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Overview of the advantages and disadvantages of agile structures

Not for everyone: What agile work is all about

  • Sarah Schmid
  • Lukas Lahme
  • Wednesday, 24. May 2023
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Agile structures are considered to be a modern solution to many of the problems companies face today. But not everything can be solved by switching to agile working. What are the most important elements of agile structures? What problems can be expected in the switch from classic to agile work?

“Agility in companies” seems to be the solution to everything. In management discourse, agility is generally understood to mean becoming faster and more adaptable to meeting customer requirements, for example – a goal everyone can get behind.

Agile working has three recurring elements

It is easy to find fundamental support in organizations for an agile approach. However, problems in achieving this goal arise due to a lack of concreteness regarding implementation. Companies often resort to general descriptions emphasizing characteristics such as motivation, trust, progress, etc. But what happens concretely in agile organizations? Three elements emerge again and again:

  1. dissolution of silos
  2. implementation of flat hierarchies
  3. stronger focus on results

What do you want to achieve by breaking down silos?

Silos are departments that are strongly demarcated from one another. Only a few stakeholders, such as the department heads, are in regular contact. This leads to each department considering its own goals to be the most important. Often it is not even known how work is done in other parts of the organization.
In an organization that sells washing machines, for example, the development department is busy designing machines that are as energy efficient as possible. The machines should also offer customers many options for washing their clothes, from very fast and very hot to gentle on clothes and gentle on the environment. For the development department, the goal is to be at the cutting edge of technology and to deliver a machine that is easy to operate.

The strategies of the respective departments are often not known.

The goal of the marketing department in the same company, on the other hand, is to promote the machines and sell them in as large numbers as possible. This department is busy highlighting unique selling points and clearly differentiating the company’s products both from the competition as well as from predecessor models. Of course, input from the development department is called for here.

From the development point of view, adaptations are unnecessary. Why should a washing machine get new functions when the existing functions cover everything needed? If it’s just about advertising, surely there are other ways!

Agile working means thinking cross-functionally

A conflict now arises between the two departments that may seem strange to outsiders. Within the respective “local rationalities”, however, it makes sense. Local rationality means that each department attempts to fulfill the expectations placed on them as best they can. Development does not want to have to constantly start from scratch. Entirely new concepts throw the previous design out the window and are prone to error. It is much more logical to build on previous strengths. For the marketing department, however, this would be a disaster. If you can’t clearly differentiate old products from new, it becomes challenging to sell new models. After all, the predecessor is just as usable.

Agile Organizations

Agile: From Buzzword to Reality

The conflict is a consequence of the division of labor. Everyone has only their own tasks in mind, which causes the big picture to fade into the background. In agile organizations, this problem is averted. There is less work in departments and more work in interdisciplinary projects and teams. The joint work creates an understanding of the other profession’s local rationality. In the case of the washing machine manufacturer, this could mean that the organization is not oriented by function but by product. The development and marketing of a model would then be driven forward by a team with members from both “camps”.

The benefits of flat hierarchies

Flat hierarchies enable a better flow of information in the organization.
Although a strong hierarchy helps with the vertical dissemination of information, such as announcements and decisions, the information collected “at the bottom” rarely reaches the top of the organization in its original form. This is because each level of the hierarchy only passes on specific information that it considers relevant. As a result, information that seems unimportant – or sometimes even undesirable – is filtered out.

With flat hierarchies, the distance that information has to travel is shortened. The goal is that decisions are made more quickly in this way. And that there is a better overview of the general situation. Sometimes, this also involves hierarchy-free teams operating without formal superiors. This way of working increases motivation and strengthens identification.

More results orientation – but also more interim reports

Agile companies move away from a traditional process orientation to a results orientation. Employees do not orient themselves on values on a scale or on completing checklists. The result and the product are key. This allows room to manoeuvre since only the goal is named, and employees can then decide how best to achieve it.

You don’t wait until the final result.

A core element of agile working is that tasks are managed iteratively. This means that checks, course corrections, and reevaluation of original goals are an integrated part of the process leading to the end result. However, this should not be confused with a return to the checklist. While a checklist also helps to track intermediate results, it does not allow for course corrections. Successful step 1 is always followed by step 2 until the end of the process is reached. Proceeding iteratively means that the work and insights gained can also change the desired outcome.
Companies increasingly implement this way of working in project formats.

Agile working solves many problems – and causes some new ones

Although the advantages of agile structures are undisputed, it is also necessary to consider the disadvantages in order to make an informed decision about how an organization works.

  1. The shift to agile teams and projects leads to a decrease in silo thinking along “the line”, i.e., along departments organized by function. But at the same time, each team and each project develops its own awareness. So local rationalities are not ended; they merely apply to other contexts.
  2. Furthermore, these “agile islands” have a hard time when their results are carried back into the organization. Suddenly, hierarchy and departmental logic become relevant again. Because if no higher hierarchical level is interested in the results, they are useless. Someone has to vouch for them.
  3. Organizations with flat hierarchies and consensus-oriented teams also tend to be risk-averse. Decisions tend to converge on the lowest common denominator that can be agreed upon. Hierarchy is again needed for controversial decisions that are implemented even when members are not convinced.

The fact remains that agile working is not for everyone and is not the solution for everything. It is much more a question of how much agility – what extent of agile structures – is needed for a transformation. If silos can’t be torn down, but collaboration needs to be changed, the organization can integrate agile structures. A key design question is: what should the new organization be able to do better than the existing one? What are we trading off when we integrate agile structures? How do the two relate to each other? – all the while keeping in mind that there is no perfect organization.

Sarah Schmid

Sarah Schmid

is fascinated by the culture of start-ups and how expectations are shaped in an environment where “no rules!” seems to be the only rule.

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Lukas Lahme

Lukas Lahme

aims to describe phenomena in concrete terms and not to hide behind ambiguous terminology.

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