New research shows that the trick for companies is to combine speed with stability. Here is a brief excerpt from an article written by Michael Bazigos, Aaron De Smet, and Chris Gagnon 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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Over the past decade, we’ve studied the impact of a wide range of management practices on different dimensions of organizational 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 organizational and leadership characteristics to the health, positive and negative, of the companies in our sample.

We’ve long inquired into the processes and structures that reinforce organizational stability. But from November 2013 to October 2014, we added questions, for the first time, on speed and flexibility. Our goal was to discover how often leaders and managers moved quickly when challenged and how rapidly organizations adjusted to changes and to new ways of doing things.

Taken together, these two sets of questions, old and new, provided the foundation for a simple matrix, comprising a speed axis and a stability axis. The matrix turns out to be a surprisingly strong predictor of organizational health and, ultimately, of performance. We describe companies that combine speed and stability as agile (see sidebar, “A word on methodology”).

No one would expect sluggish companies to thrive. It’s equally reasonable to assume that success achieved through breakneck speed, without stabilizing processes and structures underfoot, will be hard to sustain over the long term. Yet some executives might not only reasonably maintain that speed and stability pull in opposite directions but also hypothesize that they may be negatively correlated. Our latest research, however, confirms that the opposite is true.

It’s significant that all 37 of the management practices we scrutinize, when combined with speed and stability, generated better outcomes in their respective dimensions of health, as well as better overall health. 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.

When we divided the companies in our sample among different groups based on their relative stability and speed scores, things got even more interesting (Exhibit 1):

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

o An additional 22 percent of companies in our 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: in fact, they had the lowest percentage of companies with top-quartile organizational-health scores in our sample: only 5 percent for trapped companies and 17 percent for bureaucratic ones.

o Twenty percent of the companies in our sample were fast. Eight percent were fast, pure and simple—a group we 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 we 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 (Exhibit 2). Fewer “start-ups” enjoyed top-quartile performance, but this quadrant was our only non-agile category in which a majority of the companies (52 percent) had health scores above the median.

Our earlier research consistently showed a strong relationship between organizational health and the creation of value: the healthiest companies far outpace those with moderate or low health in long-term total returns to shareholders. Our new analyses suggest that speed and stability are significant catalysts for organizational health and performance.

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Here is a direct link to the complete article.

Michael Bazigos, head of organizational science at McKinsey, is based in McKinsey’s New York office; Aaron De Smet is a principal in the Houston office; and Chris Gagnon is a principal in the New Jersey office.

The authors wish to thank McKinsey’s Wouter Aghina, Lili Duan, Claudio Feser, Dinora Fitzgerald, Monica Murarka, Bill Schaninger, Rob Theunissen, Kirsten Weerda, Abby Wurts, and Cynthia Zhang for their contributions to this article.