Agile Organization

How can sustained business success be ensured in complex and uncertain environments?

Established companies are facing increasingly dynamic framework conditions. To continue to operate successfully in these conditions, they must respond to the constant, unpredictable changes in market opportunities and risks with speed and adaptability. After all, truly lasting competitive advantages are now rare, as they are becoming obsolete ever faster. This makes it all the more important for companies to be able to continuously adapt their competitive position to new circumstances. This requires the appropriate "dynamic capabilities" within the organization. These enable the sustained building, integration, and reconfiguration of internal and external resources and competencies to manage and shape the rapidly changing business environment. Specifically, these include:

"Scoping" to define and communicate the strategic direction and goals with measurable performance indicators (KPIs)
"Configuring" to consistently align existing strategic initiatives and new opportunities with strategic goals and KPIs
"Sensing" to identify and develop new strategic opportunities
"Seizing" to leverage identified opportunities for the organization and to quickly validate, iterate, or discard them
"Transforming" to establish and scale validated opportunities with the necessary organizational resources and processes
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Image title: Strategic Renewal Capabilities Framework
Source: venture.idea (own research)

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Agile organization with dynamic capabilities for continuous adaptation to the dynamic environment

Sustainable corporate success, therefore, requires a continuous strategic renewal of competitive advantages through the establishment and application of dynamic capabilities. Classic, rigid organizational structures are, however, poorly suited to establishing and applying such dynamic capabilities, as they are optimized to efficiently exploit existing competitive advantages. Instead, the company must be developed into an "agile organization" by initiating concrete changes to organizational levers such as resources, processes & methods, structures, culture, and control. This is no easy task, but it is worth it: agile organizations are, on average, 2.7 times more successful than non-agile companies.

"If you relate a company's degree of agility to its financial performance, the most agile companies are 2.7 times more successful than the average of the non-agile companies."
_{(Neoma Business School "Agile Performer Index").}

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Image title: Agility and corporate performance
Source: Dr. Prodoehl, Olbert & Prof. Worley, Organizational Agility As A Competitive Factor, 2017

The greatest changes are usually required in the organizational structure, as more independent, decentralized structures and interfaces for networking are needed here. A good way to achieve this is through autonomous, but interconnected organizational units, so-called "interlinked autonomous-aligned units". Depending on the initial situation, however, various organizational models are possible - from simple decentralization to far-reaching approaches to self-organization to predefined models such as Holacracy, RenDenHeYi, etc. from pioneers such as Zappos, Haier, Spotify, or ING. Not only is the selection difficult here - predefined models usually do not fit every company. On the contrary, it is important that companies define and implement their target vision and the necessary changes based on their individual situation. In principle, however, the design and implementation of a new organizational model must be systematic and targeted in order to be successful.

Capability Check for the targeted further development of the organization

For more than 10 years, venture.idea has been working on the challenge of how established companies can be permanently innovative and successful. However, the solution to this is different for each organization. Therefore, a capability check can first be used to determine the status quo of the existing dynamic capabilities and organizational levers for strategic renewal in the company. The resulting recommendations then offer the possibility of establishing and applying the dynamic capabilities through the targeted processing of the most important levers. A joint project team with experts from venture.idea and internal managers, e.g. from HR and Corporate Development, develops and implements the corresponding change measures with the involvement of all relevant stakeholders. As short-term measures, models are possible that do not affect the existing organization, such as the establishment of dynamic capabilities in a strategic innovation unit („StrategyLab“). Longer-term measures, on the other hand, permanently anchor the capabilities in the entire company in accordance with the recommendations, for example through agile control systems, strategic innovation processes, agile control or new, agile ways of working and organizational forms.

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Dr. Lysander Weiss

Partner

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