Way too many decisions are decentralized. They don’t take advantage of their scale. If you just move fast and you go away from stability-losing any sense of centralization or quality control or risk management or the ability to capture economics of scale-what you find are these $10 billion or $20 billion companies that are trying to act like a start-up. You need stability and this dynamic capability. And that’s the wrong way to think about it. Many large companies try to find where they want to be on the spectrum. It’s much easier and more comfortable to add things because that gives you a, maybe false, sense of control.Īaron De Smet: Imagine a spectrum: on one end, fast, nimble, agile on the other end, stable, slow, efficient, more centralized. You have to reduce the structure, the processes. What you should do is actually a real act of leadership: you have to take things away. You exert control, add things, add rules, add processes, add structure. And now, when they try and put some experiments in place to be more agile, to give more space to people, to allow them to be more flexible, what happens? Well, when you are a leader and for 20 years you have been in a managerial hierarchy, what do you do when you really get fearful and uncertain? You go back to what’s worked in the past. They have grown, and most of them have been successful by actually using what we call a managerial hierarchy-a classical way of managing from the top down, with jobs, with boxes and lines and structures and process descriptions, running and controlling the company from the top. Tomorrow it will be relevant for you.īut for big, successful companies-now or in the past-it’s very difficult to get agile. And if you think that you’re still in a corner where this doesn’t hold true, wait for the disruption to come. It’s critical to be agile and quickly respond to change and actually benefit from change. Now, having said that, you could think, “I’m not in the high-tech sector, so that’s less relevant for me.” But with today’s levels of uncertainty, ambiguity, volatility in the markets, and globalization, this is starting to be true for any company. In that sector, you’re often only as good as your last product. Take the high-tech sector, where I’ve done most of my work. Wouter Aghina: Agility has always been important for companies. That’s what I call agility: when you thrive on change and get stronger and it becomes a source of real competitive advantage. In today’s environment-with enormous changes coming from both inside and outside of the organization-that’s what we think the aspiration should be. The opposite of fragile is something that gets stronger when I exert force or stress on it. But is that really the opposite? Something that stays the same? So what’s the opposite of fragile? We immediately think of words like resilient, strong, robust, maybe even flexible, so that it bends and it gets back to the original condition. When we put stress on it, when we exert force on it, it gets weaker or even breaks. What’s fragile? Fragile is a crystal glass. Wouter Aghina: What do we mean by agility? Let me answer that question indirectly. But as soon as you get any sense of size or scale, you cannot be agile without some sense of stability. The start-up out of someone’s garage can be just fast and agile without a lot of stability. In really small start-ups, stability is typically embodied in the founder, and you have a few people around a founder. (For more on the importance of being both agile and stable, see “ Agility: It rhymes with stability.”) It’s this stable backbone that becomes a springboard for the company, an anchor point that doesn’t change while a whole bunch of other things are changing constantly. And agility requires stability, a stable foundation-a platform, if you will-of things that don’t change. One is a dynamic capability, the ability to move fast-speed, nimbleness, responsiveness. Agility requires stability for most companies.Īgility needs two things. Agility is not incompatible with stability-quite the contrary. Interview transcript Defining organizational agilityĪaron De Smet: Agility is the ability of an organization to renew itself, adapt, change quickly, and succeed in a rapidly changing, ambiguous, turbulent environment. An extended and edited transcript of Aghina’s and De Smet’s comments follows. Aghina was interviewed by Monica Murarka, a senior expert in organization design at McKinsey, while De Smet was interviewed by Luke Collins, an editor with McKinsey Publishing. In these interviews, the leaders of organization design at McKinsey, principals Wouter Aghina and Aaron De Smet, explain what agility means and how organizations can evolve to thrive in an environment that demands constant change. Established companies often struggle to become more dynamic-but it’s not impossible.
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