The era of mass production and mass consumption, powered by Fordism and Taylorism, ushered in a new way of working that saw huge gains in productivity. The trouble was, the system considered organizations as machines. Workers existed in silos, focused on one component or function, and were unable to see the purpose and result of their labor, let alone know how customers perceived it.
Organizationally, power was concentrated in the hands of a few at the top who were unable or unwilling to devolve decision making. Size and scale made it nearly impossible to change course quickly. Even if managers wanted to do something different, massively complex systems foiled their efforts time and again.
The reality is that many utilities today are still set up to operate in this fashion. As business leaders, we’ve been conditioned to act as if people and profit are in conflict. We can make exceptional returns at the expense of customers and people; or engage and empower customers and people at the expense of business performance. Old habits die hard. As technology and societal change speeds up, there is more pressure on utilities than ever before. In the form of new competitors and technologies, radically changing consumer behaviors, regulatory pressure and, increasingly, a workforce that prizes purpose and flexibility.
Despite well-intentioned commitments to customer service or employee engagement, many leaders under pressure choose short-term outcomes. In our opinion, this is one of the most stubborn and prevalent risks facing business today. We’ve seen first-hand how utilities can beat their numbers and deliver higher all-around performance by being agile.
Now we can prove through research that utilities who display agile characteristics are more likely to outperform their peers. We surveyed 500 leaders from some of the largest organizations across a range of sectors, including financial services, manufacturing, FMCG/retail, life sciences, travel, energy and utility, telecoms and logistics. For each organization, we analyzed 15 agile characteristics across five dimensions and found a strong positive correlation between agile characteristics and financial performance.
The top 10 percent of businesses by financial performance are almost 30 percent more likely to display agile characteristics, suggesting that commitment to organizational agility can make a crucial difference as a driver of success. We call this group our Agile Cohort. And they aren’t slowing down. The agile organizations we’ve identified are already evolving again, achieving greater performance across their operations. They’ve recognized that it will be essential to operate at least another 30 percent faster across all the five dimensions:
You might have thought that agile is a topic for the IT department or program management office. Wrong. More than 60 percent of the organizations we surveyed already have organization-wide programs of work underway to build agility, systematically. And nearly half of them would describe these programs as “very effective.”
Agile is evolving. Whether you’re starting an agile project, using agile techniques to accelerate change in a department, or building agility right across your organization, there is a proven route to success. Agility is a thoroughly democratic attribute. It’s not just for dynamic high-tech start-ups. Far from it, agility can transform well-established utilities, household names and industry stalwarts, ensuring they are fit to represent the future of the business rather than just its heritage.
So, where do you go from here?
Here are five achievable steps you can take now.
Organizational agility enables large-scale companies to thrive, delivering higher all-round performance, with positive benefits for customers, shareholders, and employees. It’s time for utilities to take the jump.
Ross Smith and Jamison Roof are energy and utilities experts at PA Consulting
Did you know the top 10% of financial performers are 30% more agile than the rest?