Agile organization

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

Established companies are faced with increasingly dynamic framework conditions. In order to continue to operate successfully in this environment in the future, they must respond to the constant, unpredictable changes in market opportunities and risks with speed and adaptability. After all, there are hardly any truly lasting competitive advantages today, as these are becoming obsolete ever more quickly. Instead, it is all the more important for companies to be able to continuously adapt their competitive position to new circumstances. This requires the appropriate "dynamic capabilities" in the organization. These make it possible to permanently build up, integrate and reconfigure internal and external resources and competencies in order to cope with and shape the rapidly changing business environment. Specifically, these include:

"Scoping" to define and communicate strategic direction and goals with measurable key 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 harness identified opportunities for your own organization and quickly validate, iterate or discard them
"Transforming" to establish and scale validated opportunities with the organizational resources and processes needed to do so

Image title: Strategic Renewal Capabilities Framework
Source: venture.idea (own research).

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Agile organization with dynamic capabilities to adapt permanently to the dynamic environment

Lasting corporate success therefore requires a continuous strategic renewal of competitive advantages through the establishment and application of dynamic capabilities. However, classic, rigid organizational structures are not very suitable for establishing and applying such dynamic capabilities, as they are optimized for efficiently exploiting existing competitive advantages. Instead, it is necessary to develop the company into an "agile organization" by initiating concrete changes in organizational levers such as resources, processes & methods, structures, culture and control. This is no easy task, but it is worth it: on average, agile organizations are 2.7 times more successful than non-agile companies.

"When a company's agility score is correlated with financial performance, the most agile companies are 2.7 times more successful than the average non-agile company."
_{(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 autonomous, decentralized structures and interfaces for networking are needed here. A good way to achieve this is through autonomous but interlinked organizational units, so-called "interlinked autonomous-aligned units". Depending on the initial situation, however, various organizational models are available - 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 it difficult to choose here - predefined models usually don't fit every company either. On the contrary - it is important that companies define and implement their target image and the necessary changes based on their individual situation. Basically, however, the design and implementation of a new organizational model must be systematic and goal-oriented 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 every organization. Therefore, by means of a capability check, the status quo of the existing dynamic capabilities and organizational levers for strategic renewal in the company can first be determined. The resulting recommendations for action then offer the opportunity to establish and apply the dynamic capabilities by specifically working on the most important levers. A joint project team with venture.idea experts and internal managers, e.g. from HR and Corporate Development, develops and implements the corresponding change measures with the involvement of all relevant stakeholders. Short-term measures include models that do not affect the existing organization, such as establishing dynamic capabilities in a strategic innovation unit ("StrategyLab"). Longer-term measures, on the other hand, anchor the capabilities permanently throughout the company in accordance with the recommendations for action, for example through agile management systems, strategic innovation processes, agile management or new, agile ways of working and forms of organization.

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Florian Lanzer

Partner

Expert in the field

Expert in the fields

Agile organization