Successful companies are faster, more flexible and innovative. They belong to the digital pioneers. They not only employ the new technologies, they have also made their organizations fit for the new digital opportunities. An overview of the latest trends.
Where do the digital pioneers differ from other companies? They are quick and innovative and not afraid to take risks. Their business models are based on digital, cloud-based platforms right from the start and can be readily scaled, according to a market segment study by Lünendonk. (Lünendonk-Marktsegmentstudie 2018 Der Markt für integrierte Digital Customer Experience Services in Deutschland (2018)) With the aid of these platforms, partners are seamlessly included in their process chain and consequently generate high market entry barriers in a very short time.
One of the primary reasons why companies design their structures more agile is the high degree of flexibility. Agile organizations achieve more flexibility to develop products, to perform projects or more flexibly use personnel. “The most important reason for making organizations more agile is speed. Speed should make it possible to obtain faster reaction times,” analyzes the HR Report from the recruiting experts Hays. (Hays, „HR-REPORT 2018, Agile Organisation auf dem Prüfstand“ (2018)) One consequence of the agile organization is the networking of all parts of the company and all employees and knowledge bearers. Then the organization adapts to the altered structures and thereafter the employees’ organization of themselves.
Agile companies are more profitable
Companies that design their structures to be agile are also more successful. Agile companies obtain above-average margins five time more frequently and grow faster than the average company, according to an analysis by the Boston Consulting Group (BCG). (Studie der Boston Consulting Group (BCG), "Boosting Performance Through Organization Design" (2017)) More rigid organizations tend to bring up the rear. One study reports that about 66 percent of companies have altered the structure of their organizations in the last few years with the aim of becoming more profitable. Here, factors such as agile working methods are becoming more important.
The primary objectives of a transformation process to an agile organization aims at goals such as increased flexibility, reducing time to market or faster decision making. Source: Capgemini Consulting, "Agile Organization Study 2017"
In the "Agile Organization Study 2017" by Capgemini Consulting, 83% of those surveyed confirmed their goal of introducing agile working methods. Agile methods function best in departments that are closely linked to direct and indirect market influences (e.g. marketing, dales, product development, R&D, etc.) as well as cross-functional project management areas.
“In departments that primarily concentrate on the identification and avoidance of errors and risk, these working methods are less successful and initial experiences do not indicate any progress in this direction,” states the study. (Studie von Capgemini Consulting, "Agile Organization Study 2017" (2017)) Finance/Risk/Compliance (FRC), Accounting and Controlling are named as examples of such areas.
Agile organizations have a different culture
Rigid structures are replaced by lean and flexible ones in agile organizations. Agile organizations exhibit something else – another type of mentality as a prerequisite for agile management structures and management cultures: (André Häusling, Bernd Rutz, „Agile Führungsstrukturen und Führungskulturen zur Förderung der Selbstorganisation“ (2017))
People interactions of processes and tools;
Functioning products over comprehensive documentation;
Cooperation with the customer over contract negotiations; and
Embracing change over strict adherence to a plan.
Accordingly, a shift occurs in the company toward people and their needs. Agility must be understood as a philosophy that applies the processes of scrum, Kanban, lean, as well as others, to be effective.
"Flexibility with regard to the adaptations of products, processes and, above all, employees with their competences are the decisive criteria for successful agile organizations." Source: Hays, "HR REPORT 2018, Agile Organisation auf dem Prüfstand"
The Boston Consulting Group confirms that the introduction of agile working methods in and of itself is not sufficient, “The anchoring of agile principles in organizational and personnel processes, for instance in management models, in the allocation of resources or performance management, makes for the biggest difference,” explains Fabrice Roghé, Senior Partner at BCG and one of the authors of the study. Nevertheless, only very few are currently taking advantage of the agile methods available. Only 19 percent of those surveyed use design thinking and only 11 percent apply scrum. (Studie der Boston Consulting Group (BCG), "Boosting Performance Through Organization Design" (2017))
The “HR Report 2018“ by Hays also deals with corporate culture and the behavior of employees: “Flexibility with regard to the adaptations of products, processes and, above all, employees with their competences are the decisive criteria for successful agile organizations.” According to the study, agile organizations are networked to a very high degree and the employees organize themselves. In addition, the working and project teams are in the position to make decisions autonomously to a certain degree. This requires a corporate culture based on trust – the trust of management in their employees and the employees amongst themselves. (Hays, „HR-REPORT 2018, Agile Organisation auf dem Prüfstand“ (2018))
Acceptance of agile project management methods varies
The authors of the HR Report were surprised by the relatively low percentage of approval (16%) for the introduction of agile organizations. This subject is only ranked eighth. A closer look at the empirical data shows, however, that the persons surveyed who work in companies where agile organizations are important or very important consider the subject to be more important.
Most managers focus nowadays on the automation of business processes and the optimization of existing processes. The securing of the core business is given a higher priority than dealing with new issues. Source: Hays Study “Between efficiency and agility “ (2018)
In the meantime, the majority of German companies (65 percent) consider projects that are performed agile more successful according to the results of a survey by Bitkom Research for staffing service provider Etengo. In the IT field, every second company (50%) has already switched to agile project management. Here, above all, the scrum agile project management method is applied. (Studie von Bitkom Research / Etengo, „Etengo-Freelancer-Index (EFX)“ (2018))
The Hays HR Report did not only examine IT projects and therefore came to different results. “But these new tools have not yet taken hold in the daily routine of many organizations. So it is no wonder that a good quarter of those surveyed (26%) do not consider design thinking and the methods of agile organization available to be important.“
Changes meet resistance
Forty-five percent of employees in Germany primarily want greater flexibility from the digital working place and see this as the essential advantage that digital working allows. However, 43 percent are not interested in the use of the digital tools that allow precisely this flexibility according to the results of a study by Civey for Cisco. (Cisco Studienbericht, „So digital ist Deutschland“ (2018))
According to a BearingPoint study, a majority of employees feel that they have not been sufficiently informed about their company’s digital strategy. The study reports that there is a (perceivable) information gap between management and employees without management responsibilities. (BearingPoint-Studie, „Lost in Digitalization, Die Kluft zwischen Plan und Umsetzung“ (2018))
In the final analysis, only 12 percent of the companies successfully conclude transformation processes, 20 percent fail as reported by Bain & Company in their study "Soul Searching: True Transformations Start Within". The success of change projects depends to 80 percent on the implementation and employees are the essential factor in this regard. (Studie von Bain & Company, "Soul Searching: True Transformations Start Within" (2018))
Source: Capgemini, Study IT-Trends 2018
Conclusion: Change can be successfully accomplished
The authors of the Bain & Company study name four criteria for successfully implementing transformation processes:
1. The company leaders must provide a clear image of the company’s future – but from the employees’ perspective. They should understand what they are investing the effort for. The employees’ commitment is paramount.
2. The staff have a lot of knowledge that has to be included in the transformation process. The employees should assume responsibility here and see themselves as actively involved. It is not enough to simply communicate the change.
3. Generally, companies require new skills in the course of change. The existing staff have to be trained in these skills. They should also understand why competence has to be brought in from the outside.
4. Because the success of the change depends to 80% on the implementation, leadership cannot be delegated. “Time-consuming work and clear decisions by the top management are unavoidable,” says the study. (Studie von Bain & Company, "Soul Searching: True Transformations Start Within" (2018))