Most of what has been written about agility so far assumes the methodology can be adapted to any organisation. However, this is not always the case. Companies that are not in good shape but still start implementing the model run the risk of throwing money out of the window.
Research by the INSEAD University outlines the characteristics of organisations and tasks most suitable for implementing agility. It also highlights some of the often overlooked factors that need to be considered before committing your organisation to agile management. Here are some key questions to think about.
Can you adapt your business processes?
Agility works best in companies whose outputs are the result of modular, step-by-step tasks, or whose products are made up of parts that are suitable for bottom-up innovation based on practical customer experience.
One example cited by the researchers is the Dutch home care organisation Buurtzorg. Teams of 10-12 nurses are assigned to a specific district ("Buurtzorg" literally means "neighbourhood care"). Each patient is cared for by a maximum of one or two nurses, and team members decide how best to work, determine plans, assign roles, and optimise team performance in the area for which they are responsible.
The model costs more than the traditional one, in which nurses are sent to perform specialised tasks at a lower cost per hour, but spend less time with the patient (Buurtzorg patients require only half the care). They also highly value patient quality and satisfaction. This model has become an innovative and inspiring example in the field of healthcare.
And what if we take a more complex environment as an example, such as banks? Can their output be divided into small independent modules with regard to related regulations, interdependencies and legal risks?
In 2015, in the face of ever-changing consumer behaviour and the growing demand for digital online services, the Dutch banking group ING turned to agile management with the aim of rapidly developing multi-channel services. It replaced the hierarchical structure of 350 people with teams of 8-10 people in a total of 13 so-called tribes, each of which has a clear purpose or project, such as payment systems or end-to-end responsibilities. The transformation has enabled ING quickly to upgrade services or introduce new ones, such as credit cards, with features targeted at specific customer groups. The headquarters became the centre for software development.
What kind of innovation are you seeking?
Development initiatives that use multiple functional departments to provide better customer service are a challenge that agility was originally intended to facilitate. If you overhaul your products or services every five years, agile processes may not help you.
Saab Aeronautics has developed its Gripen E fighter aircraft by implementing these procedures at all levels and in every discipline from software and hardware to fuselage design. More than 1,000 engineers were grouped into 100 teams, each of which was given autonomy in developing the best implementation. The teams were self-governing and had technical ownership. The Gripen E is now considered good enough to defeat Russian Sukhoi aircraft without having to rely on extremely expensive competing technologies.
Now a different example. If a product is not as easily customisable as online services and less adaptable to various enhancements, an agile approach can be counterproductive. Take Tesla, for instance: Tesla has tried to rediscover the way cars are manufactured and maintained by reconceptualising the role of automotive software using agile methods and introducing a highly automated manufacturing process in which each subsystem is processed separately. The company started production of the Tesla 3 model before it was fully developed, which resulted in production delays, confusion and higher costs, as the interfaces between the subsystems were constantly changing.
Any decision to switch to agile management methods should be based on an assessment of your organisation's innovation goals and the nature of your business activities.
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