Agility

Agility is a flexible term with many different aspects. Everyone seems to have a different understanding of what agility is all about. That’s why we offer our understanding of agility here – hands-on, for SMEs, for industrial, service and technology companies that are at home in B2B markets.

In this context, the agility of companies plays an important role for us in order to orientate an organisation towards the future and to create a fundamental willingness to adapt (= agility).

Why do we believe that lived agility is so important for companies that want to remain successful in the long term or want to become successful again?

We live in an age that is often characterised as a VUCA world (short for volatility, uncertainty, complexity, ambiguity). This describes the current environment and the reality of companies.

In practice, this means that we also have to orient and manage companies differently in order to cope with this environment. As a model, agility provides many answers to the challenges facing companies in the VUCA world:

• The complexity of markets reduces the plannability and predictability for companies,
• and at the same time demands fast and flexible adaptability to new situations,
• annual targets have to be corrected more frequently during the year,
• results in a company are much more readily achieved through teamwork than through the performance of individuals,
• strictly defined, rigid processes lose importance and give way to agile, iterative or step-by-step procedures,
• new technologies such as digitalisation, artificial intelligence or blockchain are changing entire industries at breakneck speed, offering great opportunities to those who engage with them early on,
• a young generation of employees wants to find meaning in the overriding corporate goals and values and is no longer so strongly extrinsically motivated (i.e. via external stimuli such as money and status). At the same time, the shortage of skilled workers, especially in promising occupational groups, is forcing companies to open up to these wishes of young employees.

In other words, there are many changes affecting companies, especially now.

So what does agility entail for a company?

An agile company or organisation is ‘in motion’, as opposed to a more static organisation. For a long time, static organisations had the advantage of being able to fully focus on efficiency in the industrial world, for example to achieve price leadership in a market. Large quantities, at minimum cost and with the best possible quality – companies used to move very successfully between these three parameters.

Changing market rules require new forms of business organisation

However, price leadership for large quantities rarely characterises the image of German and European SMEs today. They increasingly stand out through special knowledge, innovation and customer benefit! On the other hand, this is often achieved while maintaining a high level of price competitiveness.

The agile organisation?

An agile organisation is able to recognise changing conditions and react to them by adapting its internal structures so that the company can continue to operate competitively in the market and remain successful. Be it new customer needs, technological changes or new, digital distribution channels that present the company with new challenges.

The required adaptability can also mean that companies, if necessary, may establish new business areas that might even compete with (still) profitable business areas, if they foresee that said business area will be replaced in the medium to long term.

Small and agile companies can overtake big businesses in the modern age

A very adaptable company in comparison to its competitors will even be able to improve its market position. For example, a company that was not the market leader in the age of high volumes and price leadership can take over the market leadership through developed agility, if, for example, innovative online sales channels or a customer-specific design at cost-effective prices become the new success criteria on the market.

Hence agility promises to be a real opportunity!

Agility in leadership?

Agility in companies can only be achieved if it is applied consistently, especially with regard to management style. We believe in decentralised structures and the assumption of responsibility at all levels and in all areas of the company. In order to make this possible, executives and shareholders must allow for greater individual freedom and managers and employees must use this freedom in the interests and for the benefit of the company.

For this to succeed, new rules are necessary. What decision-making powers and individual freedoms do employees and managers have? And what needs to be changed so that the decentralised decision-making competences serve the company’s goals in a targeted manner? In which areas are employees and managers more strongly involved and make a meaningful contribution? And what are the limits? Especially when the new way of working is still new, intensive support, regular communication and maximum clarity are necessary to reduce uncertainty on all sides.

Sharing responsibility, allowing freedom to make decisions, communicating a positive error management culture and recognition – these are success factors for agile companies

In agile management, it is essential that employees know the objectives the company is pursuing and which criteria are important as guidelines for decentralised decision-making. Clarity in strategy and success parameters must be communicated and shared by management in an appropriate form.

When entrepreneurs in agile organisations delegate part of their responsibility, everyone has the chance to think about how to achieve the best results. In a best case scenario, everyone contributes ‘their own’ part. This allows a positive dynamic and very constructive work culture to take root in the company.

An important basic requirement is to embody a positive error management culture and to acknowledge the commitment in taking responsibility. If a mistake occurs because of a decision, it shouldn’t be punished. After all, anyone can make a mistake, be they a manager or an employee, and no one with any level of responsibility in a company is immune to it.

Leadership in agile structures means supporting leadership and trust

In this context, ‘supportive leadership’ refers to the modern self-image of managers who are committed to accompanying and supporting their employees in both professional challenges and personal development opportunities.

Managers no longer necessarily have the specialist knowledge to lead their employees on a purely technical level. For example, many managers have trouble fully comprehending new technologies due to their age. Of course, all managers should be curious and open to new technologies, but that doesn’t mean they have to learn how to program the blockchain.

Nevertheless, leadership remains extremely important! It may no longer be based on expertise, but it should support employees in achieving goals, be it through coaching, conflict management, praise and recognition or joint brainstorming on how to solve specific problems. And this requires above all listening, thinking and experience – leadership qualities that gain in value in an agile context.

Agility in processes?

Processes and agility – that sounds like a contradiction!!

Processes, i.e. the organised sequences of individual steps, are designed to reduce errors by always repeating the same procedures, to minimise costs and ensure consistent results! When perfecting processes, it is best not to change existing, well-running workflows at all! After all, they’ve proven themselves over the years, right?

For us, agility in processes does not mean messing with everything that has worked well so far!

However, the following trends and considerations can further improve and sometimes even replace existing processes in agile companies:

• Processes in agile organisations should be designed with a view to customer benefit. In other words, they should be less strongly determined by internal organisational structures. The number one question for a process flow should always be: “How can the process benefit the customer?” The second most important question is: “Who does it require from the existing organisation?” So not “this is a sales process” and “this is an engineering process”, if, for example, the result should be an offer for a specific, cost-effective, technical product for the customer! Instead of this – moving away from internal structures – “Who do we need from engineering, sales and product management in order to create such and such an offer for the customer in a targeted and flexible manner?”

Cross-functional thinking and working is more important in agile structures

• Review processes more often – are they still up-to-date, can they be simplified (lean management principles) or are there new technologies that could be used to make processes faster, cheaper and safer? A great deal is currently changing, especially with regard to available and affordable technologies. Usefully integrated into existing processes, new technologies can make procedures in the company simpler and more effective for customers.

For existing processes, regularly check which new technologies can help make processes simpler, faster and more efficient

• If processes repeatedly lead to problems, to conflicts between teams, to quality issues or complaints, it may be time to re-examine the process in its entirety. Maybe customer needs have changed so much that the standard process no longer applies at all? Don’t get bogged down in situations like these just to save the process – agile companies see a new beginning as an opportunity!

How do you start exemplifying agility in your company?

Don’t change or start questioning everything at once! Leadership is a good place to start. How do we lead today and how should we lead tomorrow? Which values belong to our company and which of them will continue to be lived in the future? Which new values should be added in terms of agility and adaptability?

In agile companies, values are becoming more and more important as a guideline for everyone to work together towards a common goal with less hierarchical guidelines.

A tolerant error management culture is most certainly essential in an agile company! What does that mean specifically? How can a company promote such an error management culture? A healthy error management culture is the only way to allow decentralised teams to make responsible decisions and take action. If everyone is afraid of making mistakes, no one dares to make a move! Understanding mistakes as opportunities to learn and having the confidence in employees and managers that everyone is striving to make the company better.

A healthy error management culture encourages everyone to have confidence in themselves

Which new technologies can I try out on a small scale and then use them on a large scale? Which new sales channels should I offer customers in order to be able to offer better customer service and thus foster greater loyalty?

Agile companies give priority to incremental developments without the need for time-consuming or large financial risks. That way you can try out what is really useful and produces the desired effects.

Curiosity and innovation, often combined with an iterative ‘trial and error’ principle, give agile companies a leg up in the long term.