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Don’t Confuse Product-Level and Organizational Adaptability in Agile Organizations

May 31, 2024

Adaptability is a key component of any successful organization. It's important not to confuse product-level adaptability with organizational adaptability. While both are crucial, they function on different levels and have distinct roles in ensuring an organization remains responsive and competitive.

Understanding Adaptability

As described in the CAO Guide, adaptability refers to an organization's ability to modify its course in response to new situations, all while optimizing value and enhancing the customer experience. This adaptability operates on two main levels:

  1. Organizational Level: This level focuses on the organization's capacity to restructure relationships between units to align with shifting management strategies. This restructuring is essential for initiating, merging, or discontinuing products or services as needed.
  2. Product Group Level: This level is concerned with how products or services can quickly adapt to market and technological changes and evolving user needs.

The Independent Scrum Teams Analogy

Consider the concept of independent Scrum Teams, where each team evolves a distinct product directly for end users. This scenario is near ideal: multiple small, independent teams each adding value and generating profit. Each team is adaptable without being slowed down by other teams.

However, often multiple teams are needed to develop a single product. To achieve adaptability at this level, forming Product Groups—a collection of teams—that operate autonomously and independently from one another—can be highly effective. We then have multiple Product Groups, each of which is adaptable without being slowed down by other Product Groups.

Realizing The Two Levels of Adaptability

Research by Wilson and Corbett (1983), supported by Firestone (1985), found that tightly coupled systems are more conducive to system-wide change than loosely coupled systems. Meyerson and Martin (1987) also noted that managers struggle to plan, predict, control, or change loosely coupled systems. These insights inform how we can structure adaptability within organizations.

Mapping that to large-scale agile product development, I learned that specialized teams such as component teams (that work on the same product) are loosely coupled from a domain perspective. And from experience, I noticed that it is very hard to plan across these teams, change overall product direction or change the organization design itself. On the other hand, tightly coupled teams make it easy to change direction and develop new functionality, as a change affects all others.

So, is it likely better to have highly coupled teams over loosely coupled teams in the context of adaptabilty? .... Absolutely.

The CAO approach

In the CAO approach, we address the two levels of adaptability as follows:

Tightly Coupled Teams for Product Group Adaptability

Within a product group, closely interlinked teams are essential for effective, system-wide change. Tight coupling between teams ensures that changes in the group impacts all teams, facilitating the alignment necessary for swift and cohesive adaptation.

Adaptability at the level of the Product Group comes from:

  • Containing highly coupled teams inside the same group.
  • Having loosely coupled teams inside the group so that they are interchangeable; that way the teams can pick up the most valuable work.
  • Having a high coupling between product group goals and teams’ actions.

Decoupled Product Groups for Organizational Resilience

Organizations with tightly intertwined departments often lose resilience and struggle to adapt to evolving contexts. In contrast, product groups with looser coupling are more flexible, allowing them to explore alternative approaches and pivot as needed. So, we trade-off centralised control over entrepreneurial product groups!

Semi-indpendendent product groups.


In a CAO prototype agile organization, semi-independent product groups and shared services coexist. Product groups are operationally coupled by shared services but functionally decoupled from each other, that is: actions by a product group does not negatively impact the ability of other product groups to achieve their function. This design ensures that product groups can make necessary changes without being negatively impacted by other groups.

Understanding and implementing both product-level and organizational adaptability is crucial for modern agile organizations. By balancing tight and loose coupling appropriately, organizations can remain resilient, responsive, and competitive in ever-changing markets. This dual-level adaptability allows organizations to thrive by continuously optimizing value and enhancing the customer experience.

Learn More About Creating Agile Organizations (CAO)

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