Over the past two decades, management consultants and academics at business schools have increasingly stressed what they view as the rapidly increasing levels of complexity and uncertainty in the environment that all organisations have to respond to and many have labelled these conditions ‘ hyper-competition’ or ‘high velocity competition’. To deal with these conditions, consultants and academics have called for organisations to become ‘agile organisations’. The ‘agile organisation’ is also described as ‘the entrepreneurial organisation’ and ‘the resilient organisation’ and the hallmarks of this kind of organisation are its high speed of response to change and its focus on the customer which calls for customized rather than standardised offerings. The notion of the agile organisation therefore originates in the discipline of strategic management with its concern for competitive advantage; in manufacturing production systems such as Total Quality Management, Just in Time, Lean and six sigma with their concern for high quality, customized batch manufacturing; and also in Agile Software development and its concern for teams and partnerships with customers. In short, the concept of agile processes was initially primarily concerned with product manufacturing and software development and from these areas it has come to be simply applied to all other organisations including both private and public sector service providers, without much reflection on whether this is appropriate or not. So when did these developments occur and how widespread are they?
A quick search of Google Scholar reveals that over the decade ending in 1993 there were 56 journal papers which referred to the agile organisation at some point and over the same period some 14 referred to hyper-competition while no papers referred to the resilient organisation but over 20,000 used the term ‘complexity’. Over the rest of that decade the number referring to agile organisations rose to 442 and the number referring to hyper-competition rose to 416 while 43 referred to the resilient organisation and there were some 19,000 references to complexity. Over the first decade of this century, there were nearly 5,000 referrals to the agile organisation, about 3,500 to hyper-competition, 385 to the resilient organisation and some 40,000 to complexity. Interest in agile and resilient organisations facing hyper-competition, uncertainty and complexity is, therefore, very recent and even now not all that widespread. Despite recognizing complexity and uncertainty, however, the prescription is overwhelmingly for managers to design organisations that can successfully deal with the supposedly ‘new’ conditions. There is very little radical reflection on what the recognition of uncertainty and complexity, which has always characterized the conditions which members of organisations have to act into, means for the possibility of designing organisation in the first place. There is very little inquiry into how members of organisations have always dealt with uncertainty and complexity. This is, perhaps, not a surprising observation when one takes account of the strength of management and leadership thought collectives and the thought styles that they perpetuate. This post reviews notions of organisational agility and resilience as responses to rapidly rising complexity and uncertainty.
Rapidly rising complexity and uncertainty
Writers calling for agile organisations present rather anxiety provoking accounts of market conditions characterized by rapid change which amounts to hypercompetition. This form of competition makes it impossible to sustain competitive advantage for any length of time. Those taking this view argue that hyper-competition requires a new view of strategy. From this perspective, one firm outperforms another if it is adept at rapidly and repeatedly disrupting the current situation to create a novel basis for competing (D’Aveni, 1995). Hyper-competition requires a discontinuously redefined competitive advantage and radical changes in market relationships. Success is built not on existing strengths but on repeated disruptions. This enables a firm to continuously establish new but temporary competitive advantages. Tactical actions keep competitors off-balance. Competitive advantage is temporary and firms destroy their own and others’ competitive advantage. Organisation units and actions are loosely coupled and competition requires aggressive action unconstrained by loyalty and compassion. Successful strategies rely on surveillance, interpretation, initiative, opportunism and improvisation.
Brown and Eisenhardt (1998) use the term ‘high velocity competition’ to mean much the same as ‘ hyper-competition’ and appeal to a central concept from complexity theory, namely, the ‘edge of chaos’, which they define as being only partially structured: too much structure gives stability and too little produces chaos. When an organisation is at the edge of chaos its managers are advised to let a semi-coherent strategy emerge; one that is not too fixed nor one that is too fluid. Since agent-based modelling developed in the sciences of complexity show that a few simple structures ‘generate enormously complex adaptive behavior – whether flock behaviour among birds, resilient government (as in democracy), or simply successful performance by corporations’ and the ‘critical management issue at the edge of chaos is to figure out what to structure, and as essential, what not to structure’ (p. 12). The authors provide a questionnaire that managers can use to identify whether they are at the edge of chaos or trapped in one of the other dynamics (pp. 30–1). They give examples from their research of a company in each of these states and conclude that the only successful one is at the edge of chaos. They then give prescriptions for moving to the edge, if organisations are not already there.
Others refer to what the economist Schumpeter, writing in the 1930s, described as gales of creative destruction and claim that these are sweeping markets ever more ferociously. Consumers are demanding higher quality products and they can form online communities on the Internet and act as a major disruptive force on the market. Executives are facing unrelenting financial pressure and rapid technological change further disrupts markets. This is said to call for agile competition, which involves individualized products and services that are customer-enriching (Goldman et al, 1995), which in turn requires manufacturing in arbitrary lot sizes.
This rising complexity and uncertainty calls for new organisational configurations and operating models.
The characteristics of the agile organisation
The essence of the agile organisation is a perpetual cycle of reactive and preemptive behaviors and also action to disrupt industry ecosystems. So agile organisations do not only adapt, they develop breakthrough business models and so innovate. Pal and Pantaleo (2005) claim that gaining competitiveness and sustaining growth require a cohesive whole of the right vision and values, teams which are adaptive and innovative and an adaptive infrastructure. The transformation must come from the top and leadership is crucial in creating the break through culture in which agile behavior can emerge. They define a breakthrough cultures as those in which people are open-minded about change, they focus in a single-minded way on the customer, they collaborate both within the organisation and across its boundaries, and they focus intensively on goals and execution. This culture is top down, innovative; a learning organisation with a service orientation and new metrics to incentivise desired behaviour.
Agile organisations are designed using holistic methods which integrate supplier relations, production and business processes, customer relations and product use and disposal (Goldman et al, 1995). This is accomplished by deploying necessary resources regardless of physical location. Agile organisations exhibit a shift from command and control forms of management to motivating and supportive leadership characterized by trust. People need to thrive on change and uncertainty rather than simply coping with them. The organisation needs to be repeatedly reinvented. Goldman et al (1995) argue that agile organisations are strategic rather than tactical, building on customer perceived value of products and services. In agile organisations, decision-making authority is distributed to operational employees and management hierarchies are flat and internal information flows are open to all rather than being confined to privileged managers. Teams are used as the standard form of organisation rather than simply for special projects.
Agility is dynamic, context specific, aggressively change-embracing, and growth-oriented. … Agility entails a continual readiness to change, sometimes to change radically, what companies and people do and how they do it. … Successful agile competitors, therefore, not only understand their current markets, product lines, competencies, and customers very well, they also understand the potential for future customers and markets. This understanding leads to strategic plans to acquire new competencies, develop new product lines, and open up new markets. (Goldman et al, 1995, p42).
Agile organisations require people with strong social and communication skills that enable them to function in intensely cooperative and team-based activities.
Goldman et al (1995) define agility as a system with the strategic dimension of enriching the customer, cooperating to enhance competitiveness, organizing to master change and uncertainty and leveraging the impact of people and information. Agility arises when managers give up control. Instead of organisational structures being deliberately chosen by managers they are flexible so as to allow the rapid reconfiguration of cross functional teams and resources required to meet customer requirements. Agile organisations support multiple concurrent organisational structures and optimize opportunism and this requires authority to be distributed as widely as possible so maximizing the positive impact of local decision making. Agile management principles involve formulating a clear vision, setting bold goals, avoiding micro-management and working to win universal buy-in. The agile organisation creates a culture that supports people, values thinking, learning and cooperation to solve problems.
Gobillot (2008) links leadership and the agile organization, arguing that a connected form of leadership is what is required to create agility. It is the role of leaders to make their organisations agile so that they are resilient to context change. He claims that ‘formal’ organisations, designed to complete tasks, stifle the ability of all members of an organisation to respond to the changes they sense whether these fall within their remit or not. For him, the ‘real’ organisation is networks of relationships between people within and outside the ‘formal’ organisation. This ‘real’ organisation consisting of relationships, a great many of which are informal, is robust and flexible. Great leaders, connected leaders, do not lead the ‘formal’ organisation but they do channel the vitality of the ‘real’ organisation to achieve the goals of the ‘formal’ organisation. They map and understand the ‘real’ organisation. Personal credibility in the informal networks is critical to the success of leaders who use this credibility to reconstruct social networks. Connected leaders who create social and moral connections are trustworthy and they trust others, they unite stakeholders around a common agenda and they encourage dialogue and conversations. Trust is critical to connected leaders.
Prescriptions for creating the agile organisation
It can be seen in the discussion in the previous section that there is a spectrum of descriptions and prescriptions for the agile organisation ranging from top down approaches at one end, through distributed approaches to reliance on the informal organisation at the other end.
Top down prescriptions
The transformation to the agile organisation must come from the top leaders who should:
Prepare new vision statements the right vision statement.
- Redesign organisational structures so that hierarchical states are replaced with agile states.
- Develop breakthrough business models which lead to actions that disrupt industry ecosystems.
- Create a break-through culture in which people are open-minded about change, focus the customer, collaborate within and across organisational boundaries, and focus intensively on goals and execution.
- Design new metrics to incentivise desired behaviour.
- Form teams which are adaptive and innovative.
Another approach calls for organizing to master change and uncertainty and leveraging the impact of people and information, so repeatedly reinventing the organisation. The prescriptions are:
Formulate a clear vision, set bold goals, avoid micro-management, and work to win universal buy-in.
- Give up control and shift from command and control to motivating and supportive leadership characterised by trust. Design management hierarchies that are flat
- Distribute decision-making authority to operational employees and design internal information flows that are open to all rather than being confined to privileged managers.
- Do not deliberately choose organisational structures but allow the flexibility that enables rapid reconfiguration of cross functional teams and resources required to meet customer requirements
- Create a culture that supports people, values thinking, learning and cooperation to solve problems People need to thrive on change and uncertainty rather than simply coping with them and they need to be aggressively change-embracing.
- Optimise opportunism and maximise the positive impact of local decision making.
- Use teams as the standard form of organisation. Develop people with strong social and communication skills that enable them to function in intensely cooperative and team-based activities.
Relying on simple rules and the informal organisation
One view stresses simple rules where managers should:
Identify whether they are at the edge of chaos or trapped in either stability or chaos.
- Move to the edge of chaos by avoiding: too much structure which leads to stability and too little which produces chaos. Work out what to structure and what not to structure. Keep activity loosely structured but at the same time rely on targets and deadlines.
- Develop a culture which fosters frequent change in the context of a few strict behavioural rules.
- Create channels for real-time, fact-based communication within and across groups.
- Allow a semi-coherent strategy to emerge, one that is not too fixed nor one that is too fluid.
Another view stresses the informal organisation, arguing that it is the role of leaders to make their organisations agile and this involves:
Unite stakeholders around a common agenda.
- Do not lead the ‘formal’ organisation.
- Instead, channel the vitality of the informal, the ‘real’, organisation to achieve the goals of the ‘formal’ organisation.
- Map and understand the ‘real’ organisation.
- Encourage a culture of dialogue and conversations.
- Develop personal credibility in the informal networks and use this credibility to reconstruct social networks.
- Trust others and display trustworthiness to create social and moral.
All agree on the need for a clear vision and bold goals around which stakeholders unite and that this is the task of top management. This is no different to the other mainstream discussion of action required of top leaders.
- All agree that hierarchies should be flattened with some arguing that leaders and managers need to give up control, others that decision making should be distributed and local, others that they should replace command and control with simple behavioural rules, and yet others emphasising the informal organisation and the need for leaders to focus on this. Is this much different to previous calls for decentralisation and empowerment?
- All agree on the need to create a culture of open-mindedness, collaboration, and customer focus. Some call for a culture in which people thrive on uncertainty and value thinking and learning. Others call for a culture of dialogue and conversation. Again this is a standard requirement in the dominant discourse.
- All agree on the importance of teams, emphasising the importance of local decision-making by operational staff and some also call for optimising opportunism. Most mainstream literature emphasises the need for teamwork.
Little attention seems to be paid to what uncertainty actually means and how it problematizes prior design of structures and choices of rules to deal with it.
These writers preserve the dominant view of visions and values chosen by top managers even as they call for decision making to be distributed.
They all call for leaders to create cultures, as does everyone else, without any exploration of whether this is possible and if it is what it entails doing – according to Schein it requires coercive persuasion (brainwashing).
They ignore power relations and the techniques for disciplinary power and so present simplistic and unrealistic forms of behavior in which operatives become freed from too many rules.
On the basis of a misunderstanding of the complexity sciences they prescribe simple rules. For example, Brown and Eisenhardt (19888) take the notion of the edge of chaos across into organisations and immediately collapse it into one of organisational structure, which then becomes a choice for managers to make. The choice is to install just enough structure to move their organisation to the edge of chaos where it can experience relentless change. This immediately loses the paradoxical notion of contradictory forces that can never be resolved. Self-organisation is equated with adaptiveness and the notion of local interaction among agents producing emergent outcomes is lost. The analogy of the birds is used and then quite effortlessly coupled with successful organisations. However, flocking is one pattern for bird behavior, one that already exists. The few simple rules that produce it will not produce spontaneous jumps to new patterns. Surely, success for corporations over the long term requires just such a move to new patterns. Furthermore, a key feature of the edge of chaos is the power law. This means that small numbers of large extinction events occur periodically while large numbers of small extinctions occur. There is no guarantee of survival at the edge of chaos, only the possibility of new forms emerging that might survive. Nowhere do the authors mention this power law. Instead, they make a simplistic equation between being at the edge of chaos and success. They reduce human behavior to a few key rules and assume that these can ensure success. So, the strategic choice now relates less to outcomes and more to a few simple rules and frequent changes to keep people on edge.
There is the need for generalizations such as ‘simple rules’ to be made particular to specific, contingent situations. Those writing about the agile organisation do not explore the implications of this.
These writers do not notice the contradiction between the need for discipline in highly complex, sophisticated organisations and the need for local judgment and decision making.
They do not notice that operational staff and also managers themselves already exercise practical judgement in local situations to get the job done.
These writers do not seem to notice forms of domination and how this provokes the arts of resistance. They do not mention the difference between the public and private discourses.
They differ on just how important they think the hierarchy is with some placing much more emphasis on relationships that form, the informal organisation.
So is the notion of the agile organisation just another fad, another label for decentralization and empowerment?
Brown, S. L. and Eisenhardt, K. (1998), Competing on the Edge: Strategy as Structured Chaos, Boston, MA: Harvard Business School Press.
D’Aveni, R. (1995), Hypercompetitive Rivalries, New York: Free Press.
Gobillot, E. (2008) The Connected Leader: Creating agile organizations for people, performance and profit, London: Kogan Page.
Goldman, S., Nagel, R. & Preiss, K. (1995) Agile Competition and Virtual Organizations: Strategies for enriching the customer, New York: Van Nostrand Reinhold.
Pal, N. & Pantaleo, D. (2005) The Agile Enterprise: Reinventing your organisation for success in an on-demand world, New York: Springer.