What is Organizational Agility?

Agile methods were only appropriate for small teams. Research on agile methods has been focused mainly on the software development function. However, in recent years, multiple authors have recognized a need to scale the agile concept to the enterprise level. For example, Kettunen and Laanti (2008) and Reifer et al. (2003) have called for this. Leffingwell (2007) developed seven practices to complement the standard agile methods like Scrum, XP, and DSDM (as shown in Table 1). These seven principles address various dimensions that agile approaches should scale, such as the link to other functions of the organization (e.g., marketing, operations), the product (e.g., architecture, requirements), and the development process (e.g., distributed development). Leffingwell also created the Scaled Agile Framework (SAFe²) based on the experiences of organizations that have adopted agile at an enterprise scale. SAFe describes practices and activities, roles, and artifacts.

Table 1: Seven additional practices to scale agile to the enterprise level

Source: Leffingwell (2007)

Meanwhile, Overby et al. (2005) described ‘enterprise agility’ as a company’s capacity to detect and adapt to environmental changes. They identified two key aspects: the ability to sense changes and respond effectively. Organizations can be positioned along these two dimensions as they may possess different capabilities to sense and respond. For instance, an organization may have well-developed abilities to sense new market opportunities but need more developed capabilities to react appropriately (e.g., deliver newly requested features rapidly). Software organizations should aim to develop their sensing capabilities, for example, through usage analytics of their software delivered to customers, as well as develop their responding capabilities, for instance, through quickly adapting and providing new features.

Sambamurthy, Bharadwaj, and Grover (2003) suggested that organizational Agility refers to a firm’s ability to orchestrate internal operations, utilize the ecosystem of its external business partners, and interact with customers. Organizational Agility also relates to a firm-wide capacity to deal with unexpected changes in commercial surroundings through rapid and innovative replies that use changes as opportunities to develop and thrive (Lu & Ramamurthy, 2011).

Chakravarty et al. (2013) defined Firm Agility as proactively anticipating and seizing market opportunities. Thus, the company can adjust its position and strategies and develop new business methods to gain an early advantage in changing circumstances. Tallon and Pinsonneault (2011) conceptualized Agility as a firm’s capacity to respond quickly to environmental changes and opportunities.

Sambamurthy et al. (2003) pioneered work on organizational agility, and their definition and dimensions of organizational agility have profound implications for later related research. Hence, in this study, I follow Sambamurthy et al.’s (2003) work and conceptualize organizational agility in terms of operational, partnering, and customer agility.

Operational Agility refers to the competence of a firm’s operation processes in responding to innovation opportunities economically and quickly (Sambamurthy et al., 2003). It represents the capability of firms to make fast changes and effectively modify internal procedures in dealing with changes, which emphasizes the operation procedures of firm flexibility and rapid response. Faced with modifications, such operation procedures are the prerequisites that enable firms to propose reasonable innovative solutions quickly (Lu & Ramamurthy, 2011).

Partnering Agility is the competence of firms to explore and exploit opportunities via integrating relevant resources and assets and to offer an ability to accommodate or amend their networks when they need access to knowledge, support, or competencies that do not currently exist in the networks (Agarwal & Selen, 2009). Partnering Agility enables firms to establish a virtual, extended, or strategic partnership network to seek opportunities for competitive and innovative actions (Sambamurthy et al., 2003).

Customer agility is an important parameter that determines a firm’s ability to rapidly perceive and respond to the customer’s relatively innovative competitive and opportunities actions (Roberts & Grover, 2012a). Customer agility refers to a firm’s cooperation with customers in exploring and exploiting opportunities for innovation (Sambamurthy et al., 2003). Customer agility represents opportunities where market intelligence can be acquired from customers, and a firm can take corresponding competitive actions (Kohli & Jaworski, 1990; Roberts & Grover, 2012).

The link between IT and organizational Agility is an exciting research topic and has been studied by many scholars over the past decades (Lee et al., 2015; Lu & Ramamurthy, 2011; Roberts & Grover, 2012; Sambamurthy et al., 2003; Tallon & Pinsonneault, 2011). It is generally considered an enabler of a firm’s Agility, but It is not unusual for IT to hinder organizational Agility and sometimes even impede it (Lu & Ramamurthy, 2011). A few studies showed an enabling role (Huang et al., 2012; Lu & Ramamurthy, 2011; Tallon & Pinsonneault, 2011), while a few others examined the disabling role of IT on Agility (Malhotra et al., 2005; van Oosterhout et al., 2006; Retting, 2007). Therefore, the “IT–agility contradiction” has been appraised in recent years (Lu & Ramamurthy, 2011). There is no universal answer to the question, “Does IT enhance or impede agility?” Cloud computing, considered the next generation of the IT revolution, has unique advantages compared with traditional IT. Due to its unique benefits, I believe the “IT–agility contradiction” does not exist in cloud computing-based systems. A few conceptual works have posited the enabling role perspective (Cegielski et al., 2012). However, there is a lack of empirical research to support this hypothesis; the existing research on how cloud computing affects organizational agility has not yet produced conclusive results. The current studies on the impact of cloud computing on organizational Agility are inconclusive.

Some empirical research tests several elements of the conceptualized nomological relationships. Lu and Ramamurthy (2011) prove the links between IT competencies and organizational Agility. Tallon and Pinsonneault (2011) consider the connection between Agility and organizational performance influenced by environmental volatility and IT competencies. This also affects how thriving companies can use their agile abilities to seize opportunities for innovation and adapt to changing business conditions or launch new competitive actions. As is the case for most dynamic capabilities, more than creating agile capabilities is required; instead, managerial efforts must facilitate their implementation (e.g., Sirmon et al. 2007). In this regard, IT competencies activate the firm’s agile capabilities and enhance performance. Thus, IT competencies also play a facilitative role.

Moreover, environmental dynamism moderates IT competencies’ enabling and conducive functions (Rai et al., 2006). Tallon and Pinsonneault (2011) demonstrate the connection between Agility and firm performance; it is essential to consider how environmental volatility affects this relationship. However, consistent with a traditional approach to the study of contingencies, they examine the effects of interactions between environmental volatility and skill on a solid performance. In contrast, following Sambamurthy and Zmud (1999).

References: 

Chakravarty, A., Grewal, R., & Sambamurthy, V. (2013). Information Technology Competencies, Organizational Agility, and Firm Performance: Enabling and Facilitating Roles. Information Systems Research, 24(4), Article 4. https://doi.org/10.1287/isre.2013.0500

Kettunen, P., & Laanti, M. (2008). Combining agile software projects and large-scale organizational agility. Software Process: Improvement and Practice, 13(2), 183–193. https://doi.org/10.1002/spip.354

Leffingwell, D. (2007) . Scaling Software Agility: Best Practices for Large Enterprises. Addison–Wesley.

Lu & K. (Ram) Ramamurthy. (2011). Understanding the Link Between Information Technology Capability and Organizational Agility: An Empirical Examination. MIS Quarterly, 35(4), Article 4. https://doi.org/10.2307/41409967

Overby E, Bharadwaj A, Sambamurthy V (2006) Enterprise agility and the enabling role of information technology. Eur. J. Inform. Systems 15:120–131

Reifer, D.J., Maurer, F., Erdogmus, H. (2003). Scaling agile methods. IEEE Softw. 20 (4), 12–14.

Sambamurthy, Bharadwaj, & Grover. (2003). Shaping Agility through Digital Options: Reconceptualizing the Role of Information Technology in Contemporary Firms. MIS Quarterly, 27(2), Article 2. https://doi.org/10.2307/30036530

Tallon & Pinsonneault. (2011). Competing Perspectives on the Link Between Strategic Information Technology Alignment and Organizational Agility: Insights from a Mediation Model. MIS Quarterly, 35(2), Article 2. https://doi.org/10.2307/23044052