PA Consulting recommends Agile method for business success

Global innovation and transformation consultancy PA Consulting recently conducted a survey on organizational agility, and found the strategy to be a central component of business success.

Agile approaches sprung from a software development method that directs self-organizing and cross-functional teams towards collaborative development efforts. The approach includes adaptive planning and continual improvement, and centrally encourages rapid and flexible responses to change. Part of the strategy includes a short feedback loop in which team members report daily on tasks achieved and possible roadblocks, and the co-location of teams to enable face-to-face interaction and cycle time reduction.

Consulting firms and management types have now taken that software development approach and applied it to entire organizations, and it’s the hottest thing since scientific management. In a world where technology reforms industries in a span of years, companies have to be extremely adaptive to roll with the punches, evolve quickly, and deliver optimal products and services. Effectively implemented organizational agility is aimed at helping them do that.

According to a recent report from innovation advisory firm PA Consulting, organizational agility drives financial performance, and is the most important factor in helping firms react to technology, customer, and societal change. The survey of 500 senior business leaders found that the top 10% of businesses by financial performance are nearly 30% more likely to be “agile” firms.

“As radical change transforms the world we live in, organizations must evolve at pace,” Ken Toombs, head of Americas at PA Consulting, said. “One in six of the companies we surveyed acknowledged that unless they evolve, they risk failure within five years. Yet we see organizational agility efforts transforming well-established financial institutions, household names, and industry stalwarts, establishing the conditions that have made them fit for the future.

“This research, and our experience, proves that embracing organizational agility is the most effective way to get ahead of the competition, and ensure your organization thrives, today and tomorrow," Toombs added.

Other key findings from the report were that two-thirds of leaders believe that their business model needs a fundamental rethink, and that 60% believe complex organizational structures are slowing them down. A further 72% cite organizational agility as a top strategic priority, while a majority are more concerned about disruption from digital natives than traditional competitors.

Ultimately, an effective agility shift seems to depend on either having or creating the right type of culture. Two-thirds of leaders said that organizational agility is more about shifting a culture than implementing a new process. As such, PA recommends putting about 80% of their agility effort on culture. “Without making sure you’ve got the right culture and processes, any agile initiative is likely to be temporarily effective at best,” the report notes. Since culture shifts can be a complex and difficult challenge, organizations often bring in experienced consulting firms for support.

Take five

The PA Consulting report identified five factors key to organizational agility, and common to high-performing firms.

• Companies need to center on their customer, co-creating and prioritizing based on their feedback. Amazon is commonly cited as a successful customer-centric firm.
• Firms also need to speed up time to value, which entails making quick decisions and acting swiftly to head off competition – moving from idea to launch at pace.
• Agile firms design for simplicity, flattening hierarchies to let teams build, adapt, and deploy products in an effective way.
• Critically, agile firms build to evolve, implementing modular digital systems that adapt easily to changing requirements, while having teams that can cope well with change.
• Finally, firms need to liberate their people, encouraging collaborative work practices and employee empowerment at every level.

“As a business leader right now, we've never been afforded a better opportunity to adapt and transform – to truly understand our customers' motivations, to harness the power of technology to create ingenious products and services and to find creative and effective ways to engage and empower our people,” Sam Bunting, an organizational agility expert at PA Consulting, said. “We've seen first-hand how organizations can beat their numbers and deliver higher all-round performance as a result of taking these five perfectly achievable steps."