In 1964, Digital was the first company to successfully launch a mini computer on the market. At its peak in the eighties, Digital was the next-to-largest computer manufacturer in the world, with over 100,000 employees.

In 1977, newcomer Apple introduced the first successful Personal Computer with a monitor and a keyboard: the Apple II. Computer giant IBM followed with its first PC in 1981. And Digital? It kept on developing mini computers, with its own technology, which were becoming less and less popular.

Eventually, Digital was taken over by Compaq in 1998, which later merged into HP.

Source: Strategic agility, by Mark Hulshof, Sjors van Leeuwen and Jesse Meijers 2013

What went wrong

To become a strategically agile organisation, it is important to work on the four building blocks of Strategic Agility. To realize and permanently improve Strategic Agility, your organisation needs to go through a continuous process that consists of four phases:

  • Identifying
  • Analysing
  • Mobilising
  • Operationalising & learning

These phases have been around for a long time. They are not unique, but they are proven. By following the process you will develop the building blocks, resulting in you becoming more strategically agile. Increasing your profitability and resiliency.

Identifying

The first phase is to identify current changes or changes that will occur in the near future. What social, consumer and technology trends and developments do you observe? Which new markets, competitors and customer groups are emerging? Look globally, nationally and locally, but also inside and outside your industry. What forces are shifting and what disruptive technologies are emerging? In this phase you are continuously looking for signals that may call for anticipation or action.

Analyzing

In this phase you analyse and prioritize the identified changes. What is the nature, speed and impact of the change? How can and should your organisation anticipate or respond? What signals did you pick up first and what do they mean for your products, processes, IT systems, employees and strategic priorities? Incorrect estimations of the possible impact trends and developments may have major consequences.

MOBILIZING

During this phase you mobilize people, resources and budgets. For this, you can use the Lean start-up method. This method allows you to prototype organisational changes, product innovations, process adjustments, IT applications or new services. The lean start-up method is ideal to develop, test and improve new ideas in practice. At Cisco, for example, managers spend 30 to 40 percent of their time managing cross-functional project teams, so they can successfully complete multiple innovative projects simultaneously.

Implementation & learning

In the fourth and last phase you optimize and reflect. The focus shifts from a rapid time-to-market to a cost-effective time-to-deliver. This means you need to spend less time on iterative development with fast feedback loops and you are no longer striving for improvement and growth, but you can pay much more attention to the organisation, structure, cost efficiency and financial management.

To become strategically agile on all three levels, there are four essential building blocks.

  • External focus
  • Unifying leadership
  • Flexible people and culture
  • Flexible processes and IT

External focus

Increase your external focus by continuously monitoring your environment and by gathering insights. This enables you to identify trends, developments, opportunities and threats in time. This makes you more ‘strategically alert’.

To become more alert, you can use well-known methods like market research and trend watching. But it is equally important to work closely with customers, suppliers, stakeholders, knowledge institutes, academic institutions, branch organizations, customer organizations and entrepreneurial networks at an international, national and local level.

The larger your external focus, the greater the chance of discovering new market opportunities or threatening developments on time and thus having the opportunity to respond quickly.

Unifying leadership

The top of the organization needs to ensure that internally everyone is ‘singing from the same hymn sheet’.  It is therefore essential that you set priorities that transcend business units and departments. Because being able to move flexibly with the environment sometimes means you need to redistribute processes, systems, people, resources and budgets.

Unifying leadership also means managers and external parties are involved in drawing up strategy. By sharing ideas widely and asking the opinion of others at an early stage, the chance of success increases and tunnel vision is avoided. This approach also contributes to a strong organizational identity and shared values, which are, after all, the ingredients for the organization’s resilience.

Flexible people and culture

Strategic agility means the end of hierarchical, bureaucratic and top-down organizations. Duties, responsibilities and authority need to be placed as low as possible in the organization, in order to be able to make quick decisions, directly when the need arises.

Important factors are close cooperation, freely sharing knowledge and information, and a culture of daring to take risks and being allowed to make mistakes. Employees and teams are mobile and can get to work quickly in other business units and departments, if the company’s strategic priorities change. By using the flexible outer layer, you align the knowledge and capacity of your organization real-time with market demand.

Flexible processes and IT

Rigid company processes and inflexible IT systems are often major obstacles for organizations wanting to implement rapid change and seize market opportunities. Increasing the flexibility of processes and IT should be high on the management agenda.

You can increase the flexibility of processes and IT by applying new concepts and tools, like process and IT frameworks, standardization, modularization, software configuration and software as a service (SAAS). This allows you to rapidly adjust processes and IT systems. Digital technologies are not only deployed for new products and services, but also to restructure management, develop new business models or optimize value chains.

In my previous post I discussed the definition of Strategic Agility and the benefits of being strategically agile. In this post I’ll focus on the different levels of agility.

Three levels

According to Professor Donald Sull of the London Business School (2009), your organization can become more agile on three levels:

  • Strategic level (strategic agility): this relates to recognizing and exploiting market opportunities and game-changing opportunities. Think of companies like Apple, Philips, Google, Fujifilm and DSM that continuously introduce new innovative products and services.
  • Business-portfolio level (portfolio agility): this level relates to a quick and efficient redistribution and transfer of employees, resources and money from underperforming areas to more promising product-market combinations. This, for example, is where companies with lots of competitors operate, like Vodafone, Procter & Gamble, Randstad, Amazon and banks and insurance companies.
  • Operational level (operational agility): this level relates to cleverly seizing opportunities within a particular business area. Operational excellence companies such as Wehkamp, Dell, Ryanair, Zalando and various internet companies, educational institutions and healthcare organizations excel in this.

Many traditional companies rely solely on operational agility or portfolio agility. Strategically agile organizations are agile on all three levels. They identify and exploit market opportunities and are able to introduce new innovative products at the right moment.

Let me be clear here. Focussing on portfolio agility or operational agility is in no way bad. The companies mentioned (Amazon, Zalando, Ryanair) have shown tremendous growth in the past years. However, on the long-run, strategic agility, incorporating both portfolio agility and operational agility, helps companies to grab more and diverse opportunities. Making them more resilient to change.

Become agile on all three levels

How about your company? Are you agile on all three levels or is it a specific level your company focuses on? It’s also possible that you don’t identify with any of these levels due to a lack of agility.

In our next post we’ll focus on the building blocks of Strategic agility and how to improve these.


Key figures

 

  • Top executives believe that their companies should become more agile to stay relevant for customers, attract talented employees and increase profitability. (KPMG,2012)
  • Over 90% of companies and governments are convinced that a cooperative network and open innovation are crucial factors in order to survive in the future. (ACE,2012)
  • 82% of the top executives sees IT as critical success factors to change business models. They also see IT as a key driver to achieve competitive advantage (Economist Intelligence Unit, 2005)
  • 34% of managers say they have a competitive disadvantage because they are not agile enough (PMI,2012)
  • 71% of top executives say that technological development is the most important factor for change in the next three to five years. (IBM, 2012)

Changes are following each other faster than ever and their impact is increasing. Setting a strategy and simply following it doesn’t work anymore. If you want to guarantee the continuity of your business, you need to constantly improve and innovate.

We live in a time where an average company doesn’t exist longer than 15 years. How do you adapt? How do you stay ahead? How do you grab new opportunities and cope with threats?

The answer is Strategic Agility.

Strategic agility consists of two complementing components, agility and resilience. Agility allows you to grab new opportunities. Resilience is the ability to endure large and sudden changes in your business environment. Combined they provide a framework that helps you and your business to be successful.

Companies that are strategically agile grow faster and perform better. They are better at detecting and avoiding threats and grabbing new opportunities.

If I got your attention, great. I’ll post content every other week on the key elements of Strategic Agility and how to implement it. Join me on this journey and become a company that grows 37% faster and has a 39% higher profitability.

Example: SONY’s Walkman

Sony successfully applied the philosophy of business process flexibility with the introduction of the Walkman. It was an extremely radical innovation, the success of which consumers and experts could only guess. Sony then decided to develop a product and product line, so that the product could be altered quickly and then produced immediately. The first year after the introduction of the Walkman, Sony launched almost 300 product varieties this way. The sales results of the first variants of the product and feedback from customers and distribution partners were used to further develop certain models and take others off the market. To achieve that Sony had to invest in a flexible product design and a flexible production process, which were not without financial risk.

Source: Strategic agility, by Mark Hulshof, Sjors van Leeuwen and Jesse Meijers 2013