Building Organizational Agility: Strategies to Drive Innovation and Growth
- What is Organizational Agility?
- Characteristics of Agile Organizations
- Organizational Agility Vs. Organizational Rigidity
- The Business Case for Organizational Agility
- Stronger Performance Through Greater Agility
- Developing Organizational Agility
- Leadership’s Role in Fostering Agility
- Creating an Agile Culture
- Developing Self-Effectiveness for Greater Agility
- Organizational Agility in Practice: Key Strategies for Success
- Key Benefits of Organizational Agility
- Organizational Agility Is No Longer Optional
Organizations are living, changing, growing organisms fed by constant change and improvement.
In today’s volatile business landscape, organizational agility has become the defining factor of long-term success. The ability to respond quickly to market shifts, embrace new technologies, and adapt internal processes gives agile companies a competitive edge. As organizations face increased disruption—whether from technological advancements, changing consumer expectations, or global events—agility enables them to stay relevant and innovative.
Let’s explore how organizational agility helps businesses navigate change, which strategies are required to foster agility, and why agility training is essential for sustainable growth within your teams.
What is Organizational Agility?
Organizational agility refers to a company’s ability to adapt swiftly and efficiently to both external and internal changes. This adaptability allows organizations to pivot their resources, strategies, and structures to meet evolving market demands and seize new opportunities. At its core, agility is about staying flexible in uncertain conditions while maintaining a clear vision and direction.
Characteristics of Agile Organizations
Agile organizations are known for their adaptability, resilience, and future-oriented mindset. These companies emphasize a culture of innovation and learning, empower cross-functional teams, and streamline decision-making processes to ensure rapid responses to environmental shifts. For example, businesses thriving in today’s digital age are often characterized by their ability to quickly pivot to new business models or product innovations, particularly during global events like the COVID-19 pandemic. These kinds of organizations are also adept at fostering collaboration, which empowers employees to problem-solve in real time.
Key characteristics of agile organizations can include:
- A commitment to being proactive to predict upcoming changes, focusing on what’s in the organization’s control, and getting the right resources in place for quick pivots.
- Flexible structures that allow for quick reconfiguration of teams.
- A culture that encourages continuous learning and experimentation.
- Decision-making processes that promote faster responses and innovation, allowing them to iterate on products and processes to stay ahead in their industries.
When Agile Isn’t Agile
It’s important to note that, in a business context, “agile” and “Agile” differ in more ways than mere capitalization. Being agile, with a lowercase “a,” refers to the ability to make quick decisions and rapid changes, particularly in response to evolving conditions. But Agile, with a capital “A,” typically refers to a multi-step method of project management and software development. Organizational agility is more about being proactive, resilient, innovative, and collaborative at a fast pace, rather than doing what Agile companies are known for: using a specific set of processes and tools for developing software or other products. It boils down to the difference between who you are and how you do what you do.
Organizational Agility Vs. Organizational Rigidity
Typically, agile organizations tend to significantly outperform their traditional counterparts in several critical areas. For instance, inflexible and hierarchical organizations can become bogged down by bureaucracy, resulting in slower response times and missed opportunities. Conversely, agile organizations benefit from decentralized decision-making, which empowers teams to act quickly and innovate without having to wait for approval from upper management. The traditional “command and control” style of leadership comes with many other drawbacks, including low engagement, collaboration, and performance.
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The contrast between agile and non-agile organizations becomes particularly evident in periods of disruption. While non-agile companies struggle to realign their strategies due to their reactive thinking, agile businesses proactively identify changes in the market, adapt their business models, and implement new strategies to maintain momentum. When organizations have a collective commitment to agility, they’re able to navigate change more effectively and focus on what’s in their control—allowing them to compete in the marketplace, rather than play catch-up.
Download our guide, The Energy of Change: 5 Leadership Behaviors to Drive Collective Action in a Fluid Landscape.
This isn’t to say that organizations with traditional structures can’t become more agile, but it does mean that businesses with a more conventional hierarchy need to make a concerted effort to remove arbitrary barriers so collaboration and quick innovation can thrive. Another essential takeaway is that not every team or task needs to be agile. According to Harvard Business Review, agile methods need not always be applied across the board; provided that the non-agile operations support the more agile activities and areas of the business, this hybrid approach can work well for many organizations. In fact, many of the world’s biggest corporations—including Google, Amazon, Netflix, and Salesforce—use a mix of agile teams and more traditional business structures to drive innovation and results.
If it’s prioritized across the board or in select areas of a business, data shows that—when implemented correctly—organizational agility can be a major driver of innovation, efficiency, and overall performance.
The Business Case for Organizational Agility
Whether you’re running a startup or you’re a leader in an established business, agility is about more than just speed; it’s about being strategically proactive. Agile companies are better equipped to manage risks, foster innovation, and capitalize on new market opportunities, ultimately leading to a sustainable competitive advantage. With that in mind, what could these competitive advantages look like for your organization?
Agility as a Driver of Innovation
There will always be more good ideas than there is capacity to execute.
While the quote above is undoubtedly true, an agile organization will be in a much better position to conceive and execute ideas than a business with a more rigid structure in place. Simply put, agile organizations tend to be more innovative because they operate with fewer constraints. They empower teams to test new ideas, iterate quickly, and scale successful initiatives. This ability to pivot fosters a culture of continuous improvement and innovation, where failure is seen as a learning opportunity rather than a setback.
By promoting a mindset that encourages experimentation, agile organizations create an environment ripe for breakthrough innovations. For example, companies in the tech industry often thrive on agility, quickly testing prototypes, gathering customer feedback, and making rapid adjustments to improve products or services.
Risk Management in an Agile Framework
Agile organizations also tend to be better at managing risks. With flexible decision-making structures in place, they can act swiftly in response to unforeseen disruptions—such as supply chain issues or changes in regulatory environments. An agile company is more likely to identify potential risks early and adapt its strategy to mitigate them before they escalate into larger problems.
When leaders and teams learn to Be Proactive®, the first habit in The 7 Habits of Highly Effective People®—they can identify and act on what’s in their control, rather than over-focusing on what’s outside their Circle of Influence®. While there will always be market conditions that leaders can’t change, learning how to prevent detrimental impacts and plan for these kinds of shifts can allow agile organizations to thrive when more traditional businesses are left scrambling.
Download our guide, How Effective Leaders Get Results: 7 Ways to Be More Proactive.
In essence, agility provides a framework for companies to remain resilient in the face of uncertainty. Agile organizations anticipate disruptions and have the necessary infrastructure in place to pivot effectively, ensuring that risks are managed proactively and efficiently.
Stronger Performance Through Greater Agility
Research demonstrates that organizational agility can lead to superior business outcomes, including increased innovation, reduced risk, and improved market performance.
In a recent Project Management Institute’s Organizational Agility Report, organizations that have successfully implemented new initiatives also report higher levels of agility than organizations with lower levels of new initiative success. Additionally, 71% of survey respondents reported that agile organizations can respond more quickly to changing market conditions, with 54% of respondents saying that agile organizations exhibit improved customer satisfaction. Around 44% of participants answered that agile organizations experience more profitable business results, while roughly one-quarter of respondents agreed that agile organizations improve employee satisfaction, cost savings, and risk mitigation. What’s more, anywhere from 71-83% of high-agility organizations were found to complete projects on time and within budget while meeting goals and meeting or exceeding return on investment.
When organizations embrace an agility transformation, the benefits become even clearer. McKinsey data shows that successful agile transformations resulted in 30% increased efficiency, operational performance, customer satisfaction, and employee engagement. Their findings also indicate that these organizations increased decision-making speed by five to 10 times, all while driving innovation. Perhaps most notably, 65% of organizations that underwent highly successful transformations reported their financial performance increased after they transitioned to an agile structure and mindset.
In other words, making the shift to an agile work environment can make a colossal difference in an organization’s most important performance metrics. But that shift will require considerable effort.
Developing Organizational Agility
There is no quick fix to chronic problems. To solve these, we must apply natural processes. The only way we can reap the harvest in the fall is to plant in the spring and to water, weed, cultivate, and fertilize during the long summer.
In a recent McKinsey survey cited in the PMI report, 90% of executives across all sectors and regions said organizational agility was both essential to business success and increasing in importance. But earlier this year, Gallup found that just 18% of U.S. employees say their organizations are agile. To put it plainly: Leaders know that agility is important, but they have yet to implement it in a meaningful way.
Embedding agility into an organization requires a combination of mindset shifts and practical tools. To truly foster agility, companies must focus on leadership development, culture, and individual learning.
Leadership’s Role in Fostering Agility
While many agile organizations eschew rigid hierarchal structures, agility still starts at the top. Leaders play a critical role in setting the tone for an agile organization. They must embrace transparency, encourage experimentation, and model adaptability. Effective agile leaders create an environment where flexibility, collaboration, and creative problem-solving are rewarded.
Agile teams need agile leaders at the helm that exemplify adaptability and emotional intelligence. These leaders are better equipped to navigate complexity, make decisions with limited information, and drive agile transformations. Knowing how to lead your team through change, communicate clear goals, and manage your time and energy to focus on the most important priorities can help foster agility throughout the organization.
Read our free guide: Adapt to Change with 5 Self-Coaching Questions.
Creating an Agile Culture
It’s not only your organization’s leaders who need to model agility. To encourage a transformative mindset shift, it’s essential that agility is baked into your culture.
That may begin with your HR department’s processes for interviewing, onboarding, and training candidates to ensure that flexibility, creativity, and a commitment to learning can be prioritized in new hires. While some employees may already come in with a more agile mindset, others may need to be coached to prioritize adaptability. Ensuring that candidates are a good fit for a more agile culture can prevent issues down the road, but that doesn’t mean that team members can’t also improve upon these skills throughout their tenure.
That’s especially true if you establish a collaborative, high-trust culture that values unique perspectives to drive innovation. Ensuring that change is a healthy part of your organization’s culture, rather than something to be feared, can help teams recognize the opportunities that change brings and become more comfortable with quick pivots.
A winning culture empowers team members to do their best work, where everyone feels included and valued, and where trust, collaboration, and creativity can thrive. These are all necessary features in agile organizations, as they allow for the quick decision-making, rapid innovation, and transparent communication necessary to compete in an ever-changing landscape.
Establishing your cultural values and norms is an essential step. But to develop this type of culture, organizations also need to invest in individual self-effectiveness to ensure each team member has the skills and mindset needed to thrive in an agile workplace.
Developing Self-Effectiveness for Greater Agility
In a business context, agility training refers to the learning and development programs organizations put in place to help employees establish and maintain an agile mindset. These programs can cover a wide array of self-effectiveness and interpersonal skills, including time management, goal setting, resilience, proactivity, adaptability, receiving feedback, communication, and self-awareness—all of which will influence an organization’s ability to plan and pivot effectively.
Organizations that want to prioritize agility training should focus on a few key areas for their learning and development programming:
Self-Effectiveness Habits
For agility to permeate an entire organization, targeted organizational agility training is essential. Training programs that emphasize agile project management, cross-functional collaboration, and iterative work processes enable teams to respond to changes in real time. By building these skills across all levels of the company, organizations can establish a strong foundation for agility.
Although technology continues to rapidly advance, our interpersonal skills matter more than ever. Organizations focused on agility need to foster effective habits in their teams, like personal responsibility, prioritization, collaborative problem solving, active listening, and inclusion to result in greater innovation, faster decision making, and increased success for individuals and teams.
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If you’re proactive, you don’t have to wait for circumstances or other people to create perspective-expanding experiences. You can consciously create your own.
When organizations need to pivot and make changes quickly, team members need to be proactive rather than reactive. The first of The 7 Habits of Highly Effective People, Be Proactive, helps individuals focus on the things that are actually in their control, rather than fixating on the conditions they can’t influence. Habits 2 and 3, Begin With the End in Mind® and Put First Things First®, center around defining clear success measures and prioritizing the most important goals. Even (or especially) when changes occur, these habits can allow your teams to get clear on what needs to be accomplished and what to focus their energy on. Habits 4, 5, and 6—Think Win-Win®, Seek First to Understand, Then to Be Understood®, and Synergize®—come into play as we work with others. Learning to look for mutual wins, honoring others’ unique perspectives, and leveraging what others bring to the table to develop new and better solutions can help your teams innovate when agility makes all the difference for competing organizations. And Habit 7, Sharpen the Saw®, ensures team members make their self-renewal a priority, allowing them to bring their best selves to work and ultimately make faster, stronger, and better decisions for the organization.
If team members are at their most effective, they’ll be better equipped to expect the unexpected, zero in on the work that really matters, and become more engaged with your organization’s mission—all essentials for any agile business to thrive.
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Resilience and Navigating Change
While there are some folks who actively seek out change, others will innately fear it. That fear is a survival instinct that can serve us well in many contexts. But while experiencing discomfort with change is natural, it can hold organizations back. Prioritizing resilience development and helping team members navigate uncertainty can create a mindset shift where change is seen as an opportunity rather than a threat.
Listen to Cultivating Personal Effectiveness and Resilience During Change
Leaders can recognize the Change Model and guide their reports through it, but team members can also become empowered to take change in stride. Learning how to better adapt to change, to rely on connection and collaboration during uncertainty, and to recognize the predictable pattern of change can help individuals more effectively manage their reactions during unpredictable periods and build the confidence necessary to navigate internal and external shifts.
Lead your team through new developments with Change: How to Turn Uncertainty Into Opportunity™.
Productivity, Purpose, and Goal Setting
During times of change, employee engagement should be top of mind. That’s doubly true for agile organizations that regularly experience change. Leaders may feel like employee engagement is intangible and mysterious, but it often boils down to whether team members feel a connected sense of purpose. As Stephen R. Covey said, “Only when people are sincerely and meaningfully involved are they willing to commit to the best that is within them.”
Transparent communication—particularly as it pertains to individual, team, and company goals—is a key component of agile leadership. It’s not enough to involve team members in conversations and ensure they feel heard; individuals also need to feel deeply connected to the organization’s purpose and their unique impact on it.
One way to accomplish that goal is to establish a framework for strategic execution. Our research shows that only 15% of employees know their organization’s most important goals. Whether it’s because the organization has no goals, their leaders have failed to communicate those goals, or there are too many goals to reasonably track and execute, the outcome is the same: Team members are confused, unengaged, and unable to reach their ultimate potential—making it impossible for the organization to truly compete in a crowded market.
Subsequently, agile organizations need to innovate with a clear end goal in mind. When you use a simple, repeatable formula for executing your most important strategies—and leaders have to define, communicate, and track those goals with their reports—you’ll unlock motivation, collaboration, and agility within your teams. Not only can this framework ensure accountability, productivity, and emotional buy-in, but it can also allow organizations to more readily pivot their energies and focus on the Wildly Important Goals® that matter most at any given time. Determining your teams’ WIGs® can ensure everyone’s on the same page and that innovative ideas are pursued mindfully, rather than in a disorganized frenzy. This allows organizations to address crucial elements like employee satisfaction, efficiency, and performance all at the same time, and provides a “North Star” to follow during times of disruption—like a lighthouse in a storm on the rough seas.
Learn more about how The 4 Disciplines of Execution® can improve transparency, activate your frontline teams, track your progress, and create a culture of high performance in agile organizations.
Organizational Agility in Practice: Key Strategies for Success
In this topsy-turvy world…we confuse efficiency with effectiveness, expediency with priority, imitation with innovation, cosmetics with character, or pretense with competence.
Organizational agility doesn’t happen by accident. It requires strategic planning and consistent execution across the company. Below are some key strategies that can help organizations build and maintain agility.
Streamlining Decision-Making Processes
One of the key enablers of agility is reducing bottlenecks in decision-making. Agile organizations typically flatten their hierarchical structures, empowering teams at all levels to make decisions quickly. This decentralized decision-making process accelerates the company’s ability to respond to market changes and improves overall responsiveness. Even organizations that have traditional structures of hierarchy may adopt new decision-making processes that empower teams to make decisions based on who’s closest to the information or who’s most closely affected by the outcome.
By eliminating excessive layers of approval, companies can shorten the time between identifying an opportunity and implementing a solution. This agility not only boosts operational efficiency but also positions the organization to capitalize on market trends before competitors do. Additionally, this shift can help build trust, accountability, and engagement between team members and leadership—all of which are necessary for agile organizations.
Fostering Cross-Functional Collaboration
Another critical strategy for achieving agility is fostering cross-functional team collaboration. Agile organizations break down silos between departments, encouraging employees from different functions to work together. These collaborative teams bring diverse perspectives to problem-solving, resulting in more innovative and comprehensive solutions.
Cross-functional collaboration also ensures faster, more agile decision-making, as teams can address challenges from multiple angles and implement solutions more efficiently. Additionally, the knowledge sharing that comes from cross-functional collaboration empowers teams to make the quick, informed decisions that are essential to organizational agility.
Habit 6: Synergize is often referred to as the principle of creative collaboration because it centers around working together to find new solutions to old problems. To achieve true synergy, we must value our differences—rather than merely tolerate them—and leverage these fresh ways of thinking to innovate beyond what any of us can do alone. Leaders who instill the value of collaboration, especially across different teams, can more effectively address challenges and leverage the skills of the entire organization when quick pivots are needed.
Listen to Be a Better Leader: Recharge Your Teams by Collaborating.
Adopting Efficient Technologies
Technology plays a pivotal role in enabling organizational agility. Digital tools, automation, and data analytics provide the backbone for agile decision-making and execution.
Agile organizations are often among the first to adopt new technologies to improve processes and fuel collaboration. Whether it’s tools that automate workflows or platforms to bridge communication gaps, leaders need to consider the ways in which technology can promote even further agility.
McKinsey data shows that 72% of organizations are now using some kind of generative artificial intelligence in their operations, but AI is just one type of automation that agile companies may employ to help move more quickly and with better data to back up their decisions. Automation allows companies to streamline repetitive tasks, freeing up employees for higher-level strategic work. By automating routine operations, organizations can reduce the time between decision-making and implementation, enabling faster pivots in response to shifts in market conditions.
Automation not only speeds up processes but also enhances the overall efficiency of agile teams. With more time to focus on innovation and problem-solving, agile organizations can respond to changes with greater speed and precision. That said, automation isn’t the only tech that can help organizations become more agile. For example, organizations that want to improve their agility might utilize cloud technologies to ensure shared documents can be changed and viewed in real time to avoid delays in decision-making. A full-service learning and development program, like the FranklinCovey All Access Pass®, can also provide the digital tools organizations need to address personal effectiveness, trust building, leadership development, and cultural transformation all in one easy-to-access platform.
Data analytics is another critical enabler of agility. Agile organizations leverage data to anticipate trends, make informed decisions, and respond proactively to market shifts. By gathering and analyzing real-time data, companies can identify emerging opportunities or risks early, allowing them to act before competitors.
Data-driven decision-making enhances agility by providing the insights necessary to navigate complex environments effectively. When combined with agile practices, data analytics empowers organizations to remain nimble and adaptive in a fast-changing business world.
Key Benefits of Organizational Agility
Adopting organizational agility offers numerous tangible benefits, including improved business outcomes, enhanced customer satisfaction, and increased employee engagement. Let’s explore just a few of these key benefits in greater detail.
Enhanced Customer Experience
Agile organizations are better positioned to respond to evolving customer needs and preferences. They can adapt their products and services quickly, ensuring a higher level of customer satisfaction and loyalty. In today’s fast-paced markets, the ability to respond swiftly to customer feedback is a significant competitive advantage. Recent studies have found that organizational agility can have a positive impact on customer satisfaction, with over half of managers surveyed by software development company USoft agreeing that increased customer satisfaction is the most important benefit that comes from greater organizational agility. Additionally, McKinsey data shows that organizational agility can improve the customer experience by upwards of 30%.
Agility also allows companies to tailor their offerings more closely to customer demands, resulting in greater customer engagement and long-term loyalty. Adding a course like Leading Customer Loyalty ® to your organization’s learning and development (L&D) program can allow your frontline managers to understand the other behaviors that need to be in place to win the hearts and minds of both customers and employees.
Increased Employee Engagement and Retention
Employees in agile organizations tend to feel more engaged because they are given greater autonomy and feel their contributions have a direct impact on the company’s success. In fact, the aforementioned McKinsey data proves this hypothesis: In their analysis of agile transformations, employee engagement increased by 20-30 points in agile environments versus non-agile workplaces.
Agile environments foster a sense of ownership, where team members are empowered to make decisions and take initiative. Since autonomy and a strong sense of purpose typically result in increased employee engagement and job satisfaction, it’s not surprising there’s a strong correlation between agile organizations and more motivated, engaged employees.
This increased sense of engagement often leads to higher job satisfaction and improved retention rates. When employees feel valued and see the results of their efforts, they are more likely to remain committed to the organization. Not only does that lead to lower levels of turnover, but it also has positive effects on profitability and other markers of success.
Improved Results
We know employee engagement drives productivity, so it’s fitting that agile organizations tend to have more productive workers who innovate and achieve their goals at higher rates than those in non-agile environments.
To recap, McKinsey found that organizations that successfully transitioned to an agile environment saw 30% to 50% improvement in operational performance; more specifically, these increases included gains in transparency, speed, predictability, and achievement of targets. That increased operational performance, combined with improvements in both employee engagement and customer satisfaction, translated to 20% to 30% increases in financial performance among these companies. Overall, 65% of companies that successfully transitioned to agile environments experienced a significant impact on their financial performance post-transition.
While one could argue that pursuing a partial transition to an agile approach would be better than no transition at all, the differences between successful and less successful transitions is stark. In contrast, organizations that underwent less successful transitions to an agile-centered approach saw just 5% to 10% increases in operational performance, with just 15% of those companies reporting significant impacts on their financial performance. McKinsey notes that the most significant gains are experienced among companies that implement agility on a holistic level and with a greater emphasis on performance improvement.
The bottom line: When organizations commit wholeheartedly to prioritizing agility, they’ll be more likely to experience improved results, along with increased customer and employee satisfaction.
Organizational Agility Is No Longer Optional
In a rapidly evolving landscape, companies that prioritize agility not only survive disruptions but thrive amidst them. But to make that transition successfully, organizations need to set their teams up for success. By embracing agile leadership, empowering teams, and investing in organizational agility training, businesses can unlock their potential for innovation, efficiency, and sustained growth.
Discover how agility, combined with effective leadership habits, can transform your organization with The 7 Habits of Highly Effective People.