In the VUCA world, the old hierarchical control patterns in organizations are becoming increasingly ineffective. Flexible action and reaction are required. But how can agile methods be successfully established in a company? TCI partner Frank Ahlrichs, an expert in agile project management, explains what is important when introducing an agile framework and why practical trial and error is so much more important than theoretical knowledge of concepts and methods.
Event information: The author of this article is a speaker at the seventh event in the TCI-Online series entitled "Agility in companies to increase competitiveness", which will take place on March 16, 2021, 14:00-17:00. Via the link https://tci-partners.com/tci-online/ you can register for free participation.
The VUKA world
The agile manifesto is 20 years old, and now almost everyone knows the Cynefin framework or the Stacey matrix, which explain that the world around us has become more complex. We live in a volatilen, usafe, komplexes and ambigen (ambiguous) world: In the VUKA world.
Rising volatility
Volatility was a buzzword after the 2008-2010 financial and economic crisis. Market fluctuations lead to unpredictable capacity utilization situations. The efficiency drive of lean management can no longer be maintained as usual. Effectiveness is becoming much more important. Doing the right things often becomes more important than doing things right.
Increasing unpredictability
The faster the world around us becomes, the more uncertainty, ambiguity and unpredictability increase. Increasing speed is not a new effect: managers in the 1970s also had the feeling that everything was speeding up. Due to the digitalization of recent years and the Moore's law product lifecycles and fashions are becoming ever shorter, new technologies, new business models and new market requirements are emerging ever faster. In addition, the Internet of Things (IoT) gives us the opportunity to realize individual production at the unit costs of mass production. As a result, we have to make significantly more individual decisions and need far more comprehensive information to do so - this often applies to several specialist functions. And it is becoming increasingly clear that hierarchical decision-making levels are not up to the task. It takes too long to get all the information to a manager, who then decides on behalf of an operational employee; the decisions deteriorate.
The alternative is the decentralization of many operational decisions. However, this breaks with the 100-year tradition of hierarchical, function-oriented organizations as an instrument for greater transparency and rationality. Team structures emerge, often cross-functional, which can be very fast and flexible. The impact of the "U" in VUCA is therefore enormous.
Increased complexity
The "K" in VUCA is mentioned most frequently. Complexity arises when many influencing factors come together in a situation and these also change frequently. In these situations, there is not enough time to fully grasp the new situation before something important has changed again. The serious consequence is that causality can no longer be observed in such situations. Clear, targeted control measures with if-then statements can no longer be formulated. Specialist knowledge is only of limited help here; experience and therefore skill are much more important.
Ambiguity: there is no longer just one way
The increasing Digitalization increases the complexity of everyday life. Everything that can be automated will be automated. Artificial intelligence (AI) can also carry out intellectual activities such as medical diagnoses and journalistic articles independently. What remains are empathy-based activities such as care, art, innovation and communication. These are beyond the scope of traditional corporate management. New forms of leadership and management are needed here. In many cases, the usual management paradigm leads to unnecessary overheads. The solution is to try things out in complex situations and react flexibly to the resulting outcomes instead of following a planned path to the supposedly one right goal.
A new professional opportunity and risk management system is therefore becoming more important than longer-term planning and control.
The VUCA world is significantly changing our business world and every single company in it. The new paradigm is not only changing the visible level of management methods, but is also creating a new attitude among managers and employees.
We call all this agility. It is therefore not about "introducing agility". Rather, the aim is to introduce a new awareness into companies that will significantly change the way we run our businesses. The specific solution looks different in every company.
Agility has to be practiced
I have seen several companies design a new, agile organization and then want to introduce it in exactly the same way as it had always worked before: The management informs the employees about the new organizational structure and asks them to work this way from now on.
But that doesn't work!
Agility means a lot of joint practice of a new way of working paired with a new understanding of leadership. New methods, such as Design Thinking, OKR and Scrum, can be learned. But after the seminar, it is important to try out what you have learned in practice and gain your own experience.
Every target group, whether top management, operational employees in order processing or product managers and developers, needs individual training and support.
It helps to have a structured system of training and coaching that leads from a general understanding of the concept to agile working throughout the entire company. Small units of two to four hours offer stressed managers an introduction; workshops lasting several days provide specialist employees with in-depth knowledge of the new "way of working".
Working in such a scaled agile framework (Skaled Agile Framwork, SAFe®) requires additional training steps.
Agility as a means of increasing efficiency?
Agility is a means of mastering the effects of the VUCA world, not a means of increasing efficiency. In case of doubt, even higher capacities are required for intensive communication and rapid new decisions. Nevertheless, agility can significantly improve the company's results. The qualitative and quantitative effects are often astonishing.
It is a frightening fact that the majority of all projects fail when it comes to digitalization and the planned business growth does not materialize. The reason: traditional project management and the traditional functional handling of these issues does not work. Other methods are required here, but above all a different way of thinking and value creation.
When considering the monetary effects, it is necessary to look at the company as a whole and sometimes even beyond. The main effects of agility lie in a faster time-to-market process. This applies not only to newly developed products and services, but also to operational processes in marketing and order processing, for example in customer projects. The main effect is a higher turnover with the same capacity. However, savings in overhead expenses also often lead to significant improvements in results.
Due to the complexity and ambiguity, i.e. again the VUCA effects, the effects often cannot be causally assigned to individual measures. However, many successes in practice show the economic advantage of agility.
Behavior and attitude change work through communication
An organization is a social system consisting of its employees and their communication with each other; this communication is what makes up the core of the system. This definition goes back to the Niklas Luhmann's systems theory.
Communication is therefore also a starting point for changing the organization. Changes in communication also change the behaviour and attitudes of the people concerned and thus the behaviour of the entire organization.
However, it takes much more effort to change communication and thus behavior and attitudes than to adapt methods, structures or processes. These are deterministic and can be communicated relatively easily as rules of the game for joint work.
However, if it is possible to change behavior and attitudes, the effects are significantly stronger than with factual method changes. It is therefore not enough to "simply" switch to methods such as Scrum or Kanban. If the attitude behind it is not right, the method change is often even detrimental.
Decentralized instead of hierarchical
Until now, communication between people in organizations has often been characterized by a boss-employee relationship. In order to act on an equal footing and to be able to exploit all capacities and competencies in the company, this vertical organization must be abandoned. On the other hand, an organizational home for each employee and disciplinary responsibilities for salary, leave, hiring and firing, etc. are important and necessary.
The solution lies in the separation of disciplinary and technical organization. In the professional organization, there are only roles, no hierarchies. It is therefore also very flexible and fast.
Working in a flat professional organization must be practiced and should ideally be accompanied by a coach over a longer period of time (at least one year). This prevents the old "command & control" organization from becoming active again when the first major problems arise.
The elements of the agile organization can then be implemented and improved step by step. This learning effect will significantly increase the acceptance of this form of organization compared to a predefined structure.
Conclusion: agility is not an end in itself
Agility primarily means being agile, not using agile methods. Agility as a value cannot be learned through knowledge transfer, but only experienced through practice. Every company has to go its own way, there are no copy-paste recipes.
Agility is a key response to the effects of a VUCA world. But agility is not an end in itself. It must fit both the people in the organization's social system and the conditions in the market environment.
The path to an agile company that can quickly adapt to new market conditions is through systematic training and expert support during implementation.
Event information: Agility in companies to increase competitiveness - 16.03.2021, 14.00-17.00 hrs
The topic of organizational management in the VUKA world is also the subject of the seventh event in the TCI-Online series entitled "Agility in companies to increase competitiveness" on March 16, 2021 from 14.00 to 17.00. In one afternoon, the speakers will present the successful implementation of agility and invite participants to exchange ideas and discuss in three parallel streams.
After all, the paradigm shift from long-term and hierarchical management to flexible and agile organization can only take place in trained minds: "How do we qualify ourselves for the new agile world?" is one of the key questions to be answered this afternoon.
The speakers are Kerstin Dannheim, Frank Ahlrichs, Dr. Wolfgang Schmid, Werner Siedl and Rüdiger Schönbohm.
Register via the link https://tci-partners.com/tci-online/ for free participation and receive lots of information and best practice examples on implementing agility in one afternoon.
Cover image: © olly | Adobe Stock
