The word “agility” has entered the business lexicon like few other terms in recent memory. Yet according to the authors, the core concept is misunderstood. An essential feature is repeatability, which requires management processes that can support adaptability over time.
The authors studied data from the largest public global companies in 22 industries between 1980 and 2012 and surveyed more than 50 companies in an effort to understand the factors that explained sustained levels of high performance. The authors concluded that organizational agility required routines in four areas: strategizing, perceiving, testing, and implementing.
Routines and capabilities, the authors note, allow organizations to perform key activities reliably and repeatedly. Management processes -- the fundamentals of planning, organizing, controlling, and motivating -- operationalize the routines and capabilities. To support agility, management processes need to be designed well, and some processes must be designed for change.
While the authors found that good management processes were a prerequisite for agility, good processes were no guarantee for success. Sustaining high performance was a function of whether certain processes were flexible and fast. They illustrate their argument using two companies from their research: the Brioche Pasquier Group, a multinational bakery headquartered in Les Cerqueux, France, and Netflix Inc., which is based in Los Gatos, California, and streams digital content to more than 80 million customers in more than 190 countries.
Both companies demonstrated an ability to operate effectively without being tied to a rigid set of steps. At Brioche Pasquier Group, for example, twice a year individuals and teams identify objectives and actions related to their work that they think can improve short-term performance or develop future capability, and they also review the previous plans. Brioche Pasquier Group uses this as an opportunity to distribute monetary bonuses (funded by savings or new value realized) to the individuals and teams whose actions contributed to the results. At Netflix, executives are committed to putting information into the hands of the people who do the work and making sure that the information flows up and down to everyone who needs it.
“Flexibility requires having a clear understanding of what the management process is supposed to achieve, functional links to a portfolio of inputs, and the freedom to adapt the process as necessary,” the authors write. “While the purpose of the process must be well established and widely shared, the information needed by the process and the means to the ends shouldn’t be fixed or narrow.”