Are Organization and Agility Compatible? 

The purpose of an organization (as both a concept and management perspective) is to deal with the inherent tension between goals and available means in ways that reduce the tension to the greatest extent possible. The organizations that are the most successful in this endeavor are those capable of acting as a single group of interconnected units operating under a shared umbrella of leadership. They benefit from a common communication system that facilitates the circulation of information. All of this enables such organizations to respond effectively to customer needs and reach given objectives.
This idea is expressed by Nobel prize-winner in economics Ronald Coase, author of The Nature of the Firm (1937). He explains, when market transaction costs are higher than internal organizational costs, an organization is more effective than a network of individuals. The choice to work together as an organization or to operate independently depends on this balance between mandatory operating costs and market competitiveness.

Not so! Establishing and enforcing a set of rules is not an end in and of itself, but rather a means to reach the goal of carrying out a strategy more effectively as a group than alone. If the rules themselves are considered to be the goal, the result is bureaucracy, to the detriment of innovation.
In “Why Some Bureaucracy is Good for Business” (2012), Leigh Buchanan points out that the things that slow organizations down (i.e., lengthy meetings, countless rules and procedures, etc.) are nonetheless essential to functioning as a group. Ideas, innovations, and initiatives must all fit into a framework of the rules necessary to organize a collective endeavor. Still, you must be willing to revise standards and procedures when they no longer respond effectively to new business or performance challenges.

This is absolutely true. You cannot work effectively as a group unless everyone plays by the same rules. An example currently given at business schools all of the globe is a story about Al Qaeda, one of the largest and most flexible decentralized organizations to date. The Org. authors Ray Fisman and Tim Sullivan present a note intercepted in 2008 by American intelligence from an Al Qaeda leader to a subordinate suspected of siphoning off funds intended for the purchase of air conditioners. They comment, “Neither allegiance to a cause nor the threats of punishment are enough to keep people in line.” Even Al Qaeda—considered a model of the future business organization—needs formal rules and procedures to ensure consistency and cohesion.

No, it is not! Agility is a mindset, a movement, a new paradigm, and a form of adaptability that stands in firm contrast with Cartesian rationalism and the notion of predictability. It is translated in an agile management style and flexible methods. Agility does not mean merely reacting to change or getting involved in social media. In fact, it is a major component of an emerging trend, where individual skill and motivation are the means to deal with complex, highly detailed systems. An organization may be considered agile when its units work in formal synergy and are thus able to anticipate or detect signs of change, and take them into account in their activities.
Practically speaking, agility is visible in a service orientation and the presence of the follow three features.

- Collective intelligence. At every stage of the service-oriented process, agility is apparent in collective work processes and a willingness to share responsibilities.
- Intense use of new technologies.
- Continually redesigned processes. Instead of pursuing traditional goals of reproduction and predictability, the accent has shifted to adaptability, quality, and value creation.

True. This deceptively simple answer is worth focusing on, because red tape, centralized power, and lack of communication are currently the most common and significant obstacles to efficiency cited by business managers and staff alike. All too often, rules & regulations (bureaucracy) are a higher priority than value creation. Creating products and services now requires contributions from increasingly higher numbers of people, but when it comes to dealing with the fragmentation of the production chain, traditional silo-type organizations are lost. Hence the ensuing decreases in business performance.
What should they do? Untangle complex chains to lighten the organizational load and foster greater agility. Companies should focus their energy on identifying, dissecting, and redesigning the processes that contribute to client satisfaction and value creation. Indeed, as odd as it may sound, processes are both compatible with and necessary for agility. The only way of dealing with matters that hinder customer satisfaction is to focus on dysfunction. Input from field managers and workers will enable organizations to monitor, measure, and subsequently improve their processes, and thus keep track of and adapt their customer offer.

Source: “Are process and agility compatible?” Business Digest °241, November 2013.

True. When it comes to change, and especially cultural change such as that inherent to becoming an agile organization, the most important factor of success is executive and senior management involvement. On the other hand, the most common hindrance to change is hostile management, or leaders that are first and foremost concerned with protecting their personal territory. ESCP Europe professor of strategic leadership Patrick Besson says, “In situations of uncertainty, volatility, or ambiguity, leadership means being flexible and displaying behavior that is quite different from what is traditionally seen among business managers.” More specifically, agile leadership requires the following.

1. Continual self-assessment to ensure alignment with changes.
2. Discussion geared toward achieving shared truths.
3. Collective action through networks and a cooperative mindset.
4. Experimentation and progressive learning processes.

Source: Wikipedia

Not true! Collective intelligence is what fosters effective processes and enables them to evolve to meet new business needs. Today’s organizational systems are like living organisms. They are complex and sometimes deliberately and perilously complicated. However, even though they may be impossible to simplify, collective intelligence is a means to transform complex, rigid, and often obsolete (with regard to business performance) rules into more smoothly flowing processes. The idea is to draw on the potent practical knowledge of the people working directly with customers and markets, soliciting their input and systematically striving to use it to improve. These people and their experiences are a formidable tool for clarifying complex matters.
Improving productivity is no longer an issue for business units to deal with independently; they need to join forces and deal with it together. Improving processes requires people from all business units, divisions, and functions to share experiences and insight. They must establish rules for effectively interacting, cut back on red tape, and create cost-efficient competitive advantage.

Source: Wikipedia and ““Are process and agility compatible?” Business Digest °241, November 2013.

False. But does it seem odd to stress the importance of organization (and its corollary, bureaucracy) when strong voices are saying that it takes something new, revolutionary, and radically disruptive to go from “good to great”? Should you believe indiscriminant, all-encompassing proclamations of “the end of management”?
It is true that in recent years, within the Brownian movement of management theories and ideas, the concepts that have had received the greatest following have highlighted agility and collaboration in a context of transitory competitive advantage (Rita McGrath). Some have even proclaimed the end of leadership (Barbara Kellerman) and the business organization as defined by Ronald Coase (Chris Anderson). However, these proclamations should be understood to simply imply the end of “business as usual”. Unfortunately, lack of time and focus, not to mention the impact of fads, have led people to retain solely the notion of newness and excitement. In contrast, Fishman and Sullivan’s The Org. (see this month’s Focus) stresses the importance of organizational discipline. Such discipline also implies the agility and adaptability necessary to enact strategy and ensure that collaborative effort generates collective value. Organizational discipline may not sound exciting. Requesting ideas for a global café will get people’s attention faster than suggesting a discussion of the cost-quality-time imperatives for turning an idea into a profitable project. But The Org. is not a do-it-yourself guide meant to counter 2.0. The new world (namely, 2.0) does not replace the one that came before it. It helps support what already exists and whispers to the old world to keep on dancing, just to a different tune.