Improving Organisational Agility

Image Courtesy: Raconteur.net – Edition #0343, 13 October 2015
ORGANISATIONAL AGILITY
A Study of Contemporary Theories, Methodologies and
Practices to improve Organisational Agility
Prepared by
Daniel Nortje, #140051040
In partial fulfilment of the:
Executive Master of Business Administration (MBA) Degree
Submitted for:
Business Mastery Project
Presented to:
Professor Aneesh Banerjee
Faculty of Management
Cass Business School
City University London
Date: 14 April 2019
Word Count: 15,231

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Table of Contents
1. Acknowledgements...........................................................................................................3
2. List of Abbreviations ..........................................................................................................5
3. Executive Summary...........................................................................................................6
4. Introduction.......................................................................................................................8
4.1 BACKGROUND........................................................................................................................................8
4.2 RESEARCH QUESTION AND AIM ..................................................................................................................9
4.3 RESEARCH OBJECTIVES ...........................................................................................................................9
4.4 INTENDED AUDIENCE..............................................................................................................................10
4.5 MOTIVATION FOR RESEARCH....................................................................................................................10
5. Methodology of Research................................................................................................12
5.1 INTRODUCTION .....................................................................................................................................12
5.2 GENERAL APPROACH.............................................................................................................................12
5.3 LITERATURE SELECTION..........................................................................................................................14
5.4 RESEARCH ..........................................................................................................................................14
5.5 CONCEPTUAL FRAMEWORK DEVELOPMENT AND RECOMMENDATIONS................................................................17
5.6 CAVEATS AND LIMITATIONS......................................................................................................................17
6. Literature Review.............................................................................................................19
6.1 INTRODUCTION .....................................................................................................................................19
6.2 THE ORIGINS OF ORGANISATIONAL AGILITY .................................................................................................19
6.3 DEFINING ORGANISATIONAL AGILITY ..........................................................................................................20
6.4 IMPROVING ORGANISATIONAL AGILITY ........................................................................................................26
7. Research.........................................................................................................................30
7.3 IMPROVING ORGANISATIONAL AGILITY ........................................................................................................38
8. Recommendations. .........................................................................................................46
8.1 INTRODUCTION .....................................................................................................................................46
8.2 CONTEXT – KEY DRIVERS FOR ORGANISATIONAL AGILITY................................................................................46
8.4 RECOMMENDATIONS TO IMPROVE ORGANISATIONAL AGILITY ...........................................................................56
9. Conclusions and Next Steps............................................................................................62
10. Bibliography ....................................................................................................................64
List of Appendices
11. Appendix 1: Details Of Methodology Of Research.............................................................67
11.1 LITERATURE SELECTED DURING LITERATURE REVIEW STAGE ...........................................................................67
11.2 CASE STUDIES USED DURING RESEARCH STAGE .........................................................................................73
11.3 INTERVIEWED EXPERTS AND DATES USED DURING RESEARCH STAGE ...............................................................73
12. Appendix 2: Details Of Literature Review..........................................................................77
12.1 WHAT IS ORGANISATIONAL AGILITY: ANALYSIS OF THEORETICAL CONCEPTS FROM LITERATURE..............................77

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12.2 THEORY BASED CONCEPTUAL FRAMEWORK: LINKING CONCEPTS.....................................................................79
13. Appendix 3: Details Of Research Stage............................................................................81
13.1 CASE STUDY SUMMARIES .......................................................................................................................81
13.2 DATA ANALYSIS OF CASE STUDIES AND INTERVIEWS AGAINST PROVISIONAL CODES.............................................87
13.3 KEY EXTRACTS FROM CONCEPTUALLY CLUSTERED ANALYSIS OF RESEARCH .....................................................88
List of Tables and Figures
List of Tables
Table 1: Definitions of Organisational Agility...........................................................................................21
List of Figures
Figure 1: Average Company Lifespan on the S&P 500 Index....................................................................8
Figure 2: Primary and Related Research Questions ...............................................................................12
Figure 3: The Research Process...........................................................................................................13
Figure 4: Qualitative Data Analysis approach, as derived from Miles, et al. (2014)....................................15
Figure 5: What is organisational agility – Author’s mindmap of key literature extracts...............................21
Figure 6: Simplified schema of Dynamic Capabilities..............................................................................24
Figure 7: A Conceptual framework for defining organisational agility, as derived from a review of the
literature – Author’s estimation .............................................................................................................26
Figure 8: A Cognitive map of the relationship between global trends, business environments and
organisations – Author’s estimation ......................................................................................................31
Figure 9: A Conceptual framing of “Types” of Agility – Author’s estimation..............................................32
Figure 10: Cynefin Framework..............................................................................................................34
Figure 11: A Cognitive Map of the relationships between an organisation’s Leadership, Operating Model
and Resource choices – Author’s estimation.........................................................................................36
Figure 12: DBS’s use of analytics to affect customer behaviour at a granular level...................................37
Figure 13: Percentage of respondents reporting organisation-wide agile transformations ........................46
Figure 14: High-level framework for improving organisational agility........................................................47
Figure 15: High-level framework for improving organisational agility – External Factors ............................48
Figure 16: High-level framework for improving organisational agility – Internal Factors & Dimension #2.....50
Figure 17: Conceptual Framework of Internal Organisational Factors impacting organisational agility .......50
Figure 18: Internal Capacity matrix – used to measure Dimension #2 .....................................................52
Figure 19: High-level framework for improving organisational agility – Strategic Rationale for Agility &
Dimension #2 ......................................................................................................................................53
Figure 20: Agility Investment Matrix - used to measure Dimension #1.....................................................54
Figure A3-1: Visual Report of provisional code coverage against case studies and interview transcripts...88

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1. Acknowledgements
This report is the conclusion of an intense, sometimes arduous, but definitely fulfilling journey for
me. Completing this paper would not have been possible without the support and assistance of
a number of individuals. This is my modest attempt to recognise and acknowledge them.
Firstly I’d like to thank the staff and academia of Cass Business School and specifically my
project supervisor, Dr. Aneesh Banerjee, for his guidance, patience and flexibility in providing me
with insights and invaluable advice throughout this project.
Secondly the various experts who participated in the research interviews and provided me
access to their substantial experience and time, free of charge. Notably this includes Sangeeta,
Jon, Owen, Erik, Jason, Sumit, Narinder and Paul. Thank you very much!
Thirdly to my fellow cohort members and notably Ricardo G., Radhika and Bhanu who shared
their perspectives on similar obstacles and challenges they faced with their BMPs. I wish them
the best of luck in their future endeavours.
Finally and I am forever indebted to my wife, Jana, without whose encouragement, patience and
support my MBA journey would not have been possible.

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2. List of Abbreviations
AI Artificial Intelligence
CEO Chief Executive Officers
FMCG Fast Moving Consumer Goods
IT Information Technology
IoT Internet of Things
MBA Master of Business Administration
S&P500 Standard & Poor's 500
WEF World Economic Forum

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3. Executive Summary
The global competitive landscape will change more in the next decade than they have in the past
40 years. While successful companies historically dominated by exploiting economies of scale
and the importance of professional managers, remaining competitive in the future will increasingly
require organisations to adapt quickly to rapidly changing environmental conditions, or risk
obsolescence (Bain & Co., 2017).
Adapting to turbulent and uncertain markets is not easy, and organisations increasingly require
the ability to quickly reconfigure strategy, structures, processes and technology in response to
disruptive opportunities and threats (McKinsey & Co., 2017). This ability is called Organisational
Agility.
While there is a considerable body of literature describing why organisational agility is essential,
defining how organisations practically improve organisation-wide agility is frequently limited to the
perspectives of management consultancies, or the specific improvements available from a limited
number of case studies.
This report explores how organisations can improve organisational agility by examining academic
and practitioner literature. This is compared, contrasted and enriched with real-world cases and
the insights from experienced practitioners (n=8), who have and are actively advising
organisations on improving agility.
The research found that improving organisation-wide agility should be considered holistically and
needs to be addressed beyond just improving as structural elements, such as dynamic
capabilities.
The research propose that organisational agility be considered across the following two
dimensions which determine the scope and scale of improvements required:
• Dimension # 1: The required rate of Internal Organisational Change, in relation to the rate
of External Business Environment Change; and
• Dimension # 2: The relevant and critical structural and cultural factors enabling or
constraining agility for the organisation. This includes the organisation’s strategy,
business operating model and underlying resources.
These dimensions provides a blueprint for organisation and where the following key improvement
recommendations proposed:

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1. Start with “Why”
Understanding why agility provides the justification for the expected value of improving
agility, the purpose of structural changes and motivation critical for cultural change.
2. Deploy a light(er)weight, digitally enabled business operating model
Improving organisation-wide agility requires removing complexity from the business
operating model. This can be achieved by empowering frontline teams; moving towards a
cross-functional ways-of-working; and adopting more digitally enabled data-driven
decision-making.
3. Considering agility improvements holistically
Regardless of the scope and scale of improvement needed. The elements which enable
organisation-wide agility have structural and cultural interdependence, and thus
improvements need to consider the congruency improvements made to ensure
alignment and fit.
4. Make improvements gradually
Invariably improving organisational agility requires a more gradual approach, as it
ultimately requires changing culture and behaviour. For older, larger and more complex
organisations this will take time and could initially lead to lower team productivity and
performance.
The report concludes that any improvements in organisational should start by considering that
organisations ultimately consist of people, where agility is driven by motivation and behaviour.
Finally it is important to consider that the framework and recommendations proposed in this
study are an initial starting point, based on the time and resource constraints of this research
project, and none of the deliverables produced have validated in practice. As next steps it is
proposed that the framework, models, matrices and recommendations provided be validated
and refined through practical use.

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4. Introduction
4.1 Background
According to the World Economic Forum (2018), competitive landscapes will change more in the
next decade than they have in the past 40 years. Successful companies historically dominated
by exploiting economies of scale and the importance of professional managers, but globally
socio-economic trends are driving changing (Bain & Co., 2017). Research from management
consultancies such as Bain and Co (2017) believe this is because:
• Industries becoming winner-take-all, where the study found that one or two players earn
(on average) 80% of all economic profit;
• Access to capital is becoming superabundant, making talent and ideas more critical
determinants for growth;
• Management is increasingly pursuing shorter-term value, driving by and shorter
investment horizons and pressure from activist investors; and
• Speed is becoming the most critical characteristic for remaining competitive in a more
service-orientated, digital economy.
Similarly, a study by Innosight (Anthony, et al., 2018) shows the average longevity of companies
to continue to slope downward and is accelerating due to the turbulence caused by disruptive
trends. As illustrated in Figure 1, Innosight expects the average lifespan of companies are
decreasing,
shrinking to just 12
years by 2027 and
50% of companies
in the Standards
and Poor’s 500
index (S&P, 2018)
are expected to go
bankrupt, be
acquired or cease
to exist in the next
ten years.
Figure 1: Average Company Lifespan on the S&P 500 Index. Source: Innosight (Anthony, et al., 2018)

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To remain competitive companies will have to become better at adapting new environmental
conditions, or risk obsolescence. Adapting, or even improving, is not easy. While many
established organisations have started developing new and disruptive business models, these on
average lag digital disruptors by nearly 25% in expected future growth (Accenture Strategy,
2017).
An increasing number of industries and markets are becoming subject to rapid and ongoing
changes in customer demands, competitive threats, technological innovations and regulatory
complexity.
Going forward the need for organisations to respond and adapt quickly will become increasingly
important. This ability to quickly reconfigure strategy, structures, processes and technology
(McKinsey, 2017), as a response to opportunities and threats, is called Organisational Agility.
4.2 Research Question and Aim
There seems to be increasing evidence that organisation-wide agility increases the long-term
performance of businesses. Recent research by Accenture (2018) claims that agile Financial
Services businesses are twice as likely to achieve top-quartile financial performance, and show
better long-term performance than peers.
While there is a considerable body of literature describing why organisational agility is essential,
defining how organisations practically improve organisation-wide agility is frequently limited to the
perspectives of management consultancies, or the specific improvements available from a limited
number of case studies. This gap forms the fundamental question explored in this study, and
which this business mastery project aims to address:
4.3 Research Objectives
The objective of this research is to produce the following deliverables as a set of
recommendations for practitioners and business leaders:
1. A Definition of organisational agility, which includes describing the reason for agility, and
providing a conceptual framework of the elements to consider when improving agility;
and
How can enterprises improve organisation-wide agility?

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2. A set of Recommendations to consider when improving organisation-wide agility, which
includes a consolidation of recommended approaches, important caveats and challenges
to consider.
4.4 Intended Audience
The primary audience for this research will be practitioners who typically engage with and advise
large organisations on improving agility.
This research aims to consolidate key themes from existing of literature, as well as expanding
and providing nuance through the experience and expertise found in the research. Ultimately the
aim is to enrich the broader body of knowledge around this topic, within the practitioner
community and for senior leaders within organisations. The deliverables created through this
research should be of value to the following potential consumers:
• Practitioners, such as myself, who work with established organisations to increase
organisational agility, as part of transformational programmes;
• Senior Managers, wanting to enhance their understanding of organisational agility and
implement recommended practices.
4.5 Motivation for Research
Over the last 20 years I have had the privilege to work across a broad range of organisations,
advising them on how to address some of the key challenges they face in an increasingly global
and digital world. While many succeeded a number also struggled.
It seemed that while most of these organisations had clear strategies, made significant
investments in new, innovative technologies and committed to large transformation programmes,
these efforts quite often only yielded only negligible impact. It is this search - to understand how
to better help my customers adapt to increasing global change - which lead to the pursuit of my
MBA.
Simultaneously I was also fortune enough to be assigned to a ground breaking project, with an
organisation transforming itself to increase its organisational agility. Here I had the privilege to
work with very experienced practitioners, who were willing to share their experience, insights and
views with me.

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Through educating myself about organisational agility it became clear that academic literature
and practitioners often seemed to have very divergent views, and finding a practical definition for,
and general practices to improve organisational agility proved a significant challenge.
This prompted and provided my motivation to undertake this research: to create a consolidated
overview of contemporary academic theory and practitioner experience and knowledge of
organisational agility.
While I don’t believe this will be sufficiently exhaustive to create a generalisable theory I do
believe it will help me be a more effective advisor for my customer. I also hope that other
practitioners, whom I will share this work with, can derive insights and continue to evolve the
body of knowledge and findings of the research.

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5. Methodology of Research
5.1 Introduction
This chapter describes the methodology used to analyse and synthesise the theory and data
collected in this research. It details the research approach and how data gathering was
conceived, designed and implemented, including consideration of risks and complexities. Any
limitations and ethical considerations affecting later analysis are identified and addressed.
5.2 General Approach
This research aims to develop a richer understanding of the context in which organisational agility
can exist within the business environment, and how this can be improved. This requirement is
well suited towards qualitative data analysis which to develop a richer perspective, thus allowing
the researcher to make sense of subjective, socially constructed meanings about the
phenomena studied (Lewis, et al., 2016).
The orientation for this qualitative research follows what Miles, Huberman and Saldana (2014)
“pragmatic realism”, which asserts that social phenomena exist not just in mind but also in the
real world. This “Miles and Huberman” way of analysing qualitative data approach contends ‘any
method that will produce clear, verifiable, and credible meanings from a set of qualitative data—
has utility, regardless of its origins’ (Miles, et al., 2014).
The primary research question is to explore how organisations can increase agility. To inform this
research the research design is structured into answering two related research questions, with
associated sub-questions, illustrated in figure 2.
Figure 2: Primary and Related Research Questions

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The first sub-question, “1. What is organisational agility?”, facilitates the analysis and
development of the “Conceptual Framework to practically evaluate organisational agility”
research objective, while the second sub-question, “2. How can organisations improve the
organisational agility”, facilitates the analysis and development of the “Recommended Practices
to Increase Organisation-wide agility” research objective.
This question structure was used to guide the structure of the research body of knowledge,
including the initial literature review and subsequent data consolidation and synthesis. Figure 3
below outlines the research process, where the body of knowledge evolves across four stages.
Figure 3: The Research Process
The research body of knowledge will evolve by:
• Utilising academic and contemporary practitioner literature review to provide an
exploratory base for the research during the stage 1;
• Expanding on this theoretical basis through the gathering analysis of relevant case-
studies, as well as the personal perspectives from expert practitioners, providing richness
and nuance in stage 2;
• Synthesising key insights derived in stage 3 to provide a conceptual framework for and
proposing recommendations to define and improving organisational agility; and
• Summarise conclusions and suggest next steps for the research topic in Stage 4.
The key considerations for approaches and methods used in the stages are discussed below.

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5.3 Literature Selection
The primary aim of the literature review stage in the research process was to provide a
theoretical basis and develop an initial conceptual framework against which the primary
researched data can be compared, contrasted and enriched with, to drive new insights and
facilitate theory development.
The literature selected of comprised of published academic papers, as well as research papers
from leading practitioners providing consultancy services to organisations in the research topic to
ensure a balance of theoretical and practical insights, increasing the robustness of the theoretical
basis.
Choices of academic literature focussed on contemporary research papers and journals,
describing theories based on academic research. Options for practitioner literature centered on
management consultancies who provide services and publish research within the realm of the
research topic, including McKinsey & Co., Accenture and Bain & Company.
The research criteria used to relevant academic and practitioner literature comprised of:
• Recency - To ensure recency this research will focus on contemporary research
published prior to the year 2000, and priority given to those most cited and referenced.
Choices for practitioner literature focus on the published, publicly available viewpoints of
management consultancies on the research topic.
• Completeness - To ensure integrity the review of relevant literature this research
narrowed the search terms used to this strictly synonymous with “Organisational Agility”,
including “organisational agility”, “Business Agility”, “Agile Enterprises”, “Agile
Organizations” and “Agile Business”.
Detail of the literature selected is provided in Appendix 1, section 11.1.
5.4 Research
The primary aim of stage 3, the research (fieldwork) stage, is to gather and analyse data to
develop contextual and nuanced insights on how organisations have and are trying to increase
organisational agility. This approach provides the ability to research organisations in their natural
settings, to give a “real life” perspective of the research topic (Miles, et al., 2014) and to enrich
the theoretical basis of literature reviewed.

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The qualitative data gathered during Stage 2 will be collected from relevant case studies and
through semi-structured interviews with subject-matter experts. This allows the research to
explore the contexts and experiences from specific situations where organisations undertook
initiatives to increase organisation-wide agility.
Research is
performed iteratively
to allow the gradual
development of a
conceptual
framework (in Stage
3). This approach,
based the work of
Miles, et al. (2014)
proposes as a set of
concurrent activities
post data collection
as illustrated in
figure 4.
Figure 4: Qualitative Data Analysis approach, as derived from Miles, et al. (2014)
An iterative approach allows the qualitative data to be used to draw insights and validate
usefulness and applicability of the initial conceptual framework in practice, and identify areas for
further improvement and refinement.
5.4.1 Data Collection
Relevant case studies and interviews with expert practitioners provide the data for the qualitative
research. According to Miles et al. (2014) qualitative research usually works with smaller samples
which tend to be purposive, rather than random, to provide context and depth rather than
statistical significance.
The choices of cases and participants are used to provide comparisons and to develop an
understanding of key relationships within each participant’s setting, thus revealing the key facets
to be explored and studied. The sample size for the primary research considered the practical
time limitations of this research and the access to relevant case studies and expert practitioners.

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The selection of data followed a comparable case selection approach, where identified case
studies and targeted interviewees were selected based on relevance, expertise and experience.
A multiple-case sampling approach (Miles, et al., 2014) was used to increase confidence in the
findings. The multiple-case sampling approach compare each case and interview to against the
key concepts derived from the literature reviewed, as well and each other, providing the ability to
compare and contrast observations and increasing the robustness of findings.
Due to the increased complexity of this approach Miles recommends a sample size of no more
than twenty cases, as the research can become unwieldy. Accordingly, this report selected:
• Four case studies, detailing organisations who are and have undergone organisational
agility improvement initiatives. These include PayPal, ING Bank, DBS Bank and Bosch
Electronics; and
• Interviews with eight candidates who have experience in working with large organisations
who have undergone or are undergoing agility improvement initiatives. (details of the
participant are provided in Appendix 1, section 11.2). Notable participants including the
global organisation-wide agility lead for a global Financial Service organisation; and an
expert who was involved in the organisational agility transformation at a leading global
electronic payments platform provider.
The research questions provide the framework used to explore each case and allowed
consistent assessment while reducing limitations placed on the insights gathered and answers
provided. Similarly, these provided the basis for the semi-structured interview questions,
provided in Appendix 1, section 11.4.
5.4.2 Data Analysis
Data analysis was performed on the collected data to 1) identify common patterns across the
different interviews, and 2) compare and contrast these with the theoretical framework developed
in the literature review. Ultimately the goal of data analysis is to enrich the theoretical basis for
this study and provide the basis for the stable conceptual model proposed in Stage 3 of the
research process.
Data analysis consists of the interwoven activities of data condensation, data display, and
conclusion drawing/verification (illustrated in figure 4). Miles (2014) propose that the analysis
activities form an interactive, cyclical process where data is collected and then condensed to
allow conclusions to be drawn and verified throughout the research process.

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A case-oriented approach to analysis is followed, exploring the case studies and interviews both
individually and collectively. Each data item is initially reviewed qualitatively, before further
comparison across the other data sets, to develop richer concept and themes, as well as identify
common patterns.
Initial analysis will use deductive coding, where a set of provisional codes which are derived from
the reviewed literature (Miles, et al., 2014), to explore the raw case and interview research data.
This initial analysis is then condensed utilising various matrixes, including Partially Ordered and
Conceptually Clustered Matrices (see Appendix 1) to select, simplify and abstract the initial
findings. This allows the further identification and enrichment of concepts, themes and patterns,
both descriptively and conceptually, providing nuance and context to the body of knowledge and
facilitates the development of the conceptual framework and recommendations.
5.5 Conceptual Framework Development and Recommendations
The aim of stage 3 is to finalise the conceptual framework and the associated set of
recommendations, as to generate meaning from research performed in Stage 2.
Miles et al (2014) argue that a conceptual framework explains the main elements of the study,
including the key factors, variables, or constructs and the presumed interrelationships among
them. Building theory relies on identifying general constructs from the data collected to define,
describe and developing clarity about the interrelationships between these constructs.
The methods used during the data analysis stage provides the foundation from which the
conceptual framework and model is developed by 1) identifying the key concepts derived from
the theoretical framework and themes and patterns inferred in the data analysis stage; and 2)
determining and explaining the interrelationships between these concepts.
Finally, triangulation is used to corroborate and evaluate the major findings of the study. This also
helps identify areas for further research, proposed in Stage 4 of this research process.
5.6 Caveats and Limitations
A study of all theory and practitioner literature related to organisational agility would be
impossible to accomplish during the eight months of available time. Subsequently a number of
delimitations were set on the scope and scale of the research.
In general it is important to consider that the framework and recommendations proposed in this
study are an initial starting point to provide practical recommendations for improving

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organisational agility. There are deliverables produced is this study which will not been validated
in practice and thus the framework and recommendations should be used as a guide in
improving agility, and will need to evolve through application in practice.
Specific caveats and limitations are listed below. Any ethical considerations were applied in
alignment and consideration with those as stipulated by Cass Business School and are included
in the additional information resources provided, as part of this submission.
5.6.1 Caveats
• The selected case studies and interviewees for our research does not represent the total
population of businesses affected or participants involved in the research topic. By
delimiting this empirical study to only include the sources, the insights derived in this
study might not be relevant outside of my employer’s advisory practice. This limitation is
however understood and does not impede the aim of the research, in providing a basis
on which the developing body of knowledge around organisational agility can expand.
5.6.2 Limitations
• The research will refer to and use concepts from related research topics, including
Dynamic Capabilities, Strategy, Absorptive Capacity and Organisational Behaviour.
Aspects relevant to the research will be defined and expanded on, however these
subjects will not be defined or discussed comprehensively;
• Using a case-orientated approach to data analysis provides a suitable approach to find
patterns across a small number of cases, however Miles (2014) contend that remain
particularistic and is not well suited to generalisability. As the sample of case studies and
interview participants were predominantly based on experience and expertise gained
from working with and in US or European organisations, this limits the generalisability of
inferences drawn. Thus, the usefulness of the framework and recommendations should
not be considered as a broad, generalisable theory.
• Six from the eight participants work in the same company in consulting type roles
currently. This increases the risk that many of the participants would be influenced by
organisational bias and use specific descriptions which can lead to the description of
virtually identical attributes and features in explaining the definition, drivers and
mechanisms for improving organisational agility.

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6. Literature Review
6.1 Introduction
This chapter provides a review of relevant literature related to the topic and includes both
academic and practitioner theory. This provides a general context to describe the origins of
organisational agility and to explore the research questions posed.
6.2 The Origins of Organisational Agility
6.2.1 Early roots - Agile Manufacturing
Mathiassen and Pries-Heje (2006) identify agile manufacturing as the most likely origin for
organisational agility. They explain that agility in business strategy gained prominence after the
Lehigh study, published in 1991 by the Iacocca Institute. This report, funded by the US
Government and involving several industry leaders, argued for the adoption of “Agile
Manufacturing” (AM) in order for US organisations to compete in an increasingly competitive
global market (Nagel & Dove, 1991). This early research concentrated particularly on the
manufacturing sector and what firms could do to enhance their agility.
6.2.2 Pre-2000s – Agile Software Development
In the 1990s organisational agility started attracting attention from multiple academic disciplines
(Felipe, et al., 2016), with the most prominent discussing the role of agility in the context of
Information Systems Capabilities (ISC). At the same time the adoption of agility became a central
theme in software production methodologies, gaining notoriety with the release of the Agile
Manifesto (2001), which was created by a group of leading software development experts, to
evolve software development towards more agile ways of working. This arguably lay the
foundation for a significant stream of modern digital innovation approaches.
6.2.3 Post-2000s – Research into agility as an organisational phenomena
After the year 2000, the emphasis of agility shifted towards greater process orientation, which led
to an examination of agility from an organisational perspective Wendler (2013). While many
attempts have been made to define agility in the organisation, most definitions focused on
separate functional areas of the businesses. Žitkiene & Deksnys (2018) notes that agility, as an
organisation phenomena, has only recently gained interest from researchers, while Teece, et al.

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(2016) and Overby, et al. (2006) additionally argue that the research area has matured due to the
evolution or other theories relevant to organisation success, including dynamic capabilities,
market orientation, absorptive capacity, strategic flexibility and leanness.
6.2.4 Today
Organisational agility today is a complex topic, with different researchers, academics and
practitioners approaching the topic from different perspectives. The remainder of this chapter
explores these theories across the main research questions posed.
6.3 Defining Organisational Agility
This section explores how organisational agility is defined within contemporary academic and
practitioner literature and addresses the first research sub-question, “What is organisational
agility?”.
6.3.1 Definitions of Organisational Agility
According to the Oxford dictionary the definition of agility is ‘the ability to move quickly and easily’
and ‘the ability to think and understand quickly’. Applying this general definition to an
organisation context is inherently more complicated, with table 1 below providing a summary of
selected definitions provided by various researchers and practitioners.
Literature Definition of organisational agility
Žitkiene & Deksnys
(2018)
‘An organizational ability to recognize unexpected changes in the
environment and appropriately respond in a swift and efficient manner,
by utilizing and reconfiguring internal resources, thus gaining
competitive advantage in the process.’
Appelbaum, Calla,
Desautels and Hasan
(2017)
‘A complex, multidimensional, and context-specific concept,
comprised of the ability to sense environmental change and quickly
respond to unpredicted change by flexibly assembling resources,
processes, knowledge, and capabilities’
Teece, Petera, Leih
(2016)
‘The capacity of an organization to efficiently and effectively
redeploy/redirect its resources to value creating and value protecting
(and capturing) higher-yield activities as internal and external
circumstances warrant’
Tallon & Pinsonneault
(2011)
‘The ability to detect and respond to opportunities and threats with
ease, speed, and dexterity’

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Lu & Ramamurthy
(2011)
‘A firm's ability to cope with rapid, relentless, and uncertain changes
and thrive in a competitive environment of continually and
unpredictably changing opportunities’
Mathiassen & Pries-
Heje (2006)
‘A solution for maintaining competitive advantage during times of
uncertainty and turbulence in the business environment’
Overby, Bharadwaj and
Sambamurthy (2006)
‘The ability of firms to sense environmental change and respond
readily’
Rigby, et al., (2018) ‘A fast-moving, adaptive organisation’
McKinsey & Co. from
Agile Organisations
series (2015)
‘A new emergent organization … (which) leverages both established
and novel principles of how to organize work, deploy resources, make
decisions, and manage performance with the goal of quickly adapting
to rapidly changing conditions’
Accenture (2017) ‘Ability for organisations to quickly respond and adapt to their
business environment and thus deliver greater value in every area of
the business’
Table 1: Definitions of Organisational Agility
Figure 5 illustrates a deeper analysis (Appendix 2, section 12.1) of the theories and concepts
underpinning these definitions, as well as the remaining literature reviewed.
Figure 5: What is organisational agility – Author’s mindmap of key literature extracts
The key themes and concepts from this mind map are discussed below.

22
6.3.2 Elements of Organisational Agility
6.3.2.1 The drivers of increasing organisational agility
Increasing organisational agility has become a key determinant for organisations to survive and
succeed in increasingly hypercompetitive markets, as driven by increasing unpredictability and
higher rates of innovation.
As the world economy becomes more advanced and integrated, businesses are becoming more
heterogeneous with different assets, regulatory frameworks and ways to create, combine and
recombine different technology elements. This in turn is increasing the rate and range of potential
threats and opportunities (Teece, et al., 2016). This higher rate of disruptive change in business
environments is a common driver identified by Baškarada and Koronios (2018) and McKinsey
(2017) for the increasing organisational agility.
Baškarada and Koronios (2018) found that 90% of companies surveyed define the importance of
agility as the ability to anticipate, adapt to and react decisively to opportunities and threats in the
environment. McKinsey (2017) in their survey identified that business models are changing due to
changes on stakeholder demand patterns; increasing pressure from customers, partners and
regulators; changes in competitive and collaborative behaviour; and the constant introduction of
new disruptive technology.
These disruptive changes are also changing the nature of competition, and which is driving the
need for greater agility within firms to survive. Appelbaum et al. (2017), Accenture (2018) and
Felipe et al. (2016) believe that increased agility is needed in increasingly hypercompetitive
markets, where speed is affecting the ability for firms to remain competitive.
Appelbaum et al. (2017) argue organisations have to shift from scale-and-control based business
models, to ones which value entrepreneurship. Successful competitive differentiation will be
based on the ability to manage, assemble and reassemble a complex network of resources and
relationships, as to rapidly take advantage of short-lived opportunities. Thus those organisations
that can efficiently and effectively innovate and adapt will perform better in the long run.
6.3.2.2 The different types of organisational agility
While there is reasonable consensus to the drivers for organisational agility clarity on what types
of agility is less clear in the literature. From the literature two relative dimensions were derived,
based on an organisation’s strategic culture:

23
1. How reactive, proactive or innovative the organisation is, based on research by Najrani
(2016); and
2. The internal or external impact of improvements in organisational agility, based on
research by Lu and Ramamurthy (2011).
Najrani contends that organisations can follow three possible strategies to achieve agility:
reactive, proactive and innovative agility. Reactive agility only responds once changes in the
market are recognised, thus leaving the organisation with the choice to react defensively to
mitigate potential future losses. Proactive agility identifies new trends, which allows the
organisation sufficient time to implement new strategies to exploit opportunities or mitigate
threats before the market does. Innovative agility emphasises the development of new products
and markets, thus facilitating a disruptive innovation-based strategy, as popularised by Clayton
Christensen (2003).
Lu and Ramamurthy (2011) identifies two forms of organisational agility, 1) market capitalising
and 2) operational adjustment agility. Market capitalisation agility emphasises intellectual
capabilities, used to find strategic threats and opportunities, and is primarily aimed at
continuously monitoring and quickly improving market facing offers, to address customer needs.
Operational adjustment agility emphasises more routine adapting of internal operational abilities,
for example business processes, in response to market or demand changes.
While both types have merit, the seem to address different dimensions of scope and scale for
organisations.
6.3.2.3 The need for dynamic capabilities
The majority of the literature reviewed, both academic and practitioner, seem to suggest that
organisational agility requires the addition of dynamic capabilities.
The theory of dynamic capabilities was developed by David Teece (2007) and emphasises the
need for capabilities to allow organisations to craft, implement, refine and transform their
business models in response to increased uncertainty and dynamism in their business
environment. Dynamic capabilities consist of the higher-order capabilities (as conceptually
illustrated in figure 6 below), and “microfoundations” The high-order dynamic capabilities include:
• Sensing capabilities, including the ability to identify, develop, co-develop, and assess
technological opportunities and threats, in relationship to customer needs, thus “sensing”
of unknown futures;

24
• Seizing capabilities, including the ability to mobilize resources to address needs and
opportunities and capture value from doing so, thus “seizing” opportunities; and
• Transforming capabilities, including the ability to revolutionise continuously or “shift” the
firm.
Figure 6: Simplified schema of Dynamic Capabilities- Source: Business models and dynamic capabilities (Teece, 2018)
Overby, Bharadwaj and Sambamurthy (2006) link the need for dynamic capabilities in increasing
organisational agility, where these capabilities allow organisations to anticipate and sense
opportunities and threats posed by environmental changes and then quickly, effectively and
efficiently seize and implement changes in their business models.
There are also some notable differences among the literature on the functions and permanence
of dynamic capabilities. Whereas Overby, et al. (2006) argue that organisations will almost
permanently require agile Dynamic Capabilities, both Teece, Petera, Leih (2016) and McKinsey
(McKinsey & Co, 2015) seem to recommend for a more situational application of dynamic
capabilities. Teece states that organisations are seldom in a constant state of transformation and
that maintaining dynamic capabilities would be cost prohibitive to maintain. Similarly McKinsey
recommends that dynamic capabilities be added, modified and deleted as needed, to allow
organisations to quickly and effectively respond to new challenges and opportunities.

25
6.3.2.4 A need for supporting Enabling Capabilities
Žitkiene and Deksnys (2018) and McKinsey (2017) also discuss the role of enabling or stable
capabilities. Žitkiene and Deksnys define enabling capabilities as those structural components
within an organisation, such as technology or organizational structures, which enables business
activities to be performed. Žitkiene and Deksnys (2018) argue that enabling capabilities can
enhance and compensate for dynamic capabilities.
This seems to correspond with the prominent role of Data and Information Technology (IT) in
improving agility, where authors including Lu and Ramamurthy (2011) and Overby, et al. (2006)
argue that the strategic investment in flexible IT investments increases overall organisational
agility.
This relationship between enabling capabilities and dynamic capabilities is also explored by
Accenture (2017) where the need for data-driven analytics (as an IT enabler) to enhancing better
decision-making (as part of the Sensing capability) is emphasised.
More recent literature also seems to emphasise a more holistic view of enabling capabilities,
beyond that of just Information Technology. Appelbaum, et al. (2017) found that a variety of
organisational elements have a direct impact on organisational agility, including strategy,
structure, employees and leadership. This view is supported by McKinsey (2015), who stresses
the importance of stable structures, decision-making governance and standard core business
process, to enable an agile organisation to be resilient, reliable and efficient, while also being
dynamic and adaptive.
6.3.2.5 Agility impacts the capacity for change
Felipe, et al. (2016) expands on the role of IT, arguing that an organisations ability to absorb
change, as a measure of Absorptive Capacity (AC), depends on its ability to mobilise strategic IT
investments in combination or jointly with other resources and capabilities. Here van Oosterhout,
Waarts and van Hillegersberg (2006) additionally makes the distinction between operational and
structural flexibility, historically a key determinant for organisations dealing with change, and
argue that agility enables strategic flexibility. This strategic flexibility enables organisations to act
quickly, both strategically and operationally.
There are some notable differences between different definitions with regards to the scope of
what changes affect organisational agility within a firm range from not being specific Accenture
(2017) and Overby et al. (2006), to focussing on firm resources Žitkiene et al. (2018), Teece et al.

26
(2016) and Najrani et al. (2016), to further include how the firm is structured and operates
Appelbaum et al. (2017), to further include the firm’s strategy McKinsey (2017).
An initial conceptual framework, illustrated in figure 7, summarises the core concepts which
define organisational agility. Please see Appendix 2, section 12.2 for more details.
Figure 7: A Conceptual framework for defining organisational agility, as derived from a review of the literature – Author’s estimation
6.4 Improving Organisational Agility
This section explores how organisational agility can be improved, defined within contemporary
academic and practitioner literature, and addresses the second research sub-question: ‘How
can organisations improve their organisation-wide agility?’. Additionally, important considerations
and challenges, when improving organisation-wide agility, are discussed.
6.4.1 Approaches to Improving Agility
6.4.1.1 Exploiting technology-enabled capabilities
This perspective emphasises the exploitation of digital innovation to improve existing and add
new organisation capabilities, to increase agility. Research from Lu & Ramamurthy (2011), Teece
et al. (2016) and Overby et al. (2006) explore how specifically innovations in the area of
information exploitation and process automation can be used to increase the speed, flexibility,

27
efficiency and effectiveness of key operational capabilities, thus increasing the agility of an
organisation.
Teece et al. (2016) emphasises the need for strong dynamic capabilities, to improve a firm’s
capacity to innovate, adapt to change, and create change that increases value for customers,
and provides competitive differentiation. Teece links agility to technology improvements, stating
that managing uncertainty relies on the ability to combine and recombine technologies to allow
strategic information about future to be “discovered” and created, by acting on competitive
insights.
Overby et al. (2006) makes a similar argument, stating firms need to develop sensing capabilities,
where the investment and effective use of IT is a pre-requisite. This enables firms to make
complex moves (ex. new ventures), simples moves (ex. operational adjustments) or no moves.
This argument is supported by both Lu & Ramamurthy (2011) and Tallon & Pinsonneault (2011)
who propose that greater IT alignment facilitates Agility by providing infrastructure flexibility, and
enables firms to execute effectively and increase business performance. Tallon & Pinsonneault
(2011) propose the following key areas of IT investment:
• Knowledge sharing, which allows the better gathering of environmental knowledge,
sharing knowledge and reacting to change in informed, aggressive, directed and agile
ways; and
• Digitising business processes, which allows firms closer resource proximity and facilitates
rapid responsiveness to change, thus reducing lead times to mobilise and transform
existing resources.
• IT enabling resources, which can improve performance, increase preparedness for
changes and stimulate greater innovation and adaptation.
6.4.1.2 Transform the organisation holistically
McKinsey (2017) and Rigby et al. (2018) propose organisational agility improvements should be
approached holistically, beyond just technological improvements.
McKinsey (2017) emphasise the need for firms to invest in the following areas of change:
• Strategically – developing a clear strategy, a shared purpose and vision which aligns to
the investments in agility increasing capabilities needed;
• Structurally – transforming to a flatter organisational structure with empowered teams
and more accountability in roles;

28
• Operationally – the standardisation of processes and ways-of-working which focus on
rapid execution and learning cycles, whether in decision-making or innovation, and
greater access to information across the firm; and
• Behaviourally – the emphasis on more dynamic people management and entrepreneurial
leadership styles, to facilitate greater collaboration and coordination, shared and servant
leadership, entrepreneurial drive and role mobility.
Rigby et al. (2018) additionally emphasise that increasingly achieving organisation-wide agility
requires leadership to adopt agile practices as the dominant way for their firms to operate, thus
expanding agile implementation beyond a few domains in favour of a more holistic approach.
6.4.2 Considerations and Challenges of Increasing Agility
The is section explores important considerations and challenges related to increase agility, as
extracted from the selected literature.
6.4.2.1 Important considerations
The following important considerations were recommended when increasing organisation-wide
agility:
i. It requires focussed implementation - Rigby et al. (2018) argue that organisation-wide
agility should not be implemented through top-down plans and directives, but rather treat
different parts of the organisation as customers, with individual needs. This will allow
priorities to be set based on the opportunities increased agility provides to these parts,
which will increase the likelihood of success.
ii. It must be contextual and congruent with strategy - Teece et al. (2016) state that
increasing agility must be contextual and congruent with a firm’s strategic direction. This
will ensure that agility will be implemented to increase the efficient and effective execution
of strategy. This provides management with a rationale for decision-making in which agile
investment decisions are aligned with the value it adds to the organisation’s strategy.
iii. Increases Costs and Decreases Efficiency - Teece et al. (2016) argue that while change is
needed to remain competitive, it is costly and often involves sacrificing efficiency. Thus
businesses cannot continuously increase for agility, but rather need to know when and
how much agility is needed.

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6.4.2.2 Challenges
McKinsey (2018) found that while many established organisations have undertaken initiatives to
increase organisational agility, few have succeeded and many-faced significant challenges in
increasing organisation-wide agility. Some of the key challenges found include:
i. A lack of alignment – McKinsey (2018) found that one the major challenges organisations
face is ensuring a clear alignment between the vision the executives want to achieve; the
plan to implement the transformation; and an agreed understanding of the value it will
deliver.
ii. Decision-making and bureaucracy - Rigby et al. (2018) argue that organisations trying to
improve agility often struggle to decide which business functions to transform, and which
not. Additionally, ineffective decision-making can be exacerbated by bureaucracy and
create organisational chaos.
iii. Lack of results and progress - McKinsey (2017) argue that firms often underestimate the
magnitude of change required to increase agility. Key issues to mitigate against include
misalignment between agile ways-of-working and day-to-day jobs; and a lack of clear
implementation plan.
iv. Operating Model deficiencies - Aghina, De Smet and Weerda (2015) propose that
increasing agility requires addressing operating model issues, including for replacing
example aging technology systems which are not easy to adapt improve; and simplifying
traditional, hierarchical organisational structures, which impede organisation-wide agility.
Organisation-wide agility requires a more organic and adaptive structure to allow flexibility
and adaptability.

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7. Research
7.1 Introduction
This chapter provides summarises the findings of research performed to understand how
organisational agility is defined and improved in practice, as collected and analysed through case
studies from PayPal, Bosch Group, DBS and ING, plus the views from experienced practitioners.
Summaries and key extracts from the research data and analysis performed can be found in
Appendix 3. Key findings derived from these are discussed in the sections below.
7.2.1 The Relationship between External and Internal Environments
A common theme across the case studies and interviews is the role that Digital Transformation,
and as a global trend, plays in driving the need for agility. A notable nuance within this trend is
the increasing demands from customers and how this is driving a need for customer-centric
business models.
Additionally, the research shows the types of organisational agility deployed by organisations
might be different across dimensions of scale - determining how much of the organisation is
impacted -, and scope - determining the degree of impact on an organisation.
Each of these findings is briefly discussed below.
7.2.1.1 Digital Transformation and the current need for organisational agility
According to the WEF’s Digital Transformation Initiative (WEF & Accenture, 2018) digital
technologies are accelerating change in global economies, businesses and societies in complex
and unpredictable ways.
For companies like Bosch (2017) this digitisation is creating an increasingly connected world,
which is changing industry boundaries, creating new competitors and prompting different
customer demands. In this environment the Bosch CEO, Dr. Volkmar Denner, believes being a
more agile organisation will allow Bosch to adapt quickly to exploit opportunities and threats, as
these occur within the external business environment. For Bosch to remain competitive he
believes the organisations must be able to change internally, at the same speed of change as its
external environment.

31
For Participant 7 the key emphasis is the way that Digital Transformation is shifting the nature of
competition towards customer-centric business models. As he explains: ‘Now the customer is at
the centre of the business environment and firms are orbiting customers. So, the environment for
business has changed where customers can switch more easily. Customers have transparency
around a level of service. Customers want more choice, expect ongoing innovation and that
demands different ways of working.’
Customer-centric business models here require a high rate of innovation, but also the ability for
businesses to pivot, as opportunities and threats arise. For businesses such as DBS this means
acting less like a bank and more like a technology company, where having a highly customer-
centric business model, which needs high organisational agility.
Consequently, this study concludes that there is some agreement that Digital Transformation is
changing the nature of competition, requiring organisations to display different characteristics,
including higher agility, to compete successfully. Figure 8 below illustrates this conceptually.
Figure 8: A Cognitive map of the relationship between global trends, business environments and organisations – Author’s estimation
7.2.1.2 Different scale and scope dimensions for improving organisational agility
There are different ranges in the scale and scope of organisation-wide agility required. For PayPal
(PayPal, 2015) the internal challenges of increasing complexity and bureaucracy had started
decreasing their ability to deliver products, leading to increased customer and employee
frustration and starting to affect their competitiveness. This internal driver leads to PayPal
undertaking an organisation-wide agility transformation, which seems to indicate drivers for

32
increasing organisation-wide agility does not always need to be externally driven and thus
requiring significant changes affecting the firm’s strategic positioning.
Additionally, increasing agility might have different relevance depending on the market or industry
a business or organisation operates in. As argued by Participant 6: ‘I don't know whether you
need to necessarily increase your agility … Some businesses may be perfectly happy with the
tempo got their work at, and they have a plan to evolve in the next 10 years … For those types of
organizations having a greater degree of organisational agility is more important, than for example
a government department processing driver’s license. Yes, they need some level of
organisational agility, but bottom line is drivers’ licenses is a process thing, which might evolve,
but the whole business model of having a driving licenses is not really going to go away anytime
soon’.
This suggests that increasing agility for an organisation can be considered beyond just specific
types (as explained in section 6.3.2.2). For example, as illustrated in figure 9, the “type” of agility
an organisation is implementing can be categorised by:
• The relative scale, determining how much of the organisation is impacted; and
• The relative scope, determining the degree of impact on an organisation.
Figure 9: A Conceptual framing of “Types” of Agility – Author’s estimation

33
Here PayPal might be considered to have made more operationally constrained improvements,
primarily focussing on the factors inside the organisation, thus more operational in scale, related
to the delivery of their existing business model, thus more sustaining in scope. For Bosch this
might be considered more strategic in scale, as increasing organisation-wide agility is aligned
adapting their business model, and potentially more disruptive in scope, as it involves more
disruptive changes to the current business, providing the firm with the ability to rapidly adapt and
steer itself into new directions.
7.2.2 Key Internal Elements of Organisational Agility
The literature suggests that implementing new dynamic and improved existing, enabling
capabilities are critical internal elements for organisation-wide agility. The research provides
additional insights and nuance to critical aspects within each.
While there is consensus on the need for dynamic capabilities to increase agility, the relevance of
probing type dynamic capabilities in more complex business environments was highlighted,
especially where there are high levels of uncertainty.
Additionally, while improving enabling capabilities can increase agility, these capabilities also
require congruency between them, where higher congruency between capabilities will
cumulatively increasing organisational agility. One enabling capability of particular importance is
the enabling role of digital technologies in providing access to information, which plays a critical
resource to help facilitate decision-making. Here data science and analytics are emphasised as
enabling more timely, relevant and granular decisions, which enabled these organisations to
operate with greater agility.
Finally, the motivation is identified as a key factor which affects the capacity for an organisation to
increase and operate with greater agility, independent on whether a required capability exists.
Each of these findings are briefly discussed below.
7.2.2.1 Probing Dynamic Capabilities
Although there is a consensus that there is a need for both Sensing and Responding dynamic
capabilities to increase agility, one of the interviewees argued that greater agility is more relevant
in situations where greater complexity, and thus uncertainty, exists. For these situations the
addition of probing dynamic capabilities are ideally suited to support an iterative experimentation
driven approach needed for organisation-wide agility.

34
Participant 7 argued that agility is more relevant when managing “Complex” situations, arguing
that: ‘With complicated problems you don't want variability, there is one best way and you're
trying to remove waste from the system. With complex problems you absolutely want variability,
it's emergent, you don't know what the outcome is going to be. If you're making a million cars
you absolutely know whether you've made a successful Toyota Prius or not. So, making a million
Toyota Prius’ is lean and is complicated, however developing a new model of a Toyota car then
you would apply agility, you'd do computer-aided design, you'd do wind tunnel testing, clay
prototypes and so on. So, you're probing, sensing and responding when you're developing a
new type of car, which requires greater agility’.
Participant 7’s explained this argument stems from the Cynefin Framework, developed by Dave
Snowden, and which is used to determine the appropriate management style for the types of
situational contexts the decision-making take place in (Snowden, 2019), as illustrated in figure
10.
In this framework “Complex”
situations are those where
cause and effect relationships
are not clear beforehand, or
repeatable.
Organisations are
recommended to apply probe-
sense-respond management
behaviour, and where the
emphasis is on the ability for
the organisation to
hypothesise, experiment and
learn because the situation is
uncertain and volatile.
Figure 10: Cynefin Framework – Source: https://cognitive-edge.com/blog/liminal-cynefin-image-release/
For complicated situations, where there is a clear link between cause and effect, lean practices
might be more appropriate, as this is where good practices will improve organisation-wide
efficiency.

35
This study concluded that it would be relevant to explore how organisations to develop and
implement these dynamic capabilities, relative to managing complex situations as defined in
Cynefin.
Some of these factors are also consistent with the literature as key elements to support
organisational transformation approaches, as explained in section 6.4.1.2.
7.2.2.2 Congruency between enabling capabilities
Insights across the research highlight the value of better technology, better practices, more
efficient processes, greater collaboration, more entrepreneurial leadership and a more
empowered workforce in increasing agility. This is also consistent with insights derived from the
literature, where improvements in key enablers, such as modernising monolithic IT systems.
There are however indications that these improvements have to be congruent, because individual
capabilities can either improve or constrain the overall organisational agility. As Participant 3
explains: "It is not about improving the technology or necessarily the speed of execution. It
comes down whether these changes have created a culture, an environment and a light-weight
operating model, in which you've got an adaptive or amorphous organization.”
Similarly, PayPal approached their agile transformation at multiple levels, bringing in new
experienced leadership, changing their internal structures and ways-of-working and enabling
their employees with new skills, tools and reward structures, all these elements aligning to enable
organisation-wide agility.
Participant 1 additionally contends that an effective way to consider the impact of this common
purpose is to understand how different elements relate and enable or constrain each other:
‘Every organization has a DNA that's unique to them, but that DNA in any company it's made up
of the same four building blocks … Leadership, engagement and how decision making happens
… Processes and operations, how teams work with each other and how are they organized …
Structure and environments, physical and tools … Culture, unsaid the unheard’.
Notably there is a repeated emphasis on the role of leadership to provide a clear vision, over and
above strategy. These observations suggest that successfully increasing agility is more likely
when driven by a common purpose, which promotes a greater emphasis on ensuring
congruency between different capabilities across organisation levels as illustrated in figure 11.

36
Figure 11: A Cognitive Map of the relationships between an organisation’s Leadership, Operating Model and Resource choices –
Author’s estimation
Here the following relationships exist:
• Leadership, defines the mission, vision and strategy of the business emphasising agility;
• An operating model, establishes agile capabilities, structures, practices and processes of
the business;
• Strategic resources, which increase agility including people, information, capital
technology and ecosystem partners; and
• Cultural implications persist across all three layers.
7.2.2.3 Information as a strategic resource
The enabling role of digital technologies, specifically data science and analytics is repeatedly
emphasised in driving more timely, relevant and granular decisions, which enabled these
organisations to make decisions with greater agility.
PayPal, DBS and ING utilised analytics to understand their customers better, thus supporting
their Sensing and Responding dynamic capabilities and enabling them to rapidly sense customer
behaviour and implement changes at a granular level.

37
DBS for example were able to utilise analytics to understand how customers were interacting
with a specific set ATMs, located in Singapore. This enabled the DBS team to observe a link
between the physical signage and the consumer behaviour, and through experiments with the
signage were able to make granular changes quickly, as shown in figure 12 below.
Figure 12: DBS’s use of analytics to affect customer behaviour at a granular level – Source: The 22,000 person start-up - Being Agile
the DBS way
Access to information is equally important in changing decision-making and management
behaviour, where analytics and data science can remove bias and speed up key decisions,
making businesses more data-driven. As Participant 8, explains: ‘That is a totally different style of
management. You are very data-driven, you have very different influence and you have a lot of
tools to show and analyse the data …"
This suggests that that information is in improving the ability to different parts of the organisation
to collaborate more effectively, because it enables increased information transparency and
access which in turn increases organisational agility.
7.2.2.4 Motivation increases the capacity for improving organisational agility
Both the interviews and case studies link the levels of motivation, driven by a compelling vision,
and the capacity of the firm to be agile, where lower levels of motivation will impede change and
behaviour. As Participant 3 explains: "An agile organisation has a group of people that have the
drive and the passion and the commitment, and will cope with the fact that overnight they say
"we're pivoting the business in this direction or with pivoting some new capabilities in this
product segment or in this market". And they can react to it. They don't have that organizational
inertia about whether you need nine months to plan this in and another year to implement.
They're actually able to do it."

38
Similarly, PayPal identified the crucial role motivation level played, both through sustained and
clear communication from leadership about the reason for the change, as well as better
empowerment of frontline teams to make decisions and be effective.
This expands on the need for absorptive capacity identified in the literature and supports the
emphasis on culture, which drives behaviour, as a critical determinant of organisation-wide
agility. As Participant 1 contends: ‘What is the culture? If you look at a tree then structures and
capabilities are like the trunk, branches and leaves which you can see. Well in this example
culture is like the roots, which you cannot see, but which provides the stable basis for the rest of
the tree.’.
7.3 Improving Organisational Agility
The research seems to support following a holistic, organisational-wide approach to improving
organisation-wide agility. This supports the findings within the literature, which emphasise
organisations who want to improve agility should:
• Have a clear shared sense of purpose and vision; and
• Implement a lightweight, digitally enabled operating model;
The case studies and interviews also identified some similar considerations and challenges as
listed in chapter 6, as well as some additional nuances.
Each of the key findings are briefly discussed below.
7.3.1 A Common, Clear Purpose
A common, clear purpose which defines the reason and vision for increasing organisation-wide
agility is paramount for success.
McKinsey (2018) found that one the major challenges organisations face is ensuring a clear
alignment between the vision the executives want to achieve; the plan to implement the
transformation; and an agreed understanding of the value it will deliver.
In the case of ING management realised they needed to focus on strategy as well, and to ensure
that innovation can lead to incremental innovation, instead of disruptive innovation. The
management here had to actively organise the organisation to the teams were empowered to
create disruption, but still aligned to strategic priorities.

39
As Participant 2 explains: ‘Amazon's mission was to provide the best customer experience …
focus on having an agile and innovative culture internally ... and then work backwards from there,
so instead of starting, for example at optimizing supply chains they considered this based on
where the biggest impact on customer experience would be’. Bosch is also an example where
the business is driven by a clear vision and purpose - to create ‘Technology Invented for Life’ – to
provide meaning and purpose to their need for agility. Here their CEO utilised social media, as
part of their 2016 Annual Report presentation (Bosch Global, 2017), to communicate how agility
plays a role in the vision and mission of Bosch.
Participant 7 argues that having a vision helps define what agility will drive as outcomes for an
organisation. This provides the logic of both “why” and “where” the organisation is trying to
improve its agility, as he explains: ‘as an organization articulate your values and your principles
first. So, your principles might be like Amazon and Google, "Customer Obsession" for example,
and then define your business outcomes and your purpose for change. So, for example for [the
bank] the business outcomes are "Better Faster Safer Happier”’.
Similarly Participant 1 contends for the different alignment of internal organisational functions to
work together to achieve strategic aims and specifically emphasise the relationship between the
IT and business functions. As she explains: ‘What needs to shift in this entire equation is this
technology pretending that business is the customer, and business are pretending that
somebody else is a customer. You have all these internal functions that support each other
in actually delivering value. If you start to shift that mindset (to focus on actual customer value)
and you start to bringing together all these functions together this cycle this feedback becomes
smaller and smaller ‘.
7.3.2 A Lightweight, Digital Operating Model
The operating model needs to evolve to provide the required dynamic and enabling capabilities
required for agility - to do different things -, but also reduce unnecessary structural complexity
and facilitate different behaviour – to do things differently.
PayPal identified that to increase their organisation-wide agility that key elements of their existing
operating model had to change. PayPal focussed on the key challenges requiring internal agility
and changed their structures, processes and tools. Additionally, they focussed on improving
critical skills and talent and aligned their business metrics and reward structures accordingly.
PayPal also invested in new enabling capabilities, including greater technology solutions which
provided greater access to information and enabled better collaboration and coordination.

40
Participant 3 also supports the need for a new, “lightweight” operating model and proposes that
a less complicated operating model supports the cultural behaviour required for an agile
organisation. As he explains: ‘… it's operating model and culture, because the operating model
alone doesn't do it. Because what happens is you create a lighter operating model, and what
offsets it then is the culture, that just gets on with doing it. Because you empower much more
within the teams, and you try to do less of a factory model. You hand over (ownership) to these
teams and create teams that have more control and more responsibility’.
As an example, ING transformed their business operating model to increase agility through the
following four key “pillars” of change:
• Working in agile ways, which required organisational structures to changes and enable IT
and commercial team members to work as squads;
• Simplifying new roles and governance structures to reduce unnecessary silos, which
hinder agility;
• Implementing modern and innovate IT tools, processes and practices enabling bi-weekly
technology delivery cycles and which enabled new levels of innovative and speed-to-
market; and
• New people models, which motivated and rewards people based on their expertise and
performance and not seniority.
Critically the exploitation of digital innovations, such as analytics and AI, also plays a crucial role
in enabling a lighter weight operating model. This is consistent with the literature reviewed, which
emphasise the importance of IT enabling capabilities in improving the collection, storage, analysis
and exploitation (through AI) of data, thus enabling strategic utilisation of information (as
discussed in section 7.2.2.3), is rather a critical enabler to increase agility.
As explained by Participant 8 explains: ‘Through our tools we are creating transparency, because
unlike PowerPoint, everyone will have access to the same information, without any being taken
away. … if you look at the Amazon teams, they are maximum 8 people and they run billions of
dollars of business. And that's because they have transparency, tools and a very flat
organisation. .... and that's hard to compete with because companies like Amazon and Apple
require much smaller number of the people than [Organisation]’.
The operating model of a business plays a critical role in facilitating or impeding agility
improvements. Existing structures, processes, capabilities or functional silos, especially those
which are used to enforce control within business, will impede agility.

41
To address these holistic changes to the operating model are required, which are contextual to
the business strategy, but also congruent to each other. Additionally, a lighter weight operating
model could reduce structural and procedural complexity and support the cultural behaviours
consistent with organisational agility.
7.3.3 Important Considerations
The following key considerations were identified:
• Agility improvement requires focussed implementation, contextual and congruent with the
organisation’s vision, mission and strategy;
• Agility should be improved gradually; and
• Improving agility requires empowering the frontline, but ceding centralised oversight and
control.
Each is briefly discussed below.
7.3.3.1 Improving agility should be focussed and contextual
Evidence from the research supports the assertions from the literature that improving
organisation-wide agility should be transformations approach increasing agility in focussed and
strategically contextual. This ensures that improvements in agility addresses the most critical and
contextually relevant areas for an organisation.
For example, PayPal focussed on challenges in internal agility, which had threatened PayPal's
competitiveness, rate-of-innovation and customer experience. Improvements were made to the
internal technology delivery practices, processes, tools and talent required to deliver the new
innovations, which PayPal’s customers sought.
Both DBS and ING saw the need to transform their business models away being traditional
banks, towards becoming more like the digital natives which posed a strategic threat for their
longer-term existence. For these businesses this meant improving agility by increasing their
speed-to-market, dynamism and customer centricity. DBS approached this transformation by
starting with improved customer centricity and working backwards. This context determined
where agility was more important and where less, for example their investment in analytics to
enable data-driven decision-making.
These observations suggest that increased agility is more likely where there is a clear alignment
between the outcomes sought by leadership, and clarity on the most relevant areas needing
improvement.

42
7.3.3.2 Organisational agility should be improved gradually
Leaders should have the patience to implement agility gradually, especially when agile ways of
working are foreign to the organisation.
Participant 1 contends that this allows the organisation to adapt to agility culturally, as a way of
life. The emphasis here is to find small groups to experiment with agile ways-of-working, enabled
by leadership and a supporting operating model, to incrementally gain momentum. As she
explains: ‘My recommendation and this don't do something really big to start off. Start small and
make incremental changes. … and then you can start to do more and more and more because
you'll start to you'll see momentum building in the organization. All of a sudden there's a team
that tastes success of some kind, and everybody else is standing around saying I want some of
that’.
PayPal for example, undertook an intensive, overarching programme to increase internal agility.
This was noted by PayPal as a key consideration, where the leadership team understood taking
a big bang approach, and transforming the majority of the business operations at once, posed a
significant risk. ING and DBS’s leadership identified a similar challenge, highlighting cultural
changes in as their most significant impediment, where increasing agility needs to start by
addressing and removing the conflicting priorities in that exist between the “old” organisation and
the more agile one.
Participant 1, who was part of the team at PayPal reflects on this challenge: ‘So was it a
successful transformation to a large degree, because the company is an agile company now.
However, was the methodology that was prescribed, did it stick? No absolutely not. They do
follow agile, but there was a revolt. … my recommendation and this don't do something really
big to start off. Start small and make incremental changes …’.
7.3.3.3 Improving agility requires empowering the frontline, but ceding centralised oversight and
control
For ING the leadership saw organisation-wide agility as crucial for ING to start emulating the
speed and customer-centricity of Fintech startups. One of these areas identified for improving
agility was the development of a new people model, which empowered people at the frontline to
make decisions, and require less management oversight.
This was a radical mindset shift for the organisation, where managers used to be rewarded
based the size of their projects or the number of employees under their control. Additionally, this
posed challenges in that individual teams could become misaligned from the overall company

43
vision and strategy, for example the increased emphasises on speed-of-innovation can lead
teams to just focus on delivering incremental innovation, at the expense of missing opportunities
for disruptive innovation.
Participant 1 and Participant 8 expressed similar views and also highlighted the cultural and
political implications. Both highlight the challenge faced by middle managers whose primary
function, controlling and overseeing frontline employees, could cease to exist. As Participant 8
explains: ‘It's going to be an extremely flat organisation, as it turned around. The operating
teams, who will bring in the money, will be more important than the business leaders …
management and has evolved and the need for management to be more entrepreneurial, more in
the field versus and being less command control’.
These observations suggest that increasing agility should be approached as a gradual process,
which might take many years within large organisations. Additionally, part of the transformation
process needs to consider the role of leadership and management. Organisation-wide agility by
default means less "control", fewer meetings, less communication and less bureaucracy. The
function of managers could increasingly move away from operationally overseeing and controlling
resources, and instead focus on the alignment of decisions to the organisation’ core strategy.
7.3.4 Important Challenges
The following key challenges are identified:
• Increasing agility could initially increases costs and decreases efficiency, thus reduce the
organisation’s performance and productivity;
• Bureaucracy at an individual or structural level can impede decision-making and hamper
collaboration; and
• Cultural change is potentially the most significant challenge to successfully improving
organisation-wide agility.
Each is briefly discussed below.
7.3.4.1 Improving agility can initially decrease performance and productivity
Teece et al. (2016) argue that while change is needed to remain competitive, it is costly and often
involves sacrifising efficiency. While Teece seemingly contends that such a trade-off could result
in permanent efficiencies some of the interviewees also believe there could be an initial effect on
performance and productivity.

44
Both Participant 3 and 4 argue that the change process itself will require leadership to accept
some initial inefficiencies. As Participant 4 explains: ‘… initially there has to be reduced efficiency,
whilst you get people thinking in a different way and a chunk of that might be accommodating an
existing fear of failure. We hear this a lot, where there are large organisations who have got this
fear of failure and nobody therefore takes any responsibility or accountability for anything. … So,
you have to get people out of that zone and put them into a place where they're comfortable. So,
it's going to require an investment of time and effort to make that change, because it's easy to
stay with the status quo and it’s hard to make the change.’
Importantly he links inefficiency with the process of learning and identifies this as a key reason to
approach improving agility in a gradual fashion.
Additionally, Participant 6 highlighted that improving agility could initially require some duplication
of effort, especially where existing teams and processes have to adapt to new, agile ways-of-
working, while still operating traditionally.
7.3.4.2 Bureaucracy
While the literature focus on the impact of bureaucracy in impeding decision-making research
findings also considers the structural reasons bureaucracy exists and how these affect the scale
and scope of agility improvements.
ING identified that silos within their old organisational structure were hindering agility. These silos,
in the form of different departments, steering committees, project managers and directors
impeded collaboration, decision-making and increased bureaucracy. ING addressed this by
creating cross-functional teams and fostering greater inter-team collaboration.
Participant 1 expands on this highlighting the challenges posed by mid-level managers and how
these obstruct and impede agility improvements, potentially because of decentralisation of
control from their roles, but also potentially because this represents a personal risk to their
careers. As she explains: ‘You look at the middle section, which typically includes mid-level
managers, these are the hardest (to change). … typically because they do not see a place for
themselves. They are the hardest to change and people fight tooth and nail whether they do it
explicitly or unknowingly ...’.
7.3.4.3 Culture change
A common theme from the research is the challenge that cultural change poses when improving
agility, which is consistent with the recommendations proposed by both McKinsey (2017) and
Accenture (2017).

45
In practice the relative starting point for a firm will determine the degree of change required to
increase agility. Thus a larger, more traditional organisation will have greater complexity and a
richer, more entrenched culture to take into consideration. ING believed that culture was the
most important element in successfully improving organisation-wide agility. For the leadership at
ING specific behaviours, appropriate for their agile culture, were essential to establish, including
ownership, empowerment and customer centricity.
Participants 1 and 8 agree, arguing that culture is the most underrated, most overlooked but also
most challenging factor to consider when increasing agility in an organisation. Participant 8 also
highlights the possibility that not everyone within the current organisation will be able to adapt to
more agile ways of working and specifically the mindset required. He highlights the need of
identifying those individuals with the appropriate mindsets for agile ways-of-working, as well as
the challenges in identifying a future for those who don’t have the required mindset. As he
explains: ‘… many employees are told what to do and not thinking for themselves ... … They
need to pack their own backpack … take ownership of updating their own skills, because we
have such a change and we are agile. … Secondly, not everybody will be able to follow. Some
people can't or are not able to follow this space. We need to find other job and roles inside and
outside the organisation, because the bar might be too steep. … We need to make the company
smaller and we need to have new skills, let old skills go and also have a social responsibility’.
Thus understanding the cultural change required in increasing organisation-wide agility is critical.
The key emphasis highlighted here is identifying and developing those individuals with the
appropriate mindsets and behaviours, for example individuals who exhibit ownership, want
empowerment and behave in customer-centric ways. Additionally, those implementing cultural
change will need to consider the impact for those individuals who cannot adapt to more agile
ways of working, including finding socially responsible ways to utilise their experience and
expertise.

46
8. Recommendations.
8.1 Introduction
This chapter details the proposed recommendations for improving organisational agility, as
synthesised from the key literature and research insights. It provides an overview of the drivers
for, and a framework to define organisational agility. This framework is then used to explain the
four key recommendations for executives to improve agility.
8.2 Context – Key Drivers for Organisational Agility
Becoming and remaining successful has become increasingly difficult for global organisations.
Global megatrends such Digital Transformation is increasing the rate of change in customer
demands and the nature and intensity of competition. Industries and regions are becoming more
complex and volatile and an increasing number of organisations are having to contend with
increasingly unstable business environments, where the ability to respond and adapt quickly is
becoming crucial to remain competitive.
While there is a growing awareness of this need for increased organisation-wide agility, as
illustrated in the exhibit from a McKinsey (2017) survey in figure 13 below, successfully improving
agility remains elusive for most.
Figure 13: Percentage of respondents reporting organisation-wide agile transformations – Source: McKinsey (2017)

47
What is consistent and clear in the research is purpose for increasing organisation-wide agility is
to enable organisations to adapt internally, to the rate of change in their external business
environments. This purpose forms the basis for the definition of organisational agility proposed in
this paper.
Improve organisational agility requires starting by defining its constituent parts first. This report
propose the model illustrated in figure 14 below provides a framework to define and analyse
organisational agility, and against which the recommendations proposed in section 8.4 can be
considered.
Figure 14: High-level framework for improving organisational agility
This model argues Organisational Agility consists of three distinct parts, namely:
• The external factors which determine the agility characteristics of an organisation’s
business environment;
• The internal structural and cultural factors which determines an organisation’s manifested
agility; and
• The relationship between the external business environment agility characteristics and
internal organisational agility characteristics, which determines the strategic rationale for
organisational agility.
Combined these can be used to define organisational agility as follows:

48
Organisational agility is the rate of external business environment change (as the
driven by global trends), in relation to the rate of internal organisational change (as
enabled or constrained by the internal structural and cultural factors).
This study proposes that improvements in organisational agility, based on this definition, should
be considered across two dimensions, namely:
• Dimension # 1: The required rate of Internal Organisational Change, in relation to the rate
of External Business Environment Change. This dimension corresponds to the strategic
rationale for organisational agility.; and
• Dimension # 2: The internal structural and cultural factors enabling or constraining agility
for the organisation. This includes the organisation’s strategy, business operating model
and underlying resources.
Each of the factors and dimensions are briefly discussed below.
8.3.1 External Environmental Factors
External environmental factors define the agility characteristics of the competitive environment
organisations compete in, and corresponds to the highlighted section of the organisational agility
framework in figure 15 below.
Figure 15: High-level framework for improving organisational agility – External Factors

49
This report identified the impact of digitalisation, and the associated increase in Digital
Transformation as a key global trend necessitating increased levels of organisational agility. This
is due to increasing levels of unpredictability and volatility associated with heightened levels of
competition and innovation.
According to the WEF (WEF & Accenture, 2018), business environments affected by digitalisation
will see increasing opportunities and threats appear as technology drives greater efficiencies
through automation; drive better customer experiences and enable new, digitally enabled
business models.
While increasing digitalisation affects many industries, as found in the research and illustrated in
figure 11, this report believes that different trends could require differing levels and types of agility
for different industries. For example other global trends, such as environmental change, might
have different associated key characteristics required for businesses to survive.
While agility will still determine how quickly businesses can adapt to the changing environmental
factors, but this will likely require new and different business models, for example emphasising
sustainability of supply chains over customer-centricity.
This report does not propose a mechanism to determine this external rate of change (proposed
as part of further research), but it is recommended that executives understand these external
factors. This study also argues that these external factors can help define the broad agility
characteristics required to succeed for a given business environments, which in turn provides a
determination of the areas where the external rates of change for the organisations requires a
higher degree of agility.
8.3.2 Internal Organisational Factors and Dimension # 2
Internal organisational factors are those structural and cultural elements which enable or
constrain agility, and corresponds to the highlighted section of the organisational agility
framework in figure 16 below.

50
Figure 16: High-level framework for improving organisational agility – Internal Factors & Dimension #2
Deeper analysis starts highlighting the interrelated strategic, business operating model and
resource elements, as illustrated in figure 17, which combine to create the organisational
organism.
Figure 17: Conceptual Framework of Internal Organisational Factors impacting organisational agility
The relevance of these component parts for organisational agility includes the following elements:

Improving Organisational Agility

Improving Organisational Agility

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