Business Agility: Who is responsible for the results of a business, understands the business issues, clears the way for teams to work, and coordinates them around the same purpose?
The C.E.O., as well as the entire C-level, right? Those responsible for ensuring a solution’s governance, compliance, and return on investments.
If that goal has remained the same for him over the decades, the way, the C.E.O. realizes his goal has changed.
First, because society has changed, and second, traditional organizations have realized that they need to transform to remain competitive. And secondly because, to transform, they need to change the infrastructure and management models they used until then.
Ultimately, these changes transformed the leaders themselves, demanding new ways of acting from them. In this context, concepts such as business agility conquer territory and thrive.
What Is Business Agility: A New Business Model
Business agility is the ability to learn quickly, remain flexible in responding, and proactively drive market innovations to outperform and stay competitive in highly uncertain markets.
For traditional organizations, this means restoring their original entrepreneurial capacity, which leads them to make improvements or innovations continually. Without giving up what works in the traditional management model, things are lost with growth.
For organizations just being born, it means a proactive and pioneering attitude in business, which prevents them from walking, with hyper-growth, towards the traditional paths of negotiation and business management.
As the name implies, business agility is a concept built on agile practices, that is, agile methods. Therefore, a ubiquitous question is whether business agility means the simple transfer of agile tools to the domain of top management.
Four Business Agility Principles
When we understand that agility takes place within the scope of the business to involve the entire organization, we also understand that all leaders need to be imbued with this same practice.
So, we talk about agility, not just of a team, especially the I.T. team. Agility reaches the business when it is practiced in some way in all sectors, by all people, and in all processes, from H.R. to operations.
In this section, we want to list how this concept unfolds in some basic principles of organizations with business agility.
The Customer Is At The Center
An agile organization has customers at the center. Put into a question, it would be something like what value proposition for the customer gives us a competitive advantage over the competition?
Note that the primary customer is not the internal one. That is, the first question is not how to increase the profit margin for shareholders, although it also exists – and legitimately. Profit is a result of the organization’s value for customers, employees, and society.
It also reduces results to numbers, not absolute increments in performance and competitiveness.
Furthermore, when the question is financial, and the customer is internal, the strategy unfolds into projects that, instead of leveraging, can create problems, such as high operating costs and resistance to change.
This justifies a view that it is necessary to reduce budgets as much as possible, transform products into commodities, and that employees are a cost to be replaced by automation to maintain the profit margin.
The Lean And Agile Flow Of Value
To say that business agility is putting the value created for customers above the profit margin for shareholders is easy. But how is this done?
The answer lies in improving the value stream, the actual place where the organization strengthens its competencies and differentials and proves itself as an innovator.
The lean experience carried out by Toyota is an iconic example of how a value stream could be tailored to the challenges and business opportunities that were on the horizon for the organization. It is a case of how this occurs not only occasionally but continuously.
According to the authors of The Lean Strategy, there is no one Toyota plant in the world like the other, and those who tried, in a literal interpretation of lean principles, to reproduce them in their organization were not successful in their endeavor – on the contrary.
What does that mean? That Toyota didn’t blindly apply the tools of the moment to its value stream. The tool of the Toyota moment – let’s remember this – is Taylorism. What would have happened if Toyota had insisted on Taylorism? Those practices were not the correct answers to their challenges. But how does an entire organization align with business goals?
Ability To Learn And Innovate Again And Again
To create high-value streams, leaders need to look at operations to downsize them, cleaning up everything that does not generate value. But you may have heard of leadership blindness to gaps in their value streams. Or that the best ideas for solving a problem come from the people who experience them, right? So why insist on it?
In business agility, the entire organization is encouraged to remain in a constant state of improvement and innovation, top to bottom and bottom to top, to expand its ability to learn in all directions.
This prerogative does not belong to top management. Leaders seek their most valuable insights outside of themselves, being directed and directing the organization.
From a business agility point of view, an organization is not a machine that is only fixed when it has broken parts but an organism to be understood and improved. You also need to know how to prioritize when you work in this way. So we come to another business agility principle.
Decisions Based On Facts
And how does an organization direct continuous improvement efforts in the business agility view? Being data-driven. Both learning and prioritization of continuous improvement actions are based on data tracking.
The significant change in view is that numbers are no longer just numbers to indicate behaviors to be interpreted. An example: if an organization earns higher than expected profit in a year, the reason for this is understood and analyzed.