6 core elements of business agility

Discover the 6 core elements that define business agility, and learn how to effectively implement them for organizational success.
Agile at scale is a topic I’m truly passionate about, and you've probably noticed it's something I chew over a lot on this blog. To me, scaling Agile is more than just picking an Agile framework and running with it. It's about reshaping an entire organization from the top down and bottom up.
Tweaking a couple of teams here and there just won't cut it if you're aiming for the big leagues of business agility. In this blog post, we're going to walk through six critical aspects that should be on your radar for a full-scale Agile transformation - as long as you want to unlock all the benefits of Agile for your organization.

Element #1 - framework

Let's start with the most straightforward element: the framework. When adopting Agile, it's common practice to align with frameworks like Scrum, Kanban, or XP. However, when we discuss scaling Agile, it's crucial to consider the choice of framework at the organizational level. Some, like SAFe or LeSS, are tailor-made to scale across multiple teams within large organizations. Despite their popularity, I've often found that developing a customized framework—one that aligns seamlessly with your organization's new structure, product development cycle, and unique context—tends to be the most effective approach.

Ideally, teams would operate framework-agnostic, empowered to select the methodology that best suits their specific needs rather than defaulting to Scrum, which many Agile frameworks assume as a baseline. This approach maximizes flexibility and enhances efficiency at the team level. Naturally, this would require additional support from experienced Agile coaches to ensure that each team is fully equipped to navigate their chosen framework effectively.

Element #2: goal setting process

Another key ingredient in the Agile at scale mix is the way we set goals. Here's the thing: if your goals are just dropping down from the top, we can hardly call that Agile. Yes, leadership is crucial, and we need to have everyone rowing in the same strategic direction, but often, it's the teams on the front lines who have their ears to the ground, conducting customer research, and handling requests daily. They know the pulse of the customer's needs. It's true that in some fields, like management consulting, leaders might be closer to the customer than the ground teams, but let's face it, that's not the norm.

What you're aiming for is a sweet spot where bottom-up goal setting meets top-down alignment. Teams should have the room to craft their own goals based on their insights and forward-thinking. Then leadership steps in to weave those goals into the larger organizational tapestry, ensuring consistency and strategic harmony. OKRs are your best bet for facilitating this process—a methodology I've dived into in another blog post you can check out here [ Unlock Growth: 7 Reasons to Implement OKRs]. They're the bridge that connects individual initiative with collective vision.

Element #3: financial planning

Financial planning deserves its own spotlight when we're talking about organizational Agility. It's not just about setting aside funds; it's about how these funds are allocated and the level of autonomy teams have regarding their budgets. It's critical for teams to have the flexibility to both acquire additional funds for goal achievement and to not be pressured to burn through their budget unnecessarily. Balancing this financial agility with accountability, transparency, and a focus on channeling investments into high-priority areas is key.

So, what's the best way to hit this balance? In an ideal setup, teams would present their objectives and key results (OKRs) during regular planning sessions, typically quarterly. They'd stake a claim on the resources they need to hit these targets. After aligning with the organization's overarching priorities, each team would receive a budget range they're free to operate within, no strings attached. This trust-based approach empowers teams to optimize resource use to achieve their goals and maximize value. Should they require more funding, the process to obtain it should be straightforward, centered around the value the additional resources will bring and the team's track record. Moreover, any notion of penalizing teams for underspending should be tossed out the window, fostering a culture that's driven by value, not expenditure.

Element #4: performance management

Performance management in Agile environments demands a fresh approach that cultivates cross-functionality and nurtures a culture of collaboration and proactive thinking. Here's a condensed recap of key shifts that Agile organizations need to embrace for a more dynamic performance management system:

  • Career Progression: With fewer hierarchical roles, Agile opens two major career pathways: individual contributors and managers, both offering equal recognition and opportunities for growth.
  • Personal and Team Goals: While team objectives take center stage, personal development goals are also crucial. Success is measured by team achievements, yet individual growth remains essential.
  • 360° Reviews: Performance assessments broaden to include feedback from the whole team, not just managers, reflecting a more rounded view of an individual's contributions.
  • Contribution Models: Clear expectations for different roles ensure that everyone can offer relevant feedback across functions, fostering a deeper understanding of each role's impact.
  • Frequent Feedback: Continuous and regular feedback replaces the outdated annual review cycle, promoting constant alignment and development.
  • Servant Leadership: Leaders transition from directive managers to facilitators, focusing on empowering their teams and being evaluated on their ability to promote team growth.

For a more in-depth exploration of these changes and their implications on HR within Agile organizations, I invite you to read my detailed post here.

Element #5: organizational structure and leadership

As previously highlighted, Agile organizations introduce cross-functional teams, which inevitably impact the overall organizational structure. Traditional corporate setups are often characterized by functional departments like sales, marketing, design, and more. However, the Agile shift calls for a rearrangement of these puzzle pieces to form teams that encompass a diverse range of specialists, all working in harmony to support a product, its elements or features, and ultimately deliver substantial customer value.

This shift in organizational structure is a shift towards becoming more product-centric. New departments are crafted around 'customer value centers,' while some functional departments, like legal and HR, may persist. With teams becoming more self-organizing, the need for as many traditional leaders diminishes, leading to a shift in the role of leadership. Leaders transform from traditional command-and-control figures to champions of empowerment, facilitation, and servant leadership. For a more in-depth exploration of this leadership transformation, you can find additional insights in my dedicated blog post here.

Element #6: culture

As we delve into the final piece of the puzzle, culture takes center stage as the linchpin of Agile transformation. Shifting culture is both the most challenging and the most influential aspect of this journey. It's not merely about altering actions; it's about fostering a new mindset—a mindset characterized by ownership, audacious goal-setting, a spirit of experimentation, unwavering collaboration, and a wholehearted embrace of change.

Cultivating this mindset is no walk in the park. It requires persistent practice and, perhaps most crucially, the establishment of psychological safety within the organization. The seeds of psychological safety need to be sown at the leadership level, emanating from there to every corner of the organization. Regular reflection, inspection, and adaptation are key, and these practices are often facilitated through regular retrospectives.

One thing to bear in mind is that cultural shifts aren't a mere byproduct of training sessions or the introduction of new tools. They demand modeling by leadership and change agents, like Agile coaches and passionate advocates of the Agile philosophy. It's not just about preaching; it's about recognizing and rewarding the right behaviors. Equally important is the ability to openly discuss the times when old habits creep in, without resorting to blame and shame, but with the purpose of finding ways to improve and adapt. This culture of continuous improvement is the bedrock upon which Agile transformation thrives.

In a nutshell, our journey through these six critical elements in Agile transformation underscores a shift in how organizations are structured, led, set goals, manage finances, assess performance, and cultivate culture. These changes highlight the importance of cross-functional teams, empowering leadership, psychological safety, and a culture of ongoing improvement. Embracing these elements paves the way for a true Agile mindset that champions innovation and customer focus at every turn.
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