Agility

🧑‍🔬 DI in Industry (DIiI)

Andy Weeger

Neu-Ulm University of Applied Sciences

February 13, 2024

Motivation

Agile organizations are both stable and dynamic at the same time. They design stable backbone elements that evolve slowly and support dynamic capabilities that can adapt quickly to new challenges and opportunities. McKinsey & Company

Introduction

Let’s discuss

What does agility in a general business context mean?

What is agile?

The term agility has been increasingly used in management literature since the late 20th century (Harraf et al. 2015).

Around the same time, agile approaches gained prominence in software development, leading to the publication of the agile manifesto in 2001 (Beck et al. 2001).

Over the past two decades, organizational theorists have focused extensively on how agile performance enable companies to successfully adapt to rapidly changing and unpredictably disruptive environments (see e.g., Adler, Goldoftas, and Levine 1999; Grewal and Tansuhaj 2001; Judge and Miller 1991; Smith and Lewis 2011).

Common themes

Several common themes in literature Harraf et al. (2015) have identified:

1. A specific set of organizational sense-response actions that are typical for organizations operating in an environment characterized by turbulence, unpredictability, and rapid change (i.e., VUCA environments).
2. Agile organizational sense-response actions can be specified using a bi-dimensional concept of magnitude of variety change¹ (flexibility) and rate of generating variety change² (speed).
3. Agility is a function of environmental conditions (the industry), exhibiting varying levels of market turbulence, competitive intensity, and customer need heterogeneity.
4. The likelihood of observing a positive effect of agility on performance (e.g., efficiency, innovativeness) is greater in fast-changing environments.

Towards a definition

Literature suggests that organizational agility can neither be reduced to a singular dimension nor is it appropriately calibrated in absolute terms.

In terms of the four key points outlined before, agility can be formally defined as follows:

Organizational agility is the ability of a firm to sense and respond to the environment by intentionally changing (1) magnitude of variety and/or (2) the rate at which it generates this variety relative to its competitors. (Harraf et al. 2015)

Visualization

Figure 1: A two-dimensional framework for conceptualizing organizational agility (Harraf et al. 2015)

According to Harraf et al. (2015) four classes of organizations with different competitive strengths and capacity regions for agility can be identified as innovators, disrupters, adapters, and indifferents.

Innovators identify their competitive strength in being able to identify new opportunities and strive for the ability to make movements that involve a greater degree of variety change, but at the expense of a lower or constant rate of change. They are able to respond to unfamiliar changes in the environment with great diversity.

Adapters their competitive advantage in generating a higher pace of variety change while maintaining a lower or constant level of variety change. They have a constant willingness to address change quickly, proactively or reactively.

Disrupters redefine market competition by developing capacity to overcome trade-offs by generating both higher magnitude and greater rate variety change. These organizations explore and exploit opportunities for innovation and competitive performance—they move the efficiency/flexibility tradeoff to simultaneously pursue both.

Indifferents do not engage in agile based competition in the industry and they do not anticipate the magnitude or rate of variety change to be important properties of their strategic responses.

Characteristics

Agile organizations explore and exploit opportunities for innovation and competitive performance by resolving the efficiency/flexibility tradeoff to simultaneously pursue both. Sambamurthy, Bharadwaj, and Grover (2003)

Ambidexterity and agility

In general, ambidexterity refers to the combination of both incremental, more efficiency-oriented innovation (i.e., exploitation) and radical, novelty-oriented innovation practices (i.e., exploration) (Clauss et al. 2021).

Operational ambidexterity “relates to a firm’s dual capacity to simultaneously pursue not only the implementation of disruptive ideas [… ] but also the enhancement of the firm’s current operational speed, reliability, and cost” (Lee et al. 2015, 401).

IT ambidexterity relates to “the ability of firms to simultaneously explore new IT resources and practices (IT exploration) as well as exploit their current IT resources and practices (IT exploitation)” (Lee et al. 2015, 398).

Lee et al. (2015) shows that IT ambidexterity enables operational ambidexterity, which enhances organizational agility.

Let’s discuss

How does IT impact organizational agility?

Agility through IT

IT competences and digital options

IT competence describes a company’s ability to gernate IT-related innovations by means of available IT resources and the ability to translate these resources into strategic digital options (Sambamurthy, Bharadwaj, and Grover 2003).

Digital options are a set of IT-enabled capabilities in the form of digitized enterprise work processes and knowledge systems (e.g., digital process capital³ and digital knowledge capital⁴) (Sambamurthy, Bharadwaj, and Grover 2003).

IT competences and digital options represent organizational capabilities that are developed over time through a series of linked strategic decisions about investments in IT.

These organizational capabilities enable organizational agility.

Types of agility

Types of agility supported by IT as identified by Sambamurthy, Bharadwaj, and Grover (2003):

• Customer: Ability to co-op customers in exploration and exploitation of innovation opportunities (source, co-creators, testers).
• Partnering: Ability to leverage assets, knowledge, and competencies of suppliers, distributors, contract manufactors and logistics providers in the exploration and exploitation of innovation opportunities.
• Operational: Ability to accomplish speed, accuracy, and cost economy in the exploitation of innovation opportunities.

Agile IT project management

The approach to IT project management defines how IT resources are developed, orchestrated, and, best case, translated into strategic digital options.

The foundation of methods to agile IT project management is the agile manifesto (Beck et al. 2001), which defines following key values and principles:

• Individuals and interactions over processes and tools
• Working software over comprehensive documentation
• Customer collaboration over contract negotiation
• Responding to change over following a plan

These key values and principles aim to enable organizations to better deal with rapid changes in customer demands, markets and technology by, e.g., decreasing lead-time, increasing change rate, and the degree of variety change.

Let’s discuss

How do agile methods like scrum implement the key values and principles?

Agile at scale

Introduction

Agile project management methods were originally designed for use in small, single-team projects (Boehm and Turner 2005).

Compared to small projects and teams, large projects and organizations require additional coordination (i.e., inter-team coordination)

In addition, adopting agile at scale often requires tradeoffs as interacting with organizational units that ar eoften non-agile in nature is required (e.g., HR) and/or a change of the entire organizational culture (Misra, Kumar, and Kumar 2010) .

Another key challenge is that management must move away from traditional hierarchical models (e.g., lifecycle-based) to autonomous, iterative models (e.g., feature-based), which requires a change of mindset.

Definition

Dikert, Paasivaara, and Lassenius (2016) define large-scale as software development organizations with 50 or more employees or at least six teams.

All people do not need to be developers, but must belong to the same organization and develop a common product or project, and thus have a need to collaborate.

This definition includes both software development companies and as the parts of larger (non-software) organizations that develop software (i.e., the application development unit within corporate IT).

Transformation challenges

Dikert, Paasivaara, and Lassenius (2016) identified challenges in nine cateogires for large-scale agile transformations

• Resistance to change (e.g., general resistance, management resistance)
• Lack of investment (e.g., lack of coaching, training, adapting physical spaces)
• Difficulties of implementation (e.g., lack of guidance, poor customization)
• Coordination challenges in multi-team environment (e.g., interfacing, autonomous team model, technical consistency)
• Different approaches (e.g., different interpretations, old and new side by side)
• Hierarchical management and organizational boundaries (e.g., silos kept, old-styled management)
• Requirements engineering challenges (e.g., gap between long and short-term planning)
• Quality assurance challenges (e.g., lack of automated testing)
• Integrating non-development functions (e.g., adjusting to incremental delivery pace)

Frameworks

To adress challenges to adopting agile methods in large, more traditional organizations, several agile scaling opportunities have been created (Dikert, Paasivaara, and Lassenius 2016; Uludağ et al. 2021, 2022).

Examples

Short name	Long name/topic	Publ. year	Cur. year	Stand. org.
LeSS	Large-Scale Scrum	2013	2015	The Less Co.
Nexus	Scaling Scrum	2015	2018	Scrum.org
SAFe	Scaled Agile Framework	2011	2020	Scal. Ag., Inc.
Spotify	Scaling agile	2014	2014	Spotify

Maturity

Figure 2: Transformation maturity model (Stettina et al. 2021)

Exercise

Scaled Agile Framework (SAFe) is popular with very large teams that require much more structure due to team size and complexity. SAFe is itself complex, but also effective. In SAFe, work is organized into three levels of Agile management: team, program and portfolio. All work moves along on what is known in SAFe as an Agile Release Train (ART).

Do some research on SAFe, try to understand the framework (start with the essionals) and explain how SAFe adresses the coordination challenges and the requirements engineering challenges.

Q&A

Literature

Adler, Paul S, Barbara Goldoftas, and David I Levine. 1999. “Flexibility Versus Efficiency? A Case Study of Model Changeovers in the Toyota Production System.” Organization Science 10 (1): 43–68.

Beck, Kent, Mike Beedle, Arie Van Bennekum, Alistair Cockburn, Ward Cunningham, Martin Fowler, James Grenning, et al. 2001. “The Agile Manifesto.”

Boehm, Barry, and Richard Turner. 2005. “Management Challenges to Implementing Agile Processes in Traditional Development Organizations.” IEEE Software 22 (5): 30–39.

Clauss, Thomas, Sascha Kraus, Friedrich Lukas Kallinger, Peter M Bican, Alexander Brem, and Norbert Kailer. 2021. “Organizational Ambidexterity and Competitive Advantage: The Role of Strategic Agility in the Exploration-Exploitation Paradox.” Journal of Innovation & Knowledge 6 (4): 203–13.

Dikert, Kim, Maria Paasivaara, and Casper Lassenius. 2016. “Challenges and Success Factors for Large-Scale Agile Transformations: A Systematic Literature Review.” Journal of Systems and Software 119: 87–108.

Grewal, Rajdeep, and Patriya Tansuhaj. 2001. “Building Organizational Capabilities for Managing Economic Crisis: The Role of Market Orientation and Strategic Flexibility.” Journal of Marketing 65 (2): 67–80.

Harraf, Abe, Isaac Wanasika, Kaylynn Tate, Kaitlyn Talbott, et al. 2015. “Organizational Agility.” Journal of Applied Business Research (JABR) 31 (2): 675–86.

Judge, William Q, and Alex Miller. 1991. “Antecedents and Outcomes of Decision Speed in Different Environmental Context.” Academy of Management Journal 34 (2): 449–63.

Lee, One-Ki, Vallabh Sambamurthy, Kai H Lim, and Kwok Kee Wei. 2015. “How Does IT Ambidexterity Impact Organizational Agility?” Information Systems Research 26 (2): 398–417.

Misra, Subhas Chandra, Vinod Kumar, and Uma Kumar. 2010. “Identifying Some Critical Changes Required in Adopting Agile Practices in Traditional Software Development Projects.” International Journal of Quality & Reliability Management.

Sambamurthy, Vallabh, Anandhi Bharadwaj, and Varun Grover. 2003. “Shaping Agility Through Digital Options: Reconceptualizing the Role of Information Technology in Contemporary Firms.” MIS Quarterly, 237–63.

Smith, Wendy K, and Marianne W Lewis. 2011. “Toward a Theory of Paradox: A Dynamic Equilibrium Model of Organizing.” Academy of Management Review 36 (2): 381–403.

Stettina, Christoph Johann, Victor van Els, Job Croonenberg, and Joost Visser. 2021. “The Impact of Agile Transformations on Organizational Performance: A Survey of Teams, Programs and Portfolios.” In International Conference on Agile Software Development, 86–102. Springer, Cham.

Uludağ, Ömer, Pascal Philipp, Abheeshta Putta, Maria Paasivaara, Casper Lassenius, and Florian Matthes. 2022. “Revealing the State of the Art of Large-Scale Agile Development Research: A Systematic Mapping Study.” Journal of Systems and Software, 111473.

Uludağ, Ömer, Abheeshta Putta, Maria Paasivaara, and Florian Matthes. 2021. “Evolution of the Agile Scaling Frameworks.” In International Conference on Agile Software Development, 123–39. Springer, Cham.

Footnotes

1. Magnitude of variety change includes the decision alternatives generated, different strategies deployed, new products and lines introduced, non-routine tasks added to the repertoire of routine tasks, and product variations offered.

2. Rate of variety change—defines the temporality of change and relates to the change in variety per unit of time.

3. Digital process capital is the IT-enabled inter- and intra-organizational workp rocesses for automating, informating, and integrating activities (e.g., customer akquisition, order fulfillment, supply chain, product innovation, and manufacturing flow) and creating a seamless flow of information (Sambamurthy, Bharadwaj, and Grover 2003, 247).

4. Digitized knowledge capital is the IT enabled repository of knowledge and the systems of interaction among organizational members to generate knowledge sharing of expertise and perspectives (Sambamurthy, Bharadwaj, and Grover 2003, 247).