Published on the 22/09/2015 | Written by Nat Tanner
Fifty years ago, running a company was much more predictable, with less competition and customers content to buy based on what you had on offer. But things have changed, writes Nat Tanner, and so should you…
In the digital age, new companies regularly emerge from nowhere and can disappear just as quickly. Seventy percent of the companies represented in the 2003 Fortune 1000 list were nowhere to be seen in the 2013 list. That’s because digital disruption has accelerated the pace of change. New ideas can be developed and brought to market faster than ever before, without necessarily requiring large amounts of capital backing.
Business systems of old can’t cope with this environment. Many companies are working with operating models that demand lengthy up-front planning and funding. Simply obtaining agreement to investigate new opportunities takes precious time and invariably involves approvals and sign-off from multiple parties. One of the biggest problems is that decision making derives from the top, taking time to filter down. It also tends to be risk-averse, a factor that stifles innovation.
Executives are under intense pressure to develop digital strategies that will help their organisations transform and make the most of the new digital era. In addition to articulating a clear vision for the future, executives must develop the right business models, obtain the skill sets and foster an environment that will enable them to bring those strategies to fruition, all with the aim of bringing product to market faster while optimising business value.
It seems like a big ask.
Building systems for ability
The answer lies in business agility.
Agility is the ability to sense and respond to change quickly and confidently, as a matter of everyday business. It’s a capability that needs to carry across from awareness (such as when developing strategy), to execution (when delivering on the strategy).
To build business systems for agility requires changes in three key areas.
First, an organisation must change the way it thinks and operates. To become faster and better at responding to customer needs, a company must stop looking inwards and focus everyone’s attention – from the warehouse floor to C-level management – on the needs of the customer. It requires replacing departmental silos with committed, cohesive teams organised around customer value.
Second, agility demands an adaptive strategy. Rather than overly precise and strictly scheduled plans, teams should consider placing their trust in “roughly right” plans. The extra speed and flexibility this delivers are well worth it.
In the same vein, long planning cycles are anathema to innovation. Instead, create a habit of feedback from team members and customers to allow your teams to adapt strategies accordingly.
The final part of the equation is execution and delivery. There’s no point getting the organisational capability in place or developing a good strategy if you can’t execute on it. Here, organisations need to find ways to replace long delivery cycles with short cycle times, at a higher velocity. Activity needs to be coordinated and synchronised across the organisation and in line with the customer focus, thinking should shift form resource utilisation to value-delivery.
Start small but think big
All that I’ve mentioned so far sounds fine, but once you start to apply the ideas to your own organisation, agility can quickly become a scary proposition. The idea of decentralised decision-making, trusting in “roughly right” plans and embarking on projects that are expected to adapt and change is counter to the accepted business approaches of the past fifty years.
What I can offer as reassurance is that hesitancy leads to paralysis and this will get you nowhere. Developing business agility requires an initial leap of faith, but those who have taken the plunge are proof that the rewards are out there.
A few years ago, banks, telcos and insurance companies were considered to be among the most conservative of organisations. Yet, in response to digital disruption, these industries have had to embrace change. Despite their reputation for resisting change, the leaders in these sectors have shown how agility can lead to innovation in product development. They have completely re-defined their customer relationships, building loyalty where for a long time, none existed.
Above all, they have challenged old ways of thinking and restructured their entire business systems – from organisational systems to people, processes, strategy and strategy deployment. In the process, they have become more customer-value focused, gained market share, cut costs and become more efficient.
Not every organisation needs to embrace change on the same scale as banks, telcos and insurance companies. But every business does face the threat of digital disruption and if we want to still be here ten year’s hence, it’s time to start responding to the challenge.
Developing agility requires courage, but you don’t have to start big. Find a project where you can readily see the opportunity for benefits to the business. Bring the best teams possible together and give them all the executive support you can muster. Plan and practice planning. Seek feedback. Accept that the goal posts will change and acknowledge this is good. Execute on the strategy and keep on improving.
You’ll soon find, like the banks, telcos and insurance companies, the more you practice, the more enthusiastic your teams will become and the better the results for the business. Before you know it, you’ll have created business agility.
Nat Tanner is Rally VP for ANZ and has more than 20 years’ experience in the IT industry.