Does the future belong to agile companies?

May 4, 2021 | Podcast

Precisely what is behind the term and how is the topic being interpreted and implemented in practice by Staufen AG? Jan Haug has a degree in industrial engineering and has been a part of the Staufen AG team for 13 years. Heading the Lean Development unit, together with his team, he has also been working on the topic of agility for years, and how it can be successfully implemented in traditional corporate structures.

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Mr. Haug, can you explain what you mean with the idea of an agile company?

Generally speaking in the context of consulting, agility is understood to mean a company’s ability to change and how quickly it is able to respond to market requirements and environmental factors. To answer the question in a more comprehensive sense, allow me to first provide an explanation of our understanding of agility.

We typically distinguish between methodological agility and structural agility, and of course we also take the topic of corporate culture, or rather cultural agility, into account. Methods, tools and roles allows us to respond more quickly and dynamically. They fit almost every context, often making them the first step for a company when dealing with agility. This requires visual management using Kanban boards, for example, or frameworks such as Scrum, short-cycle coordination/feedback loops with customers, etc.

Nonetheless, the issue as to whether a company should also embark on the journey on an organizational level really depends heavily on its environment and, of course, on the “maturity” of the company. To evaluate this, we at Staufen use an analysis format that allows us to determine the need for transformation.

Moreover, a company does not become agile simply by introducing methods and transforming the hierarchy it has in place into a network organization; actual agility requires a cultural change. This is because the values, skills, and behavior that its people demonstrate on the basis of the changes contribute greatly along the way.

Why is it more important than ever for an established company to give thought to its agility?

Companies develop over time. A newly established company usually has a manageable staff, flat hierarchies, simple processes and is generally responsive with the capability to change. The longer a company is on the market, the larger it becomes, the more “cumbersome” it becomes; processes and structures become more complicated, and the company’s ability to respond dwindles.

Over the past few years, the market environment has seen dramatic change. Globalization, disruptive competitors, new technologies, and an increasing demand for diversification based on the specific needs of individual customers have made the basic conditions for companies more complex and confusing. The artificial word VUKA describes this state of affairs and stands for volatility, uncertainty, complexity and ambivalence/ambiguity.

Many companies are simply not agile enough to respond adequately to constantly changing parameters or even to anticipate them. Agility as a whole allows companies to again become responsive, allowing them to survive in the VUKA world; to this end, they must continue to question existing processes and structures. Unfortunately, the thought and value processes of the past are simply no longer helpful.

Because of this, we define corporate agility in the following manner: An agile company is able to recognize changes at an early stage, to adapt itself quickly to current circumstances at any time – taking into account its own needs – and to develop the most effective and efficient organizational form.

So, companies must have the capability to continuously adjust to new circumstances? Does that mean that stability is a thing of the past?

Organizations are social systems that renew themselves all the time. As in any other company, strategies, processes, structures and especially the corporate culture lend the necessary degree of stability in agile companies. Formally, or informally, they control how the business operates, how decision-making processes are handled, how information flows … Yet in order to have the necessary flexibility to ensure the company’s survival in the complex environment, the dimensions must also be aligned with each relevant business scenario. So, in the broadest sense, the structures of a company, such as the organizational structure, should not be understood as rigid and given, but instead they breathe and adjust themselves continuously.

So, they allow the formation of interdisciplinary teams, which in an ideal world works in a self-organized manner. In this sense, self-organized means that the teams make their own decisions without having to navigate long, hierarchical paths. Continuously adjusting themselves also means that these teams may in some cases only be set up temporarily and thus that staff members and executives do not always find themselves in the same roles and in the same environment.

However, agile companies are of course also “stable”. The term stability is just interpreted somewhat differently than in traditional companies. In an agile company, the focus on a common purpose and on the customer is the most important organizing principle, positioning the collective efforts of everyone involved in the company in a larger context and therefore adding another element of emotional motivation.

What are the differences between methodological, structural and cultural agility that you mentioned earlier? And what steps does Staufen take to make companies more “agile”?

Introducing visual management and the corresponding frameworks Scrum, Shop Floor Management or Kanban provide transparency in the manner in which projects or processes progress. This provides something tangible, enabling the change process towards an agile company to be supported. We then speak here of methodical agility: In particular, the boards as well as other tools, roles, artifacts and events represent the visible part of the change. This visible part is also referred to as “doing agile” and is usually the first step on the journey to becoming an agile organization. “Doing Agile” increases clarity and transparency in addition to purposeful communication, while also raising the performance of a team and an organization.

Structural agility formalizes the agile way of working, regulating how everything meshes and what is possible. This includes decision-making authority and role descriptions, among other things. It is a misconception to think that an agile organization can be successful without principles, rules and clear responsibilities. Nor does the whole company need to have agile structures. In our practice, we also develop agile organizational units in companies with a traditional hierarchy and we create so-called hybrid operating systems.

Many companies find that by introducing agile methods, tools and structures, they are not able to leash unexpected performance potential for their organization. In many cases, what is missing is cultural agility, i.e. an appropriate attitude combined with the internal orientation within the company, so basically as in “attitude beats method”. This attitude is influenced by the agile values transparency, cooperation and customer orientation of the members of the organization, creating a lived corporate culture that makes all the difference. When employees interact with each other, additional skills, such as communication and conflict management, self-control, and the ability to give and receive feedback, become more important.

“Being agile” describes the full potential of an organization’s ability to perform, enabling it to combine and live methodical, structural and cultural agility.

How does agile transformation unfold?

To develop and implement an agile company, what is needed is a process of transformation. This requires certain framework conditions, comparable to those of other successful change projects. Especially when starting with individual pilot areas (“agile habitat”), these basic conditions are critical for ensuring the success of the transformation (such as time, capacities, learning protection, etc.). After all, even agile organizations – like any newly designed organization – are initially fragile and must first prove their advantages and benefits as compared to the old system.

This is why Staufen AG pursues an integrated consulting approach in each and every transformation process, in which we combine relevant expertise with our competence in designing cultural-systemic interventions.

What does leadership look like in an agile world?

As opposed to “heroic leadership,” in which the leader alone sets the course and ensures implementation through command and control, leadership in agile organizations is no longer tied to one person alone. Instead, leadership is understood as a team collaboration, in which leadership is tied to a role and can be exercised by different people depending on the context.

More focus is placed a person’s skills and talents. For this reason, in some contexts, every staff member can assume the role as leader within a team. In other situations, by contrast, this same person can be called upon as a technical expert or specialist. However, this does require strong communication skills, flexibility and an expanded understanding of the roles of each of the other persons involved.

Agile self-organization creates the basis conditions required to promote an entrepreneurial culture within the company and to ensure a greater willingness to take responsibility and action by means of a meaningful culture. In order to promote this type of culture, the traditional leaders primarily act as coaches and sparring partners to empower and support employees.

MIT Professor Ed Schein, one of the fathers of organizational psychology and organizational development, sums it up briefly: “In an increasingly complex world, leaders simply do not know enough to decide on their own what is new and what is better. This is why leadership is a team sport.”

Host

Dr. Thilo Greshake, Partner Automotive, STAUFEN.AG
With a doctorate in mechanical engineering and more than 15 years of international consulting experience in lean development, engineering excellence and quality management, Dr. Thilo Greshake has been responsible for the Automotive division at Staufen AG since 2017.

Guest

Jan Haug, Partner, STAUFEN.AG

Jan Haug has a degree in industrial engineering and has been a part of the Staufen AG team for 13 years. Heading the Lean Development unit, together with his team, he has also been working on the topic of agility for years, and how it can be successfully implemented in traditional corporate structures.

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