Ebook | What Executives Need to Know About Business Agility
Disruptors? Inevitable.
Whether it is a new entrant to the market or the latest artificial intelligence technology, there is one competency that will allow organizations to thrive during the most volatile times: business agility.
It’s no surprise that business agility has penetrated into the C-suite. Today’s executives are under increasing pressure to keep competitors on the back foot and to continually attract and capture new customers.
If executives really want to understand and enable business agility, they need to find a shared understanding of the concept – specifically for their business – and to prepare the organization for the journey ahead.
In this book, we review the fundamentals of business agility, provide some clarity on what leaders need to know about it, and offer options for what your first (or next) steps toward it might be.
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Business Agility for Execs Ebook
Chapter 1: What is Business Agility?
According to the Business Agility Institute1, business agility is a set of capabilities, behaviors, and ways of working that afford your business the freedom, flexibility, and resilience to achieve its purpose. If that doesn’t match up with what you’ve heard thrown around in meetings, don’t worry. You’re certainly not alone. Part of that muddled rhetoric mentioned in the introduction to this publication has led to many people believing that business agility is a set of tools and frameworks you can bolt onto existing ways of working – an easy way to turbocharge market disruption and customer growth.
While business agility might not be an out-of-the-box solution, it’s not inaccessible. It’s also an approach to ways of working and governance that is significantly more powerful than any set of tools could be.
Let’s start with the true span of business agility, which covers five key domains:
- People-first leadership
- Responsive customer centricity
- Engaged culture
- Value-based delivery
- Flexible operations
Combined, these five domains determine your organization’s change competency – the most critical factor when it comes to surviving and thriving in today’s volatile, uncertain, complex, and ambiguous (VUCA) marketplace. Change competency comprises decision speed and effectiveness, execution speed and effectiveness, and your organization’s resiliency to absorb and rebound past failure.
To clarify: The speed of decisions is as important as the speed of execution, and the speed in rebounding from failure is as important as the speed of change that may fail.
In fact, failure itself gets redefined and can be built as a competency as a key component of learning. Pulling this off requires competency across the entire organization, not just a small part of it. Even better? It is achievable.
Why Pursue Business Agility?
Just because almost every global organization is currently talking about business agility doesn’t mean that your path will look like theirs—nor are you doing it for the same reasons! In addition to general market disruption and competition, the most significant drivers influencing leaders toward business agility are:
- Increasing pace and disruption by the competition.
- Decreasing employee engagement and culture scores. A shortage of “next up” leaders ready to take the reins.
- Organizational silos, dropped communication, and finger-pointing.
- Widening gap between IT and the business language, process, and culture.
Do you see yourself or your organization reflected in any of these? Then you’re in good company. That said, if your reasons for pursuing agility are different, that’s no cause for alarm. Running your organization with flexibility, adaptability, and a better understanding of how and why change is important is its own reward.
A Competency, Not a Goal
Today, every industry is facing increasing global competition, a reduction in market entry barriers, a quickening of new and improved products and services to market, and increased technology-embedded solutions. All of this combines to shape an increasingly VUCA business landscape.
To adapt to this new environment, executives need to undergo a paradigm shift.
Executives often pursue business agility as a goal or destination. Instead, executives should view business agility as a competency that helps their organization identify challenges, pivot if necessary, and execute business strategy.
This isn’t always easy for key stakeholders to understand, especially if they come from a culture that’s not familiar with business agility. To address this, set expectations with stakeholders by framing business agility as a concept on par with culture, fitness, and health. It’s a change of lifestyle, values, habits, and disciplines that requires nurturing over time, versus a time-boxed change program.
Framing business agility in this manner can help everyone understand that it is not an end-state or a result to be achieved. Business agility is a new way of running a business.
Changing the way individuals, teams, and organizations work and think, especially at that scale, might sound intimidating, especially if you’re part of a large organization. Don’t let it discourage you! While it’s true that smaller organizations may have a slightly quicker path toward agility, companies with 16 to 16,000 employees are just as capable of achieving business agility.
Chapter 2: Benefits of and Barriers to Business Agility
While there are many ways—big and small—in which business agility improves organizations, there are two particular benefits of business agility worth noting: business performance and organizational health. Organizations with high levels of business agility are seeing a reduction in silos, improved practices, and better responsiveness to change.
As a result, they’re getting their products to the market faster—with improved customer satisfaction and growing product/service revenue not far behind. Each of these factors drives business performance.
The benefits of business agility look inward as well. Employees in organizations with more business agility rated their organizations more positively, showed more appreciation for the direction of their organization, and were more likely to recommend their organizations to others. These factors drive organizational health and resiliency.
So, what creates this positivity? A number of factors—chief of which are more flexible working arrangements, more cross-training and feedback, improved communication and collaboration, and better focus and reprioritization of work. Considering this, it should not shock you that organizations with more business agility have higher employee retention.
If you’re losing customers or employees, you might want to examine your agility.
Barriers to Business Agility
If achieving business agility were simple, everyone would have already done it. That said, the most worthwhile value lies further into challenging journeys.
If you’re losing customers or employees, you might want to examine your agility.
Some of the obstacles you may face on the road to business agility include:
- Mindset Inhibitors – Humans are naturally averse to change. Regardless of how many benefits business agility can bring, leaders will still encounter people who are more comfortable with the status quo. To shift mindsets on business agility, executives must balance new change against current stability (everything that isn’t changing) and empathize with the challenges change introduces. An effective shift toward business agility ultimately requires competency in change management.
- Cultural Inhibitors – Organizations are living systems that have developed over years or even decades. They are shaped as much by their successes as their failures. It’s no wonder that, when recommendations for improvement are made, people often reply, “This is just how we do things around here.” Executives who understand culture, who are willing to expose strengths and challenges, and who are capable of fostering cultural change will be more successful with business agility.
- Capability Inhibitors – Leaders are typically well-educated and experienced in their discipline, function, or domain. They are also more experienced in driving business performance. Is that enough for success? Absolutely not. For all the strengths shared by leaders, they also can be undereducated and inexperienced in change management and in understanding the human factors, culture, and levers that shape organizational health. Developing leadership and management capabilities in these areas is critical for improving business agility.
- Structural Inhibitors – While organizational design can take on many forms, all organizations function thanks to some fundamental structures: divisional and functional groups, roles and responsibilities, leadership tiers, governance policies and guidelines, and more. Larger organizations have to contend with even more complex structures that are often spread across geographical regions, time zones, or even cultural and language divides. If you want to succeed with business agility, you must recognize both the structural strengths and challenges present.
Chapter 3: How to Improve Business Agility
If you’re relatively new to business agility, it might sound as if there are more barriers than benefits. Never fear! For every roadblock, there are many potential solutions. In fact, forget the term “solutions.” The following recommendations should be thought of as fundamentally good practices to foster business agility and improve your organization and leadership overall.
Don’t Delegate Business Agility
The organizations leading the business agility curve have transformations led from the boardroom. What does this mean in practical terms?
Executives must not simply delegate business agility to an HR or transformation team. Instead, they need to wade into the change themselves and engage their senior leadership teams and board of directors in the journey. Leadership engagement and ownership is critical to effective business agility. If you’ve been delegating this role, it’s time to glove up and step into the ring.
Align Customers Over Departments
The organizations that are implementing business agility most effectively are those that have aligned their products and services along customer lines, as opposed to functional, departmental, or other internal divisions. Breaking up organizational silos and instead integrating across functions is critical, both to serving customers and responding quickly to change. Larger organizations may consider multiple value streams along these lines,
but how you do it is less important than the mindset shift accompanying it.
Involve Every Department
Don’t apply the principles of business agility piecemeal. Organizations that include multiple business units or functions in their business agility journey score significantly higher2 than those that limit their transformation to one business unit, which is usually somewhere in the technology sector.
In fact, most organizations see a far greater business agility impact when they cross the IT-business divide. Why is that? Business agility’s IT roots stem from the ever-evolving complexity of challenges these teams encounter. As a result, IT teams developed agile ways of working that emphasize adaptability, iterative problem-solving, and close alignment with business goals. This approach has proven so successful that it ultimately ushered in the broader concept of business agility. So don’t limit agile to IT when you could cast a wider, more effective net.
Get Finance Involved Early
Of all of the operational units within your organization, the finance department is the most likely to impede your quest for business agility. This is mainly due to the number of policies and governance that run through finance in the spirit of risk management.
Risk itself is changing in this new world, where building the wrong thing has overtaken building it wrong as the greater risk. Long gone are the days of annual budgets developed months ahead of the new year. In a VUCA environment, incremental funding models that are evaluated, reinvested, or shut down are necessary. If finance is operating in an agile way, it can enable other teams to follow suit.
Educate and Inform Leaders
Ask senior executives to self-assess how agile their organizations are, and they’ll give you five-star ratings. Ask the employees closest to the customer, and they likely have a different perspective. This disconnect between the C-suite and customer-facing individual contributors can lead to poor decisions and delayed progress when it comes to true business agility.
How to solve this? Get executives and senior leaders involved and educated on a deeper level. If they understand business agility, they will help enable higher levels of that same agility throughout the organization.
Chapter 4: Navigating Toward Business Agility
When faced with the complexities of business agility, it can be exciting to reach into a tried-and- tested toolbox and leverage existing frameworks, processes, and tools. The problem is that each of those comes with its own values, biases, strengths, and challenges. Like jamming a stray puzzle piece into a spot where it doesn’t belong, integrating those tools or frameworks into an organizational context will expose gaps and cause friction. Successful organizations evolve a bespoke approach to business agility – one that suits wherever they are in their journey.
Manage Expectations
Business agility is not an overnight process. In fact, most organizations that begin implementing agile ways of thinking and working report a minimum of two years before they achieve a distinct, stepwise improvement. Two years! But then, they see additional growth in years three through eight. That takes patience!
You can see why executives who set expectations of quick improvements are going to be disappointed. Instead of priming teams for an immediate explosion of agility, spread a message of marginal gains with yearly reinvestments. It’s similar to investing in the market. Trying to double your money in six months? Good luck. But if you invest in business agility with reasonable expectations of steady gains and you reinvest the dividends, you will ultimately reap the rewards.
Business agility requires ongoing focus, attention, and effort. It’s not a set of tools and frameworks to implement. Instead, it is an organization-wide way of thinking, working, and problem-solving that places the customer at the center of strategy and implementation. Don’t be intimidated or overwhelmed. Instead, approach business agility with knowledge, optimism, preparedness, and a long-term outlook. You will build all the capabilities, behaviors, and ways of working required to help your organization succeed.
Takeaways
The journey toward business agility represents a transformative shift in how executives lead their organizations and navigate the complexities of today’s rapidly evolving market landscape.
Remember, business agility is not simply a buzzword or a set of tools. It is a comprehensive competency that encompasses people-first leadership, customer-centric responsiveness, an engaged culture, value-based delivery, and flexible operations—each of which are crucial for surviving and thriving in a VUCA environment.
It requires a paradigm shift from executives, a move from pursuing agility as a destination to embracing it as a continuous journey of growth and adaptation. This serves not only as a call to action for those in executive or C-suite seats, but as an inspiration. Yes, the path to business agility can be challenging and requires patience, persistence, and a willingness to embrace change at every level of the organization. However, the rewards are worth the effort.
Embracing business agility will prepare your organization not just to respond to market changes, but to lead and shape those changes. Embark on this journey with confidence, knowing that the pursuit of business agility is not only a strategic imperative but a transformative opportunity to redefine success for your organization and its people.
