Slow economic growth and shifting global market priorities have created a complex, risk-laden business environment—one that rewards innovation yet also threatens to derail projects. And there's little question that global volatility will continue into the foreseeable future, causing organizations to cancel or delay projects.
Such 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.
Taking a deeper dive into the topic, PMI's 2012 Pulse of the Profession In-Depth Report: Organizational Agility focuses on how organizational agility impacts success and how to increase that agility.
To forge that agility, successful organizations are aggressively reshaping their culture and business practices on a three-pronged front:
Sources: Economist Intelligence Unit, Organisational Agility: How business can survive and thrive in turbulent times, sponsored by EMC, 2009.
PMI Pulse of the Profession In-Depth Report: Organizational Agility, 2012.
■ Rigorous change management to better adapt to shifting market conditions
■ More collaborative and robust risk management
■ Increased use of standardized project, program and portfolio practices
The report reveals a clear payoff: Highly agile organizations are twice as likely to see increased success with their new initiatives as their counterparts with low agility.
Key Findings
A COMPETITIVE EDGE
Due to the volatile economic environment over the last two to three years, only 45 percent of organizations reported increased success with new initiatives.
Those organizations that are successful report higher levels of organizational agility—giving them a powerful edge on the competition.
Even before the economic downturn, the role of organizational agility in providing a competitive advantage was supported by a McKinsey survey. Nine out of 10 executives, spanning all regions and industry sectors, ranked organizational agility both as critical to business success and as growing in importance.
In addition, nearly 90 percent of executives surveyed by the Economist Intelligence Unit ranked organizational agility as vital for business success. One-half of all CEOs and CIOs agreed that rapid decision-making and execution are not only important, but also essential to a company's competitive standing.
Agility may also be linked to profitable growth: Research conducted at the Massachusetts Institute of Technology suggests that agile firms grow revenue 37 percent faster and generate 30 percent higher profits than non-agile companies.
Done right, organizational agility provides rewards on multiple levels. PMI respondents identified the following benefits of increased organizational agility:
There is, of course, no magic bullet for staying ahead, especially during tumultuous economic times. However, organizational agility is proving to be a powerful tool in ensuring success now and in the future.
The Takeaway: Greater organizational agility leads to better performance—providing organizations with a powerful edge on the competition.
HOW TO IMPROVE ORGANIZATIONAL AGILITY
Organizations cannot simply declare themselves more agile. They must make a concerted effort to transform three key areas:
1 Implement change management best practices
2 Implement risk management best practices
3 Standardize portfolio, program and project management practices
1. KEEP UP WITH CHANGE
Whether due to anemic economic growth or the constantly morphing digital landscape, the business environment is changing at an unprecedented pace. Yet some organizations manage that volatility better than others through aggressive change management.
Organizations effective at change management are more agile, not only reducing the impact of external changes, but also capitalizing on the opportunities they may present.
The Pulse of the Profession In-Depth Report: Organizational Agility reveals that 92 percent of organizations highly effective at change management report high or moderate agility. That's almost three times more than organizations that report minimally effective change management.
92% of organizations highly effective at change management report high or moderate agility.
The Takeaway: Organizations effective at change management are more agile.
2. MASTER RISK
When organizations are forced to make rapid-fire decisions, they can sometimes lose control. Effective risk management helps executives and project leaders identify and mitigate the factors that could sabotage success.
The findings on risk management echo those on change management, with 90 percent of organizations effective at risk management reporting high or moderate agility. That's more than double the organizations that report minimally effective risk management.
90% of organizations effective at risk management report high or moderate agility.
The Takeaway: Organizations effective at risk management are more agile.
3. STANDARDIZE PRACTICES
Faced with changing economic conditions, priorities and demands, organizations have to act fast. But a solid foundation of portfolio, program and project management practices is still a must.
When organizations standardize their project management practices throughout all departments, they are three times as likely to report high agility than their counterparts that don't.
The study also shows that organizations that always or often use portfolio management are three times more likely to report they are highly agile than those that don't use portfolio management.
The report further highlights the need to improve agility. Only 12 percent of organizations characterized themselves as highly agile. But the data also reveals standardized practices that highly agile organizations said they use always or often:
The Takeaway: Organizations that use standardized practices are more agile.
THE PAYOFF
Agile organizations lead the pack. If project leaders and executives work together to build greater agility, they can solve problems, take smarter risks, and deliver innovative products and solutions to market faster—all leading to greater success.
Consider this: The average percentage of projects completed on time, on budget, achieving business objectives and forecasted ROI is significantly greater in organizations reporting high agility than those reporting low agility.
CONCLUSIONS AND IMPLICATIONS
PMI's Pulse of the Profession In-Depth Report: Organizational Agility demonstrates that organizations are increasing their success rates on new projects, even in a weak global economy, with high agility. To survive—and indeed thrive—in today's competitive marketplace, organizations must build their agility by implementing risk management, change management and standardized practices across the enterprise.
By investing in the three core practices outlined above, organizations improve agility—giving them that elusive edge in a fast-paced, dynamic market.
The End Result
| Greater Organizational Agility | = | Better Performance | = | Improved competitive Advantage |
ABOUT THE STUDY
PMI's 2012 Pulse of the Profession In-Depth Report: Organizational Agility was conducted in August 2012 among 1,239 practitioners around the world who are involved in project management.
