Over the last 30 years, my colleagues and I have worked to identify key capabilities an organization must possess to succeed. We have defined the concept of organization capability as what an organization is known for and good at doing to deliver value to its key stakeholders. Having the right organizational capabilities leads to investor confidence and we have created a Leadership Capital Index to define them as intangibles that investors value over time. Having the right organizational capabilities leads to improved customer commitment and revenue per customer and we have worked to define the right internal culture and leadership behavior. Having the right organization capabilities also leads to employees having greater personal well-being and work productivity and we have worked to define how to increase personal meaning at work.
The critical organizational capabilities to win have pivoted over time, as shown Figure 1:
Agility has become the “capability du jour.”Agility is the ability to anticipate and/or quickly respond to emerging market opportunities. Agility combines being able to change, learn continually, and act quickly and with flexibility for both organizations and individuals. In a world of unrelenting change, agility matters at four levels.
Strategic agility differentiates winning business strategies as they pivot from:
- Industry expert to industry leader.
- Market share to market opportunity.
- Who we are to how customers respond to us.
- Penetrating existing markets to creating new and uncontested markets.
- Beating competition to redefining competition.
- Blueprints for action to dynamic processes for agile choices.
Strategic agility is less about what an organization does to win now and more about how to build a capacity for continual strategic change. It means continually and rapidly updating choices about where to play and how to win.
Strategic agility also requires understanding the business context and environment, and targeting anticipating future stakeholder wants and needs. For example, strategically seeking out customer-focused insights leads to co-created products and services.
Organizational agility enables the organization to anticipate and rapidly respond to dynamic market conditions. More agile organizations win in the customer and investor marketplaces.
Organizations that cannot change as fast as their external demands quickly fall behind, never catching up. Rapid response to future customer opportunities and fast innovation of products, services, and business models differentiate organizations that win. Organizational agility is enhanced when organizations: create autonomous market-focused teams that can move rapidly to create and define new opportunities; allow values to evolve to match the desired culture and firm identity; and discipline themselves to make change happen fast. These organizations continually experiment, improve, remove boundaries inside between silos and outside with customers, and create networks or ecosystems for improvement.
Individual agility is the ability of people and leaders to learn and grow. More agile individuals find personal well-being and deliver better business results.
Individual agility is the competence of an employee to learn and grow (learning agility) as a leader or an employee. Learning agility has been found to be one of the key indicators of effective leadership, and individuals who cannot change as fast as their work demands have limited impact. Individual agility is a mindset (e.g., growth mindset, curiosity) and a set of skills (e.g., asking questions, taking appropriate risks).Therefore, individual agility comes in part from predisposition (nature)—which implies hiring individuals who are naturally agile (learn, change, and act quickly)—but can also be enhanced through training on asking questions, taking risks, experimenting with new ideas and actions, continuously improving by auditing what worked and what did not, observing others, embarking on stretch assignments, and so forth.
Human Resource Agility:
HR practices around people, performance, information, and work can be crafted to foster strategic, organization, and individual agility.
People can be hired, promoted, and trained to signal and encourage organizational and personal agility. For example, agility can become a behavioral factor in talent choices. An executive told me once: “If I put the right person in the right place at the right time, I don’t have to worry about strategy because it will happen.”Putting learning agile employees and leaders into key roles fosters strategic, organization, and individual agility.
Rewards can be aligned to agility or the ability to change and adapt. Financial incentives can be predicated on agility skills like learning and change. Non-financial rewards can signal the importance of agility also. In one company, when they held their “top 100” leaders meeting, they invited ten employees into this leadership pool not by title but by recent contribution. As they introduced these employees to this important non-financial reward, they added that “five of these agile (or innovative or change or learning) employees are here because they succeeded in their initiatives; the other five failed but focused on the right priorities, and their lessons learned will also be valuable going ahead.”
Information can be shared about successful change efforts to illustrate both successful and unsuccessful change. The “after action review” (AAR) logic has become standard in so many companies to ensure that lessons learned from one setting can be generalized across boundaries of time and space to other settings.
Finally, work can be organized to foster agility. Agile firms are increasingly creating high-performing teams who focus on market opportunities, as previously stated; they also allow those autonomous teams to act independently to accomplish their goals quickly. But agile organizations go further to make sure that the independent teams are connected to other teams. The connection of independent teams into interdependent ecosystems institutionalizes agility.
When HR both advocates for and models agility, they ensure that strategies, organizations, and individuals anticipate and adapt to dynamic change as fast as the change occurs.