How to Structure an Agile Organisation

With all the talk of Zappo's adopting a holacratic business model, it seems that lean and agile business models are gaining interest across different business sectors. This is adding to the growing group of companies starting to adopt Agile Business Management; that is the agile principles and techniques outside of IT.

The Sad Truth

The sad truth is that there are very few truly agile corporations. While there are often agile teams, projects and people (even outside of ICT), for an organisation to be completely agile requires such a mindshift that very few have attempted it.

Good corporate governance is about getting hundreds, if not thousands or hundreds of thousands, of employees all working, in harmony, towards the common goals on behalf of the shareholders via the board of directors. Governance processes help to ensure that managers are making appropriate business & financial decisions, managing staff & their deliverables, and adequately controlling quality processes.

This tends to translate into rigid structure, strong contracts and the centralisation of authority. Compare this to the Agile Manifesto:

  1. We value individuals and interactions over processes and tools.
  2. We value [completed customer requirements] over comprehensive documentation.
  3. We value customer collaboration over contract negotiation.
  4. We value responding to change over following a plan.

It takes a brave company to change their governance processes, let alone organisational structure, to encourage this.

An Agile Structure

Those organisations that are willing to take the risk, and associated reward, involved in being an adaptive business will often apply both agile management and agile work practices (both very important) but will disregard the importance of an agile organisational structure.

An organisation that is positioned to adapt to the changing needs of their customers, needs a complementary organisational structure that is both efficient and highly functional. This means a change in the way we think about our organisation. Rather than see the organisation as a pyramid, with executives at the top, graduates and entry level positions at the bottom and everyone else in between; start to think of it has a bee-hive. Hundreds of cells, collaborating towards common goals and outcomes, but ultimately independent in action.

An agile organisation achieves this by reducing the structural hierarchy and minimising communication overheads through the creation of semi-autonomous, self-organising and cross-functional teams. In this environment, a single, mid-level manager should be capable of supporting 10-20 cross-functional teams, consisting of between 5-9 full-time staff working towards a single, specific outcome.

To understand what an agile organisation should look like, there are 3 concepts you need to understand;

1: Cross-Functional

Cross-functional teams contain all the key skills required to deliver to the needs of their customers. Unlike traditional hierarchical or matrix management structures, cross-functional teams are responsible for the delivery of a product or service from design to completion, and should not need input from, or handover to, other teams at pre-determined stages.

Benefits to this integration include

  • faster delivery times by reducing handover and communication delays,
  • consistent ownership of work,
  • rapid response to new issues, and
  • improved information sharing across the organisation.

The best cross-functional teams also integrate the customer, or customer representative, within the team. The will significantly improve customer engagement and, by sharing the accountability for delivery, will dramatically improve the overall outcomes.

2: Self-Organising

Self-organising teams have the responsibility and authority to create a functional, internal team structure by replacing, retraining, or reorganising team members as needed. This is most evident when the customer’s needs exceed the team’s current capabilities. The team should then self-organise by transferring, or in some cases recruiting, staff with those skills into their team.

There are 5 factors that teams need to take into account to ensure a complementary team structure.

  1. Individual Team Members will have specialisations and preferences, and whilst they should be able to take on different roles, they may not be as productive.
  2. Team Members should be able to take on multiple roles, though they will not be able to take on ALL roles. You will need a good coverage of skills to ensure role coverage.
  3. There is a productivity penalty for context switching; you want Team Members to focus on a specific role, and switch only as required.
  4. Staff who can take on multiple roles, tend to be more creative in their work.
  5. The Customer’s Requirements drive the structure of the Team, and often require multiple Team Members in the same role to meet them.

3: Self-Managing (or Empowered)

But by far the largest bottleneck to organisational agility is the bureaucracy and management needed to ensure that team outcomes align to customer expectations and corporate strategy. In an agile organisation, this can be overcome by giving individual teams the accountability and authority to engage with, and deliver to, their customers without undue interference within the bounds set by the customers’ requirements.

Trust is the most important factor in developing empowered teams. Staff must trust management and management must trust staff. Customers must trust the organisation, and the organisation must trust their customers. Trust comes from communication and respect. Put in place a good communication framework and you are removing many of the impediments to self-management of staff.

A team facilitator may be used to simplify cross-team communication, ensure consensus within a team and align with corporate expectations. Ideally this should be an ordinary team member, but may also be a team leader function if required, although it needs to be noted that facilitation and management require different, though complementary, skillsets.


As with everything, agile organisational structures and cross-functional teams are not without their risks. For example; understaffed teams may not be able to meet their customer's expectations, a team may lack members with required or specialised skills, or individuals may be unable to dedicate the time required to the team (through either unplanned leave or other corporate requirements). By being aware of these, and related risks, you can put in place simple resource mitigation strategies.

Final Thoughts

There are a lot of processes, techniques and frameworks under the agile umbrella that can be applied outside of ICT. But, whatever the ultimate goals, an agile organisation emphasises adaptability and customer interaction, but needs to remain aligned to the core agile values.


Melbourne, Australia

‘Directing the Organisation’ is published by IT Governance Publishing available on Amazon, at Book Depository, and all good bookshops.


Image is CC BY NC - justus.thane (via flickr)