Culture can make or break agility

While many companies are striving to become agile, only four percent of survey respondents have completed an organization-wide transformation, the latest McKinsey research finds. The No 1. problem they cite is culture.

Anecdotal evidence supports this culture challenge. The former COO of ING, a financial services giant at the forefront of applying agility enterprise-wide, reflected that “culture is perhaps the most important element of this sort of change.” He noted that ING has spent “an enormous amount of energy and leadership time trying to role model the sort of behavior—ownership, empowerment, customer centricity—that is appropriate in an agile culture.”

For example, consider the matter of delegation. Companies large and small struggle with effectively delegating work. A manager, who let’s assume gets a decision correct nine out of ten times, hands off a task to a worker who is right eight out of ten times – at least to start. Thus, the manager determines that making slightly fewer good decisions sometimes is a price worth paying to improve efficiency, speed and empowerment.

Here’s the rub: The first time the worker makes a decision that differs from what the manager would make, the worker gets feedback. Depending on how it is delivered, the feedback can trigger a level of fear and anxiety that prompts the worker to avoid a future misstep.

  • Imagine that this first mistake was on decision No. 10. The designated worker has made nine good decisions since having been delegated the authority to make the decision, matching the manager’s level of proficiency, but has made them faster and more efficiently because the manager wasn’t involved.
  • Then on decision No. 10, there was a not-so-good outcome. After getting a slap on the wrist, or “feedback” which triggered performance anxiety, for making a mistake on decision No. 10, the next time the worker likely will check first with the manager. Soon, the delegation evaporates and turns into escalation.

In a complex, hierarchical organization, you can imagine that lots of decisions escalate up the ladder multiple times, going high up the chain of command.

So, what happens when an “empowered” cross-functional team tries to move at high velocity within a slow culture of escalated decisions? Agility dies. This is why Amazon CEO Jeff Bezos’ notion of decision velocity – and the need for managers to “disagree and commit” – is so important.

McKinsey's global survey on organizational agility illuminated the difficulty of getting the culture challenge unstuck.

Organizational agility potentially represents an existential crisis for middle management. The traditional middle manager is often in place to communicate, direct, and control. The agile organization tosses that aside and instead, suggests that traditional ways of planning aren’t that useful. For these organizations to thrive, they still need visionary leaders looking at the big picture, but much planning now is emergent and bottom-up. The value of middle managers controlling things and passing information up and down the chain of command starts looking not so valuable. If you wonder where the resistance to change is likely to come from, the clue is here.

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