Companies that adopt agile working perform financially better

12 March 2019 4 min. read
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Companies that embrace agile working and realise a more flexible and responsive operating model enjoy a competitive advantage over their rivals, according to new research. Not just in terms of organisation agility, but also in hard financials. 

“The best performing organisations have a higher level of agility – flexibility – than their counterparts with traditional business models,” said Hans Burg, an agile expert at PA Consulting Group. The consultancy conducted an international study among 500 executives of large companies across a range of sectors, asking them how they view agile working and what they see as the key factors for successful adoption.

Two thirds of the respondents said that their business model is at risk of fundamentally becoming outdated, with agile considered a key method for transitioning to a future-proof strategy. While agile is typically regarded by many as a method geared at streamlining operations, PA Consulting’s research suggests the approach could take things a step further. 

Here, investing in agile can bring rise to improved financial rewards. “The top 10% of businesses by financial performance are almost 30% more likely to display agile characteristics, suggesting that a commitment to organisational agility can make a crucial difference as a driver of success”, said Burg.Five Dimensions of Agility

To come to this conclusion, the researchers evaluated how well companies performed across 15 agile characteristics, finding a strong positive correlation between agile characteristics and financial performance. Among the characteristics deemed typical for agile are flexibility, speed of decision-making, co-creation, feedback, empowerment, collaboration, decentralisation, prioritisation, dynamism and mobilisation. These features enable agile leaders to respond quicker to clients and their needs, boost the time to market for new products and services, speed up internal collaboration and support more agile processes and systems allowing for continuous adoption to changing market conditions. “Agile leaders are breaking through barriers and seizing the real opportunities to transform and grow.”

However, becoming an agile leader is not an easy task. Three of the five surveyed leaders acknowledged struggling with how to embed agile. “Management teams know that they have to do things differently, and they realise that organisational agility is the key to success in an environment where threats and opportunities are dynamic,” remarked Burg. “But just a handful of companies succeed in creating an organisational culture in which agile is more than just a topic for the IT department.”

A supportive culture

The need for a supportive culture is according to the researchers the top reason separating a successful agile transition from a failed one. “It is the main condition for embedding flexibility, with the required culture change needing to start at the top of the company.” Then, it is key that there is a strong focus on culture across the entire organisation. This approach is essential, highlight the executives in the survey. “An agile organisation requires an organisation-wide approach to systematically increase agility.” Coming so far is likely to stretch capabilities however, with 70% of the leaders recognising that their internal DNA will need to change in order to create a culture that enables people to take risks and change direction quickly.

Looking ahead, business leaders expect the need for agile to increase further in the coming years. In fact, the methodology is touted as likely to become a mainstream practice for the majority of organsiations. “Agile is the new normal in today's world and certainly not a quick interim solution.” According to the respondents, one out of six organisations will end up in heavy weather if they fail to embrace organisational agility. Moreover, 72% of business leaders believe that their company’s ability to respond rapidly to change will prove a ‘make or break’ factor between success and failure.

Further, developments in the external environment will bump agile’s relevance. Two-thirds of business leaders believe the cycle of invention and innovation is speeding up, and five years from now, companies will need to operate almost one-third faster than they do today to remain competitive.

Related: Integral approach and embedding change are key for agile success.