How agile organisations fare better than bureaucratic ones


Agile performance units excel at strategy and people-related practices, and are more stable and dynamic than bureaucratic units.

With rapid disruptions in technology, changing economies and dynamic work environments, organisations will have to now learn to adapt quickly or they could perish. It’s time organisations became more agile than ever. However, according to a recent McKinsey Global Survey, organisational agility—the ability to quickly reconfigure strategy, structure, processes, people, and technology toward value-creation and value-protection opportunities—is still elusive for most.

Despite being aware of the advantages, most respondents in the survey admit that their companies have not yet fully implemented agile ways of working, either company-wide or in the performance units where they work. That said, respondents in agile units report better performance than all others, and companies in more volatile or uncertain environments are more likely than others to be pursuing agile transformations.

The survey reports that more than 90 per cent of agile respondents say that their leaders provide actionable strategic guidance (that is, each team’s daily work is guided by concrete outcomes that advance the strategy); that they have established a shared vision and purpose (namely, that people feel personally and emotionally engaged in their work and are actively involved in refining the strategic direction); and that people in their unit are entrepreneurial (in other words, they proactively identify and pursue opportunities to develop in their daily work). By contrast, just about half of their peers in non-agile units say the same.

According to the survey, agile performance units excel most often at strategy and people-related practices, and they outperform the bureaucratic units in both stability and dynamism. On the other hand, bureaucratic units are relatively low in dynamism and most often characterised by reliability, standard ways of working, risk aversion, silos and efficiency. Here are ten dynamic practices where bureaucratic performance units lag behind their agile counterparts.

Rapid iteration and experimentation: Only 29 per cent of bureaucratic respondents report following rapid iteration and experimentation, as compared to 81 per cent of agile respondents. A particular weakness in this area is the use of minimum viable products to quickly test new ideas: just 19 per cent of bureaucratic respondents report doing so, compared with 74 per cent of agile respondents.

Technology, systems and tools: The use of advanced technologies, tools and systems is one of the areas bureaucratic organisations really need to catch up with. In fact, the largest gap between bureaucratic units and agile units is their ability to roll out suitable technology, systems, and tools that support agile ways of working. Only 17 per cent bureaucratic respondents agree to it, whereas 62 per cent agile organisations enjoy the benefits.

Continuous learning: While 80 per cent of agile organisations believe in continuous learning, only 36 per cent of bureaucratic respondents hold the same belief.

Sensing and seizing opportunities: 75 per cent of the agile performance units are able to gauge and seize opportunities in time, as compared to 35 per cent of the bureaucratic units, which also explains why they may not be so future focused and nimble in their approach.

Role mobility: This is another area that shows a huge gap in its adoption at the agile units, compared to the bureaucratic ones. While only 20 per cent of the bureaucratic respondents admit to having strong role mobility strategies in place, 60 per cent of agile units believe in its importance and have strong implementation processes.

Information transparency: An important aspect that has an impact on any organisation’s culture and its overall business performance, information transparency exists at 87 per cent agile organisations as compared to only 50 per cent bureaucratic organisations.

Flexible resource allocation: There is a 37 per cent gap in how agile organisations and bureaucratic ones look at resource allocation, with 79 per cent agile units reporting flexibility in resource allocation, as compared to 42 per cent of bureaucratic organisations.

Performance orientation: Despite being a vital agenda for any organisation in current times, the survey still shows a 33 per cent gap in the metric for agile setups and bureaucratic ones. 82 per cent agile organisations report being performance oriented as compared to 49 per cent bureaucratic organisations.

Active partnerships and ecosystems: In times when collaboration is key, only 23 per cent bureaucratic units admit to having active partnerships and ecosystems, while 56 per cent agile organisations have the same.

Open physical and virtual environment: With a 29 per cent gap, 49 per cent bureaucratic organisations and 78 per cent agile organisations report the presence of an open physical and virtual environment in the workplace.

In addition, the report further states that bureaucratic units also have room to improve on certain stable practices. For instance, bureaucratic units lag far behind in performance orientation; in agile units, employees are more likely to provide each other with continuous feedback on both their behaviour and their business outcomes. Moreover, leaders in these units are better at embracing shared and servant leadership by more frequently incentivising team-oriented behaviour and investing in employee development.

Lastly, it’s much more common in agile units to create small teams that are fully accountable for completing a defined process or service.

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