McKinsey Explainers
What is agile?
Agile is a way of working that seeks to harness the inevitability of change
rather than resist it.
March 2023
Quick on your feet: think for a minute of your
favorite athlete. Unless this person is a bodybuilder,
strength and sheer power are only part of the story.
For most sportsmen and women, real success on
the playing field comes with a certain hard-toteach nimbleness—the ability to quickly take in new
information and adjust strategy to achieve a specific
result. Part of the appeal of sports is the excitement
that comes with constant change, and—discounting
the vicissitudes of luck—the result comes down to
how athletes apply their abilities in response.
Change is also a constant in business (and, yes, life).
Agile, in business, is a way of working that seeks to
go with the flow of inevitable change rather than
work against it. The Agile Manifesto, developed in
2001 as a way of optimizing software development,
prioritizes individuals over processes, working
prototypes over thorough documentation, customer
collaboration over closed-door meetings, and swift
response to change over following a set plan. In
the years since its inception, agile has conferred
competitive advantage to the organizations that
have applied it, in and out of the IT department.
As our business, social, economic, and political
environments become increasingly volatile, the
only way to meet the challenges of rapidly changing
times is to change with them. Read on to learn more
about agile and how to adopt an agile mindset.
What is an agile organization?
Let’s go back to sports for a minute. Maybe you’re
a great free throw shooter in basketball. You make
nine out of ten shots when you’re by yourself in
your driveway, shooting around for fun. But when
you meet friends for a pickup game at a nearby
court, your shot is off. People keep jumping in front
of you when you’re trying to line up, and maybe
the sun is shining in your eyes from an unfavorable
angle. You make maybe a couple of shots the whole
game. The following week, disappointed by your
performance on the court, you decide to make a
change. Rather than doubling your practice time
shooting in your driveway, you mix up your routine,
practicing your shot at a couple of different courts
at different times of day. Maybe you also ask a friend
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What is agile?
to run some defense drills with you so you can get
used to shooting under pressure. Maybe you add a
layup to your shot practice. This is a shift to an agile
approach—and increases the likelihood that you’ll
perform better the next time you play pickup.
Traditional organizations are—much like you
shooting free throws in your driveway—optimized
to operate in static, siloed situations of structural
hierarchy. Planning is linear, and execution is
controlled. The organization’s skeletal structure is
strong but frequently rigid and slow moving.
Agile organizations are different. They’re
designed for rapid change. An agile organization
is a technology-enabled network of teams with a
people-centered culture that operates in rapidlearning and fast-decision cycles. Agility adds
speed and adaptability to stability, creating a
competitive advantage in uncertain conditions.
What is kanban and what is scrum?
Kanban and scrum are two organizational
frameworks that fall under the umbrella of agile.
Kanban originated in the manufacturing plants
of postwar Japan. Kanban, which is Japanese for
“signboard,” was first developed to prioritize “just in
time” delivery—that is, meeting demand rather than
creating a surplus of products before they’re needed.
With kanban, project managers create lanes of work
that are required to deliver a product. A basic kanban
board would have vertical lanes for processes—these
processes could be “to do,” “doing,” “done,” and
“deployed.” A product or assignment would move
horizontally through the board.
The idea of scrum was invented by two of the original
developers of agile methodology. A team of five to
nine people is led by a scrum leader and product
owner. The team sets its own commitments and
engages in ceremonies like daily stand-up meetings
and sprint planning, uniting in a shared goal.
Scrums, kanban, and other agile product
management frameworks are not set in stone.
They’re designed to be adapted and adjusted to
fit the requirements of the project. One critical
component of agile is the kaizen philosophy—a pillar
of the Toyota production model—which is one of
continuous improvement. With agile methodologies,
the point is to learn from each iteration and adjust
the process based on what’s learned.
What are the hallmarks of
an agile organization?
A team or organization of any size or industry can be
agile. But regardless of the details, all agile groups
have five things in common.
1. North Star embodied across the organization.
Agile organizations set a shared purpose and
vision for the organization that helps people feel
personally invested—that’s a North Star. This
helps align teams with sometimes wildly varied
remits and processes.
2. Network of empowered teams. Agile
organizations typically replace top-down
structures with flexible, scalable networks of
teams. Agile networks should operate with high
standards of alignment, accountability, expertise,
transparency, and collaboration. Regardless of
the configuration of the network, team members
should feel a sense of ownership over their work
and see a clear connection between their work
and the business’s North Star.
3. Rapid decision and learning cycles. Agile
teams work in short cycles—or sprints—then
learn from them by collecting feedback from
users to apply to a future sprint. This quickcycle model accelerates the pace throughout
the organization, prioritizing quarterly cycles
and dynamic management systems—such
as objectives and key results (OKRs)—over
annual planning.
4. Dynamic people model that ignites passion.
An agile culture puts people at the center,
seeking to create value for a much wider range
of stakeholders, including employees, investors,
partners, and communities. Making change
personally meaningful for employees can build
transformational momentum.
5. Next-generation enabling technology. Radical
rethinking of an organizational model requires
a fresh look at the technologies that enable
processes. These include, for example, real-time
communication and work management tools that
support continually evolving operating processes.
Agility looks a little different for every organization.
But the advantages in stability and dynamism that
the above trademarks confer are the same—and are
critical to succeeding in today’s rapidly changing
competitive environment.
How should an organization
implement an agile transformation?
According to a McKinsey survey on agile
transformations, the best way to go about an
agile transformation is for an entire organization
to transition to agile, rather than just individual
departments or teams. This is ambitious but
possible: New Zealand–based digital-services and
telecommunications company Spark NZ managed
to flip the entire organization to an agile operating
model in less than a year.
Any enterprise-wide agile transformation
needs to be both comprehensive and iterative:
comprehensive in the sense that it addresses
strategy, structure, people, process, and technology
and iterative in its acceptance that things will
change along the way.
Transformations vary according to the size,
industry, and scope of the business, but there are
a common set of elements that can be divided into
two components.
1. The first phase of an agile transformation
involves designing and piloting the new agile
operating model. This usually starts with
building the top team’s understanding and
aspirations, creating a blueprint for how agile will
add value, and implementing pilots.
What is agile?
3
Agile is a mindset; it’s not
something an organization does —
it’s something an organization is.
2. The second phase is about improving
the process and creating more agile cells
throughout the organization. Here, a significant
amount of time is required from key leaders, as
well as willingness to role model new mindsets.
The best way to accomplish this phase is to
recognize that not everything can be planned
for, and implementation requires continuous
measurement and adjustment.
Culture is a critical part of any agile transformation.
Agile is a mindset; it’s not something an organization
does—it’s something an organization is. Getting this
transition right is key to overall success.
Who should lead an agile
transformation?
The single most important trait for the leader of an
agile organization is an agile mindset, or inner agility.
Simply put, inner agility is a comfortable relationship
with change and uncertainty. And research has
shown that a leader’s mindset, and how that mindset
shapes organizational culture, can make or break a
successful agile transformation.
Leaders need three sets of capabilities for agile
transformations:
— Leaders must evolve new mindsets and
behaviors. For most of us, the natural impulse
is to react. Research shows that people spend
most of their time in a reactive mindset—
reacting to challenges, circumstances, or other
people. Because of this natural tendency,
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What is agile?
traditional organizations were designed to run
on the reactive.
Agile organizations, by contrast, run on
creative mindsets built on curiosity. A culture
of innovation, collaboration, and value creation
helps nurture the ability to flexibly respond to
unexpected change. Creative mindsets also help
members of an organization, at all levels, tap into
their core passions and purposes.
Roche, a legacy biotech company, recognized
the importance of a mindset shift at the
leadership level. When the organization
decided to build an agile culture, it invited more
than 1,000 leaders to a four-day immersion
program designed to enable leaders to shift
from a reactive mindset to a creative one.
Today, agility has been widely deployed within
Roche, engaging tens of thousands of people in
applying agile mindsets.
— Leaders must help teams work in new and more
effective ways. Agility spells change for both
leaders and their teams. Leaders need to give
more autonomy and flexibility to their teams
and trust them to do the right thing. For their
part, teams should embrace a design-thinking
mentality and build toward working more
efficiently, assuming more responsibility for
the outcomes of their projects and being more
accountable to customers.
— Leaders must cocreate an agile organizational
purpose, design, and culture. A critical
organization-level skill for leaders is the ability
to distill and communicate a clear, shared,
and compelling purpose, or North Star. Next,
leaders need to design the strategy and
operating model of the organization based
on agile principles and practices. Finally,
leaders need to shape a new culture across the
organization, based on creative mindsets of
discovery, partnership, and abundance.
For tips on how to develop agile leaders, see
“Leading agile transformation: The new capabilities
leaders need to build 21st-century organizations.”
How can we build inner agility?
Inner agility can feel counterintuitive. Our impulse
as humans is to simplify and solve problems by
applying our expertise. But complex problems
require complex solutions, and sometimes those
solutions are beyond our expertise. Recognizing
that our solutions aren’t working can feel like
failure—but it doesn’t have to. To train themselves
to address problems in a more agile way, leaders
need to learn to think beyond their normal ways of
solving problems.
Here are five ways to build inner agility:
1. Pause to move faster. This can be tough for
leaders used to moving quickly. But pausing
in the middle of the fray can create space
for clearer judgment, original thinking, and
purposeful action. This can take many forms:
one CEO McKinsey has worked with takes a
ten-minute walk outside the office without
his cell phone. Others do breathing exercises
between meetings. These practices can help
leaders interrupt habits to create space for
something different.
2. Embrace your ignorance. Being a know-itall no longer works. The world is changing so
fast that new ideas can come from anywhere.
Competitors you’ve never heard of can suddenly
reshape your industry. As change accelerates,
listening and thinking from a place of not
knowing is crucial to encouraging the discovery
of original, surprising, breakthrough ideas.
3. Radically reframe the questions. We too
frequently interrogate our ideas, asking
ourselves questions we already know the
answers to—and worse, questions whose
answers confirm what we already believe.
Instead, seek to ask truly challenging, openended questions. Those types of questions
allow your employees and stakeholders to
creatively discuss and describe what they’re
seeing, and potentially unblock existing
mental frameworks.
4. Set direction, not destination. In the increasing
complexity of our era, solutions are rarely
straightforward. Instead of setting a path from
one point to another, share a purposeful vision
with your team. Then join your team in heading
toward a general goal, and in exploring and
experimenting together to reach common goals.
5. Test your solutions—and yourself. Ideas may not
work out as planned. But quick, cheap failures
allow you to see what works and what doesn’t—
and avoid major, costly disasters.
In times of stress, we often feel ourselves
challenged. Rather than falling back on old habits,
inner agility enables us to embrace complexity and
use it to grow stronger.
What is deliberate calm?
Deliberate calm is a mindset that helps leaders
keep a cool head during a crisis and steer their
ships through a storm. It’s not something that
comes naturally: in times of uncertainty, the human
brain is wired to react rather than stay calm. The
ability to step back and choose actions suited to
a given situation is a skill that must be cultivated.
In their 2022 book Deliberate Calm, McKinsey
veterans Jacqueline Brassey, Aaron De Smet, and
Michiel Kruyt describe their personal self-mastery
practices to offer lessons in effective leadership
through crises.
What is agile?
5
One important lesson? Not all crises are created
equal. Inspired by the thinking of Harvard Business
School professor Herman “Dutch” Leonard, De
Smet differentiates between routine emergencies
and crises of uncertainty. Routine emergencies
can be dealt with using past experiences and
training. But crises of uncertainty are different. In
these moments, where you don’t know how deep
the rabbit hole goes, you can’t fall back on what
you know. “If you are in an uncertain situation,”
says De Smet, “the most important thing you can
do is calm down. Take a breath. Take stock. ‘Is the
thing I’m about to do the right thing to do?’ And in
many cases, the answer is no. If you were in a truly
uncertain environment, if you’re in new territory,
the thing you would normally do might not be the
right thing.”
• Execution leaders own the transformation
road map, assessing and adjusting it on an
ongoing basis.
• Methodology owners gather lessons from
the transformation and refine and evolve agile
practices and behaviors.
• Agile coaches guide teams through their
transformations, helping to instill an agile
culture and mindset.
What is an agile transformation office?
• Change management and communications
experts maintain lines of communication
through periods of change.
To set up an ATO for success, an organization has to
make three design decisions:
1. Agree on the ATO’s purpose and mandate.
An ATO needs a purpose just as an agile
organization needs a North Star. This step
links an ATO specifically to the “why” of the
transformation. An ATO’s mandate can include
driving the transformation strategy, building
capabilities, championing change, coaching
senior leaders, managing interdependencies,
and creating and refining best practices.
2. Define the ATO’s place within the organization.
While an ATO’s reporting lines will depend on the
What is agile?
3. Determine the ATO’s roles and responsibilities.
Regardless of an ATO’s size or mandate, the
following core capabilities should be managed
by a strong transformation leader:
For more from De Smet and his coauthors, check
out their discussion on The McKinsey Podcast, their
Author Talks interview, or order Deliberate Calm.
Establishing an agile transformation office
(ATO) can help improve the odds that an agile
transformation will be successful. Embedded
within an existing organizational structure, an ATO
shapes and manages the transformation, brings the
organization along, and—crucially—helps it achieve
lasting cultural change.
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organization, usually the leader of successful
ATOs reports to the CEO or one of the CEO’s
direct reports. This ensures tight alignment and
support from top leadership.
As agile principles become the norm across
industries, an ATO can help usher in an agile
transformation regardless of the design choices an
organization makes in setting it up.
Can remote teams practice agile?
Agile teams typically rely on the camaraderie,
community, and trust made possible by colocation. The remote work necessitated by the
COVID-19 crisis has put this idea—along with many
other assumptions about work and office culture—
to the test.
While the shift was sudden, talented agile teams
working through the crisis proved that productivity
can be maintained with the right technology in
place. Here are some targeted actions agile leaders
can take to recalibrate their processes and sustain
an agile culture with remote teams.
1. Revisit team norms. Tools to ease teams
into remote work abound—these include
virtual whiteboards, instant chat, and
videoconferencing. But they still represent a
change from the in-person tools agile teams
usually rely on for ceremonies. Team members
need to help one another quickly get up to
speed on how best to shift to virtual. Teams
also need to make extra effort to capture
the collective view, a special challenge when
working remotely.
2. Cultivate bonding and morale. In the absence
of in-person bonding activities, like lunches or
spontaneous coffees, team members can bond
virtually, such as by showing each other around
their homes on a video call, introducing pets
or family members, or sharing music or other
personal interests. Being social is important in
the virtual space, as well as in person, to nurture
team cohesion.
3. Adapt coaching and development. Team
leaders who normally do one-on-one coaching
over coffee should transition as seamlessly as
possible to remote coaching—coffee and all.
4. Establish a single source of truth. In person,
agile team processes are usually informal.
Teams make decisions with everyone in the
room, so there’s not usually much need to record
these discussions. In the virtual space, however,
people might be absent or distracted, so it’s
important to document team discussions in a
way that can be referenced later.
5. Adjust to asynchronous collaboration.
Messaging boards and chats can be useful in
coordinating agile teams working remotely. But
they should be used carefully, as they can also
lead to team members feeling isolated.
6. Adapt a leadership approach. When working
with remote teams, leaders need to be
deliberate in guiding team members and
interacting with external customers and
stakeholders. Simply put, they need to show—
in tone and approach—that everyone is in
this together.
Now that it seems likely that remote work is here to
stay, it’s all the more important that teams reinforce
productivity by purposefully working to sustain an
agile culture.
How can public-sector organizations
benefit from agile?
The pandemic era and its attendant sociopolitical
and economic crises have placed new pressures on
public-sector organizations. In these situations of
urgency, agile can help public-sector organizations
better serve citizens by being more responsive.
Compared with the private sector, where agile
has had a clear impact on the overall health
of organizations, the public sector doesn’t
immediately seem to be a great candidate for
agile methodology. Government processes are
often slower moving than their private-sector
counterparts, and agencies are frequently in
competition for funding, which can discourage
collaboration. Finally, public-sector organizations
are usually hierarchical; agile methodology works
best in flat organizational structures.
But according to McKinsey analysis and experience,
agile tools can still have an impact on public-sector
productivity. As with any agile transformation,
the approach should be tailored to each specific
department, team, and organization.
Government entities, for example, might focus on
short-term, results-driven management styles.
OKRs and quarterly business reviews (QBRs) are
agile concepts that can transform planning and
resource allocation for governments. Agencies, for
their part, can benefit from increased collaboration
and cross-pollination made possible by agile
operating models.
What is agile?
7
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working at McKinsey.
Articles referenced include:
Scan • Download • Personalize
— “When things get rocky, practice deliberate
calm,” November 10, 2022, Jacqueline Brassey
and Aaron De Smet
— “In pursuit of value—not work,” October 24,
2022, Elena Chong, Christopher Handscomb,
Tomasz Maj, Rishi Markenday, Leslie Morse, and
Dave West
— “Why an agile transformation office is your ticket
to real and lasting impact,” June 30, 2021, Amit
Anand, Khushpreet Kaur, Noor Narula, and
Belkis Vasquez-McCall
— “The impact of agility: How to shape your
organization to compete,” May 25, 2021,
Wouter Aghina, Christopher Handscomb, Olli
Salo, and Shail Thaker
— “Doing vs being: Practical lessons on building
an agile culture,” August 4, 2020, Nikola Jurisic,
Michael Lurie, Philippine Risch, and Olli Salo
Designed by McKinsey Global Publishing
Copyright © 2023 McKinsey & Company. All rights reserved.
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What is agile?
— “All in: From recovery to agility at Spark New
Zealand,” McKinsey Quarterly, June 11, 2019,
Simon Moutter, Jolie Hodson, Joe McCollum,
David Pralong, Jason Inacio, and Tom Fleming
— “The journey to an agile organization,” May
10, 2019, Daniel Brosseau, Sherina Ebrahim,
Christopher Handscomb, and Shail Thaker
— “Leading agile transformation: The new
capabilities leaders need to build 21st-century
organizations,” October 1, 2018, Aaron De Smet,
Michael Lurie, and Andrew St. George
— “Agile with a capital ‘A’: A guide to the principles
and pitfalls of agile development,” February 12,
2018, Hugo Sarrazin, Belkis Vasquez-McCall,
and Simon London
— “The five trademarks of agile organizations,”
January 22, 2018, Wouter Aghina, Karin Ahlback,
Aaron De Smet, Gerald Lackey, Michael Lurie,
Monica Murarka, and Christopher Handscomb
— “A business leader’s guide to agile,” July 25, 2017,
Santiago Comella-Dorda, Krish Krishnakanthan,
Jeff Maurone, and Gayatri Shenai
— “ING’s agile transformation,” McKinsey
Quarterly, January 10, 2017, Peter Jacobs, Bart
Schlatmann, and Deepak Mahadevan