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How to Build Agile Organization during Digital Transformation

Updated: Sep 21, 2022

As organizations launch digital transformation initiatives, many find that agility is the key to making the process more successful. What makes agility becomes crucial in the process of digital transformation?


The famous American computer scientist and futurologist Ray Kurzweil answered the question. Kurzweil explains that the pace of innovation doubles every decade due to the birth of digital technology. Since the speed of change is accelerated, the age of an invention becomes obsolete faster. The inventions should be aimed at the world of the future, not the world that existed when your organization's R&D project was launched. The accelerated pace of digital innovation triggers digital disruption that demands a flexible, faster response to thrive.


As digital technology has disrupted the competition landscape in the last 15 years, we have witnessed the dominance of companies engaged in natural resources, such as Exxon, Total, and Shell, are declining. Their position in the top 5 list of global giants has been replaced by technology innovation-based companies such as Apple, Microsoft, Amazon, Alphabet, and Facebook. Within the past 25 years, the average company lifespan has been declining from 60 years to less than 15 years, and heading toward 5 years for the next decade.. Thus, digital transformation becomes fundamental for the survival of every organization.


The process of digital transformation entails a flux of changes across processes, practices, and routines of organizations. It is imperative for leaders to understand where to focus and how to execute effectively when undertaking a digital transformation. A survey shows that 81% of business leaders consider organizational agility is the most essential characteristic of a successful organization in times of rapid change. No choice exists; every leader must develop organizational agility to be faster and more resilient.

While most corporate leaders know digital transformation's importance, putting agility into concrete action is another story. It takes measurable steps and an understanding of the principles of agility so that digital transformation can achieve the expected results.


Embracing The Principles of Agility as a Strategic Mindset

A recent research found that successful digital transformation was a result of the way leaders within organizations respond to situations of uncertainty and constant change. The study identified four agility principles that are essential in digital transformation.

Mindfulness of Leaders: Leaders should make conscious decisions and convey them to subordinates to achieve transformation goals without being influenced by dogma or previously believed beliefs. This principle's success is reflected in employees' willingness to be sensitive to the organization's direction.


Our research in Vanaya NeuroLab finds that the brain activities of a person undergoing a coaching session show a similar pattern as the brain activities of an expert meditation practitioner during a meditative state. This finding indicates that coaching enables leaders to be mindful during ideas generation and decision-making, which is essential to foster leadership agility.

Light-touch routines: The capacity for structure and flexibility that allows easy and fast adaptation reflects light-touch practices. An example of this principle can be found in Excel applications combined through email communication which replaces the complex HR system. The touch of minor but routine changes can make a significant difference.

Flexible infrastructures: The development of innovation opens a vast space for various innovations from many technology system providers. Companies must be able to quickly set up the best IT infrastructure to deliver on organization goals. A flexible infrastructure will more easily support the organization's sustainable digital transformation.

Ambidextrous structure: This structure trains companies to balance exploration activities for new and innovative things and exploitation activities for technology and products that the organization already has. The combination of exploration and exploitation has resulted in a more flexible organization anticipating and determining the next steps.


6 Stages to Build Organizational Agility

Marked by a high speed of execution, adaptability, and a commitment to innovate and find creative solutions, agile organizations are the ones that don’t just survive, but thrive in highly-disrupted markets. Inspired by the framework offered by Prof. Stefano Bresciani and his colleagues, there are six stages that need to address in fostering organizational agility during digital transformation:


1. Prepare. At this stage, organization leaders focus on preparing the resources needed for digital transformation, such as funds and the right business strategy. Organization leaders must be able to lay the right and strong foundation because it will affect the organization's culture going forward. The steps that must be taken for this stage include setting company objective and key results, reviewing the organizational structure, assessing the current agility levels of employees, and many more.


2. Define. Organization leaders must define agility needed during digital transformation along with every aspect that follows them. This step is essential so that the understanding of every person in the organization is the same. Agility asks a lot of employees, from working in small, iterative teams to being accountable for project successes—and failures.


3. Design. At this stage, the key results need to be well-defined and actively aligned across the organizational level, as the benchmarks for which all employees must be held accountable. A procedural overhaul, where leaders hammer out business processes and documentation, should take place to give employees the ability to respond to change in a matter of hours. Organizations must equip their employees with the capabilities to quickly adopt and implement new strategies through training and education.


4. Build. This stage is when the digital transformation comes alive. To implement a successful, long-standing agile operating model, leaders must go beyond operations and strategy and get to the heart of their company culture. The key is shifting old employee beliefs, which are then manifested in the ways they think and act.


5. Verify. When the agile way of working has started to run, it is essential to constantly evaluate the progress so that iterations can be carried out to address identified challenges with a solution-focused mindset.


6. Launch. This stage is the most crucial endpoint of the agile transformation process. A successful organization will have a digital DNA within the organization as well as an agile culture that enables sustainable transformation.


 

Source:

1. Perkin, Neil & Peter Abraham. Building the Agile Business through Digital Transformation. London: Kogan Page Limited, 2017.

3. Baiyere, Abayomi., Tommi Tapanainen, Hannu Salmela. “Agility of Business Processes – Lessons from a Digital Transformation Context.” Proceedings on Mediterranean Conference on Information Systems (2018).

4. Ferraris, Alberto & Stefano Bresciani. “Agility for Successful Digital Transformation.” Paper on Digital Transformation Management for Agile Organizations: A Compass to Sail the Digital World, 167-187 (2021).

5. Forbes Insight in Association with ScrumAlliance. The Elusive Agile Enterprise: How the Right Leadership Mindset, Workforce and Culture Can Transform Your Organization. 2018.

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Prepare, Define, Design, Build, verify and Launch

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