Agile Corporate Culture – What’ s It All About? (Part 1)
The ever-increasing digitalization and the associated changes confront companies with dynamically changing environmental conditions, such as constantly changing customer requirements and increased competition (Yang and Liu 2012). In this environment, a company’s success increasingly depends on its ability to regularly adapt its product and service portfolio and its business model to changing circumstances (Roy and Sarkar 2016). In order to meet this requirement, an agile organizational culture is indispensable, in addition to the development of technical agility, including the adaptation of internal processes and the adaptation of the technical infrastructure (Denning, 2016). However, the annual 14th State of Agile Report (2020) shows that the transformation to an agile culture is something that only few companies achieve. Organizational resistance often prevents the cultural transformation in many companies without the companies being aware of it (VersionOne, 2020). It is essential to establish the appropriate structures and routines within a company in order to initiate this cultural transformation – whether by adapting the organizational structure or by integrating agile working methods (Caligiuri, 2012).
In recent years, various companies have established the vision of an agile organizational culture. We would like to mention ING as an example here, as the management of ING has given cultural change a high priority in its transformation efforts. In the summer of 2015 the banking group decided to transform its organization following the example of Google, Netflix and Spotify. Key elements for establishing cultural change were the introduction of a new agile organizational structure, the definition of a code of conduct that summarizes the most important behaviors of employees, the promotion of an open error culture, and the creation of the foundations of a mentality of mutual help (McKinsey, 2017).
In general, a corporate culture can be described as the beliefs, values and behaviors that shape the social and psychological environment of an organization (Needle, 2004). Establishing an agile culture is about creating an environment that enables the organization, teams and individuals to be more adaptable, flexible, innovative and resilient in the face of complexity, uncertainty and change (Agile Business Consortium, 2018). In essence, an agile organizational culture comprises the following components (Agile Business Consortium, 2020; Dove, 2005):
- Purpose and goal orientation: Every employee stands behind the vision of the company and knows how his or her work contributes to achieving the company’s purpose. Employees authentically live the values of the company, which affect their actions both within the organization and in contact with external partners or customers.
- Trust and transparency: Managers practice open and transparent communication and thus contribute to a positive organizational culture that is characterized by a proactive sharing of knowledge and resources. An environment is created in which other opinions can be expressed openly and honestly, thus creating psychological security.
- Open error culture: Employees and teams are made more sensitive to recognize problems and unproductive procedures in time. An open error culture means that problems can be addressed openly and that the focus is on their cause instead of looking for a culprit.
- Innovation and ability to learn: Employees are encouraged to think outside the box and develop innovative ideas. This can mean, for example, that employees use new methods and tools to solve an existing problem with new approaches. It is important that the organization creates an environment where failure is seen as an opportunity to learn and ultimately achieve better results.
- Adaptability: Agile organizations respond proactively and quickly to changes in the business environment while maintaining a strong, stable core. As a result, new ideas are quickly adopted and tested for feasibility, with employees willing to take reasonable risks.
The question many companies ask themselves is: How can the development of an agile culture be supported sustainably? This question I will answer next week in the second part of this article.
Agile Business Consortium (2018). Towards an Agile Culture. https://cdn.ymaws.com/www.agilebusiness.org/resource/resmgr/documents/whitepaper/towards_an_agile_culture.pdf
Agile Business Consortium (2020). Agile Culture DNA. https://agiledojo.co.uk/agile-culture-dna/
Caligiuri, P. (2012). Cultural agility: Building a pipeline of successful global professionals. John Wiley & Sons.
Denning, S. 2016. “Understanding the Three Laws of Agile,” Strategy & Leadership (44:6), pp. 3–8.
Dove, R. (2005, May). Agile enterprise cornerstones: knowledge, values, and response ability. In IFIP International Working Conference on Business Agility and Information Technology Diffusion (pp. 313-330). Springer, Boston, MA.
McKinsey (2017). ING`s agile transformation. https://www.mckinsey.com/industries/financial-services/our-insights/ings-agile-transformation
McKinsey (2020). Doing vs being: Practical lessons on building an agile culture. https://www.mckinsey.com/business-functions/organization/our-insights/doing-vs-being-practical-lessons-on-building-an-agile-culture
Needle, David (2004). Business in Context: An Introduction to Business and Its Environment.
Roy, R., and Sarkar, M. 2016. “Knowledge, Firm Boundaries, and Innovation: Mitigating the Incumbent’s Curse During Radical Technological Change,” Strategic Management Journal (37), pp. 835–854.
VersionOne (2020). 14th Annual State of Agile Report. https://stateofagile.com/#ufh-i-615706098-14th-annual-state-of-agile-report/7027494 Yang, C., and Liu, H. M. 2012. “Boosting Firm Performance via Enterprise Agility and Network Structure,” Management Decision (50:6), pp. 1022–1044.