The paradigm has shifted in business. The new normal consists of a quickly evolving environment, regular introduction of disruptive technology, accelerating digitization and democratization of information, and increased competition for skilled workers. In the face of such factors, a report at McKinsey identifies the five trademarks of agile organizations that thrive in the new paradigm:
- “North Star” embodied across the organization
- A network of empowered teams
- Rapid decision and learning cycles
- A dynamic people model that ignites passion
- Next-generation enabling technology
“North Star” is an ambiguous way of saying that agile organizations are customer- and stakeholder-focused, as opposed to shareholder-focused. They also embrace farther-reaching opportunities to co-create value and build robust supply chains. It is called “North Star” in the sense that all these actions should be anchored by a shared purpose and vision.
By comparison, the idea of “a network of empowered teams” is much more straightforward. It is the idea that teams can be trusted to produce stellar results for the business without excessive management or instruction. But for this to be true, teams must do at least the following things: operate in flat structures, have accountable roles, get hands-on with governance, and become robust communities of knowledge. Along these same lines, it is not necessary or desirable for senior leaders to build elaborate strategic plans with massive scope. Rather, strategy is absolutely necessary, but decisions should be made rapidly and the results should be reacted to quickly.
Regarding the importance of a dynamic people model, the McKinsey report shares this:
Leadership in agile organizations serves the people in the organization, empowering and developing them. Rather than planners, directors, and controllers, they become visionaries, architects, and coaches that empower the people with the most relevant competencies so these can lead, collaborate, and deliver exceptional results. Such leaders are catalysts that motivate people to act in team-oriented ways, and to become involved in making the strategic and organizational decisions that will affect them and their work. We call this shared and servant leadership.
The final trademark of agile organizations is that their technology is fundamentally woven into strategy to unlock value. Technology is not an afterthought or a support mechanism. Technology itself is part of the value mechanism.
For a deeper, lengthy analysis of these concepts, you can view the full report here: https://www.mckinsey.com/business-functions/organization/our-insights/the-five-trademarks-of-agile-organizations