Agile organizational characteristics are crucial, but they alone won’t determine all of your design decisions. You’ll still need to tackle typical questions like:
- How should you structure your organization for value delivery and divide up the work?
- What roles are needed, and how should you distribute authority and responsibility among units and roles?
- Which processes are necessary within each unit, and how should you coordinate between them?
- What human resources policies can you use to encourage multi-skilled people to work in teams?
- Which specific outcomes and output measures are relevant for the organization?
So how do you make these decisions? Well, the strategic focus of your organization can point you in the right direction.
When it comes to strategic focus, there are three main types, each of which requires different capabilities and results in a unique Agile organizational design:
A product-centric organization focuses on innovation, new product development, and speedy time-to-market. Value is identified as cutting-edge products, unique features, and applications that competitors can’t match. The organization is structured around its products, with employees specializing in research and development and striving to be the best. In a commercial context, success could be measured in product releases or profit from new products. Agility lies in discovering and addressing changing customer needs faster and more effectively than competitors can.
In terms of adaptability, product-centric organizations must be able to pivot quickly to respond to changes in customer demand and emerging technologies. This means that they need to prioritize experimentation, embrace risk-taking, and be willing to fail fast and pivot even faster.
An operations-centric organization, on the other hand, prioritizes low cost, automation, reliability, and adapting to changing production volumes. Value is derived from price, efficiency, consistent quality, the cost to serve, or cost per transaction. The organization structures itself around key processes works to standards and aims for high resource utilization and operational excellence. Examples of operations-centric organizations include certain operations in banks and insurance companies. These organizations need to be adaptable to react to variations in volume and changes in customer demand while maintaining operational excellence. Agility is key to managing sudden surges or dips in transaction volume or responding to changes in customer preferences.
Customer-centric organizations focus on delivering high customer satisfaction and forging long-term customer relationships. They identify value based on customer retention and long-term satisfaction, with a focus on truly understanding customers and crafting personalized solutions for them. These organizations are likely structured around customers and have a customer- or market-segment-specific units. Employees have the skills to build long-term relationships with customers and show passion for assisting with customer implementations and providing aftercare. A consultancy with units for a specific large customer is an example of a customer-centric organization. These organizations need to be adaptable to adjust to specific customer needs and preferences, as well as changes in the market environment. Agility is key to keeping up with shifting customer demands and market trends and maintaining a deep understanding of customer needs.
To determine which specific capabilities you require, it’s important to understand your strategic focus. That’s where my workshop comes in! You can get the workshop here.
Each strategic focus calls for specific capabilities, resulting in unique Agile organizational designs. However, most organizations require a mix of foci to succeed, with different units having varying focuses and Agile setups. Understanding your organization’s strategic focus is crucial in determining the required organizational capabilities for Agile success, and being adaptable to changes is key to maintaining a competitive edge.
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