Blog: Is Your Organisation Agile?

Is Your Organisation Agile? Take these three tests

_{Why should you want to be agile?}

Agility is an advanced and dynamic organisation-level capability. With it, organisations can make timely and effective changes because they do a better job of selecting and executing the ones that will help them counter challenges in their environment. Plus, those changes are subject to maintenance and reform which help embed them over the long term.

Fundamentally, agility is a repeatable resource that gets used over and over again. It represents an investment in change. Agile organisations see change – not stability and efficiency – as the key to current and long-term performance.

_{How do we measure agility?}

There are three standards for assessing agility. Two of them are outcome related, one is organisational.

1. The first outcome standard is operational. Agile organisations must be able to demonstrate the ability to change, especially the capacity to develop and implement new capabilities that differentiate the firm under different environmental circumstances. One of the best examples of this type of change is Nokia. Over its 100-year-plus history, Nokia has shifted its core operating capabilities from pulp and paper, to a diversified commodity and technology conglomerate, to electronics, to mobile phones, and is currently remaking itself into a network infrastructure, software and services technology firm.
2. The second outcome standard is financial. Organisations with the ability to make timely, effective and sustained change should perform consistently higher than the average of their competitive group over time. Meeting this standard is an admirable achievement.
3. The third standard of agility is organisational. Organisations must have the strategies, structures and systems that can drive change and sustained performance, and they must understand that change and performance are the result of capability, not just luck. People in the organisation must agree that it is able to strategise, perceive, test and implement.

_{How many organisations pass these tests?}

In Worley, Williams and Lawler’s ground-breaking research, they examined the profitability of four selected firms in the fast-moving food and beverage consumer goods industry between 1990 and 2014. Across all of the industries examined, the same patterns of performance were found. About 13% of the firms displayed what we called the ‘chronic underperformer’ pattern. By way of example, Tyson Foods beat the industry average only 8% of the time.

By far the most common pattern (68% of all firms) was what we called the ‘thrasher’. Thrasher performance fluctuated, often wildly, between very high performance and very low performance. Sara Lee demonstrates this pattern neatly: its return on assets exceeded industry average profitability 50% of the time.

Finally, in every industry there was always one, two or sometimes three firms that consistently beat the industry average. Overall, only 18% of the firms achieved this level of performance. In the consumer products industry, Unilever beat the industry average 83% of the time while Campbell Soup Company, despite its traditional and somewhat stodgy image, exceeded the average 88% of the time, and has done so for a long time. The financial outcome standard suggests that organisations need to post above-average profitability at least 80% of the time over relatively long periods.

Thus, while survival is a necessary but not sufficient condition for agility, it is not the same thing. Firms that have survived over a long period have clearly adapted, but that doesn’t necessarily mean they are agile. Organisation agility is manifest in a variety of organisation changes that result in sustained, above-average performance.

Want to learn the secrets of agile performance to unlock your organisation’s potential? Check out CRF’s Agility 2.0 International Conference Hub here.