Achieving business agility in today’s rapidly evolving marketplace requires a focus on both operational and strategic agility — here’s how technology can help.
In this day and age, it’s clear that businesses need to be flexible if they hope to survive. In fact, a recent Forbes Insight study found that 70 percent of surveyed companies were concerned as to whether their company would still be relevant in just two years. However, with industries evolving so quickly, organizations need to focus on more than just surviving — they must rely on business agility to pull ahead of the pack.
First, it’s important to understand what the concept of business agility really means. This term usually refers to one or both of operational agility, which defines the ability to optimize internal processes; and strategic agility, which refers to the capacity to make proactive organizational shifts in response to external pressures. Here’s how businesses should think about agility — what it is, why it’s important, and how technology fits into the picture.
Operational agility refers to an organization’s ability to improve and optimize existing internal processes or products. Businesses often struggle with operational agility because once a workflow is established, the investment required to make an operational pivot can inhibit decision-makers from shifting gears. Employees become comfortable with their roles and tasks, even if it means having to deal with inefficient workarounds or unnecessary steps.
A similar challenge applies to manufacturing and logistics processes — the fact of the matter is that changing a process or product often costs time and money. Redesigning production flow for small efficiency gains can seem like too much of a disruption, and the product itself may seem “good enough” already.
Despite the disruption, putting in the upfront investment for operational agility is important. Making the right day-to-day tweaks to business processes can streamline workflow for everyone in the office. Small efficiencies add up over time and can generate additional benefits like boosting company morale.
Manufacturing and logistics operations should also take the time to address the latencies in their systems and processes — even a few minutes gained throughout the workday can translate to significant savings in the long-run. Customer demands are always growing, and products and services can always be made cheaper, faster, or better. When organizations are open to operational agility, they may find that it’s entirely possible to optimize their current business model with minor changes.
Strategic agility, on the other hand, refers to the creation of entirely new processes or products, typically based on external conditions and an outward-facing approach. Businesses must understand their current environment and how current trends will shape it going forward. As such, strategically agile businesses will study the competitive forces at play, shifts in the market, and developments in technology that could force (or support) industry-wide disruptions. In other words, if operational agility means improving upon current workflows and processes to the benefit of existing customers, strategic agility means creating new workflows and processes to the benefit of potential new customers and new gaps in the market.
Of course, these external pressures can be positive or negative. A new but challenging market could open up overseas. A legal change could impose new restrictions on a manufacturing process. In either case, strategic agility allows companies to implement an appropriately-measured response tailored to capitalize on the externality.
The rise of the Internet of Things (IoT) is already driving many companies to invest before they even understand what they’re trying to achieve with the technology. But strategic agility goes beyond simply staying abreast of the trends. When everyone else was building a better boat, the Wright brothers were inventing the airplane. To put it most simply, strategic agility, as a capability, is about developing an organizational mindset that allows for change to occur — not just in the way you’re doing business, but in what business you’re doing in the first place.
Naturally, developing strategic agility is much more challenging than its operational counterpart. Overhauling and inventing new processes undoubtedly requires time and money. And yet, operational agility can only get you so far — incremental efficiency gains will eventually pale against the step-change disruptions that invariably visit every industry. Making strategic pivots before the competition has a chance to react can pay enormous dividends. If there are industry opportunities (or pitfalls) to be addressed, strategic agility can help you not just survive, but thrive.
Case Study: Operational and Strategic Agility At 30,000 Feet
To better understand both forms of business agility, let’s consider an airline. Traditionally, most airlines operate with the same set of basic offerings, differentiating themselves through service, loyalty programs, and other small variations. Take in-flight meal service as an example.
Let’s say that on any given flight, an airline designates two flight attendants to run meal service, starting from the back of the plane and working their way to the front. Imagine that this airline receives consistently poor reviews regarding in-flight meal service, ranging from “the food is bad” and “flight attendants were rude” to “service and clean-up blocked the walkways for hours.”
To begin addressing these complaints, the airline will likely take the time to create a new plan for meal service that speeds up the process and alleviates pressure on flight attendants. Instead of two flight attendants running meal service, an airline might designate four flight attendants and start service from both the back and the front of the plane to meet in the middle. This is operational agility, in which our imaginary airline improves upon the current in-flight meal service process to produce better results for customers and efficiencies for employees.
But now let’s consider an airline that takes an entirely different approach to address these complaints. While the natural response might be to improve upon in-flight meal service procedures, what if an airline instead stops to ask: why not do away with in-flight meal service altogether? This is the case of Southwest Airlines, who found their competitive advantage not by improving upon the traditional set of basic airline offerings, but by entirely overhauling the traditional in-flight experience. Southwest won over a key segment of the market by getting rid of the features that other airlines continually made efforts to optimize and compete over.
When Southwest eliminated in-flight meals, they cut costs and offered a much more attractive price point to their customers. The lack of meals also added efficiency to service and flight operations, freeing up time for their crew to focus on friendly and proactive customer interactions. By doing away with seat assignments, they reduced turnaround time at the gates and increased customer satisfaction. And by limiting their air fleet to only one type of aircraft (the Boeing 737), they got rid of the need for specialized crews and increased the level of scalability in their business. Although these decisions all involved a willingness to challenge the status quo, they paid off for Southwest — and fundamentally changed the industry by redefining what customers expect from an airline.
Situational Awareness Technology For Business Agility
Contemporary businesses need to be agile — but they need to think deeply about how they cultivate this agility. There’s no small amount of truth to the adage “no risk, no reward.” Overhauling business models does come with risks. But when it comes to staying ahead of today’s rapidly changing business environment, remaining stagnant is a risk in itself.
This economy expects greater speed, visibility, and responsiveness than ever before. The organizations that are willing to disrupt their spaces — that have been built from the ground up to allow for highly-responsive strategic shifts (think Amazon and Uber) will always be positioned not only for richer rewards but greater staying-power as well.
To enable and support this critical agility, businesses must orchestrate their information systems with great care and concern. The secret to transformational success isn’t actually so secret — in today’s business world, a sound strategy is all about surfacing the right information to the right people, at the right time.
The most situationally aware organizations will almost assuredly also be the most agile. Plenty of businesses claim to “prepare for the unexpected,” but the reality tells a different story. Businesses tend to lay their plans according to firm expectations. Those that succeed in the long-run will have developed two institutional competencies — first, they’ll be very good at recognizing and forecasting market forces; second, they’ll be able to change course with incomparable speed when their expectations don’t meet with reality.