Each year, a growing number of enterprises are beginning to pursue corporate agility. According to the 5th Annual State of Agile Marketing report, published in 2022, 20% of all Agile transformations are mandated by executives (e.g. the Chief Operating Officer).
Despite the significant benefits to achieving corporate agility, a company-wide transformation comes with significant risks if the organizational culture is not ready to shift to this new mindset and way of working.
When it comes to your organizational culture, there are several key prerequisites that need to be in place in order to maximize the chances of successfully transforming your traditional business to an all-around Agile one. In this article, we will examine each of the cultural characteristics that support the flourishing of agility to help you determine your readiness.
The 4 Types of Organizational Culture
The success of every Agile transformation depends a lot on the established culture within an enterprise. Before we dive into the prerequisites for achieving corporate agility, let’s have a look at the types of enterprise organizational cultures.
We can think of organizational culture as a set of shared values, beliefs, and behaviors. Nearly 40 years ago, business professors Robert E. Quinn and Kim Cameron did some foundational research on organizational culture and identified several distinct types that apply to the majority of enterprises, namely:
- Clan culture
- Adhocracy culture
- Market culture
- Hierarchy culture
A clan culture is a family or tribe-like type of corporate environment that emphasizes consensus and commonality of goals and values. Organizations that fall into this category are characterized by friendly working environments and psychological safety for their employees.
In such enterprises, relationships between people and respect are held in high regard. Employees collaborate freely and perceive managers as mentors rather than bosses, who command and control. The biggest downside to clan culture is that the pursuit of consensus all the time might hinder productivity and slow down the delivery of value.
In a business context, adhocracy is a type of corporate culture that’s based on the ability to adapt to quickly changing circumstances. The behaviors associated with it facilitate an environment where employees are encouraged to take ownership of their work and feel safe to innovate without fear of the consequences if they fail.
It’s typically observed in startups and small enterprises. In adhocratic organizations, learning and development are held in high regard. In addition, innovation and a fast pace are encouraged by leadership, sometimes to the point of intimidation. Last but not least, the constant change of direction often creates a feeling of uncertainty and hinders predictability.
A market organizational culture is characterized by a strong drive for internal competitiveness. It is by far the most aggressive type of the four types of organizational culture. In such enterprises, leadership sets difficult goals and constantly pushes employees to achieve them.
With this type of culture in place, metrics are everything. Everyone within the organization has ambitious targets that are expected to be met at all costs. This creates an environment of high pressure and gets in the way of collaboration as everyone is trying to beat their internal competitors.
Hierarchical organizational culture is based on respecting and strictly complying with the status quo within the enterprise. It creates a very structured and bureaucratic environment, where employees are expected to follow instructions without question and comply with existing processes.
When this corporate culture is in place, decision-making is centralized even for the smallest matters. Silos are very distinct and managers serve as gatekeepers of information. This usually results in process rigidity, which makes changing direction very difficult when necessary.
Which One Is the Best for Facilitating Corporate Agility?
Over the years, AgileSherpas has coached organizations that fall in all of these organizational culture categories. As a result, we can confidently say that, with the right support, corporate agility is achievable with all of them. The paths just look different. Some paths are longer and more convoluted, depending on the entrenched culture.
If we have to point to the single best one for facilitating corporate agility, that would be the Adhocracy culture. This is because the associated behaviors resonate most closely with Agile principles and values.
However, having this corporate culture in place doesn’t guarantee a company will be able to achieve corporate agility. On the other hand, having a clan, market, or hierarchy culture is also not a reason to abandon this aspiration.
We know that any enterprise can transform itself to achieve corporate agility, as long as it has the following cultural pillars in place.
An Agile transformation doesn’t happen overnight, especially when we’re trying to achieve company-wide corporate agility. During the transformation process, a lot will change like the way we process work, the way we give and receive feedback, and even the way we hold our meetings.
When there are multiple teams coming from different departments that are transforming their ways of working, strong leadership is crucial. As everyone within the company is going to be deviating from the way they’ve been doing things to this moment, we can expect resistance, attempts to revert back to the old ways when things are hard, and a plethora of other challenges along the way.
Strong leaders are needed to spot and address these issues and create feelings of safety and stability during this uncertain period. So before we decide that it’s time to embrace corporate agility, we have to ensure that we have the right leaders on all organizational levels to support the transformation.
Depending on the type of organizational culture, psychological safety may or may not be held in high regard. If we want to achieve corporate agility we want to ensure it’s there before we initiate a transformation.
When everyone within the organization feels safe to make mistakes and provide feedback, they’re more likely to respond positively to the changes necessary for achieving and sustaining corporate agility.
Even more so, psychological safety boosts the likelihood of employees suggesting innovations that contribute to the success of the Agile transformation. Without it, the whole weight of the transformation falls on the leaders’ shoulders and opportunities for improvement might go unnoticed because the people closest to the working process are afraid to give their input.
The power of Agile lies in its values and principles. The first value listed in the Agile Manifesto is “focusing on customer value and business outcomes over activity and outputs”.
In order to be ready for embracing corporate agility, everyone within the organization needs to have the customers’ interests at heart. This has a lot to do with the established mindset within the company.
In traditional organizations, performance is evaluated based on outputs. In other words, the more work we deliver, the better we’re doing. This mindset is outdated and will only get in the way of achieving corporate agility.
Before we initiate an Agile transformation, we need to make sure that we have a results-driven mindset, instead of an output-driven mindset, established on all organizational levels and within all functional areas. It allows us to focus on doing the right things at the right time to satisfy our customers and avoid wasting time on activities that bring little to no value.
The last key prerequisite for enabling corporate agility is being ready to embrace change. It’s important because the business environment in most industries is now changing faster than ever before.
If we’re used to spending enormous amounts of time developing static plans and strictly following them no matter what happens along the way, we’re likely to struggle in embracing corporate agility. That is because corporate agility requires the ability to quickly change direction when needed, without derailing on the path toward business goals.
Before we go for corporate agility, it’s important to have a shared understanding of what’s happening around our organization and be ready to change direction when necessary. Agile will provide us with the necessary tools, but the drive and change readiness must come from within.
Are You Ready for Corporate Agility?
Achieving company-wide corporate agility is far more difficult than successfully transforming a single team or department within an organization. This begs the question – is our enterprise well-positioned to embrace Agile ways of working?
To answer this question, we must look into the depths of our organizational culture. Even though there are unique aspects to every organization, most fall into one of the four distinct categories of culture. Luckily, all of them can be candidates for successful corporate agility if they have a few vital characteristics in place.
It all starts with strong leadership on all organizational levels. Without it, some of the challenges during the transformation have a high chance of stopping it in its tracks.
Since a lot will change during the pursuit of corporate agility, it’s crucial to facilitate psychological safety among employees and encourage them to suggest new ways of doing things.
Add to those prerequisites a results-driven mentality and change readiness within the organization, and we can safely say that an organization is ready to embrace corporate agility.
Few of the enterprises we’ve coached have had all four prerequisites in place when initiating their Agile transformations. However, all of them had the desire to acquire them. If you think that you are missing one or more of these, there’s no need to worry. Just ask a Sherpa for guidance!
Book a free session with our team at Business Agility Lab to кeep climbing towards the summit of agility!