Agile working: mastering the challenges of the digital world

Agile working is enjoying increasing popularity in companies’ organizational culture. Within just a few years, it has become a key issue in mainstream management and is considered the best method for companies to successfully face the challenges of digitalization. But what are the actual principles of agile working? Is everything as rosy as it seems, or do managers also need to factor in risks and disadvantages? We provide an overview of how agile working emerged, how it works, and what prospects it offers companies.

What is agile working?

The term “agility” comes from the Latin agilis, which can be translated as “dynamic, swift, and fervent.” In general linguistic use, agility now means the ability to adjust to changes flexibly, quickly, and proactively.

Agility in a work context is defined less clearly. The term has been used by the scientific community since the 1950s, but with various meanings. For instance, Talcott described the AGIL paradigm (adaptation, goal attainment, integration, latency) for social, self-preserving systems.

According to the 2017 report by the SD Learning Consortium in New York, agility in a business context is based on four key characteristics: delighting customers, descaling work, enterprise-wide agility, and nurturing an agile culture.

The Agile Business Consortium offers a similar definition. Here, agility is the “ability of an organization to adapt quickly to market changes, internally and externally; respond rapidly and flexibly to customer demands; adapt and lead change in a productive and cost-effective way without compromising quality; [and] continuously be at a competitive advantage.”

Agile working typically involves small interdisciplinary teams, short feedback loops, an iterative approach, as well as incremental improvements and flat hierarchies.

The Agile Manifesto represented a milestone in the spread of agile working. It comes from software development, however, the four principles presented can also be applied to agile working in other industries:

  1. Individuals and interactions are more important than processes and tools
  2. Functional software is more important than comprehensive documentation
  3. Collaboration with the customer is more important that contract negotiations
  4. Responding to change is more important than following a plan

Agile working popularized with the advance of digitalization, but has still not been uniformly defined. It can be described as an approach to work distinguished by swift, flexible, and proactive action based on an agile mindset. This, in turn, is characterized by values like customer centricity, networking, trust, and self-organization.

History of agile working

The agile approach first emerged in software development and IT project management. Its earliest application can be traced back to the early 1990s. With the publication of the Agile Manifesto in 2001, the principles first became popular in IT departments and in project management – areas in which frequent and quick changes have always been part of day-to-day business.

In the meantime, digitalization has arrived in every industry and every business area: As a result of continuous change, agile methods and principles could be applied and adjusted everywhere. Since the 2000s, agile working has established itself increasingly as a new standard in management and organizational culture.

From agile principles to specific methods

Companies that wish to organize their work according to agile principles have a choice between various methods. The most well-known frameworks are Scrum and Kanban.

With Kanban, the focus is on visualizing the workflow. The aim is to create an even, free-flowing process to efficiently bring projects to a successful conclusion. Tasks are thereby limited and visualized on a board representing the project sequence. The method can be used by both teams and individuals to structure projects of any size.

Scrum is a more comprehensive method that works with defined roles and short work sprints. Rather than an even workflow, Scrum aims to deliver creative products in increments and continuously improve results.

In practice, the methods are often adjusted to the given circumstances, combined or simplified to achieve the goals of agile working.

Advantages of agile working in business practice

Agile working came about as an alternative concept to the traditional waterfall principle in which projects are handled phase by phase in a linear manner. This restricts flexibility, as everything is aimed towards a defined end result at the very outset. Errors only become obvious later and the return on investment only materializes after project completion. The fast pace of digitalization and the growing competitive pressure worldwide mean that this stiff and sluggish model is becoming less and less effective.

With agile methods, a direction or preliminary goal is defined rather than a strict end goal. After all, it’s vital that companies can respond quickly to changes. What’s more, for companies to be successful in a globalized economy, they need to follow trends and develop innovation – instead of playing catch-up with competitors. Agile methods make it possible to anticipate changes and thereby secure a competitive edge.

Besides these external factors that have pushed many companies to reexamine their established operating models, changes from within have also helped push companies towards agile working. More specifically, the preferences of employees have changed: Demographic shifts and the associated shortage of specialist staff, among other factors, have forced company executives to rethink business success.

Employees no longer wish to work in rigid hierarchies; they want more freedom in their work and to collaborate as equals. Plus, projects are gaining in complexity with an increasingly complex environment. Conventional structures are no longer suitable for effective work.

Agile principles have touched a nerve – among employees as well as business management. They not only improve results, but also take into account staff preferences towards a more respectful company culture and a better work-life balance thanks to the agile mindset.

Benefits at a glance:

  • Faster responses to market changes are possible
  • Higher competitiveness
  • Better efficiency
  • Continuous product improvements
  • Higher customer satisfaction
  • Innovation
  • Attractiveness as an employer (for skilled staff)
  • High employee satisfaction

Disadvantages and risks of agile working

Agile working is probably the best methodical approach currently for many projects and companies. But it’s not a magical solution. Besides the many advantages, agile working also involves risks and disadvantages that are important to bear in mind when opting for this method.

The fact that the approach foregoes setting a defined goal is one of its biggest disadvantages. There is also the significant danger that teams may lose track of their objectives in recurring work sprints and constant improvement processes, meaning projects quickly get out of hand. Work in iterative cycles makes it difficult to measure project progress.

If no clear time frames are defined, this can result in soaring costs for customer orders. Internally, the flexibility of the approach also makes it difficult to conduct realistic resource planning, since no clear work results exist.

Compared to the conventional model, much more time needs to be planned for communication – both for communication with the employer as well as within the team(s).

If new employees join the team during an ongoing workflow, onboarding becomes far more challenging in agile systems. After all, less attention is dedicated towards extensive documentation. Instead, the focus is on practical progress.

Risks of agile working at a glance:

  • Risk of never-ending optimizations
  • Progress is difficult to measure
  • Difficulty of realistic resource planning
  • More communication is necessary
  • Minimal documentation makes onboarding more challenging
  • High social skills are required

Summary: The benefits of the agile approach

Agile working has been hailed by some managers as a cure-all and guarantee of business success in the digital age. It often seems that agile working could solve all the problems of digital transformation.

As such, agile working has become the subject of intense debate, especially its early phase. Here, the proponents of the old waterfall model and the supporters of the new agile approach have faced each other irreconcilably, each claiming to represent the truth.

In many cases, agile working may be the best answer to challenges surrounding corporate culture organization. But the term obfuscates the fact that there is not just one way to take the agile approach. There are actually a range of agile methods that differ from each other significantly. For companies, this means it is important to obtain all the necessary information and find the right agile approach for them by experimenting.

The decision need not be limited to adopting or rejecting agile working. A number of hybrid models have been developed in practice, where companies combine traditional and agile methods and create individual solutions to meet their requirements.

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