Developing Business AgilityBy Faisal Hoque | Posted 2009-06-24 Email Print
Constant change is the new dynamic of the global economy, making agility more necessary than ever.
Success requires 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.
Agility is a new paradigm for the production and distribution of services and products. 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. Enterprisers have three requirements for achieving agility.
Sense-and-respond capability. To respond to changes in their environment, 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. These firms must replace traditional command and control approaches with mechanisms that facilitate coordination within and across locales. These mechanisms must provide individuals, groups and units with the autonomy to improvise and act on local knowledge, while orchestrating coherent behaviour across the firm. Processes—the assignment of task and responsibilities—must be supplemented with personal accountability.
Regardless of where one begins 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 (www.btmcorporation.com). 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. © 2009 Faisal Hoque | email@example.com
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