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Strategic agility
Agility is emerging as the key competitive edge in an uncertain world. As companies face increased competition, accelerating technological change and shifting market conditions those that can respond to change faster, with greater insight and more precision hold an edge. To achieve this agility organisations need to dispense with the current static business planning and adopt an agile approach.
Why Go Agile?
With emerging technologies, shifting market conditions and increased competition, today's global firms face an unprecedented and unrelenting pace of change - and as organisations, markets and consumers become more interconnected the speed with which new ideas, technologies, fashions or business models fly around the world is accelerating.
In 1914 it would take days to deliver a news story and the financial markets would measure reaction in days if not weeks; in the 1980s this accelerated to days, hours and minutes and today competitive advantage in responding to news and trades is measured in seconds.
This trend is not constrained to financial markets - today this pressure to reduce the cycle time of making decisions can be found in sectors as diverse as aerospace, energy, pharmaceutical, media and consumer goods. EMI, the fabled but struggling music group, was acquired by a private equity firm in late 2007. An advisor to the firm remarked, "EMI is very clumsy, it's not very agile, it's just not fast enough on its feet" (FT, 15 January 2008).
The mega-trends such as globalisation and technological innovation are relentless and pervasive. They cannot be ignored. As a result, strategies require almost constant reinvention - either because the old assumptions are no longer valid (as was the case for EMI), or because the previous strategy has been imitated and neutralised by competitors, or because the shifting marketplace has thrown up unanticipated opportunities.
Strategy Is Inherently Uncertain
Strategic decision-making is complicated and inherently uncertain. Plans are made and then the world changes - business is not alone, think sports such as American Football, Americas Cup, Formula 1 or football.
So the question is how do you establish sustainable advantage, create growth and out-manoeuvre under these conditions of increased uncertainty about the future? Operating in an age of uncertainty there is less focus on creating the perfect plan, and focus instead on mastering conditions thrown at you.
A 2006 global survey by McKinsey & Company of over 1,500 executives found that 89% ranked agility as extremely or very important to their company's performance, and 91% believed that the importance of agility had increased in the preceding five years.
The Agile Organisation
Being able to take advantage of that moment of change, the infliction point or slight pause - successful sports teams or military campaigners or marketers for that matter seem to be able to sense and react to this better than their opponents.
This 'snap' moment is when a team, as one, moves from Plan A to Plan B, gracefully and seamlessly - and often before the opposition has realised - and when they do it's too late.
So how do the rest of us achieve this?
It helps to picture strategy as an iterative loop rather than a linear process. Why a loop? It's activity that is ongoing, modern organisations undertake strategy and execution at the same time; learning by execution and adapting their strategy as they go. Call it 'discovery-led' strategy; this capability is now key across many activities including new product development, entering a new market, marketing campaigns, R&D and even finance.
Agile organisations are comfortable with rapid iterations and have shorter decision cycles than their rivals; think how a great sportsperson seems to have just that little bit extra time to assess their situation, choose their option and make their play.
Agile organisations use iterative loops to deal gracefully with imperfect information, each cycle incorporates new information and can translate it into action at any time i.e. making the decision at the right time in terms of information quality, sometimes actively not making a decision is the best thing to do.
Agile Beats Brawn
Agile Decision Management gives senior decision-makers a platform that enables them to map out their strategic options, determine the optimal path forward based upon what is known today and then recalibrate this strategy as real-world events unfold. This helps an organisation make strategic decisions faster, with greater insight and more precision across their entire business portfolio, and just like sport teams, those organisations that can react to change in this way hold a competitive advantage.
Agile Decision Management is not really a startling new insight, it's common sense and much closer to humanistic decision-making than the bloated corporate planning processes of yesteryear; all that the impressive mathematics adding decimal places of accuracy to what was (and still is) a guess.
The game has changed.