Like innovation, customer service, operational excellence and becoming digital, agility is something that a lot of company executives talk about. However, few come close to mastering it. This is because doing that requires more than a small shift in direction. It requires a fundamentally different approach to how an organization typically does business.
That is also something that has been said many times before. But in this case it really seems to be true. Moreover, successfully undertaking such a transformation is likely to not only make a business more agile, but it should also make it more innovative, better focused on the customer, simply better at doing business and well on the way to the Holy Grail of being digital.
Business leaders seem well aware of the situation. According to a new report from PA Consulting, those running the largest corporations are now more concerned about the “Amazonification” of their sector than they are about traditional rivals. But they often seem at a loss as to how to go about countering the threat.
Admittedly, the world they inhabit is probably more complex in political and regulatory terms than it has ever been. However, an earlier report by PA (covered here) suggested ways in which regulators could assist rather than hinder innovation. Another issue is the well-rehearsed issue of the pressure to deliver short-term returns for investors. But, while this is undoubtedly a problem in that it can cause businesses to revert to such measures as cost-cutting and restricting activities that can be self-defeating, it can be overcome. Indeed, PA’s research found “a consistent correlation between agile characteristics and financial performance”, with the top 10% of businesses by financial performance almost 30% more likely to display agile characteristics. Given that these traits are more likely to go hand-in-hand with the sort of workplace environment that appeals to modern “talent”, there might even be some justification in the claim of Sam Bunting, an expert on agility at PA and one of the authors of the report, “The Evolution of the Agile Organisation”, that the people-versus-profit paradox has been broken.
So what is it about this “Agile Cohort” that is enabling it to break free of the restraints impeding established businesses in their battles with the fleet-footed insurgents? PA has identified five dimensions of agility. These are:
Each of these dimensions has sub-elements that the researchers see as vital for success. For example, designing for simplicity involves decentralisation, integration and delayering, while liberating people requires empowerment, dynamism and collaboration.
Did you know that the top 10% financial performers are 30% more agile than the rest?
This all makes sense, but it is likely that many organisations will get stuck at the first dimension. Anybody who has ever had business tell them that they cannot do something because their systems do not work that way will know that focusing on customers requires rather more than having a shiny website. As the report says, “Creating a truly customer-led culture, where the organization places itself at the centre of its customers’ universe, rather than one that focuses on the business’s own interests, calls for an unusually high degree of organisational openness and receptivity.”
It also clearly requires an acknowledgement that the process is never going to be complete. Because the internet has created a perception among consumers that they will always be able to get exactly what they want sooner, better and cheaper elsewhere, companies need to be thinking about how they can be central to people’s lives - meeting their needs before the consumer knows it has them even. This is a challenging prospect, but the success of technology “platforms” - especially Amazon - shows what can happen for those who are relentless in getting this right.
This inevitably leads to the second dimension - another likely stumbling block for many companies. Indeed, the authors explained in a recent interview how in the auto industry and other parts of the manufacturing sector lengthy product cycles are often the result of individuals simply not having sufficient understanding of their colleagues’ needs or priorities. To some extent, this approach has been challenged by Tesla and its non-traditional ideas about car making. But a more marked contrast is in fashion retail, where Zara and Asos will often rapidly design, produce and sell small batches of garments rather than produce a whole collection several months in advance - and then be hit by weather or other factors.
In the interview, Bunting stressed that CEOs needed to “grasp the nettle”. Insisting that it was possible to start to make the changes required (and see the rewards) within the period a business leader was typically in charge, he said businesses had to pivot towards the customer. “The CEO has to be clear that it has to happen,” he said, adding that it was a positive thing for employees who would shift from doing mundane tasks to serving customers but would require challenging existing structures. On the other hand, he offered this note of encouragement: “You only have to be 30% more agile to be among the top 10% of performers.”