Here is a brief article written by Karin Ahlbäck, Santiago Comella-Dorda and Deepak Mahadevan for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.

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Agility gets hailed as the new order for organizations striving to unlock value in an uncertain and rapidly changing market environment. But, as clients occasionally ask us, “What about its drawbacks?”

As a philosophy, agility has few tangible downsides – but relies on being applied for the right reasons, in the right places and in the right way. Done well, it delivers tremendous impact. Misused, it can trigger disruption and productivity loss.

Firstly, agile can prove difficult to get right. Typically, its new ways of working differ from what came before and it’s easy to go astray. Watch for these common pitfalls:

• Copy-pasting: Agile principles are universal, but their application varies depending on the work targeted (e.g., product development vs. sales operations). Emulating someone else’s model without a clear vision and deep understanding of agile can cause significant harm.
• Partial agile: It occurs by applying agile to parts of the value chain and leaving the rest as-is; for example, handling agile product development within a traditional go-to-market setting. To achieve full benefits, agile should be executed end-to-end.
• Insufficient capability building: Agile succeeds when people – including leaders – possess the right set of skills and mindsets, e.g., entrepreneurialism self-management abilities. These must often be strengthened.
• Diluted focus on performance: Self-management sometimes becomes a license for agile teams to stop planning, reporting and delivering results. However, agile requires more discipline, not less.
• Short-term bias: Agile software development teams must continually decide between new features and optimizing existing software to avoid technical debt. Unless managed, agile tends to bias towards overemphasizing new features at the expense of long-term quality.

Secondly, adopting agile so that it unlocks full value potential is a significant strategic investment. While structure and process changes are considerable, the most underestimated costs often relate to people and tools. Principal investments include:

• Productivity loss during the learning curve: Inevitably, the first few agile development projects suffer from productivity loss (averaging 14 percent). But when agile teams conquer the learning curve, they see productivity boosts (averaging 27 percent vs. traditional teams).
• Leadership time spend: Agile brings fundamental changes to how an organization is run and led, especially when done at scale. Senior leadership must spend sufficient time developing the agile operating model and supporting its application (e.g., communications, role modeling new agile behaviors).
• Potential loss of key employees: Agile unavoidably disrupts the status quo and requires significant adaptation from employees, especially middle managers. Be prepared to lose employees who want off the agile train.
• New talent management systems and approaches: These rank among the hardest aspects to tackle, often requiring surprisingly large investments to talent management and HR systems. This can include investing in capability-building programs, elevating branding and value propositions to attract the right talent, changing compensation bands and structures, and reimagining career paths and individual performance management, among other things.
• Improvement of the technology infrastructure: Heavily tech-dependent companies must often invest time and resources up front to enable agile, e.g., reducing technical debt and automating process steps such as testing. In the short term, this will reduce resourcing for new feature development.
• Employment of temporary capabilities: A sure way to fail is to adopt agile without enough people who’ve done it before and know what good looks like. These capabilities are often scarce in-house and need to be contracted at a premium (e.g., agile coaches, consultants, contract hires).

Agility can have large impact – but only if done properly for the right reasons. It’s not a “silver bullet.” The most successful agile adopters employ a well-aligned, situation-specific strategy that weighs the investment against expected benefits.

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