As social conditions and customer needs become more complex, and the need for DX is called out, companies are required to build organizational systems that can respond flexibly and quickly to changes. Under these circumstances, the concept of a new organization called “Agile organization” is currently attracting attention. In this article, I will explain in an easy-to-understand manner so that you can understand “what is an agile organization?”
Table of contents
- What is an Agile Organization?
- Advantages and Disadvantages of Agile Organizations
- Points to transition to an agile organization
- Summary
What is an Agile Organization?
An agile organization is a concept that applies “Agile development”, which has spread since the 2000s in the field of system development, to the management of the entire organization. Agile development, which is the prototype of an agile organization, is a method of advancing development while reflecting customer needs and ideas for improvement in real time by repeating the process of releasing and improving applications in a short cycle.
An agile organization that applies this agile development to organization building has the advantage of being able to create an organizational system that can flexibly respond to change. Agile organizations prioritize the needs of their immediate customers over their routine management processes. And we practice continuous improvement by constantly drawing out new ideas and innovations from our employees and optimizing our products, services, and business processes.
To achieve the above goals, each employee must be able to move flexibly and quickly. As such, agile organizations essentially employ a flat organizational hierarchy, with each employee working autonomously with the necessary authority. Through this kind of organizational structure, companies can quickly respond to complex changes in the market and social conditions.
Why you need an Agile organization
Agile organizations have spread mainly in the United States, and are now being introduced in Asian countries and Japan, and the number of companies producing results is increasing. The reason why many companies are paying attention to creating an agile organization is that this new organizational form is suitable for today’s rapidly changing business environment.
Today, due to the spread of SNS, etc., market needs have come to fluctuate drastically in a short period. In particular, during the COVID-19 pandemic that has continued since 2019, conventional business principles have become obsolete, and companies are under pressure to flexibly build organizational structures in line with changing social and market conditions. Building an agile organization is an organizational theory that is required under such a social and contemporary background.
Comparison with conventional pyramid organization
The conventional organizational structure, which is sometimes ridiculed as “vertical division”, is positioned as an inverted triangle pyramid organization. As the table below shows, these pyramidal and agile organizations are different in many ways.
| pyramid organization | Agile organization | |
|---|---|---|
| chain of command | Top-down method | Autonomous distributed system |
| Organizational structure | Separate departments for each specialty on a functional basis | Gather diverse human resources for each service |
| business process | Focus on planning | Rapidly iterate releases and improvements |
| Human resource management | Emphasis on manuals and rules | Emphasis on independent judgment by individuals |
First, the decision-making process in traditional pyramid-shaped organizations is based on a top-down flow of instructions from a small number of executives and managers. In this organizational structure, employees at the bottom of the hierarchy are required to work as loyal hands and feet of their superiors, so it is very difficult to raise measures from the front line to the top management. Therefore, in a pyramid-shaped organization, employees are required to work according to instructions from their superiors and advance plans and manuals.
Agile organizations, on the other hand, prioritize responding to change over acting on a plan. However, this does not mean any strategy, but rather a short and frequent review of the plan to ensure that current activities are aligned with current business needs.
Agile organizations have a flatter structure compared to pyramidal organizations, with different privileges distributed more evenly among employees. This is because Agile organizations value employee autonomy over leader control, and believe that such freedom is the soil that creates innovation.
Teams are not organized by specialized departments, but by service units that bring together human resources with various abilities so that they can carry out projects independently. A team organized in this way is called a squad and is operated in an end-to-end manner that can provide value to customers independently.
To recap, pyramid-type organizations are organized in a vertical structure and are rigidly operated in a top-down manner, whereas in agile organizations, teams (squads) are distributed autonomously within a flat organizational hierarchy. They move around quickly and quickly turn business processes around.
Advantages and Disadvantages of Agile Organizations
Next, I will explain the advantages and disadvantages of Agile organizations based on the above characteristics.
Benefits of an Agile organization
Key benefits of an Agile organization include:
Increased productivity
Agile organizations, which are premised on evolving through a cycle of release and improvement in a short period, tend to be more productive than pyramid-shaped organizations, which tend to be rigid. Because employees are empowered to act on their ideas, they are more motivated to succeed, and your business can grow with them.
Quick decision making
An agile organization, where each squad and employee has free rein, enables rapid decision-making. No matter how carefully you consider things, if customer needs have already changed when you make a decision, it will be meaningless. In that respect, agile organizations with agility can deliver products and services at the moment when customer needs are greatest, even if imperfectly, and enter new markets ahead of their competitors.
Increased engagement
Employees in agile organizations are more likely to find their work rewarding by being given free discretion and placed in an environment where they can easily demonstrate their abilities. As a result, they are more likely to be motivated, engaged, and more likely to contribute to your company for the long term.
Disadvantages of Agile Organizations
Disadvantages of an Agile organization include:
Difficult to manage
Agile organizations assume that each team and employee work autonomously. For this reason, when viewed from a broader perspective, it is difficult to accurately manage whether or not each individual is moving in line with the overall schedule and objectives. In addition, considering the tendency of Japanese people to act in an organized manner, even if they are told that they can act autonomously, they may become confused or withdrawn, and on the contrary, they may find it difficult to demonstrate their abilities. I guess.
Close communication with customers is necessary
Agile organizations are based on repeating releases and updates while grasping customer needs in real-time each time. However, to do so, close communication with customers is essential. If customers do not understand agile methods and cannot communicate well, an agile organization that has lost the guiding principle of customer needs may go astray.
Points to transition to an agile organization
What are the key points when moving from a traditional pyramidal organization to an Agile organization?
First of all, the top management of the organization needs to make decisions that significantly change the organizational structure of the company. As we have discussed so far, Agile organizations operate under a fundamentally different organizational structure and way of thinking than traditional pyramidal organizations. Strong leadership and decisiveness from top management are essential to carry out these organizational reforms.
The next point is to share your company’s vision company-wide. Moving to an agile organization can change the corporate culture from the traditional one. For the entire company to maintain cohesion even as the organization undergoes major organizational changes, it is essential to have a process of sharing new visions and values between management and employees.
The third point is to be thoroughly purpose-driven. Simply put, being purpose-driven means working towards a set purpose. In an agile organization, each team will work autonomously, but what is expected there is to work in line with the purpose and interests of the entire company. In an agile organization, individual goal settings will be updated every moment, but even then, each employee must understand the company’s strategic objectives before engaging in their work.
Summary
An agile organization is a new organizational system inspired by agile development. In agile development, each employee is given discretionary powers to flexibly and quickly turn business processes. In today’s society, where uncertainty is increasing, the importance of building an agile organization is expected to grow.
