contingent on the issue at hand, therefore organizations need to flexibly match minds to problems. Instead of single and fixed leadership roles, institute multiple dynamic hierarchies where who is in charge depends on the problem being addressed. Servant leadership approach: Agile mindset requires putting the customer value (service / experience / delivery) as the main priority. Leaders must acknowledge that they exists to serve the customers through the people. Ensure that leaders put the needs of the employees first and help them develop and perform as much as possible so that they create maximum possible value for the customers.
  5. Autonomy at work: Some jobs can better be done solo. For some, establishing a team is unavoidable. Decentralizing power and getting the work done through autonomous roles or teams increases speed, flexibility and efficiency. It also presents good opportunities for team members to develop themselves. For being autonomous, a few things are important: Clarity of purpose and short term goals: Autonomy requires clear direction. At the beginning, “What to do?” or “How to do?” may not be very clear, however “Why to do?” must be very clear. Feed the people and teams with a clear purpose. Define how they will understand whether they fulfilled the purpose or not. Ensure that they translate the purpose into clear goals to be achieved in the short time window ahead so that they can align their efforts and make coordinated decisions. Clarity of authority: Autonomy requires boundaries. Defining accountabilities and constraints makes authority explicit. Constraints must guarantee that autonomy at sub-scale of someone or a team must not harm the purpose at overall scale. Let the role owners and teams decide and act quickly within the perimeter of their authority by leaving «How much to do?», «When to do?», «How to do?» and «Who will do?» to their discretion. In this way, it is possible to avoid delays in decision making / getting approval. Fit-for-purpose competency: Having people and teams adequately skilled for the purpose increases the chance of having successful results. Being sufficiently skilled reduces dependency to others, increases self-confidence and facilitates operating autonomously. Try to minimize the skill gap of any role owner or a team in total. Minimize talent waste by avoiding to utilize over-qualified or disqualified staff. Collective ownership: Teams must collectively be held accountable for the quality and success of their work. Team members can not give any excuses (or blame anyone else) for what needs to be done. Even if each member has specific expertise, they must take responsibility whenever and wherever needed. All members must experience the consequences of collective success or failure.
  6. Transparency: Transparency balances autonomy. Make strategy and all business related data visible to everyone. Visually manage the work so that both the progress and the contribution of the team (performance) becomes visible to every one. In this way the need for reporting and formal progress review meetings is eliminated.
  7. Radical collaboration: All organizations are open systems. Employees interact with both each other and many external parties (customers, suppliers…ect.) each day. However, most of the time, this interaction does not include genuine collaboration. Collaboration with customers: Effectiveness of any team is dependent on how the team collectively engage with its stakeholders. The most important stakeholder is the customer. Ask the teams to involve customers into all phases of the work. Showing the output frequently and receiving feedback of the customer will help the team understand the customer better and will reduce the risk of scrap or rework. Collaboration within the organization: Members of the organization need to communicate and collaborate on a number of levels, both formally and informally, while working together. Provide them the ecosystem to work together closely (ie: in the same location) and communicate face to face. Asynchronous and written information flow through systems or forms kills speed and efficiency.
  8. Market-based collective intelligence: Utilize collective intelligence of all members whenever the value of involving more perspectives beats up the extra effort and efficiency loss to do so. Markets are generally smarter in sensing the ecosystem, forecasting future, creating different options and allocating resources. Markets also bring a different kind of discipline as a result of their inherent competitive nature. Opportunity/challenge markets: …. Idea markets: …. Job markets: Put all job opportunities to a market, let people compete for role assignments anywhere within the organization freely. Let them elect role owners. Allow people to resign from their roles freely and pursue other opportunities.
  9. Constant tempo: Ensure that the organization establish a repeatable and maintainable working tempo at which they can deliver value (exploit) and improve value (explore) constantly. Simple routines and rituals: Routines make it is easier for everybody to get organized and work. Establish a routine, which supports exploitation and exploration. Focus & commitment: Multitasking kills speed and efficiency. Cheetahs can not catch gazelles if asked also to catch a few rabbits while running down. Define time-boxes and let the team focus and commit on one task at a time. It is the responsibility of management to ensure that people are not interrupted with other requests (ie: execution tasks).
  10. Quality focus: Continuous attention to technical excellence and good design enhances quality, and quality enhances agility in the long term. When a team prioritizes speed over quality, it starts taking easy but limited solutions. Limited solutions can save the day but may create too many limitations for future. First-time-quality prevents many wastes.
  11. Value delivery focus: …
  12. Continuous learning & growth: All members must assume a ‘growth mindset’ in the face of problems while working. They should perceive failure as an opportunity to grow. While working, it is important to ask ‘how?’ questions more instead of ‘why?’ questions. And it is important to reserve time and space for reflecting how the work is done? Then comes the turn of ‘why?’ questions.

How can Organizations be Agile?

How can these values and principles come to life? Especially in large and reliability-driven organizations? As mentioned above, for these organizations, “being agile” translates into “being ambidextrous”. They should continue exploitation, and in the meantime, they should find new value opportunities and shift some resources to work on these opportunities. First issue to resolve is to craft a proper governance model and structure to support ambidexterity.

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