Digital transformation – it’s all in the mix

But on what? Researchers are (still) unsure. So far, there has not been a single study anywhere in the world that has proven there is a correlation between agility and business success. But that doesn’t mean there is no link at all. The fact that empirical evidence has yet to emerge may well have to do with how difficult it is to statistically exclude other factors that influence a company’s success. Another crucial point is that there is no one agreed definition of “agility”.

Another common misunderstanding is that an agile approach and scrum are one and the same thing. Scrum is just one specific project management method and thus only a small piece in a large jigsaw puzzle. In the words of Prof. Stephan Fischer, an expert in promoting agile structures: “You will not be successful by turning just one screw.” We start to get to the heart of the matter by examining the idea behind scrum, i.e. a highly collaborative approach involving small steps that are followed by a review or feedback round. This concept suggests that agility is about both how we work and the attitude we adopt. A few decades ago, the norm was for companies to have rigid hierarchical structures and a clear division of power – and employees had to fit in. Nowadays, employees naturally expect a feedback culture, transparent workflows and a high degree of autonomy. The effects on companies are diverse and complex. The digital transformation and demands for greater agility are throwing up new challenges, first and foremost for HR experts and managers. But does that mean businesses whose employees have an “agile mindset” are automatically more successful? Not always – agility isn’t the solution for everything.

The rules of evolutionary biology apply directly to the sustainability of business success – adapt to survive. Companies that are flexible in how they respond to the digital transformation are in with a great chance of achieving longlasting prosperity. Yet how flexible do they need to be? Those who can react to changes by making small innovative amendments to existing products and services can achieve this better with stability than with agility. In contrast, those facing a disruptive transformation can only survive with genuine innovations and have to completely reinvent themselves. The problem is that – even despite market analyses – companies can‘t know how their customers‘ needs are going to change or what their competitors are thinking. Once the smartphone had arrived on the scene, the leading cellphone providers of the day could never have held their position, not even by offering longer battery lives or trendy designs. Evidently, Nokia & co weren’t aware of just how much interest there was in carrying around photos and music.

Digital transformation requires companies to adapt to the market, but also to rethink how they are structured. Those with managerial responsibilities don’t have the same position they once did, with employees now expecting their managers to communicate and collaborate with them on a level playing field. “The command and control approach doesn’t work anymore”, adds Fischer. Instead of work performance being closely monitored, people want trust, and constructive feedback in both directions is increasingly taking the place of praise and admonishment from “on high”. As a general rule of thumb, the less centralized power is in a company, the better agile practices work. The leap of faith that this requires isn’t always easy for either party. At the one end, you have managers struggling to let go of the reins, who see transferring knowledge as a risk to their power and thus their position within the organization. At the other, you have unsure or overstretched workers who perform better in clear structures with precise guidelines. The good news is that it can benefit a company when not all of its staff are agile. A balanced mix of agile and traditional approaches is completely wholesome. Every organization has to strike the right balance for its specific needs – after all, there is no “one-size-fits-all” solution.

A 2013 study showed that a company‘s agility has a significant and positive impact on its image. It has to be said, however, that this study only surveyed engineers from technical businesses. Nevertheless, in the fight for young talent and specialist workers, agility could be a decisive advantage over the competition. To what extent companies can derive benefit from this depends on how big a role agility plays in recruitment, retention and HR development. This is by no means an easy task. As of yet, HR experts don’t have an inventory of values to test applicants’ agility during the selection process, with aptitude tests also lacking the necessary methods. A key issue that is emerging is which incentive systems can be used to motivate employees with an affinity for agility. After all, personalized target agreements are counterproductive in an agile culture that strives to promote collaborative working. Without specific instructions, there remains a risk of mismatching companies and applicants.

Doesn’t it seem tempting in light of all this uncertainty to pay little or no attention to agility? But you might want to think again, as Fischer warns: “If you don’t, someone else will!”