What Leads to Organizational Agility: It's Not What You Think

Interest in agility has grown tremendously in recent years, leading to considerable theorizing, research, and practice aimed at creating more agile individuals, teams, and organizations. The ultimate goal of agility interventions is to enable organizations to compete more successfully in today's hypercompetitive and rapidly changing work environment, but relatively little research has examined the impact of agility interventions on organizational performance. This paper describes research in which a model of organizational performance is developed and tested that examines the role of agility and its potential antecedents as correlates of competitive success. Based on data from 325 companies and a subset of 114 publicly traded companies for which financial performance metrics were available, agility was shown to be a blend of both proactive and reactive components, the latter of which essentially describe resilience. This agility-resilience construct was shown to be significantly related to measures of corporate financial performance, with companies high on agility-resilience showing 150% higher return on investment (ROI) and 500% higher return on equity (ROE). Three organizational characteristics-stability, rightsized teamwork, and relentless course-correction-were all shown to have significant direct effects on agility-resilience, which in turn, served to mediate relationships to organizational financial performance. These findings challenge some commonly accepted "best practices" assumed to create agile organizations, and we conclude with suggestions for alternative approaches to teamwork, change, and performance monitoring that may be "better practices" for enhancing organizational performance. What's It Mean? Implications for Consulting Psychology Based on data from 325 companies worldwide, this study shows that three organizational characteristics-stability, rightsized teamwork, and relentless course-correction-play an especially important role in creating organizational agility and resilience, which in turn, lead to substantially higher organizational financial performance. This article provides specific guidance and behaviors for leaders and teams to help them build these organizational characteristics into their work environments.