Singapore companies are going agile to stay ahead

MANAGING businesses in the time of Covid-19 is delivering important insights. Decisions that used to take months in large organisations are taken in days. Likewise, companies able to be agile in the face of existential shocks and the ongoing pandemic-related volatility and uncertainty can adapt, survive and even thrive.

Such lessons are here to stay. That is why agility is getting so much attention; globally, online searches for the term "agile transformation" yield around 100 million hits.

As the pandemic continues to increase the push towards more agile businesses, the good news is that Singapore companies are among the leaders. More than 70 per cent of the Singapore companies we surveyed said they were preparing for, or are in the process of, becoming agile - well above the global norm. But how companies deliver on these agile goals will be an enabler of their, and Singapore's, success.

Our latest research, which surveyed over 2,000 respondents across 800 global organisations, shows that being agile is not just a new way of working but an essential strategy for business success. It also reveals how companies are driving agile transformation, and the impact that transformation is having on the bottom line.

First, what does agile transformation look like?

Of the 800 organisations we surveyed, around 30 per cent are driving highly successful agile transformation. They are reimagining the entire organisation as a network of high-performing teams - each going after clear, end-to-end business-oriented outcomes, and possessing cross-functional skills and capabilities to solve complex and novel problems. The teams are essentially interconnected mini businesses, obsessed with creating value rather than just delivering functional tasks.

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A second question for anyone considering agile transformation is why become agile?

Our survey provides a clear response: highly successful agile transformation typically delivered around 30 per cent gains in efficiency, customer satisfaction, employee engagement, and operational performance. Transformation made organisations five to 10 times faster and accelerated innovation. These organisations also had three times as many chances of becoming a top-quartile performer among peers than those who had not transformed - a clear competitive advantage.

Businesses going agile in the face of the pandemic will be well-positioned to emerge stronger and better.

Importantly for technologically-advanced Asia, agile transformations can leapfrog digital natives. Companies that have successfully transformed reported significantly higher operating maturity (measured across 17 elements of agility) compared to digital natives. They also considered their technology setup to be a competitive advantage - possibly because many digital natives are already accumulating decades of legacy in their IT setup.

Finally, let's look at how companies become more agile. Our research provides insights and lessons for Singapore companies.

On execution, Asia is ahead of the pack. More than two-thirds of companies here are preparing to start, have started, or have completed agile transformations. Despite being more recent adopters, they are more likely to achieve successful transformations. One explanation for this could be that the more collaborative, collective culture of Asian companies means they can pivot quicker to an agile way of working.

SPEED AND SCALE

Ensuring the top team gets it is vital. We found that change driven from the top all the way down an organisation increases chances of success to 75 per cent, and that employee engagement is key.

Scale and speed are also major success factors. Or to put it another way, companies should go big, or go home.

Organisations driving highly successful agile transformations are embracing agility at scale instead of treating agile as team-level experiments. They go beyond agile teams to build what we call connective tissue - rewiring the entire operating model (strategy, structure, process, people, and tech).

They are also moving fast, completing the main phase of the agile transformation in less than 18 months to preserve momentum and avoid exhausting the organisation. They are starting with frontrunner areas to adjust their implementation approach so they can more quickly scale up other parts of their organisations.

We also found that Singapore companies tend to take a test-and-learn approach to agile transformation. Agile Singapore companies are around 16 per cent more likely than global counterparts to experiment carefully before scaling transformation.

One Asian financial institution piloted agile transformations in Singapore and Vietnam aimed at bringing in a renewed focus on customer-centricity, while simplifying and connecting the organisation. Following these pilots, it has launched a second wave of agile transformations in two different markets, with the third wave to follow shortly. This measured approach has allowed the organisation to learn, iterate and create its own tailored approach to agile.

The benefits of a test-and-learn approach need to balance against the need to scale agile transformation beyond the team-level to the wider organisation to deliver results - and against the need to sustain momentum. While Asian companies are good at getting started, some struggle with momentum, lagging global counterparts on metrics relating to people and corporate culture.

Businesses in Singapore have also identified other challenges to becoming an agile company. Of the Singapore companies surveyed that did not embark on agile transformation, 70 per cent identified lack of familiarity with enterprise agility as a barrier.

Singapore's headstart on agility should give more companies the confidence to embark on agile transformation. Scaling agility is key to building resilience amid the volatility and uncertainty that is likely to continue, and can help keep Singapore and its companies ahead of the pack.

• The writers are from McKinsey & Company's Singapore office. Denis Bugrov is a senior partner and Asilah Azil is an associate partner.