Agility is not just for projects
crafting the agile organisation
Michel Thiry, PhD, PMI Fellow, PMP, Managing Partner, Valense Ltd., London
Adjunct Professor, University of Technology, Sydney
The objective of this paper is threefold:
1. Understand the different types of agility from operational to organisational
2. Learn how to integrate project, program, and portfolio management (PPPM) practices, strategy, and operations to increase organisational agility
3. Know how to participate in your organization's effort to sustain agility
In the first part, I will examine why today's organisations need to be agile and what agile really is, from simple adaptation tactics to full-blown organisational agility.
In the second part of the paper, I will discuss how organisations can become agile, and how PPPM can help them achieve this through better risk- and opportunity-taking, sound change management, and harmonisation of PPPM practices.
Finally, I will show, through examples, how you can help achieve this for your organisation by developing in what PMI has called the “Talent Triangle,” which mixes technical skills with strategic and business acumen as well as leadership.
The PMI 2013 Organizational Agility: Pulse of the Profession® In-Depth Report states: “a turbulent environment demands organizational agility, a trend identified in PMI's 2012 Pulse of the Profession® report, based on an annual global study of more than 1,000 project, program and portfolio managers” (PMI, 2013b, p. 2).
According to this PMI survey, 71% of respondents claim that organisational agility enables organisations to respond faster to changing market conditions, and 55% say it improves overall organisational efficiency and customer satisfaction.
The PMI report states that organisational agility is a three-pronged approach based on risk, change, and PPPM. We will examine each of them in turn and see how you can help make it happen.
But before we do, we need to understand what organisational agility really is. I will therefore look at the origins of agility and how it has evolved from a simple IT project management technique to an organisational approach. Together, we will examine different forms of agility and define true organisational agility.
Agility and Agile Organisations
Agility has existed for immemorial times, since humans have had to adapt to their environment in order to survive. It is in the essence of humankind to be agile. So why are we today talking about agility as if it were a new thing?
Well…the other side of the coin of humankind is order. Humans needed to be agile to adapt; they also have always sought order and stability, which could be seen as the opposite of adaptation. Based on extensive research, Quinn stated that over 90 percent of organisational change was incremental (1978). Organisations changed, but slowly…in a controlled way.
In fact, since the beginning of the 20th century, the teachings of business schools have been about stability, order, and hierarchy. This is the model that most organisations have followed for the last 100 years. And then…
A revolution: the Internet, the digital age, smartphones, start-ups, social media, Bitcoin, and all the turmoil that ensued. In 2005, Siggelkow and Rivkin, two U.S. scholars, wrote:
“Rapid technological change, deregulation, and globalization have intensified competition and increased the turbulence that managers face, forcing them to adopt new, more responsive organizational forms…The degree of interdependence among the decisions that a firm faces is a key driver of complexity.” (p. 101)
But, even if scholars and researchers, as well as management gurus, have advocated for organisational responsiveness, agility, change, and even revolution, managers have generally been reluctant to embrace change and agility as a way to do business.
“Due to a more volatile and less predictable economic environment, the pace and magnitude of business transformation is far faster and greater than ever before, yet it's a process that most companies haven't mastered.” (Couto, Ribeiro, & Tipping, 2010)
Today, this is changing, and the project management community can be at the forefront of this revolution.
What Is Agility?
Projects are traditionally used to manage change in an ordered way; in the last 20 years, though, they have become more and more “unordered,” as project management is increasingly used to manage complex situations in a turbulent environment. These circumstances have shown the need for more responsive forms for managing change.
Traditional project management is ill prepared to tackle complex and fast-moving environments. As early as the late 1980s and early 1990s, agile concepts were applied to fast-track construction projects where teams were co-located, activities were executed in parallel, and results drove the plan. The concept of “agile methodology” itself was introduced by a group of thinkers of what was then called “lightweight methods” to tackle complex, fast-moving software development projects.
In 2001, these thinkers issued the Agile Manifesto (Beck et al., 2001), which states four basic concepts for agile management:
- Individuals and interactions over processes and tools
- Working software over comprehensive documentation
- Customer collaboration over contract negotiation
- Responding to change over following a plan
Although agile management was initially codified to deal with software development projects, its principles have now spread to program management and organisational management.
Craig Larman, in his 2004 book for managers, describes agile methods as: “short timeboxed iterations with adaptive evolutionary refinement of plans and goals…iterative development lies at the heart of agile methods” (p. 25). Strategy development has followed a similar route. Hambrick and Fredrickson stated, “A strategy…is an integrated, mutually reinforcing set of choices…that form a coherent whole.” (2005, p. 52). This concept has been advocated in more recent organisational publications that advocate “transient advantage” over “sustained advantage” and agility over stability, like The New Ecology of Leadership (Hurst, 2012) or The End of Competitive Advantage (Gunther McGrath, 2013).
As can be seen through these references, agile management requires strategy to be developed in an iterative way, and be constantly realigned, based on measured results, to ensure it delivers stakeholder value. Exhibit 1 summarises the basic concepts of an agile framework.
Exhibit 1: Stable management framework versus agile management framework.
The Standard for Program Management – Third Edition (PMI, 2013d) and Managing Change in Organizations: A Practice Guide (PMI, 2013a) are good PPPM examples of this shift of perspective from stable to agile.
One has to be careful not to mistake stable with static. Stability is a desired, albeit elusive, state in today's context, whereas static is never desired as an organisational approach.
Why Do Organisations Need to Be Agile?
As stated above, organisations are subjected to increasing complexity and turbulence; this means that any competitive advantage they have is quickly eroding in regards to competition, new technological advances and discoveries, and societal changes. Let's just take a few examples, like the advent of Facebook, Twitter, and other social media:
- Facebook was created in 2004. In 2006, it had over 100 million users, and at the end of 2013 it reached 1.2 billion users worldwide. Today, its stock is valued at over US$200 billion.
- Twitter was created in March 2006. In 2007, 5,000 tweets were posted per day; in 2014, 6,000 tweets were posted every second, and over 500 million per day.
- In two years (from 2010 to 2012), Instagram reached 100 million users before it was bought by Facebook for US$1 billion.
This is just a very narrow example of the changes that have happened over the last 10 years, but shows how they have affected our whole way of life.
I first used a computer in 1992. My son, who is 21, cannot remember a time where we did not have a computer in the house. In 1994, my boss got one of the first mobile phones in Montreal; it was the size of a briefcase, and it was a revolution. Today, smartphones rule our lives. In just a few short years, we went from watching movies in cinemas to VHS, then to DVDs, then to streaming; from LPs to 8 track, then to cassettes, then to CDs, and then to MP3. MSN (Windows Live Messenger) went from the most popular social network for young people to oblivion in just a few years. Shopping evolved from the small family-owned store to supermarkets, and then to online shopping in less than two generations.
In management, over the last 20 years, we have seen the advent of international virtual teams, outsourcing, crowdsourcing, a spate of mergers and acquisitions that have consolidated whole areas of the economy and diversified others, the rise and fall and rebirth of the Internet start-up, and many other trends that now rule (or “unrule”) organisations. Exhibit 2 represents these tendencies.
As the organisational context is changing more and more and faster and faster, an organisation's competitive advantage is quickly eroding, at the risk of becoming a competitive deficit if the organisation does not continually seek new “transient” advantages. This is the strategy that the likes of Apple, Google, Virgin, and W. L. Gore have adopted. They continually diversify, seek new avenues of development, and encourage their employees to be intrapreneurs. In one word, they are agile.
Exhibit 2: The context of today's organizations.
Project Agility versus Organisational Agility
Whereas project agility is a technique, or a set of techniques, organisational agility is a culture. It requires agility from management, who encourage initiative in their employees by empowering and enabling them; it requires a capability to deal with ambiguity and uncertainty, to see change as an opportunity rather than a threat, and most of all, to create a networking culture to encourage dynamism and innovation.
Crafting Organisational Agility
The PMI white paper titled “Organizational Agility: Where Speed Meets Strategy” (PMI, 2013c) states: “organizational agility helps companies respond faster to changing market conditions, improve overall organizational efficiency, boost customer satisfaction and drive more profitable business results” (p. 2). In the following sections, I will aim to identify some of the factors that can help PPPM practitioners support their organisations’ quest for true organisational agility. In particular, we will see how to balance between added value and acceptable uncertainty, the need to embrace change, and how to harmonise PPPM practice.
Basic Organisational Agility Principles
Agile management, program management, and recent strategy formation practice are based on the concept of an integrated, mutually reinforcing set of decisions that form a coherent whole aimed at creating stakeholder value. They share a number of common concepts, among which:
1. Responsiveness as a measure of value, which consists of embracing change and seeing it as an opportunity rather than a threat;
2. The team as an integrated evolving system where all key stakeholders are actively involved in a truly networked relationship;
3. An approach based on simplicity to improve response to changing demands and turbulent environments, and finally;
4. An evolutionary and adaptive development, which translates into gradual and measured release of benefits.
Change management is at the forefront of many organisations' strategies, but as Moss-Kanter so rightly said in the Harvard Business Review: “[Executives] claim to seek new ideas but shoot down everyone brought to them. And repeatedly, companies make the same mistakes as their predecessors” (2006, p. 75). Responsiveness is most often translated into cost cutting.
Although the PMBOK® Guide has included opportunities as part of risk management since its 2nd edition (PMI, 2000, p. 139), traditional risk management still generally consists of minimising threats rather than seeking opportunities. This is also the case for organisational management. Peter Drucker, one of the last 30 years' best-known management gurus, is often quoted as having said (in reaction to organisational risk management), “effective strategies should be focused on maximizing opportunities, and action should not be based on minimizing risks, which are merely limitations to action.”
Empowerment, engagement, delegation, motivation, trust…who has not heard these words repeated by any manager and executive he has dealt with? But how many really apply them? In many large corporations, they just mean that you are expected to handle everything that is thrown at you…with a smile. Most studies, including PMI's Pulse of the Profession™, show that engagement and active sponsors are key to successful projects and any change effort. But how can agile leaders be different from conservative managers?
In an experiment, Burke (2011, p. 251–254) asked groups of managers in different countries to identify the differences between leaders and managers. Some of the key characteristics identified for leaders are: starter of change, risk-taking, intuitive, and passionate (Japan); strategic, idealist, stimulating, giving ideas (China); and inspires, visionary, open to ideas from team, hands-off (UK). This is opposed to: administrator of change, seeking security, logical, and cool (Japan); tactical, practical, enthusiastic, working on ideas (China); and orders, compels, status quo, closed to ideas from team, and hands-on (UK).
Hurst (2012) comes to similar conclusions based on his study of large multinational organisations; he sees management tools as the embodiment of power in impersonal systems, whereas leadership tools are linked to power as a social phenomenon that results in the creation of purpose and meaning for the group (p.135).
Those two studies demonstrate the importance of team empowerment and a transactional approach for the success of agile leadership.
Simple Systems, Evolution, and Adaptation
Evolution and adaptation mean that agile organisations must be able to adjust their strategies on an ongoing basis, depending on circumstances. Managers, and particularly executives, have to learn to learn. They often mistake the achievement of performance goals with true improvement. Performance goals are often just an excuse to play the system, and the more complicated the system, the easier it is to play with. Just think of the recent education or health targets set by the UK government that tick all the boxes, but have led to all kinds of abuse.
The key for agile organisations is to install simple systems but change the way people think about performance, not in terms of targets, but in terms of outcomes. Accept mistakes, learn from results, good and bad, and have the courage to change a decision if it is shown not to achieve the expected results.
Another important point, supported by goal-based motivation theories, is to balance the challenge with capability to achieve it. This means that managers and leaders have to commit the resources necessary to achieve objectives. And finally, they have to set intermediate measures of success that can show progress towards the objectives so that teams stay motivated and they can assess the need for realignment.
Increase Organisational Agility Through PPPM
Until now, we have seen that change is an essential part of agility in organisations. Portfolios, programs, and projects are ideal methods to implement change in organisations. Good portfolio management enables organisations to select the most rewarding initiatives and to measure success on an ongoing basis. Program management is specifically designed to address complexity and uncertainty in a controlled way, as demonstrated in Program Management (Thiry, 2010) and Managing Change in Organizations: A Practice Guide (PMI, 2013a). Finally, project management enables organisations to clearly define and monitor short-term results to be achieved within a defined timeframe with predetermined resources, offering them the possibility to readjust quickly if required.
But, in order to achieve this, a few elements must be in place.
Agility Is About Taking Risks!
Risk management is a key element of success in today's turbulent environment, but risk management need not be stifling; otherwise, organizations will lose to nimbler competitors. Risk management should be more about balance between added value and acceptable uncertainty.
Exhibit 3 compares risk management and value management, and explains how risk and value management can be integrated to bolster organisational agility.
Exhibit 3: Value and risk for agile organisations.
As seen in the exhibit, risk is an uncertainty reduction process, the intent of which is to identify known-unknowns that are manageable, in order to alleviate their adverse effect and increase their positive impact: the “how.” On the other hand, value management is an ambiguity-reduction process, the intent of which is to help decision-makers achieve the best balance between alignment with objectives and achievability of the solution: the “what.” Risk management is a rational decision process; value management is a creative decision process. Both are required to be agile.
For example: a company that is seeking to develop a new product line will take a “risk-based” approach by developing new products based on the improvement of successful existing products. This is what Nokia did in the beginning of the century by sticking to the Symbian technology; it reduced uncertainty, but in the long-term did not help them maintain their share of the market. On the other hand, Apple (iOS) and Samsung (Android) took a “value-based” approach and embraced an untested more “risky” technology for smartphones and took the market by storm.
In 2010, Nokia was still two times bigger than Apple and four times bigger than Samsung; it had 29% of the market, from 49.4% in 2007 when iPhone was launched, but was still growing faster than either rival. By 2012, Apple had grown to be four times bigger than Nokia, and Samsung had become eight times bigger and Nokia had a mere 3% of the market when it was bought by Microsoft.
Agility Is About Embracing Change!
Change management is another element of the agility equation and, sadly, many organisations don't understand change. Change is inevitable, but managers should lead change, not be led by it. External and internal context should inform the change, not drive it. And organisations need to have a clear vision of their future state when embarking on a change process.
It is well known that executives and managers react to change rather than provoke it. Michael Dell famously stated in an interview that he didn't have a vision. He was driven to it. He was not starting with a strategy; instead, operating activities were forcing his strategy (Rothenberg, 2004). But Dell had the courage to transform his operating activities to address a low-cost mass market through direct sales, and was successful. Another example is Nintendo, which had to make a dramatic change when competition from Sony and Microsoft almost forced it to bankruptcy. The Wii managed to carve a whole new market for gaming and ensured their survival.
Some companies take a more dynamic approach by continually provoking change through their management practices and culture. Google evolved from an Internet search engine to one of the most powerful corporations in the world today, dealing in things as diverse as smartphone operating systems, robotics, and recently, cars. Apple has always been known for breaking ground with such diverse products as computers, music players, music download, and recently, high-tech watches. Finally, I want to mention a less known example: W. L . Gore, best known for Gore-Tex, which actively encourages its employees to develop their own projects. At Gore, the only condition to start a project is to convince other people that it is worth supporting. One of these “employee” projects is the Elixir guitar strings, based on nanotechnology, and today, one of the best-selling guitar strings in the world. More recently, Netflix took the entertainment business by storm by launching a whole TV series in one shot, allowing viewers to “binge” the episodes (such as Orange Is the New Black and Marco Polo).
So, react to a crisis or be a leader of change? Both strategies are likely to work, but the best results are achieved by leading change, and in order to lead change, agility is a required foundation. Reaction can only ensure short-term success, whereas agility is a long-term choice.
Exhibit 4 summarises the difference between those two options; one is good, the other is better.
Exhibit 4: Reacting to change versus embracing change.
Agility Requires Harmonised Management of PPPM!
Although PMI reports that standardised PPPM practices enhance agility, the numbers are not overly convincing. Our own experience is that integrated PPPM is really the key to organisational agility success. Applying project, program, and portfolio practice independently of one another and independently from the rest of the organisational functions does not work. In fact, organisations that have managed to integrate those practices are the ones who succeed.
If an organisation uses a traditional linear project management approach, benefits are lost because there are integration gaps between the different components of the organisation:
- Strategies are driven from top-down from the corporate level and bottom-up from the business unit level, creating piecemeal initiatives.
- Performance management is driven by pre-set KPIs (key performance indicators) that do not take into account context changes.
- Portfolio management focuses on resource allocation rather than strategic alignment and achievability.
- Program management is a multi-project coordination activity, or regards the management of mega projects.
- Project management consists of the management of discrete projects, focused on deliverables on time and on cost.
- Finally, operations consist of business-as-usual and maintenance of status quo without consideration for innovation or improvement.
Any link between those areas consists of “over-the-fence” handover without accountability for business benefits beyond short-term financial return on investment (ROI).
In integrated organisations, corporate and business strategy are well integrated and driven by context and results. The strategy is continually adapted in regards to changes in the business environment as well as the assessment of operational performance and results.
Portfolio management is an ongoing process that takes into account changes in the business environment and uses both strategic alignment and achievability of objectives as prioritisation criteria and as measures of success.
Program management is a strategy delivery process that takes into account stakeholder needs, business analysis, results delivery, and operational benefits. Its purpose is to translate strategy into tangible measurable results and realise value by transitioning project results into operations.
Project management produces tangible results in alignment with the portfolio and/or the program objectives. These results should consist of “usable” capabilities for operations. It is the role of operations to integrate these capabilities to produce measurable performance results and to continually seek innovation and improvement responding to new demands or pressures like competition, technological developments, and others. Operational results and adaptation demands then feed back to the strategy.
Exhibit 5 graphically represents this approach.
Exhibit 5: Simplified view of an integrated agile organisation.
What Can You Do About It?
Participate in Your Organisation's Effort to Sustain Agility
Whereas, in a traditional organisation, the objective of PPPM is consistency and reliability; in an agile organisation, this has to be combined with responsiveness in order for the organisation to be able to adapt quickly to changing circumstances. Exhibit 6 explains both approaches’ key principles.
Exhibit 6: Key principles of traditional and agile approaches.
As a portfolio, program, or project manager, or manager of a PMO, you have to seek responsiveness in your work.
- PMO leaders should aim to set up simple and meaningful systems, processes, and procedures and set program and project management measures adapted to the organisation's environment.
- Portfolio managers need to continually update their portfolio on the basis of changing context, continuous alignment with strategic objectives and, mostly, capability to achieve results.
- Program managers have to take a change approach, starting with stakeholders’ expected benefits and transitioning results into the business to create tangible benefits for the business.
- Project managers should deliver the agreed scope and quality on time and at cost, but should be aware of the benefits that their deliverables need to produce when transitioned into operations.
Executives typically wait until there is a crisis before acting on change. Through examples, I have shown how today's organisations have lost their capacity to be agile and explain what needs to be done to regain it.
Risk, change, and PPPM are key elements of agility in organisations. In this paper, I have shown through examples how organisations have become static and how we can make them agile again through these three elements.
Agility is the capacity of an organisation to redistribute and empower its resources where it really matters in order to stay relevant in its context. PPPM practitioners are best placed to rise to that challenge because we understand change and agility.
Are you ready for it?
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© 2015, Michel Thiry
Originally published as a part of the 2015 PMI Global Congress Proceedings – London, UK