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Flex your thinking: A leader’s guide to an agile mindset

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ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

Brought to you by Liz Hilton Segel, chief client officer and managing partner, global industry practices, & Homayoun Hatami, managing partner, global client capabilities

Most leaders are familiar with agile operating models, which originated in manufacturing plants after World War II and were later popularized by software developers. With agile’s emphasis on small teams that respond quickly to changing market conditions, it’s uniquely suited to today’s uncertain environment. But before diving into the specifics of agile frameworks, such as squads, chapters, and tribes, it’s important for leaders to cultivate a mindset of inner agility, which is a “comfortable relationship with change and uncertainty,” according to McKinsey analysts. “Research has shown that a leader’s mindset, and how that mindset shapes organizational culture, can make or break a successful agile transformation.”

AN IDEA

A butterfly emerges from its chrysalis stage.

Focus on the human factor

In any agile transformation, “the people dimension—culture especially—is the most difficult to get right,” state McKinsey’s Nikola Jurisic, Michael Lurie, Philippine Risch, and Olli Salo. “In fact, the challenges of culture change are more than twice as common as the average of the other top five challenges.” Culture trumps even major issues such as a lack of leadership and talent and an inability to establish a clear vision and implementation plan. Drawing on real-life agile transformations at companies around the world, the McKinsey experts offer four practical techniques for agility that keep people front and center. One of their recommendations is for leaders to define cultural “from–tos”—the behavioral shifts that people may need to make to thrive in an agile operating model. For example, teams might need to go from listening only to big personalities or leaders to actively looking for diverse perspectives or from prioritizing their own deliverables to helping others shine .

A BIG NUMBER

That’s the number of characteristics that successful agile organizations consistently exhibit, according to research led by McKinsey senior partner Aaron De Smet and colleagues. “True agility comes only when all five are in place and working together,” they say. “Linking across them, we find a set of fundamental shifts in the mindsets of the people in these organizations.” One trademark is the establishment of a dynamic people model. This involves a shift in leaders’ mindsets from controlling the work of employees to empowering them to manage and be accountable for their work. “Employees in agile organizations exhibit entrepreneurial drive, taking ownership of team goals, decisions, and performance,” note the researchers.

A QUOTE

“One misconception is that agile is just to ‘do what you want.’ And it’s not, actually. It’s systematized. It’s a pretty structured way in which to work.”

That’s McKinsey senior partner Sherina Ebrahim in The McKinsey Podcast on what makes companies faster and more productive. Agile operations offer people a well-defined framework within which to do their daily jobs. It allows them to “know their role and what might be their career path,” Ebrahim says. The dynamic aspect of the structure lies in swift ways of working that enable people to collaborate quickly and effectively. Another myth about agility is that it applies uniformly across an entire organization; in reality, different parts of an organization experience different benefits from agile methodology, according to McKinsey senior partners Krish Krishnakanthan and Shail Thaker and colleagues .

A SPOTLIGHT INTERVIEW

White spheres in motion on top of blue curved lines.

When insurance company Allianz Türkiye undertook an enterprise-wide agile transformation , it was coping with siloed structures and a plethora of initiatives, task forces, and steering committees. One of the key challenges was “designing a brand-new people model in a completely flat organization,” says Aylin Somersan Coqui, CEO of Allianz Trade and former chief risk officer of Allianz, in a discussion with McKinsey. “Being agile involves changing how people behave day in and day out, and it therefore takes much longer to achieve,” explains Tolga Gürkan, the Allianz Türkiye CEO and former COO who led the effort. The company focused on a few critical behaviors that all employees needed to exhibit, such as showing ownership, being performance oriented, and working collaboratively across hierarchies. “We launched an ongoing leadership development program and new training programs for our people to encourage them to model these behaviors and catalyze the change,” says Somersan Coqui. “Our employees are happier and feel empowered to innovate,” Gürkan adds .

BENT OUT OF SHAPE

Feeling strained? Overzealous adoption of agile may place undue stress on organizations, according to an Economist article. “There is a danger that, while a firm’s best talent is off pursuing new ideas, the core revenue-generating business deteriorates due to neglect,” it says. Agile organizations should be fast and flexible, but they also need “a backbone of stable elements,” note McKinsey’s Wouter Aghina, Aaron De Smet, and Kirsten Weerda. These consist of standardized structures, governance, and processes, which underlie the more flexible layers of cross-functional teaming and information flows that enable agility.

Lead with agility.

— Edited by Rama Ramaswami, senior editor, New York

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by "McKinsey Leading Off" <publishing@email.mckinsey.com> - 01:14 - 8 May 2023

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Flex your thinking: A leader’s guide to an agile mindset

Focus on the human factor

“One misconception is that agile is just to ‘do what you want.’ And it’s not, actually. It’s systematized. It’s a pretty structured way in which to work.”