Agile working is said to be flexible, fast and dynamic. But what does this mean exactly – and how does a company stand to benefit? “In times of turbulence the biggest danger is to act with yesterday’s logic.” This quotation from Peter Drucker, the founder of modern management theory, summarizes the challenges facing businesses today. Digitalization is changing methods, work processes, products and customer requirements – and at tremendous speed. What was gospel yesterday is outdated today.

Due to the internet, everything now takes place on a global level. For a medium-sized company in Germany, this means that its competitors are no longer necessarily based in the same region, but could instead be in Shanghai, California or Tel Aviv. To be successful, businesses therefore need to be able to toss yesterday’s logic overboard and react quickly to this change. And this is where agile working steps in.

Agile working: Flexibility instead of rigid rules

The concept of business agility dates back to 2001, when a group of software developers met to draw up an agility manifesto. Calling themselves the Agile Alliance, they included representatives of DSDM, SCRUM and Extreme Programming, which are often associated with the concept. The group began devising working models with greater flexibility, resulting in the Agile Manifesto of Software Development.

It boils down to a sea change for companies – a transition from rigid hierarchies and structures to dynamic processes. Gabler’s Encyclopaedia of Business defines business agility as the “agility, manoeuvrability or flexibility of organizations and people as well as in structures and processes”. Agile working therefore means acting flexibly and proactively in order to introduce necessary changes.

By contrast, traditional, stable organizations employ process and project orientated approaches. Because they often stick tightly to existing rules and hierarchies, they can’t respond quickly or flexibly to new situations.

The term ‘agile’ thus fronts a new, bold mindset in businesses. But what does it mean exactly?

Six pillars of business agility

Business agility is all about dynamics, flexibility, speed, exchange and networking. It’s based on six pillars: an agile mission statement, customer focus, short-term results, flat hierarchies, dynamic personnel planning, and an open corporate culture.

Agile mission statement

Although an agile company normally starts with the IT department, it mustn’t stop there! The mistake made by many businesses is that it’s simply not enough to make just one team or project agile. Business agility must be part of the corporate culture and should permeate the entire organization. Agile working can only succeed if it’s enshrined in the company’s aims and mission statement.

Customer focus

In agile working, businesses stop looking at themselves and turn their gaze to their customers instead. What do their customers want – and how can customer benefit be maximized? Doggedly carrying out instructions doesn’t help. What’s needed is flat hierarchies, working in networks, and the rapid sharing of knowledge among employees.

Short-term results

This also means that customers receive a product in small parts, albeit in quick succession. This speeds up work and requires less planning time. As a result, customers receive a product faster.

This has another advantage for companies: they get feedback from their customers more quickly. Instead of investing a lot of money in perfecting a product which may not be what the customer actually has in mind, they can gradually adapt the product to the customer’s needs.

Flat hierarchies

Dynamics, exchange and personal responsibility form the basis of agile working. But their full potential can’t be achieved with rigid hierarchies. Therefore, collaboration in agile companies isn’t dictated from above, but takes place in autonomous teams. If this is to succeed, employees need sufficient scope and the confidence of their managers to take their own decisions.

This in turn means that the role of managers needs to change. Instead of just issuing orders and hiding away in the boardroom, they should take on a hands-on role similar to that of a coach personally driving and motivating the team.

Dynamic personnel planning

This also requires individual employees to actively participate in their own development within the company. Instead of carrying out instructions that might ignore their abilities and talents, they need to be involved in setting their own personal goals. This makes them part of personnel planning. In addition, employees should give each other regular feedback.

Open corporate culture

In traditional companies, there are plenty of rules and little in the way of exchange. The opposite is true of agile companies. Agile working makes for an open corporate culture characterized by transparency, dialogue, trust, knowledge-sharing and feedback.

Companies must realize that the aim shouldn’t be to do everything they can to avoid errors. Those who are creative and try out new things inevitably make mistakes. But they can be turned into a learning experience if dealt with openly and constructively.

Careful! Agile change can be explosive!

All this might sound great in theory, but putting it into practice isn’t always as easy as it sounds. Companies taking the bold stop of turning agile need to be aware that it can have a powerful, emotional, active, even explosive impact! This isn’t always easy to handle – neither for the company, nor for individual employees. Agile working doesn’t come about overnight.

Therefore, employers need to create the necessary forums, such as workshops or feedback opportunities where the team can talk about the changes and openly express criticism and concerns. Studies have revealed shortcomings in this respect.

Incidentally, this doesn’t only apply to workers, but also managers. One of the biggest hurdles to agile working is the lack of communication from managers and their fear of letting go. But they have to learn to trust the team.

A supervisor can’t say that teams are supposed to work independently, but then set precise instructions and keep looking over everyone’s shoulder along the way. Sometimes the best way to introduce agile working is to start with a pilot project.

This shows that agile working is a process, albeit sometimes a laborious and painful one. It’s therefore only fair to ask whether it’s really worth all the effort.

Agile companies are more successful

In a nutshell: yes! In a study by the University of Koblenz, more than 90% of companies from over 30 countries said that the improvements brought about by introducing agile working are much bigger than the input required. Employees also had a much more positive view of agile methods compared to traditional corporate structures.

This is reflected in companies’ success. For example, a study by the Boston Consulting Group among 1,100 executives and employees from 10 different sectors and 40 countries found that agile companies achieved above-average margins up to five times more often. In addition, it discovered that agile businesses grow faster than their competitors and can secure long-term competitive advantages for themselves.

Given this, it’s all the more astonishing that the majority of German companies haven’t adopted agile working yet. According to the Haufe Group’s Agility Barometer 2017, 90% of employees and 70% of managers in Germany have never used agile methods. But when they are used – usually in the form of SCRUM principles – employees almost always rate them positively. Nevertheless, traditional, hierarchical structures continue to predominate in German companies.

Of course, agile working isn’t a panacea and won’t work for every business. Even so, companies aiming to keep up with digital change certainly stand to benefit enormously from business agility concepts.