McKinsey and Company Organization Practices. The impact of agility: How to shape your organization to compete.

Agility is on everyone’s lips—online searches for “agile transformation” yield around 100 million hits, and the stories of well-known pioneers circulate widely. But is this just hype, or are there real benefits to be gained? Is agility just noise from the IT department, or an opportunity that merits serious attention from the top team? And if pursuing agility yields benefits, what is the recipe for success? To find the answers, we conducted a McKinsey Global Survey that reached 2,190 respondents across industries and geographies. We wanted to go beyond the fluff, so we asked respondents what, if anything, their companies did in practice to advance agility, and what hard numbers they achieved regarding business impact. Their organizations fell into two broad groups: the first group consisted of organizations with no agile transformation efforts in process; the second group consisted of organizations on the move, pursuing, or having recently completed an agile transformation beyond a few individual teams (see sidebar “Organizations are on the move”). Two-thirds of those pursuing a transformation, however, said that their organizations were just treading water, taking no decisive action, and consequently achieving little or no business impact. Within this second group, we identified a select set of organizations (represented by 10 percent of the entire sample) that were driving highly successful agile transformations. They were embracing agility at scale to create and capture value instead of treating agile as team-level experiments in discrete departments. This means reimagining the entire organization as a network of high-performing teams, each going after clear, end-to-end businessoriented outcomes, and possessing all of the skills needed to deliver, such as a bank boosting the performance of customer journeys; a retailer analyzing turns and earns of product categories; a mining company reviewing productionand safety-process steps; an oil and gas company planning wells; a machinery player undertaking full product management, from R&D to go-to-market; or a teleoperator simplifying products. The teams are essentially interconnected mini businesses, obsessed with creating value rather than just delivering functional tasks. However, agility at scale goes beyond adding more agile teams and team-level practices. The broader operating model, the connective tissue between and across the teams, also needs to be transformed. The organizations driving highly successful agile transformations made sure to do that by building an effective, stable backbone. This means optimizing the full operating model across strategy, structures, processes, people, and technology by going after flat and fluid structures built around high-performing cross-functional teams, instituting more frequent prioritization and resource-allocation processes, building a culture that enables psychological safety, and decoupling technology stacks. Enterprise agility is thus a paradigm shift away from multilayered reporting structures, rigid annual budgeting, compliance-oriented culture, separation of business and technology, and other traits dominating organizations for the past hundred years. If this is true, and not just hype, a discontinuity of this magnitude should provide an opportunity for organizations to turn their operating models into a competitive advantage—as did early adopters of lean in the 1990s. While individual case studies and agile success stories have been plentiful, having quantifiable results and a larger sample allowed us to go beyond anecdotes for the first time.

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