Achieving Business Agility

In the face of rapid technological advancements, evolving customer demands, and unforeseen market disruptions, achieving business agility becomes paramount for businesses to survive. However, despite a growing awareness of the benefits of organisations adopting an agile mindset and responding swiftly to these changes, some organisations still find it difficult to make that quantum leap.

The Destruction of Business Agility: From Startup to an Empire

Successful organisations seldom begin large. You can often hear successful entrepreneurs recounting how they began operating from a modest garage and are now leading a multinational organisation with a workforce spanning thousands of employees.

The organizations we created in the 20th century were designed much more for reliability and efficiency than for agility and speed.

John P. Kotter

What typically happens is that successful organisations often start operating on a small scale. Their main objective is to serve their customers to the fullest while seizing as many new business opportunities as possible.  Internal roles and reporting relationships remain fluid, with the focus being on rapid and efficient collaboration to deliver value as quickly as possible in a short period of time.

As organisations grow and expand, they begin seeking ways to achieve economies of scale to reduce their overall costs. As a result, businesses start introducing functional areas along with rigid policies, processes, and procedures. Eventually, organisations manage to attain economies of scale at the expense of the entrepreneurial network that thrived during their early, smaller stages of operation.

And the first casualty is…the customer.

The organisation stops listening to the customers’ needs as it becomes more focused on maintaining economies of scale by sticking to its current products and services to sustain momentum. This means that the organisation loses its agility to respond to customers’ needs, disruptive market changes, and technological advancements, putting the organisation’s survival at risk.

Should we trash the new hierarchy?

In my view, the answer is no because the new hierarchy serves a vital purpose.

The people within the new hierarchy have expertise that the business now relies on to serve its customers, which it might not have needed when the organisation was still in its infancy. For those businesses that have entered a regulated market for example, the policies and procedures introduced during their journey are essential to ensure regulatory compliance.

The Road to Business Agility

The solution is not to trash what we know and start over but instead to reintroduce a more agile, network-like structure.

John P. Kotter

One way this can be accomplished is by operating with two different organisational structures, one being the recently established hierarchical one while the other adopts more of a network-like structure. While the network-like structure focuses on ensuring rapid response to market changes and emerging opportunities, the hierarchal structure focuses on maintaining efficiency and stability. However, it is crucial that both structures complement, rather than compete with each other. 

There are several ways in which organisations can manage these two structures simultaneously. For example, the SAFe Framework recommends organising the network-like structure through Value Streams as shown below:

However, achieving business agility is not just a matter of setting up two complimentary systems and expecting everything to automatically fall into place. It requires organisations to develop competencies in several domains, some of which include:

• Leaderships and Culture: Leaders must not only embrace the agile mindset, but also champion it throughout the organisation, inspiring others to follow suit. This includes the concept of continuous learning, risk taking, and team-empowerment.
• Self-Organising Teams: The organisation needs to dismantle the functional silos and support the concept of self-organising, cross-functional teams that focus on continuous collaboration and trust to achieve their objectives.
• Lean Thinking: The organisation needs to explore ways to optimise its processes and resources to reduce waste while enhancing overall efficiency.

The setup of the dual operating system, coupled with investment in building the right competencies to make this dual structure work, will help organisations respond quickly to business opportunities and customer demands. The quicker organisations can sense opportunities and deliver small, innovative products to the market, the more likely they are to gain a sustainable competitive advantage.

However, organisations should not rest with being the first in the market. They need to listen to customers’ feedback, learn from it, and adapt their products accordingly. Only through this approach can they survive in this competitive-driven economy. 

The road to business agility is far from a one-time endeavour. It is a continuous journey that demands collective effort, commitment, and resilience. Operating a dual system, each with distinct objectives is not easy. It necessitates striking a delicate balance and adopting a strategic mindset.

Amidst these complexities, our main target should however remain clear: that of delivering value to our customers.