Are you struggling to make your company more agile?
In my work with organizations in virtually every industry, I find that business agility – the ability to spot and capitalize on new business opportunities as they emerge – is a capability that many companies aspire to, but few achieve.
What makes agility so elusive?
I’ve observed six primary obstacles to achieving agility.
1. Losing Touch
When a company loses touch with customers and leaders lose touch with employees, it can be like driving with blinders on.
Leaders receive poor, late, or biased information, or no information at all, about things like emerging customer needs, changes in competitor capabilities, or the possibilities that new technologies are creating.
Honest, timely information doesn’t travel up the organization or between organizational silos. As a result, when a new opportunity does arise, leaders often fail to see and act on it.
- Get out into the field, onto the front line and in front of customers regularly to observe and ask questions.
- Ask your most forward-thinking, innovative customers to collaborate with you.
- Shop the competition. Feel what it feels like to fall in love with the competitor’s product.
- Use your own products and services, just as a customer would.
- Don’t shoot the messengers of bad news.
- Communicate frequently, honestly, and widely, especially when things are going wrong. That way, everyone can pitch in to solve the problem.
2. A focus on doing “More of the Same”
Especially when a business is successful, managers experience a near-irresistible urge to continue doing exactly what they are already doing.
Improve incrementally on what you did last year—growing sales by 5%, or reducing cost a bit—and you’ll keep your job and earn your bonus.
After all, the thinking goes, if we don’t change anything, we don’t risk anything.
The trouble is, competitors aren’t thinking this way. They are trying new things every day. If your philosophy is “if it ain’t broke, don’t fix it,” you’ll become obsolete before you know it.
- Don’t be afraid of risk—manage it. Don’t forgo a “hard swing at the ball” just to have a mediocre, but less risky, result.
- Disrupt your own business, before someone else does.
- Ask provocative questions to shake up your team’s thinking about how things are done (Example: How would we do things differently if we didn’t have our current assets, processes and people?)
3. Heads-down Syndrome
Far too often, leaders get so wrapped up in daily challenges and business as usual that they fail to imagine what the future might hold.
Then they get tripped up when the unexpected occurs—a new regulation, a new competitor, a new customer need, or a new technology that changes the industry. By then, it’s too late. Customers are defecting, or margins are plummeting.
- Take time out to imagine what the future might hold.
- Constantly experiment, and design your strategy to maximize learning.
- Encourage dissent and disagreement. You’ll pressure-test your decisions and end up with a better result.
- Monitor trends in the business environment, and talk to experts inside and outside your industry about what they are seeing.
- Anticipate the potential future scenarios that may unfold, and ask yourself – if scenario A occurs, what will we wish we had done? What about scenario B, or C?
4. Unclear decision rights
Have you ever been in an organization in which decisions just don’t seem to get made, or in which “analysis paralysis” seems to be the norm?
When there are many stakeholders, it’s often unclear who can make crucial decisions. <– Click to Tweet
We hope we can reach consensus, but a more likely outcome is that we just don’t decide.
- Don’t waste time trying to reach concensus by gaining agreement from every stakeholder.
- Establish clear rules regarding who can decide what.
- Keep decision rights dynamic and flexible. For example, capital expenditure approval levels may flux up and down, depending on the state of the economy.
5. Incentives that Deter
I once met with an executive of a leading supplier of financial services technologies. The company had identified a major new product opportunity more than five years earlier, yet had made little progress toward pursuing it. The reason? The capabilities needed to move forward were spread across three or four different business units. Each would get credit for only a small portion of the revenue, and as a result, they had little incentive to go after the opportunity.
This is a prime example of how organizational structure and incentives can work against the best interests of the company as a whole.
Especially in today’s fast-changing world, incentives often get in the way of common sense, and prevent us from doing what’s right for the customer.
- Ensure managers are not penalized for events beyond their control (for example, don’t hold a fleet manager responsible for fuel prices).
- Keep incentives flexible. For example, consider adjusting goals mid-year if the business environment changes.
- Set aside funds in the budget for unexpected opportunities (nothing is more demotivating than having to forego an exciting, but short-lived business opportunity, just because there is no money in the budget to pursue it).
- Provide special bonuses for managers who adapt effectively to changing conditions, or who spot and capture a newly emerging business opportunity.
- Don’t employ a one-size fits all incentive system. For example, instead of setting fixed revenue and profit goals for small and growing lines of business, set objectives based on achieving certain learning objectives or milestones.
6. Failing to Inspire
Seeing an opportunity and even making a timely decision to pursue it is not enough. There’s another key ingredient to the process which is often omitted from the mix. You also need to communicate a compelling and inspired vision to truly harness your employees’ full energy, creativity and agility. Failing to do so often creates a lackluster response from your employees, which will likely create a lackluster result.
- Communicate your strategic intent and values every day, so that your vision is crystal clear in every employee’s mind.
- Give employees the tools and leeway to deal with the unexpected, and to respond to events as they transpire.
If you feel your organization is not moving fast enough to capture the new business opportunities that come your way, feel free to reach out to me. I would welcome a conversation about what you can do to enhance speed and agility.
Tell us, what’s another obstacle to achieving agility that has created problems in your organization?
Amanda Setili is author of The Agility Advantage: How to Identify and Act on Opportunities in a Fast-Changing World (learn more or read a sample here.) and managing partner of strategy consulting firm Setili & Associates – visit us to engage on this and other posts.