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Is our pursuit of risk-aversion risky?

Does culture, leadership and systems together hold the key to organisational agility and business growth.

Uncertainty, complexity and volatility cast a shadow over every employee, team and organisation. This era, shaped by rapid and diverse cultural, environmental and technological shocks, is what influential thinker Peter Drucker refers to as the ‘3 Cs’ – accelerating change, increasing complexity and tremendous competition.

This article from the World Economic Forum, ‘What happens in an internet minute’ illustrates the massive volume of information we have to instantaneously process and contextualise. Our hyper-connected world only serves to amplify these powerful forces and will potentially point us towards a state of paralysis. It’s no surprise therefore that the historian and author Yuval Noah Harari points out, “in a world deluged by irrelevant information, clarity is power.”

Survival has always been determined by our ability to continuously scan environments. We thrive by quickly identifying and processing the threats and opportunities that matter. And then responding to these moments in time.

Here’s the problem. Organisational longevity today is threatened by yesterday’s levers: a continued reliance on traditional hierarchal structures and its associated control mechanisms. Centralised controls and the ‘organisation-as-machine’ model underpinned an earlier management era. One that focused on creating marginal execution-focused efficiencies realised through scale. However, that model was also deeply reliant on the business climate remaining stable and predictable.

This operating formula is ill-equipped to handle today’s fast-paced environment. Moreover, the transition is complicated by command and control structures that are typically more resistant to change. With disruptive forces on the rise, business longevity is falling, a signal that businesses are struggling to adapt in time. Business failures are rarely the result of failing to adapt entirely, instead they are so often the result of repeated failures to respond in a rapid and effectual manner.

Success is determined by the decisions we make

In the book ‘What Matters Now’, Gary Hamel highlights that the key capability of an agile organisation is exceptional decision-making, distributed across the workforce. Increasingly algorithms are supporting decision-making, but the ultimate choice and future success of business rests with your people.

The Performance triangle (shown here) illustrates the foundational components and relationships of an agile organisation.

Culture: The powerful force that gives rise to a sense of meaning and purpose at work, intuitively guiding all interactions. It sets the context for people to come together in a quest for finding common ground, shared values and agendas.

Leadership: The determinants of a successful leader are subjective and depend on context. In an agile environment, adaptability plays a part. To create a collaborative culture, leaders should build rapport, share the vision and foster experimentation.

Systems: The key theme here is trust. What are the processes, rules and technologies designed to achieve? Striking the balance between freedom and restrictions ensures flexibility doesn’t get out of control. Getting it right will help empower teams, although too much control can breed disengagement and apathy.

Research conducted at the Massachusetts Institute of Technology suggests that agile firms grow revenue 37% faster and generate 30% higher profits than non-agile companies. However, research carried out by Gallup found that only 13% of UK companies operate with that agile mind-set.

Agility is not about discarding all that we have learned about structures, management and systems. Instead, we should view it as a sliding scale mind-set which adapts to a changing environment. It would be wise to accept widespread disruption is here to stay; for agility to succeed against this backdrop, we must also factor in stability.

Control and structure are fundamental components of every business. Without them, commercial chaos ensues. Every organisation should prioritise responsiveness through flexible, digital-led operations, whilst simultaneously finding a balance that ensures control measures don’t hinder collaboration and decision-making.

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