Agile Environment: What It Is and How to Create One

Customer needs are evolving, and companies that are able to respond quickly and accordingly reap the benefits. Here, we discuss what an agile environment is and how to create one.

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The world is changing faster than ever. With technology empowering consumers like never before, organizations that are able to quickly respond to evolving customer needs have the upper hand. Those that cannot will, sooner rather than later, find themselves drifting into oblivion.

A cautionary tale that has been discussed in countless ways is Nokia. In 2007, Nokia’s share of the handset market was just shy of 50%. Then, Steve Jobs walked into the picture, pulled an iPhone out of his pocket, and less than 10 years later, Nokia sold its devices business to Microsoft.

According to INSEAD emeritus professor of strategic management Yves Doz, Nokia’s decline was the result of several factors, including infighting. But primarily, it was because “Nokia had become a sitting duck to growing competitive forces and accelerating market changes.”

The need to quickly and readily evolve as the world around them evolves is exactly why more and more businesses are now considering agile work environments.


Overview: What is an agile environment?

“Agile” is a word that means “to move quickly and easily,” whereas agile project management is a widely used approach in IT and software development. An agile workflow allows a scrum team — or any other agile team, for that matter — to:

  • Break projects down into short cycles or iterations
  • Rapidly bring a working product to market
  • Involve customers in the process and leverage their feedback to create better products or services
  • Conduct events or rituals called agile ceremonies — or scrum ceremonies, if you’re using scrum as an agile framework — to stay focused

Agile methodologies follow the principles and core values laid out in the Agile Manifesto. In 2001,17 software developers laid out in this treatise their vision for a substitute to complicated software development processes with too much emphasis on documentation.

It was also then that the word “agile” was formally used to refer to many software development practices and frameworks.

A direct comparison between the waterfall and agile methodologies of project management.

The agile methodology revolves around four core values: individuals and interactions over processes and tools, working software over comprehensive documentation, customer collaboration over contract negotiation, and responding to change over following plans.

Although agile began as an alternative to the unwieldy waterfall method for software development, the guiding principles of the Agile Manifesto also apply to other business aspects. An agile environment, in a nutshell, is a work environment that:

  • Supports collaboration and teamwork
  • Encourages openness to frequent change and experimentation
  • Emphasizes innovation and creativity
  • Promotes self-organization
  • Focuses on outcome over output
  • Embraces the potential of feedback loops for process improvement and behavioral change
  • Values interaction over documented processes

According to a McKinsey & Company report, agile organizations are more customer-centric, achieve higher revenue growth, post lower costs, and have a more engaged workforce. The same report found that such organizations exhibit five trademarks:

  • North Star, which defines the company's purpose, embodied across the organization
  • Network of empowered teams
  • Rapid decision and learning cycles
  • Dynamic people model that ignites passion
  • Next-generation enabling technology

Having all five in place and working together results in a mindset shift that paves the way to organizational agility.

A chart explaining McKinsey’s five trademarks of agile organizations.

The five trademarks of agile organizations. Source: McKinsey.com.


Benefits of creating an agile environment

The characteristics that make IT agile are the same attributes that make organizations agile: constant feedback and learning, flexibility, collaboration, creativity, and innovation. Adopting an agile process, whether in software development, HR, or marketing, has numerous advantages, including:

1. Attract top talent and increase retention

Acquiring top talent is one of the many challenges organizations face. Not only are skilled professionals in short supply, they also generally do not stay long. In the tech industry, for instance, the employee tenure average for many Silicon Valley companies, including Dropbox, Tesla, and Square, is between 2 and 3 years.

Studies show that salary increases don’t necessarily deter employees from leaving. Many of today’s workers admit that company culture plays a pivotal role in employee turnover, and 94% of employees are willing to stay longer if companies invest in their learning and development.

As for professionals working from home, Upwork’s 2020 Future Workforce report found that 64% of top professionals prefer to work independently.

2. Increase overall productivity

With technology comes a multitude of agile tools that enable distance work, increase collaboration, and boost productivity among teams.

When employees aren’t hampered by rigid structures and processes (e.g., no bureaucracy to worry about for approvals and dissemination of relevant information) or inflexible job descriptions that limit what they can do, they are better able to fluidly collaborate with their peers, develop skills aligned to their goals and objectives, and play to their strengths.

3. Develop a competitive edge

Because agile organizations are highly collaborative, anticipate and embrace constant change, and recognize the value of customer feedback for continuous improvement, they can:

  • Quickly respond to evolving market demands and disruptive trends
  • Create innovative products and services that are in line with what customers need

How to create an agile environment

So how exactly can small businesses create an agile environment? Let’s take a look at some tips and best practices.

Tip 1: Get everyone on board

Transitioning from a traditional top-down organization in which decisions are made by just a few in leadership positions to an agile work environment with a flat structure will require changes to how people work. It’s vital that everyone is on board — from the CEO down to the newest entry-level person in the organization.

Tip 2: Empower people

Empowerment isn’t just about conferring titles or responsibilities. It’s also about providing an environment and nurturing a workplace culture where employees can maximize their full potential, make their own decisions, and take charge of their actions. This means:

  • Setting clear expectations
  • Providing the tools — such as project management software, Gantt and burndown charts, collaboration systems, etc. — and resources to get things done
  • Relinquishing control and allowing employees to perform their jobs the way they see fit
  • Providing constructive feedback
  • Being receptive to various ideas and input
  • Recognizing achievements
  • Clearly communicating the company’s vision

Tip 3: Encourage learning

Achieving organizational agility doesn’t happen overnight. Plus, market trends, technologies, and customer demands are evolving at an unprecedented pace.

So, the importance of an organizational culture that fosters continuous learning cannot be emphasized enough. Learning from past mistakes and applying those learnings to future endeavors is a core tenet of agile.

Tip 4: Promote transparency

Organizational transparency is all about sharing information, whether good or bad, with employees, and endeavoring to keep them in the loop regarding issues and strategies, among other things.

This, in turn, strengthens collaboration, promotes accountability, and allows team members to make timely and informed decisions.

Tip 5: Minimize bureaucracy

Bureaucracy, according to Investopedia, is a term often used to describe complex organizations with multilayered systems and procedures. Although these processes and structures are designed to achieve control and uniformity throughout the company, they can also hamper innovation and operational efficiency.

Eliminating bureaucracy in the workplace can mean:

  • Finding the shortest route to get to what you want done
  • Eliminating routine processes that aren’t necessary
  • Minimizing paperwork, if possible
  • Prioritizing tasks and projects
  • Not delaying decision-making
  • Becoming an action-oriented organization, hiring people of action, and rewarding them for action taken

The agile working mindset

Agile, at its core, is a mindset. It’s a constant-learning thought process that fosters a culture of respect, ownership, and accountability and delivers value and adaptability. Organizations that put a premium on agility and provide the frameworks necessary to support it are bound to outperform their peers.

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The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned. Click here for more information.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool owns shares of and recommends Apple, Microsoft, Square, and Tesla. The Motley Fool recommends Upwork and recommends the following options: short March 2023 $130 calls on Apple and long March 2023 $120 calls on Apple. The Motley Fool has a disclosure policy.