The executives in senior-level positions, once expected to anticipate and drive change, are now struggling to do so. One executive recently told Forrester, "We are paying way too much for CEOs that can make little difference in an enterprise's ability to execute." How can companies cope with today's feverish pace of change? In new research, my colleagues and I maintain that business agility is the single most important attribute that enables companies to survive -- and thrive -- amid change.
So how is an agile company different? It makes decisions differently by embracing a new, more bottom-up way to manage. Employees in business units, in close touch with customer problems, market shifts and process inefficiencies, are often in the best position to understand challenges and opportunities, as well as make decisions to help improve the business. As a result, agile organizations make important decisions at lower levels in the firm.
In this new environment, the CEO and senior executives focus more on creating an agile organization and culture, and less on making decisions themselves. But actionable frameworks around business agility remain sparse. In 2012, for example, our research showed that agility existed only within departments and was poorly mapped across the company. As one senior banking executive told us, "What aspects of agility should we pursue? Our problem is we do not have a shared understanding on what we should focus on or even a good way to have a conversation in the business." Another executive added, "We all agree we need to be more agile, but at times it seems too big to grasp, and we do not know where to start."
In this new environment, the CEO and senior executives focus more on creating an agile organization and culture, and less on making decisions themselves.
In order to be successful in today's business ecosystem, my colleagues and I believe that a combination of business agility across 10 dimensions is necessary:
1. Market responsiveness. Agile companies know how to leverage data. Because online, social customer interactions create rapid change in customer attitudes and behaviors, firms must gather customer information and use this knowledge to make smart decisions.
2. Channel integration. Today, customers interact with brands across more channels than ever before. Agile companies organize and share information across departments, channels and functions, and work to provide a seamless experience across physical, phone, Web and mobile touchpoints.
3. Knowledge dissemination. Companies make decisions more quickly if the necessary knowledge to make those decisions is easily available. For example, eliminating layers of management for certain tasks allows crisp and rapid decision making.
4. Digital psychology. Digital disruption means that new products and services come to market at a dizzying pace. To compete, firms must use digital tools to envision and create new products and service offerings regularly.
5. Change management. Bottom line? Change is the new normal. Brands must develop repeatable, familiar practices to deal with such events as price wars, mergers and new competition.
6. Business intelligence. Business intelligence reveals better information, creating transparency to provide a deeper understanding of business drivers and challenges. What distinguishes an agile company from the rest? This information is easily accessible by employees, not just specialized IT staff.
7. Infrastructure elasticity. By shifting IT focus away from the data center and toward cloud-based solutions, companies can acquire, build and deploy new services quickly.
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8. Process architecture. To match the new power of customers, enterprises must redesign processes (such as work patterns, rules and templates) to take advantage of new touchpoints, such as tablet apps and mobile websites.
9. Software innovation. This is at the heart of most business process innovation. Agile organizations know quickly when problems are developing and build strength in core skills.
10. Sourcing and supply chain. Unexpected supply-chain shocks can undermine efficiency and customer experience, dramatically weakening performance. Instead of being caught off guard, firms must have feedback mechanisms that continuously allow the supply chain to adapt.
About the author:
Craig Le Clair is a vice president and principal analyst at Forrester Research, serving enterprise architecture professionals.
This was first published in September 2013