Introduction
At TeamForm, we get to work with enterprise organisations across industries who are seeking to improve on the delivery of outcomes for their business, customers, and teams. With this experience, we know that business agility isn’t a destination; it requires a long-term commitment to the continuous improvement of delivering better value to customers and evolving an organisation’s ways of working.
Many of our current and prospective customers still have open questions about the journey towards a more nimble and responsive operating model:
- What are the common challenges we should expect?
- How are other companies moving towards greater business agility?
- What actually moves the needle?
This field guide is our way of giving back to the community – our intent is that these learnings and insights provide a simple and practical source of inspiration, whether you’re leading the change within an enterprise organisation or a change agent who wants to improve your own team’s ways of working.
What is an operating model?
Before exploring the concept of Business Agility, let’s first start with an understanding of an organisation’s operating model. According to Wikipedia:
An operating model is both an abstract and visual representation (model) of how an organisation delivers value to its customers or beneficiaries as well as how an organisation actually runs itself.
In essence, operating models encompass how your organisation delivers value, and how your organisation works, including:
- How your organisation structures around the delivery of value
- How your organisation aligns your portfolio and investments around your organisation’s strategy and goals
- How your organisation aligns your teams to support the delivery of business goals and objectives (e.g., OKRs)
- How people, capabilities, and technology are structured to support your business strategy
- How people communicate and collaborate across the organisation within their system of work
- How you govern and fund work, and invest in the incremental delivery of outcomes
- How you prioritise across the organisation impacts your organisations ability to deliver
In 2024, change is the real constant. Evolving your operating model and how teams work is as important as getting work done. Organisations are under pressure to do more with less and unless the system of work improves, your options to cut costs are limited. On top of that, it’s likely that your competition is evolving their operating model at pace, even if you aren’t.
When thinking about your operating model, consider how you re-wire your organisation to succeed in the marketplace (see Gene Kim and Steven Spear’s recent book Wiring the Winning Organization for some timely insight on how this works).
At the core of improving how value is delivered in your organisation are three main questions:
- What systems are in place that enable or constrain the organisation’s ability to make effective decisions and empower teams to experiment and learn based on customer interactions?
- How do you invest, measure, and align to strategy and incentivise work in your organisation? This will determine how people and teams act and what they focus on.
- What other processes are slowing you down or steering you in the wrong direction? For example, decision lag in your organisation could be slowing you down.
What is Business Agility?
As defined by the Business Agility Institute:
Business (or Enterprise) Agility is a set of organisational capabilities, behaviours and ways of working that affords your business the freedom, flexibility and resilience to achieve its purpose.
No matter what the future brings.
Most enterprise organisations are emerging from the post-Covid pandemic era facing a constantly increasing rate of change and challenging macro-economic conditions, which has brought on a burning platform to transform how it works and delivers value to customers.
When organisations reference the concept of “Business Agility”, what they’re usually referring to is moving towards a more responsive operating model that is characterised as a shift from more “traditional” ways of organising and working.
Traditional Organisations
- Organised in functional silos, focused more on delivering planned outputs
- Governance and decisions flow down the org chart
- Fund time-bound projects, with specific outputs
Responsive organisations
- Cross-functional teams organised into teams of teams that support customer journeys / value streams and outcomes.
- Teams are empowered to rapidly learn and make decisions to deliver better value to customers.
- Hypothesis-driven investments that are validated through measurable outcomes, rather than the completion of work.
Large complex organisations often start their transformation journeys by starting with product and technology teams – then begin to gradually adapt ways of working across the entire organisation.
The benefits of Business Agility
The main business drivers of this shift in modern enterprise organisations, across industries:
- An increasingly complex business environment, with organisations needing to respond to frequent and unpredictable factors (recent example: Covid-19 pandemic): in order to stay competitive, organisations are seeking to more quickly respond to the rapidly changing environment: macroeconomic conditions, customer needs, technological adoption and evolving competitive landscape
- All companies are now tech companies: the rapid growth of digital products and services as a way to deliver value to customers has required organisations to embrace technology not as a separate function within their organisation, but a deeply integrated and core capability, deeply embedded in every business unit
- Employees expect more engaging and meaningful work: expectations of what work is and how work is done; employees now expect more flexibility, autonomy, and opportunities for growth and learning, which requires new ways of leading and working
Does Business Agility lead to better results?
Organisations reporting to be higher performing claim the following benefits (Source: Business Agility Report 2023):
- Better delivery of commercial outcomes: customer satisfaction, achievement of business outcomes, improved speed to market, and higher revenue
- Organisational agility: better ways of working, reducing silos, improved practices, better ability to respond to change
- Workforce engagement: improved employee engagement, and better transparency and communications
How are organisations approaching Business Agility?
It is often tempting to buy ‘off the shelf’ solutions when it comes to operating models, however this is often at your peril. Organisations are complex adaptive systems and have their own unique ways of doing things, so an operating model simply cannot be ‘installed’ like a piece of software as the right systems, culture, leadership and practices will not be setup to support such a change.
There is no one way (or “silver bullet”) for organisations to transform, but there are common principles for how to approach your organisation’s transformation efforts.
- Transformation is a long-term commitment, not an end destination: organisations are complex adaptive systems, which means trying to transform this system is inherently emergent, which will not be successful if you take a deterministic view and mindset
- Leadership commitment is essential: successful transforms are led by executive leaders (and ideally the board of directors) who are all committed to delivering better outcomes for customers, business and employees; leaders must not only say the right things, but consistently role model behaviours that create an environment of psychological safety, transparency, and continuous improvement
- Start small, but work across functions: organisations who take a more iterative and experimental approach can more successfully prove the value of the transformation to the organisation before starting to “scale”; true business agility involves a combination of transforming across business functions: IT, finance, HR, legal, and security
Areas organisations can focus on to improve Business Agility
Most organisations have likely tried to scale “Agile” through an “Agile Transformation” and failed. In the State of Agile 2018 Report, 96% of Agile Transformations fail to generate the capability to adapt to changing market conditions.
There’s no common blueprint for transformation, but organisations self-report that focusing on these common patterns make the biggest difference when it comes to moving the needle and “making the change stick”.
Common opportunity areas to focus on:
- Shift to cross-functional teaming structures
- Organising for outcomes
- Organisation-wide planning rhythm (QBR)
- Adaptive and dynamic funding models
- Codifying a shared language and taxonomy around structure, roles, outcomes and work
- Connecting the ecosystem of tools and data
Further learning
- BVSSH
- Wiring the winning organisation (Gene Kim and Steven J. Spear)
- Business Agility Institute Report 2023
