As creative knowledge- and learning-based tasks become more important, organizations need a distinctive value proposition to acquire-and retain-the best talent, which is often more diverse. The increased volume, transparency, and distribution of information require organizations to rapidly engage in multidirectional communication and complex collaboration with customers, partners, and colleagues. Accelerating digitization and democratization of information.Examples include developments such as machine learning, the Internet of Things, and robotics. Established businesses and industries are being commoditized or replaced through digitization, bioscience advancements, the innovative use of new models, and automation. Constant introduction of disruptive technology.All stakeholders’ demand patterns are evolving rapidly: customers, partners, and regulators have pressing needs investors are demanding growth, which results in acquisitions and restructuring and competitors and collaborators demand action to accommodate fast-changing priorities. This is expressed in four current trends: Now, we find the machine paradigm shifting in the face of the organizational challenges brought by the “digital revolution” that is transforming industries, economies, and societies. From Taylor on, 1911 to 2011 was “the management century.” Disruptive trends challenging the old paradigm For decades, organizations that embraced this machine model and the principles of scientific management dominated their markets, outperformed other organizations, and drew the best talent. Gareth Morgan, Images of organization, Beverly Hills, CA: Sage Publications, 1986. Gareth Morgan describes Taylorist organizations such as Ford as hierarchical and specialized-depicting them as machines. Taylor’s ideas prefigured modern quality control, total-quality management, and-through Taylor’s student Henry Gantt-project management. “100 years of the moving assembly line,” Ford Motor Company, .įord’s ideas, and those of his contemporary, Frederick Taylor, issued from scientific management, a breakthrough insight that optimized labor productivity using the scientific method it opened an era of unprecedented effectiveness and efficiency. Ford reduced assembly time per vehicle from 12 hours to 90 minutes, and the price from $850 to $300, while also paying employees competitive rates. A decade later, Ford had 60 percent market share of the new automobile market worldwide. In 1910, the Ford Motor Company was one of many small automobile manufacturers. An agile organization thus adds velocity and adaptability to stability, creating a critical source of competitive advantage in volatile, uncertain, complex, and ambiguous (VUCA) conditions.įirst, the old paradigm. Such an agile operating model has the ability to quickly and efficiently reconfigure strategy, structure, processes, people, and technology toward value-creating and value-protecting opportunities. In contrast, an agile organization (designed for both stability and dynamism) is a network of teams within a people-centered culture that operates in rapid learning and fast decision cycles which are enabled by technology, and that is guided by a powerful common purpose to co-create value for all stakeholders. The skeletal structure is strong, but often rigid and slow moving. It operates through linear planning and control in order to capture value for shareholders. The dominant “traditional” organization (designed primarily for stability) is a static, siloed, structural hierarchy – goals and decisions rights flow down the hierarchy, with the most powerful governance bodies at the top (i.e., the top team). We are now seeing a paradigm shift in the ways that organizations balance stability and dynamism. The paradigm must then shift to include that new information. These trademarks complement the findings from “ How to create an agile organization.” The old paradigm: Organizations as machinesĪ view of the world-a paradigm-will endure until it cannot explain new evidence. The trademarks include a network of teams within a people-centered culture that operates in rapid learning and fast decision cycles which are enabled by technology, and a common purpose that co-creates value for all stakeholders. Our experience and research demonstrate that successful agile organizations consistently exhibit the five trademarks described in this article. They integrate their deep experience and thought leadership to extract the best from McKinsey’s global experience as it helps organizations transform themselves into agile organizations. This article was written collaboratively by the McKinsey Agile Tribe, a group of over 50 global colleagues bringing expertise from the digital, operations, marketing, and organization disciplines.
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