“Agile” in business typically has been associated with software development within a company’s IT or technology team, in reference to the methodologies deployed to iterate, project manage, and ultimately deliver value to customers at pace.
However, agility is about applying the principles more broadly across the enterprise for better business outcomes. With disruptive forces at their fiercest today – and technology now a critical component of every organisational area – what can companies glean from the term’s digital origins and apply to their strategies more broadly?
Agility’s 'historical home' in IT functions for the past couple of decades made sense because most of the advances in technology were confined to the lower tiers of technology stacks – infrastructure and middleware, for example – something that the Tech/IT functions could manage in the “engine room” without exposing change complexity to the wider business.
More recently though, the commoditisation of business-facing technology (e.g., SaaS platforms for Data Analytics), a greater focus on customer centricity, and rapidly changing market conditions have all heightened the importance and relevance of agility to the broader enterprise.
It is now abundantly clear that adapting to changing market conditions is a critical business attribute – in many cases just to survive the current macroeconomic downturn after weathering the worst of the pandemic.
Preservation and realisation of value has never been more important, as input costs rise and customer propensity to spend contracts. In the absence of a business-wide plan to embed agility, organisations will continue to suffer from squandered value as a result of disjointed multi-million-dollar investments.
To take a holistic hold of ‘agility’, businesses must focus sharply on their enterprise capabilities and carefully profile technology’s required involvement to enhance them. There are three typical scenarios that will be revealed:
- TYPE 1: Business-owned and tech-independent: Capabilities that are typically business-owned with no material technology enablers, such as how to execute a continuous forecasting process using existing platforms. Though there is some value to be derived from ensuring the tech platform is right-sized and remains in sync with business requirements, it would not be the focus of business value creation.
- TYPE 2: Business-owned and tech-dependent: Capabilities that are typically business-owned with significant technology enablers, such as how to execute dynamic pricing based on customer analytics.
- TYPE 3: Tech-owned and direct business impact: Capabilities that are typically Technology function-owned with direct business function interest/implication. For example, continuous deployment of changes, embracing cloud hosting, or automation of testing. These capabilities remain within the ‘gift’ of technology functions to organise, streamline, and create efficiencies.
Whilst Type 1 and Type 3 capabilities enable “agility”, Type 2 capabilities tend to create the most value for businesses, yet also involve the greatest complexity in building and scaling enterprise-wide agility. As a result, this tends to generate more tension between business and technology teams.
A common example is in deriving ‘Value from Data’. While business/functional teams are keen to establish solutions that enable them to exploit data to help drive business value, they are typically reliant on technology teams to establish the underlying technology infrastructure. These would include, for example, the data foundations platform that would source, transform, and store data.
The challenges that can arise from this scenario include the possibility of businesses/functions bypassing central technology teams in favour of setting up shadow tech teams, which will create further inefficiencies and increase costs for the company as a whole. Alternatively, where the existing technology teams are engaged, the businesses might find progress slow and frustrating, as typically such exercises tend to become more tech-led and disconnected from the business over time. In either case, overall enterprise agility is compromised and difficult to sustain over time.
The impact of inadequate agility and the resulting erosion in value cannot be underestimated during these challenging times for businesses. In our experience working with portfolio companies, we have seen a number of targeted actions that successfully avoid these scenarios and shift the focus to realising the myriad opportunities that technology can enable and, ultimately, enhance agility:
- Establish clear business sponsorship for the technology initiative. This should ensure that investment availability and business engagement remain throughout the initiative journey at the levels required for success.
- Clearly articulate the problem and prioritise opportunities. In clear and simple business terms, present the problem that needs solving and avoid (or clarify) terms that may lead to unnecessary confusion. Drive ruthless prioritisation of opportunities and be flexible in altering prioritisation based on the evolving business context.
- Have a clear definition of target capabilities and their agility-enhancing attributes. This must be defined in terms of clear business outcomes, associated KPIs (operational and financial), and expected levels of business and technology change.
- Gain momentum quickly. Deliver quick wins in the areas where there is the highest level of outcome clarity, along with the lowest complexity in implementation.
- Act beyond technology. Establish sustained enterprise agility by focusing on underpinning the operating model across business and technology functions.
- Build a learning culture. Drive changes to current ways of working and embed agility as a mindset.