Last year in Cascais, at our trainer meetup, we found ourselves diving into an intriguing question: What are the principles of Creating Agile Organizations (CAO)? It’s one of those seemingly simple questions that stick with you long after the discussion ends.
Initially, we looked to the Guides in the CAO book, seeing them as possible principles. But something about the question kept resurfacing in my thoughts. What really are the core principles that organizations need to embrace to thrive in an ever-changing world?
Now, back in Cascais for some remote work, I took the opportunity to reflect more deeply. I revisited the Guides, reexamined our conversations, and distilled what I believe are the 8 Principles. These principles are designed to help organizations build resilience, adaptability, and sustained value delivery in a complex and dynamic environment.
1. Context-Driven Approach
Organizations don’t operate in a vacuum. Every organization has a unique context defined by its environment, market, culture, and strategic goals. A one-size-fits-all approach to organizational design rarely works.
Principle: Tailor organizational design to your unique context and strategic objectives. Understand your environment and adapt your structures and processes to meet its demands.
2. Capability-Driven Design
An organization’s ability to execute its strategy depends on its capabilities. Identifying gaps in these capabilities is critical to success.
Principle: Identify and address key capability gaps to align with and achieve strategic objectives. Build and strengthen the capabilities that matter most to delivering value.
3. Design Product Groups Around Value Creation
The way you structure product groups has a direct impact on the value your organization delivers. By primarily organizing around the goods and services you provide, you ensure alignment with customer needs.
Principle: Organize groups around delivering goods and services to maximize customer value and drive impact.
4. Loosely Coupled Groups
Too much interdependence between groups can create bottlenecks and reduce overall resilience. Instead, fostering independence allows groups to adapt and respond effectively.
Principle: Promote group independence to enhance overall resilience and effectiveness, ensuring each group can contribute meaningfully to organizational goals without impeding the other groups.
5. Shared Services for Integration
Shared services play a crucial role in providing support and maintaining organization-wide standards. However, these services should not carry essential components that belong within product groups.
Principle: Use shared services for group support and standards without embedding critical components of product groups.
6. Optimize System-Wide Performance
Focusing on the performance of individual components can often lead to suboptimal outcomes for the system as a whole. True success lies in optimizing for the bigger picture.
Principle: Optimize the interaction of structure, process, rewards people and strategy for overall performance, even at the cost of individual components.
7. Design for Adaptability
In a world of constant change, adaptability is essential. Organizations must reduce inefficiencies and bottlenecks that hinder their ability to respond to shifting demands.
Principle: Minimize workflow delays, transaction costs of repeated activities, and switching costs of stopping and starting work. Reduce single-skilled groups by fostering broad specialization to eliminate single points of bottlenecks, enhancing adaptability and accelerating value delivery.
8. Emergent Coordination
Large meetings and rigid coordination methods can stifle progress. Instead, focus on creating an environment where coordination emerges naturally and effectively.
Principle: Replace large meetings with focused, purposeful discussions to enable effective collaboration.
Applying the Principles
At first glance, these principles might seem straightforward—even obvious. But as any leader or organizational designer knows, applying them in a complex organization is the real challenge. By embracing these principles, organizations can build orgs that are resilient, adaptable, and thrive in uncertainty.
Want To Learn More About CAO?
Visit the CAO website.