With the agile company to unfair competitive advantages.

When I wrote an article on the agile company a few months ago, I didn’t actually think it would trigger such a big response. But it did. In countless conversations, I had to explain further what we mean by this, how it works and, above all, how a traditionally organized company could move in this direction. I also realized that there is a great deal of dissatisfaction with conventional hierarchical organizational models. In this article, I would like to highlight the fact that the agile company also offers a whole range of economic advantages.

(Reading time: 4 minutes)

Decision quality

Agile companies should rely as much as possible on self-organization. This is typically done by forming teams within the workforce. A team is always a group of people who cover certain areas together. For example, working for a customer or doing part of the production. Teams should typically be no larger than 10 and no smaller than 4 people. Decisions should be made in these teams whenever possible.

In other words, by the people who actually work on the things that require a decision. In traditional companies, the more “important” such decisions become, the higher up in the hierarchy they are passed on. Theoretically, this superior should now familiarize themselves with the matter, get input and then make a decision.

Unfortunately, in practice this usually happens quite differently. The line manager has so much on his plate that he makes a decision lightly, i.e. without thorough clarification. He often has the feeling that he can do this. Be it from experience or because he is the superior. This is pretty convenient for subordinates. They can simply push delicate matters away and, as is often observed, they will do so more and more if the superior makes a relatively quick decision. A model that systematically produces the wrong results.

Quick, mostly wrong decisions

I have made thousands of such decisions in my career and I would say that 70% of the time I had no real idea what they were about. Of course, I didn’t think that at the time of the decision.

Rather, I have learned in recent years that teams simply make the better decisions. If someone comes to my table today and asks me to make a decision, I usually ask them first why they think I can make that decision. For example, have I spent the last week dealing with the problem? Had I spoken to the customer? Did I know the consequences of the decision? I haven’t fallen on my head, but I would have to familiarize myself with all of this practically immediately. That takes time and I can never do it in a reasonable amount of time to the same extent as the team members who have been dealing with it for longer.

So I don’t do it either. If I have to make decisions solely because I’m the line manager, I can’t really contribute anything factually. It’s different when I’m asked to contribute my experience in an area. To be part of the decision-making process. To help the teams come to a decision.

I believe that a group of people who deal with a problem and discuss possible solutions controversially will ultimately come to better decisions than an individual. Better decisions, in turn, mean hard cash for the company.

The fairy tale of top-down control

The fact that it is very difficult to control employees in an agile company was also always mentioned in the discussions. On the one hand, I don’t think much of controlling employees. I either trust them and know that they are doing a good job or I have employed children. You have to control children to make sure they don’t light candles in their room, wreck dad’s car or torment the neighbor’s cat.

You shouldn’t have to control employees. Moreover, the countless examples in the financial sector show that it is precisely traditional control that is fundamentally failing. There is no other explanation for these blatant offenses and damages.

If employees are organized in teams and work together, this creates what I call social self-control. The group controls itself, so to speak, and settles differences within the team. In the vast majority of cases, this works; if it doesn’t work, the team falls apart. In a way, this is a breaking point.

Away with middle management

If the teams function as I have described in the temporary sections, you need far fewer people in management at a stroke. In other words, you can safely leave out all the middle management.

Middle management is a dangerous zone for the company anyway. In most cases, employees are promoted to middle management if they have paid particular attention to internal politics and superiors. And it takes a lot to make good personnel decisions in this area. And things are correspondingly bad. Nowhere else in companies do I see so much unproductivity and so much hot air as in these hierarchical middle layers.

Typically, however, these employees are relatively expensive. If you remove this layer completely, you can generate a considerable cost advantage. Clever entrepreneurs use some of these savings to finance higher salaries for team members.

Does this also work in large companies? Very probably yes

Three years ago, I often heard in conversations that this was a great model and that we at AOE could easily do it with 100 people. But it would change dramatically if we had twice as many people. Today we have 300 employees and it works better than ever.

And we don’t see why it shouldn’t work even with 600 employees. On the contrary. Since we don’t have middle management, it is much easier to grow because some of the “structures” don’t have to grow with us because this part of the “structures” doesn’t even exist.

Management is the support department of the workforce

In such a company, the self-image of management must change. While management teams in traditional companies see themselves as drivers and leaders, management in agile companies is, to put it somewhat banal, the support department for the workforce. Its task is to help employees whenever they get stuck. Of course, management also has to perform certain legal tasks. However, the concept of “servant leadership” is at the forefront.

For this to succeed, the style must also be changed. People from management need to be present, easy to access and easy to deal with. No weeks of waiting for an appointment, no audience cults, no overwork and non-stop phone calls, just being there for the employees.

The CEO a discontinued model?

As a logical consequence of agile organizational development, the distribution of roles in management is also becoming obsolete. In fact, it should simply be another team. Nevertheless, there are differences.

On the one hand, the role of the CEO is extremely important for the external image. A CEO represents the company to the outside world and should constantly tell its story.

What would indeed be a possible further development, however, is for different people from the company to start performing these representative functions. For example, a group of five people who all have the relevant skills and credibility in different areas to represent the company to the outside world. This does not have to be the members of the management team. But of course they can be.

I think and experience that the agile company offers enormous advantages as an organizational form. When I compare the output, adaptability and speed of such companies with traditionally organized companies, I find that they are fundamentally superior. At first glance, the cultural advantages may appear to be in the foreground. But one should not be deceived. There are also drastic cost advantages when you look at the figures.

Questions and feedback welcome

At this point I would like to encourage all interested parties to send in questions or comments as soon as possible. I may soon be holding a small Q&A session. But I will certainly answer all questions individually.