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Research shows that the trick for companies is to combine speed with stability

Over the past decade, McKinsey studied the impact of a wide range of management practices on different dimensions of organisational health. This analysis, based on surveys of more than two million respondents at over 1,000 companies, has become a stable baseline for understanding the incremental contributions of specific organisational and leadership characteristics to the health, positive and negative, of the companies in their sample.

 

From November 2013 to October 2014, they added new questions on speed and flexibility. Their goal was to discover how often leaders and managers moved quickly when challenged and how rapidly organisations adjusted to changes and to new ways of doing things.

 

The output was a simple matrix, comprising a speed axis and a stability axis. The matrix turns out to be a surprisingly strong predictor of organisational health and, ultimately, of performance.

 

McKinsey look at 37 management practices. When these practices are combined with speed and stability, they generate better performance. In fact, in 4 of the 37—financial management, financial incentives, capturing external ideas, and involving employees in shaping a company’s vision — speed and stability had a particularly striking impact.

 

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Key Take Outs

  • Relatively few companies stood out as being especially agile from the sample: 58 percent of them had speed scores, stability scores, or both that hovered near average.

 

  • An additional 22 percent of companies in the sample were slow—either slow and unstable, a group we describe as trapped (14 percent), or slow and stable, which we call bureaucratic (the remaining 8 percent). These slow companies generally have poor organizational health.

 

  • Twenty percent of the companies in the sample were fast. Eight percent were fast, pure and simple—a group they describe as “start-up.” (These companies were not start-ups, but resembled start-ups in their speed, irrespective of size.) The rest (12 percent), which McKinsey call agile, combined speed with stability. All of these fast companies had better organizational-health scores than the other 80 percent did. Agile companies, however, enjoyed a far greater premium: the odds that one of them would rank in the top quartile for organizational health were 70 percent. Fewer “start-ups” enjoyed top-quartile performance, but this quadrant was our only nonagile category in which a majority of the companies (52 percent) had health scores above the median.

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