Agile doesn’t create future-proof organizations

19 Jan, 2024
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Authors Riët Broekhuizen and Ellen Barree

A fourth industrial revolution is happening, challenging organizations to implement radical change. The fusion and exponential growth of technologies that allow man and machine to "merge" will impact society, organizations, and people in ways we can barely imagine. Consider, for example, the impact of smart devices in your home, voice control, self-propelled trucks, robot receptionists, and AI.

As companies enter new markets, we see a rise in competition from often unexpected sources. The physical limitations of organizations and labor are becoming blurred, and the demand for new types of skills is on the rise, such as creative and cognitive ability and the ability to effectively process and integrate different technologies to create products and services that fulfill future customer needs. The “war on talent” is becoming even more urgent, and employees increasingly make career choices to fit their lifestyle, not the other way around. There is also increased social pressure on organizations, thanks to legislation, regulations, and ethical issues around people and the planet.

Going Beyond Agile

Nobody can deny that the digital revolution has fundamentally changed the way we live in the world.
As services and products become increasingly digital, the world will become more complex and exponentially interconnected. Organizations have to take innovation and agility to the next level to survive in this new age.
We see that most corporate leaders agree with this mindset, demonstrated by the widespread adoption of Agile ways of working, as flexibility, customer orientation, automation, and robotization have become catchphrases in boardrooms worldwide.

However, futurologists and trendspotters don’t stop there. They argue that the world is changing so fast that a one-time overhaul of your set-up won’t suffice to remain relevant as an organization. Instead, organizations must build frameworks and capabilities that allow for continuous adaptation to changing circumstances—from collaborative structures to business models, sustainable production, and contributing to a healthier work/life balance for employees.

With this in mind, every management team should ask themselves, “What are the expectations of society, our customers, and our (future) employees, and how do we adapt to meet these expectations?”

Moving Away from Shareholder Value

In August 2019, the Business Roundtable, a group of chief executive officers of nearly 200 major U.S. corporations, stated a new definition of the “purpose of a corporation.” Core to this new definition was that each stakeholder is essential: “We commit to deliver value to all of them for the future success of our companies, our communities, and our country.” This statement perfectly illustrates the shift from only considering a corporation’s value to the shareholders to one that includes the customer, employees, and broader community.

The survival and profitability of your organization depend on how you adapt to this development.

Customer value-first

Delivering value to the customer, or “value-based” work, is one of the most critical pillars in an Agile company— executing in short cycles to gain feedback. But this approach is no longer enough. Technological advances- ments are driving us forward so fast that today’s consumers can no longer imagine what they will want tomorrow. Delivering customer value means thinking beyond the customer’s needs— it means being able to predict them.

Employee Value & the War on Talent

Innovation is more critical than ever before, and there can only be innovation with creative humans thinking up with what doesn’t yet exist. Innovative organizations must create space for creativity and experimentation to meet future consumer demands. That means finding the right employees with the right skill sets and nurturing them to do their best.

The creative talent within organizations must be empowered to go beyond their market challenges. To deliver real value to the community and the world, they should address the problems we face as a society and identify out-of-the-box solutions. Therefore we need to create an environment where talent wants to (continue to) work. Organizations often overlook this somewhat “soft” or elusive side of the business, even though it is the backbone of organizational success. In the era of the 4th revolution, talent with creative minds will determine whether your company survives or disappears. As Ram Charan said, “Competition today is not for finance or money. Competition today is for talent.”

Community Value

Ethical leadership and Corporate social responsibility have evolved from an afterthought into a core consideration for CEOs worldwide. Paul Polman (former CEO of Unilever) confirmed this evolution in his speech during the SDG summit in October 2019. Or Feike Sijbesma, former CEO of chemical concern DSM, who has proven profitability and sustainability can go hand in hand. These leaders are changing how their companies do business and calling upon other organizations to take responsibility for the broader community. In this way, they are helping customers consume more sustainably without compromising comfort or quality.

Time for Radical action

So far you can conclude that implementing an Agile way of working is the best thing to do. But in practice, we see that most corporates fail if they want to radically change their business by changing their existing way of working and  truly embracing an Agile mindset. It is a time-consuming process that takes years. The 4th revolution requires radical innovation, where organizations experiment with new revenue models and structures, automate all repetitive actions, eliminate bureaucratic processes, and employ the latest technologies in an open and transparent environment. To achieve this, simplify your organization, let go of traditional hierarchy and job descriptions and let innovation flourish even if it comes at the expense of your existing darlings.

Our advice, therefore is two-fold:
1.Think beyond implementing the Agile way of working in your daily business. Start with arranging radical change at the edges of your organization; create your start-ups, connected with the company but independent enough to be adaptive and fast, capable of thinking differently, experimenting with different business models, and more driven by community and customer value.

2.Invest in creativity for radical innovation.
Therefore create an attractive environment to talented people with the right creative skills and
cognitive ability. Talents who are capable of interpreting big data and developing products and
services for future customer needs. To win the increasing war on talent, focus on employee value
and create an environment and culture that empowers and motivates them to take your
organization to the next level.

Ellen Barree
Ellen is Business Unit Manager Transformation and an organizational culture and behavior expert. With Xebia's Transformation team of consultants, she creates truly adaptive organizations beyond applying an agile method, creating digital leaders.

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