Business leaders use the term “agility” to describe their business plans and strategic initiatives, but it’s often little more than just a vision. Agility is something that requires planning and a full incorporation in business and management processes. It’s a philosophy and action. And, most of all, it requires courage and commitment. But what does agility really means to business, and how does it help achieve higher levels of efficiency and success?
Agility probably has as many definitions as means for implementation. For purposes of our discussion, we define agility as the ability to see and seize opportunities in the marketplace. The flip side of that coin is resilience, or the ability to react to unexpected changes. Agility is proactive and has a positive connotation. Resilience is reactive and has a negative connotation.
The distinction is important. The evidence of agility and resilience is an organization’s survival, perseverance and, ultimately, success. It has the ability to move quickly to introduce new products, revamp business processes and create new business models. And it has the resilience to bounce back when unexpected threats take their hit.
Companies don’t survive unless they’re agile and innovative. Even multibillion-dollar powerhouses must recognize when a shift in their original knitting needs to evolve in order to adopt new technologies, products and businesses as the market changes to ensure continued growth.
Agility is a resource
Agile companies have what athletes and soldiers call “situational awareness”. They put themselves both in a position to observe what’s happening and have the wherewithal to act upon that intelligence. Agile companies establish formal relationships outside of their walls with customers, partners, suppliers and the public. These relationships are their antennae on the world, sensors of change, either opportunistic or threatening. Internally, they tap the minds of their employees in ways other companies do not and use technology to track what is going on in near real-time.
The public is increasingly a source for inspiration and agility. In traditional product and marketing models, companies would assemble focus groups in their target marketplace to determine if they had the right look, features and messaging to sell the product. In today’s Web-based economy, companies are leveraging Web 2.0 applications and social networking tools such as Linked In, Facebook and Twitter to solicit consumer feedback and input during the design and marketing phases.
In this world, agility, then, begins with awareness: What are competitors up to? How is the market changing? What new technologies are coming along? Most importantly, what are customers thinking? What do they need?
Creating agility
Success requires many things but included among them are innovation in services and products. It also requires the continuous improvement of business processes within and across firm boundaries. These two mandates are mirror images. Innovation of services and products cannot occur without well-defined and aligned processes, nor can business processes be improved without attention to changes in customer needs.
Agile is a new paradigm for the production and distribution of goods and services. It achieves economies of scope rather than economies of scale. To be agile, firms must serve ever-smaller niche markets and individual customers without the high cost of customization. Being agile requires the ability to sense-and-respond, and those capabilities are shaped by designing and managing business processes and technology enablers together.
There are three requirements for achieving agility:
Sense-and-respond capability – To respond to changes, firms must facilitate learning from various processes. This learning must operate at different levels and within different areas of the firm and should be based on recurrent sense-and-respond cycles. Business technology can facilitate these learning processes by supporting the collection, distribution, analysis and interpretation of data associated with business processes; and generating response alternatives, decisions on appropriate courses of action, and orchestrating selected responses.
Improvement and innovation emphasis – Business agility combines improvement and innovation responses. Opportunistic firms emphasize improvements, but often fail to foster innovations. They follow best practices, listen to the customer, and are good at improving current capabilities.
Innovative firms, by contrast, are focused on innovating processes through new technologies, services and strategies. They generate “next” practices, but have a limited focus on fine-tuning current operations.
Fragile firms lack both the ability to identify and explore opportunities, as well as the ability to innovate.
When market pressures are high and the environment is turbulent, the ideal is an agile firm that combines improvement and innovation initiatives to constantly reposition itself. Agile firms are able to improve existing practices and innovates new ones.
Distributed and coordinated authority – Agile firms must adopt radically different forms of governance and translate their mission and objectives into information that can easily be interpreted by constituents. Agile firms must replace traditional command and control approaches with mechanisms that facilitate coordination within and across locales. In turn, these mechanisms must provide individuals, groups and units with the autonomy to improvise and act on local knowledge all the while orchestrating coherent behaviour across the firm. In other words, processes — the assignment of task and responsibilities — must be supplemented with personal accountability.
Regardless of where you begin the journey toward agility, a converged management of business and technology often plays a critical role in establishing the strategic position required to adjust or change based on unforeseen market circumstances. Agile organizations have the processes and structures that indicate what is going on both internally and externally, as well as the mechanisms established to act quickly on that knowledge, as needed. Such actions incorporate agility as part of an organization’s DNA.
Faisal Hoque is an internationally known entrepreneur and author, and the founder and CEO of BTM Corporation. His previous books include Sustained Innovation and Winning The 3-Legged Race. BTM innovates business models and enhances financial performance by converging business and technology with its products and intellectual property.