Requirements for Agility
The word “agility” is often used to describe small, nimble startups that are unencumbered by massive corporate hierarchies with multiple procedural layers, legacy products and expectations. People seem to think that only companies that capture the attention of an adoring public – whether the latest social media network, new and improved search engine, or revolutionary newcomer to the scene - are representative of what it means to use agility to create and expand a business.
Conventional wisdom says that the old guard of Corporate America can be neither innovative nor agile. In other words, a multinational conglomerate cannot change once it’s achieved a certain critical mass.
This is far from the truth.
By developing an environment in which strategic exploration and business agility occur, a critical link is built in establishing and sustaining an organization’s strategic position. Agile organizations have the processes and structures that allow them to know what is going on internally and externally, as well as the mechanisms to act on that knowledge rapidly.
To remain competitive, organizations must plan intelligently, make the most efficient use of available resources, and take quick, effective action. However, the key to thriving is being able to identify, understand and respond to accelerating change and disruption as it happens. Companies must find new ways to streamline business activities to eliminate redundancy or costly exceptions, while creating higher value. Leading companies have mastered the ability to reduce costs, despite the fact that the cost of doing business continues to rise, by increasing their ability to respond and adapt to frequently changing business conditions.
Oftentimes, the right response at the right time can be the key to a company gaining an edge over its competition. Previous BTM Research supports this position through findings that identify agility as that ‘right response’, and illustrating that the ability to be agile is the difference between taking advantage of change as opposed to falling victim to it. The findings show that these companies are agile because they have converged their management of business and technology. Organizational constructs, processes, and management behaviors drive business agility, and as a result, lead to improved financial performance.
Traditional business practices of the past did not stress the need for agility and innovation. Such terms were rarely viewed as necessary in the day-to-day operations or success of an organization. But today, business runs quite differently than it did in the landscape of the past. Boundaries no longer exist – we now play on a global field, where unforeseen changes, not only in the marketplace but also in your competitors, can spring up at any time. Both agility and innovation are necessary to the growth and survival of an organization. Constant change is the new dynamic of the global economy, and makes agility even more necessary than at any point in business history.
Business leaders often use agility to describe their business plans and strategic initiatives, but it’s often little more than just a vision. But what does agility really means to business, and how does it help achieve higher levels of efficiency and success? Most people acknowledge that agility is the key to capitalizing on innovation and achieving success in the fast-paced and rapidly evolving marketplace.
Agility requires planning, processes and structures. Technology-based initiatives have long enabled business organizations to coordinate activities with their business partners. For instance, many companies share their forecasts and plans with suppliers and distributors to extract network-wide efficiencies, while others, such as retailers, have relinquished their decision rights to their suppliers on when and how much to replenish in the pursuit of even greater efficiencies for all concerned.
Although efficiencies can be extracted through the coordination of activities across a business network, such processes do nothing to sense and respond to unforeseen events. Simply put, such business networks, which improve performance in a predictable environment, provide, at best, a false sense of security under rapidly changing conditions. Agility requires the dynamic configuration of processes across a business network. Such efforts allow a company to know what is going on internally and externally, the ability to move quickly to take advantage of the changes it needs, and the imagination to see itself in a different light.
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.
To do this, agile companies establish formal relationships outside of their walls with customers, partners, suppliers and the public. These relationships act as their antennae or sensors of change on the world, and serve to warn or predict shifts – whether opportunistic or threatening.
Being agile requires translating that information into the ability to sense-and-respond accordingly to each situation. Designing and managing business processes and technology enablers together shape these capabilities. Through this type of structured process, immediate action can be taken. Such actions incorporate agility as part of an organization’s DNA.
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.
Companies don’t survive unless they’re agile. 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.
Enterprisers have three requirements for achieving agility.
As previously discussed, a sense-and-respond capability is needed. Companies must facilitate learning from various processes to respond to changes in their environment. 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.
Next is an emphasis on improvement and innovation. 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. 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 because they have an enterprise architecture in place that forms a construct in support of the overall strategy.
Finally, having distributed and coordinated authority is key. 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 behavior across the firm. Processes—the assignment of task and responsibilities—must be supplemented with personal accountability.
The Converged Company
One sign of a converged company is that the people making decisions on business and technology are the same people – they are conversant in both. They have an understanding of the business mission and an appreciation for the technologies that enable it. However, enterprises that fail to take a multi-disciplinary approach can’t move quickly or intelligently to seize advantage or respond to threats.
The quest for success in an organization today begins with repeatable, day-to-day disciplines through the converged management of business and technology.
Research conducted by the BTM Institute has shown that genuinely agile and innovative organizations have moved towards the convergence of business and technology management.
Convergence relies upon repeatable, cross-disciplinary management capabilities that will drive agile, innovative, extended enterprises. Convergence occurs in the establishment of organizational structures, processes, information flows and automation that unite decision-making from the boardroom to the project team.
Converged organizations are able to adapt and move rapidly in response to events and change. This is a direct result of the two “sides” of an organization acting in unison with full knowledge of what resources they have available and what they need to do to act on an opportunity or a threat.
Agility is the catalyst.
Survival is enabled.
Success is the result.
To hear Faisal speak more about Achieving Business Agility through Convergence, visit him at Impact 2010. To learn more about the event, visit: www.ibm.com/impact
Faisal Hoque (www.faisalhoque.com) is the founder and CEO of BTM Corporation (www.btmcorporation.com). A former senior executive at GE and other multi-nationals, Faisal is an internationally known entrepreneur and thought leader. He has written five management books, established a non-profit institute, The BTM Institute, and become a leading authority on the issue of effective interaction between business and technology. © 2010 Faisal Hoque