Created in the 2000s by software developers, the Agile way of working is fast becoming the defining approach across industries and functions amid a fast-changing business landscape. Last year, 44 percent of some 2,200 companies surveyed by McKinsey had become fully or partially Agile. In Agile organisations, activities are planned around cross-functional, self-managed teams, each with a clear purpose and focused on specific customer needs. The reward is often improved performance and customer-centric innovation.
But not every company, or every department in the same company, is cut out for such a decentralised, iterative way of working. Those who force it on themselves risk upending organisational culture with little payoff. GE provides a sober example. The company’s years-long, unsuccessful attempt to implement Agile under then-CEO Jeff Immelt ended in 2017, when 30 percent of its market capitalisation had evaporated.
We analysed the characteristics of organisations and tasks best suited to Agile. Here’s what we found, as outlined in a working paper: First, Agile works best for modular and sequential
