Improving business agility in an uncertain market
To sharpen your competitive advantage, you need to optimize performance across growth, profitability, and sustainability, and gain customer trust. To thrive, your business operations should be agile.
The changes imposed by COVID-19 have been especially challenging for small and medium-sized businesses (SMBs). Business structures had to evolve to meet new consumer needs and expectations. Technology continues to advance rapidly alongside market transformations.
Businesses need to understand, react to, and reflect these developments. They need to be agile. The focus must be on strategies that embrace innovation, flexibility, scalability, and technology to drive sustainable growth and profitability.
Building growth stories
In Signals of change (2021), professional services company Accenture share that "organizations that invest in sustainability and digital transformation are 2.5x more likely to be among tomorrow’s strongest-performing businesses. Decisions made over the next 12 to 18 months could determine the difference between thriving and struggling to survive in the next five years."
Also revealed in the report is that agile organizations benefit from 'a nearly threefold earning advantage'. Further, agile organizations achieve 'long-term EBITDA [earnings before interest, tax, depreciation, and amortization] growth of 16%, compared to just 6% for non-agile organizations'.
How can a business effectively evolve their operations, services, and marketing strategies in order to be agile and thrive in our increasingly digitized world?
According to McKinsey & Company, agile businesses are stable and dynamic. To reach these operational heights, a business must establish dynamic core elements — structures, governance, and processes — to adapt to new challenges and opportunities quickly.
At the heart of this are five ‘key trademarks' around strategy, structure, process, people, and technology. That translates to 'a network of teams within a people-centered culture that operates in rapid learning and fast decision cycles which are enabled by technology and a common purpose that co-creates value for all stakeholders.'
Put simply, to be agile you need a shared purpose and vision with buy-in across your team(s), a structure with strong leadership supported by a network of empowered people, each with a clear and accountable role.
A robust operational process means that you can make quick decisions and, underpinned by next-generation technology, you'll maintain a competitive edge.
Technology for agility
Technology is revolutionizing how businesses operate and help organizations become more agile. A small business might lack the people power or skills to implement comprehensive operational strategies. New business tools often provide scalable solutions – and additional resources that can bring businesses up to speed in a competitive market.
These are often enterprise-level tools but, bought on a subscription basis, have less of an initial investment cost for small businesses.
Cloud technology, or cloud computing, is one area driving change. It enables businesses to store and access data and programs online rather than on a computer's hard drive, bringing greater flexibility to everyday workflows. Teams can access data anywhere and collaborate by opening new channels for communication. What cloud-based software offers is access to a suite of technologies that enhance operations, promote flexibility, and offer a more agile way of working.
Similarly, business apps create new operational opportunities. With apps covering the broad remit of business functions – from accounting and inventory management to marketing and content management – small businesses can improve cash flow, customer billing, and time management to improve process, cash flow, and profitability.
As with any change, there are challenges to agile transformations, but nothing a little change management can't handle.
McKinsey & Co identified five common characteristics during the COVID-19 crisis that can help build agility in the next normal:
Establish a common purpose and clear communications
Set up structures to enable rapid decision making, including the reallocation of resources against new priorities
Create networks of local teams with clear, accountable roles
Develop a culture that empowers people and gives them the opportunity to unleash their entrepreneurial drive
Provide people with the technology they need.
Driving a culture change
The biggest challenges during agile transformations are cultural. For example, a mismatch between agile ways of working and job requirements, a lack of collaboration, and employee resistance.
To manage this culture change, focus on the following:
organizational alignment on new mindsets and behaviors needed to move forward;
leaders role-modelling new attitudes and behaviors and hold each other accountable for making these changes;
support for employees in developing skills needed to succeed in the 'future organization';
formal mechanisms to reinforce change and reward and incentivize people to demonstrate new behaviors.
Be clear on the vision
Agility thrives when a shared vision and purpose is underpinned by actionable, strategic guidance. The vision must be held and believed in by all and should inform how your team approaches different functions – such as sales, marketing, or customer services.
Decide where and how to start
The root of success is a well-informed plan. When making your business more agile, there's no one-size-fits-all approach, but there are specific points to consider:
define the sections of the organization you want to transform and how you’ll do it;
the best approach to achieve agility and implement so that what you do in one area reinforces other areas;
the resources and time frame that the transformation requires.
Why be agile?
The future is unpredictable. An agile business is one that can quickly adapt to changes as they happen, is scalable, and can remain customer-focused during challenging times. By leveraging new tech, driving positive culture changes, and being clear on your vision, you’re sure to succeed in this goal.