A Guide to Building Agile Culture

By AgileBusiness, Culture, Leadership, Organisational Structure, Strategy No Comments

excelunlimited - people are motivated by the organisation’s culture

We’ve just published the results of our workplace culture research entitled
A guide on the importance of building an agile culture and you can download it free here.

An organisation is only as good as its people. But people are motivated by the organisation’s culture as that’s what drives the behaviours that make the organisation successful.

Organisational agility is not well understood, our research into the subject revealed four critical areas, which are key indicators of what we can term as potential misalignment within an organisation.

We looked at how SMEs manage change and transformation when they go through transition(s), such as a growth phase or through the process of a Merger & Acquisition.

Our focus was on identifying the way businesses managed the four key elements of organisational culture to more efficiently pursue agile transformations.

These four elements are:

1. Recognition: Recognising good or hard/smart work. One in five claim that there are never any personal development reviews inside their organisation…and strongly disagree that there is a system of recognition.

2. Communication: Organisational purpose, clarity of expectations and alignment of people. One in five companies claim that the organisation’s values are not visible…and a similar number claim that the relationship between their role and the purpose of the organisation is not clear.

3. Trust: Trust in other people/ Organisation.Trust is more likely to be associated with fellow colleagues rather than senior management.

4. Learning: Investment in training. In controlling cultures there’s less investment in skills.

An agile culture has to be built on an agile mindset. This allows things to move more quickly, less hierarchy in decision making and responsibility handed to small agile groups and teams to make things happen. Communication channels are then efficient and open, as in there is more transparency.

Building an agile mindset and culture offers a way to harness the power of the people in your organisation to find ways to be more adaptive, innovative and resilient in a fast-paced digital economy.

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A Guide to Building Agile Culture

By AgileBusiness, Culture, Leadership, Organisational Structure, Strategy No Comments

excelunlimited - people are motivated by the organisation’s culture

We’ve just published the results of our workplace culture research entitled
A guide on the importance of building an agile culture and you can download it free here.

An organisation is only as good as its people. But people are motivated by the organisation’s culture as that’s what drives the behaviours that make the organisation successful.

Organisational agility is not well understood, our research into the subject revealed four critical areas, which are key indicators of what we can term as potential misalignment within an organisation.

We looked at how SMEs manage change and transformation when they go through transition(s), such as a growth phase or through the process of a Merger & Acquisition.

Our focus was on identifying the way businesses managed the four key elements of organisational culture to more efficiently pursue agile transformations.

These four elements are:

1. Recognition: Recognising good or hard/smart work. One in five claim that there are never any personal development reviews inside their organisation…and strongly disagree that there is a system of recognition.

2. Communication: Organisational purpose, clarity of expectations and alignment of people. One in five companies claim that the organisation’s values are not visible…and a similar number claim that the relationship between their role and the purpose of the organisation is not clear.

3. Trust: Trust in other people/ Organisation.Trust is more likely to be associated with fellow colleagues rather than senior management.

4. Learning: Investment in training. In controlling cultures there’s less investment in skills.

An agile culture has to be built on an agile mindset. This allows things to move more quickly, less hierarchy in decision making and responsibility handed to small agile groups and teams to make things happen. Communication channels are then efficient and open, as in there is more transparency.

Building an agile mindset and culture offers a way to harness the power of the people in your organisation to find ways to be more adaptive, innovative and resilient in a fast-paced digital economy.

An agile culture is increasingly recognised as a critical component for the survival and growth of a business.

In a fast- paced environment where changing trends and consumer sentiment are the norm, significant disruption is not only to be expected but embraced.

Rapid changes in competition, demand, consumer and employee expectations, technology and regulations make it imperative for organisations to be able to adapt quickly.

importance of being agile - excelunlimited

Becoming agile is important to my organisation

Despite companies ranking agility as a high strategic priority in their performance units, respondents sentiment painted a picture of organisations falling behind in transforming activities in several parts
of their structure—from innovation and customer experience to operations and strategy.

What’s more our survey also confirms that organisations that have successfully implemented an agile culture and adopted an agile mindset excel at both stability and dynamism.

The guide looks at some of the behaviours that nurture and characterise an agile mindset and the impact that adopting agile culture can have on communication, commitment and collaboration within your organisation, and the symbiotic relationship between culture and leadership and how it shapes and influences change within organisations.

If we’re not investing in our workforce what are we doing?

If you’re struggling with understanding your corporate culture, why the business isn’t growing as fast as it should and need some help then get in touch.

excelunlimited - guide to building an agile culture

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You can read more about  building business agility in our book.

excelunlimited - guide to building an agile culture

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The Ambidextrous Organisation

By AgileBusiness, Disruptive Innovation, Organisational Structure, Strategy No Comments

The concept of the ‘ambidextrous organisation’ was first described by Charles O’Reilly and Michael Tushman in their 2004 HBR piece as a way to capture the challenge inherent in businesses being able to make steady improvements to existing models whilst still developing breakthrough innovations. This, they said, was akin to the challenge of constantly looking backwards in attending to the products and processes of the past whilst also gazing forwards and preparing for the innovations that will define a new future.

They studied 35 different attempts to launch breakthrough innovations that were undertaken across nine different industries, looking for those instances where the business was able to simultaneously pursue incremental innovations for existing customers whilst also developing breakthrough innovations for new customers.

The research showed that the companies that had successfully balanced simultaneous exploitation of existing models and more radical exploration of future shared some common characteristics – most notably in maintaining a degree of separation between the traditional areas and the exploratory ones, so allowing for different processes, structures and cultures to emerge, whilst also keeping links between the units tightly integrated at the senior executive level. More than 90% of these ‘ambidextrous organisations’ ended up achieving their goals, far higher than the other ways of structuring for breakthrough innovation.

The commonalities and differences between the exploratory and exploitative areas of the business and how they link and interact are key. O’Reilly and Tushman showed that successful ambidextrous organisations had been able to set up structures that were independent enough to enable breakthrough innovation and different ways of working to emerge whilst connected enough at the senior level to keep them aligned to vision, strategic goals or needs. This requires the senior teams and management to be ambidextrous in understanding the divergent needs of the different kinds of business areas, combining the ability to make difficult trade-offs or decisions with the visionary thinking required of entrepreneurs. The senior team must also be committed to operating ambidextrously. A compelling vision relentlessly communicated by that senior team can articulate a goal and direction that can enable the exploitation and exploring parts of the business to co-exist and thrive, and bring to life the benefits of both types of operating model for employees.

The need for breakthrough innovation has certainly not declined since the research was done in 2004, and the business environment has if anything become even more characterised by rapid change and unpredictability. So the concept of an organisation that can ambidextrously optimise for the present whilst simultaneously creating the future is a powerful one. 

But in the modern environment where value is increasingly shifting from long-term, sustainable competitive advantage to generating and exploiting a series of transient advantages, businesses need a continuous flow of new propositions and breakthroughs. This can only happen if there is enough separation in the early stages to ensure that new thinking, cultures and ways of working are given sufficient space to thrive and are not suffocated by legacy and hierarchy. But then the bigger opportunity is for these new ideas and operating models to catalyse a much wider transformation across the entire organisation. For that to happen, as concepts are commercialised and scaled there should be growing commitment and integration not just at the most senior level, but at all levels through the organisation, and a more seamless flow between exploit and explore.

For more like this, order your copy of Building the Agile Business Through Digital Transformation, or you can join our community to access exclusive content related to the book.

Photo by Vincent van Zalinge on Unsplash

Changing Innovation Horizons

By AgileBusiness, Digital Disruption, Disruptive Innovation No Comments

Silicon Valley entrepreneur Steve Blank makes a good point about McKinsey’s Three Horizons Model for innovation and how our approach to understanding how we apply it needs to change. The model famously seeks to define the different types of innovation that businesses need to focus on if they are to survive and thrive:

  • Horizon 1 is about incremental improvements or continuous innovation around a company’s existing products, models, or core capabilities. This type of innovation typically focuses on existing markets or utilises existing technologies that the company is familiar with, and is likely the easiest and most common form of innovation
  • Horizon 2 innovations are more about adjacencies, next generation products and likely focused on extending the company’s existing business model or core capabilities to new markets or customers, perhaps using new technologies. Since this extends into areas that the company is less familiar with, it likely requires different thinking and techniques to Horizon 1
  • Horizon 3 innovations are entirely new, breakthrough products or categories that are pushing the boundaries, responding to or taking advantage of disruption, and pushing the company to explore new markets or technologies

Originally articulated in the book The Alchemy of Growth in 2000 by Baghai, Coley, White, the model has become a well-referenced way of describing the need for organisations to shape focus and funding on the different types of innovation and how the ability to create ongoing competitive advantage depends on all three types. Whilst it’s easier for businesses to focus on incremental innovation which is closer to existing, well understood models (Horizon One), there is a requirement for a more comprehensive approach that recognises the need for continuous exploration in lesser known areas (Horizon 2 and 3).

three-horizons-modelThree Horizons presents a way that organisations can concurrently manage optimising for current growth opportunities whilst discovering and building potential future opportunities for growth. But it is important for businesses to recognise the differences in the way in which you manage each one. For example approaches to risk and payback, sources of value creation, measures, and the allocation of senior management time.

The source of value creation in Horizon 1 comes from superior execution, in Horizon 2 from ‘positional advantage’ (where you are trying to gain a better position relative to your competitors), and in Horizon 3 from insight and foresight around changing customer and market contexts and opportunities.

McKinsey found that Horizon 2 and 3 required more time from senior leaders, but also a commitment to avoid starving these innovations of resources due to short-term financial pressures. They also found that in Horizon 3, whilst the general hit rate may be lower, successful innovators clustered their experiments into between two to five themes depending on the size of the organisation.

Measures through the Horizons also differed. Horizon 1 is more about profit, cash flow and return on invested capital, overseen by experienced business managers. Horizon 2 is more entrepreneurial, so is supervised by ‘business builders’ whose metrics for success might be revenue milestones and net present value. Horizon 3 is far more emergent and so requires visionaries and ‘champions’ who are focused on emerging technological and commercial value milestones.

The point that Steve Blank makes concerns the delivery time for each horizon and how this has fundamentally changed. The McKinsey model accounts for the fact that different industries may have different timescales for innovations to return value (short cycle industries for example may seen value created quicker), but in general the impact on profit and cash flow, and current market value is far longer with more emergent innovations than it is for extending core capabilities. Horizon 1 may therefore deliver impact in the short-term since it is focused on models and capabilities that are already contributing the majority of value and profit today. Horizon 2 may take 3-5 years to see a return since it involves extending existing businesses and capabilities. And Horizon 3 may take as long as 5-12 years as it involves more disruptive creation of value.

In the modern environment however, Blank notes that the time it can take for disruptive ideas to be researched, engineered and scaled to market has been radically transformed by digital technologies and networks. Horizon 2 and 3 may now happen at speed. The potential for new, emergent, even disruptive, ideas to be rapidly prototyped and then to generate scale and take on a life of their own has added an entirely new dynamic:

‘These rapid Horizon 3 deliverables emphasize disruption, asymmetry and most importantly speed, over any other characteristic. Serviceability, maintainability, completeness, scale, etc. are all secondary to speed of deployment and asymmetry.’

The Three Horizons, whilst still a valid and important way of understanding the different types of innovation that businesses need to continuously focused on, is no longer bound by time. Disruptive businesses, unencumbered by legacy technologies and systems, and entrenched, slower moving processes,  can move quicker towards generating return from newer, disruptive technologies and models.

Blank defines four key ways in which incumbents can counter this kind of rapid disruption:

  • Incentivising third party resources to focus on your goal or mission – open innovation initiatives, allowing external parties to innovate from your data through APIs, creating new marketplaces through platform thinking (Apple and the App store), partnering with entrepreneurs to venture build around aligned goals (Diageo and Distill Ventures), setting incentivised, inclusive challenges (DARPA Prize Challenges)
  • Acquiring external innovators that can operate at the speed of the disruptors. The challenge here though is the not-insignificant potential for corporate culture, processes, and approaches to stifle any speed advantage that the newer business has
  • Rapidly copying new, disruptive models (like Google copying Overture’s pay-per-click model) – this carries with it the risk of not properly understanding customer needs and contexts and so failing to do it well
  • Innovating better than the disruptors (like Amazon and AWS, Apple and the iPhone). This is of-course extremely difficult for a large, incumbent organisation to pull off when it is focused on execution, optimisation and protecting legacy value creation

Three Horizons remains an extremely useful taxonomy, but the trap is that we under-appreciate the impact of re-purposing existing Horizon 1 technologies into new models at speed, and the rapidity with which new, emergent propositions can be iterated and scaled.

For more like this, order your copy of Building the Agile Business Through Digital Transformation, or you can join our community to access exclusive content related to the book.

Photo by Graham Page on Unsplash