Article



Is agility the latest management fad? Or not?

Agility is the hot topic in management, but should all companies introduce agile practices.

By Professor Bettina Büchel

As a business school professor who deals with top management thinkers and senior executives day-in and day-out, all I hear about these days is ‘we need to be more agile,’ ‘Agile is the new digital’ and other various praises of Agile management.

For those of us that have been in the world of business for a long time, once something gets this popular, it is healthy to be a little skeptical that the bubble might soon burst, and we’ll be on to the next new trend.

What makes something a fad?

A management fad is a collective belief, disseminated by trend setters, that a management technique will lead to progress. In the last 20 years, we have seen many fads ranging from business process engineering (BPR), balanced scorecards, knowledge management to ambidextrous organizations. While many of them have created buzz, they were often cyclical phenomena and reactions to external events. For example, in the 90s, business process engineering which focuses on rethinking and redesigning the way we work came about as a reaction to the economic crisis.

Agility seems to be THE hot topic in management right now, but it is also somewhat reactionary. New entrants and companies from emerging markets are arriving on the scene and challenging once dominant players. Tech sector companies are moving into all industries and increasing the speed at which traditional competitors need to respond.

Let’s look at a few statistics that illustrate these changes:

  • A third of Fortune 500-companies in 1970 were gone by 1983. And many of those that were in the top-10 in 2015, didn’t even exist ten years before that.
  • 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.

In addition, work priorities are changing. Companies are going from having employees with fixed employment contracts and life-long company affiliation to hiring a project-based, temporary work force. And digital challenges are diluting both the time and space of work engagements. Another important reason behind all the hype agility is getting is partly created and reinforced by those who stand to benefit the most from it – management consultants. Today, nearly every major consultancy firm has something to say about agility.

digital illustration
Download this article

PRINTABLE PDF – Less than 1MB

Does that mean we are all trapped into believing that the business world needs agile management practices while we should be less susceptible to the crazy ideas hatched by gurus and consultants?

Probably not. Agile goes back a lot further than the last five years of consultants paying attention to it. The founding fathers started with the Agile Manifesto in 2001. At its core, Agile practices help companies focus on rapid delivery of business value. While Agile originates in software development and involves a time boxed, iterative approach to software delivery in an incremental manner right from the beginning, it has extended beyond this to include a way of organizing using tribes, squads, etc., an underlying methodology (Scrum, XP, Kanban and others) and leadership behaviors. The methodologies used in Agile management are based on continuous improvement, flexibility, team input, and delivering high-quality results. 

Agile management often starts by looking at a customer’s needs. User involvement is encouraged, providing visibility and transparency, showing the actual progress of projects. The Agile method is all about iterative planning, making it very easy to adapt when some requirements change. The fact that there is continuous planning and feedback through the process means that teams start delivering business value from the beginning of the project.

Should all companies introduce agile practices? And change the way the whole organization works?

Whether or not a company adopts Agile depends on its context. In industries with long product development cycles and long product life cycles, the urgency of agile practices might be slightly lower. Therefore, companies with these characteristics can start to experiment with agile on limited projects such as product development, digital solutions or IT projects.

But if your organization is exposed to fast cycle times with a heavy level of digitalization and software development efforts across multiple functions then agility may actually be core to your survival. This requires adopting not only Agile methods but organizing using Agile structures and developing leaders to exhibited Agile behaviors.

Bettina Büchel is Professor of Strategy and Organization at IMD.

 

Do you need more information?
Contact us for additional information or republishing

Keep reading