As a term in business, “agile” is typically used to refer to a method of project management, especially for software development. But Protiviti’s Jim DeLoach explores another, more strategic connotation of agility that merits close attention in disruptive markets.
A 2023 survey of 3,000 CEOs and senior executives reports that most CEOs (98%) are of the view that they need to change their business model within the next three years. Three in four CEOs indicate that their companies face significant disruption. Interestingly, seven in 10 are concerned that their executive teams lack the agility to manage and keep pace with this disruption.
Another global survey corroborates the concern over lack of agility. It reports that CEOs and their executive teams face the challenge of transforming their businesses while also preparing their organizations to adapt and adjust to the realities of rapidly shifting markets. According to the survey, directors and C-suite leaders share concerns about near- and long-term issues that frame a tough environment for strategists and executives tasked to bring a digital mindset to sustaining strategic relevance and continuously improving customer-facing and back-office processes.
They rate highly risks relating to economic headwinds, acquiring and retaining top talent, reskilling and upskilling the workforce, and the organization’s agility in meeting performance expectations related to quality, time to market, cost and innovation as well as competitors that are either “born digital” or investing heavily to leverage technology for competitive advantage.
Leaders cannot allow the global risk landscape to inhibit the formulation and implementation of innovative, differentiating digital strategies. They need only reflect on the reimagining of business since the turn of this century to gauge the implications of rapid change over the next decade. Greater bandwidth and reduced latency are augmenting speed and scale at lower costs, enabling increased customer connectivity and transformation of how companies and whole industries operate.
The buzz about generative AI adds a whole new dimension to this conversation. That is why companies should do everything they can to remain closely connected to the customer experience, invest in growth and position themselves to innovate and compete in the evolving global economy over the longer term. If an economic recession develops, leaders need to keep an eye on the future at the same time they preserve their organization’s financial health over the near term.
So the message is clear: As markets evolve, so should companies. Given that, what should leaders do to enable their organizations to function at the speed of the market? The following eight points offer a holistic approach.
Focus on improving the customer experience continuously. In inculcating agility into an organization’s culture, this mindset is ground zero. Companies are competing on customer experience both now and in the future. In the marketplace, customer loyalty is fleeting, as it exists until something comes along that is faster, better or comparable at a lower cost. That is why driving value for the customer is at the heart of all decision-making, creating new sources of value for existing customers while opening up new markets to grow the customer base. This never-ending, innovative pursuit is all about reimagining and improving business models and processes continuously. Anything short of that is tantamount to playing to lose, breeding sluggishness, operational blindspots and strategic error as markets progress.
Draw from data-driven customer insights. Leaders should view their organizations as living organisms. The faster the organization learns, the quicker it evolves. Improvement initiatives are fueled by attention to speed in gathering and learning from continuous feedback loops. The data needed to uncover and connect deep customer insights vital to informed business decisions should be collected and operational improvements implemented at the speed needed to compete and retain market relevance. Insightful customer data is the currency that retains this relevance.
Speed up the decision-making process. Remember the “change or die” urgency requiring rapid decisions at the onset of the Covid-19 pandemic? That same philosophy is needed in an environment in which customers’ preferences are constantly changing, leading them to always gravitate to something that is better, faster and cheaper. To break down the silos that slow execution, the end-to-end customer experience should be at the heart of the decision-making process.
Leaders should encourage processes leading to high-velocity, high-quality decisions that support the dexterity in execution so essential to a customer-centric organization. For example, companies should function like a startup by keeping things simple, avoiding overplanning, resisting delays until “all of the data is in,” taking prudent but necessary risks and listening to feedback. Decision-making should not be a one-size-fits-all process. Some decisions require a formal process, but many can be reached in a relatively unstructured manner.
Connect technology to customer value. Viewing technology in terms of the customer process risks tilting the customer interaction to one that is too transactional. It is better to view technology in terms of the customer experience, which means making the interaction more personal. Customer-facing teams should focus on harmonizing automation and personalization to meet customers’ expectations of a personalized experience. Often, this requires an integration of competencies across the organization that can be challenging to orchestrate. The collective sales, service and marketing perspectives and customer behavioral insights should be combined to break through internal barriers and drive improvements to the customer experience.
Weave innovation into the fabric of the operating model. In today’s marketplace, efforts to differentiate the business or customer strategy are harder to sustain and may result in advantages of shorter duration than in the past. Ways of working that infuse innovation into the business — with the intention of continuously differentiating in the market — are required to sustain competitive advantage. Accordingly, leaders should couple technology and operational expertise with insightful customer knowledge and an innovative culture that encourages experimentation to design new products, business models and growth strategies facilitated by automation and a resilient, adaptive culture. An innovative mindset should be applied across all areas of the business to foster value-added outcomes in growing and scaling the business.
Employ agility as a business mindset — not just a methodology. Uncertainty is here to stay. Yet with uncertainty also comes opportunity. Organizations need to create flexibility and infuse agility into operating principles and processes to navigate continued waves of change imposed by the market. They can do this through adjusting their priorities and focus to take advantage of new potential value streams, rapidly solve for jobs to be done and facilitate pivots in response to changing customer needs, shifts in supply and demand and advances in enabling technology. Employing agile as a broader business mindset will prove decisive in defining the leaders emerging from periods of downturn or business disruption.
Set the tone for lean behaviors with a supportive organizational structure. With the board’s support, the CEO should encourage an open, flexible and agile organizational structure with a flat hierarchy that drives efficiencies, speeds up innovation cycles and facilitates collaboration, communication and rapid decision-making and execution. Executive sponsors should empower focused, dedicated teams armed with purpose and clear objectives to tackle well-defined tasks, as assisted by appropriate ecosystem partners. Sponsors close to the executive team should set expectations and keep efforts on the fast track.
Select the talent that will lead to success and embrace learning at market speed. Directors and executive leaders should understand technology and digital business models and take an active role in digital leadership. They should encourage the investments needed in recruiting, onboarding, developing and training employees and retaining critical talent. Companies should regularly assess their digital capabilities as a core competency. Diverse talent enables and is enabled by a learning organization culture that embraces open-mindedness, critical thinking, fresh ideas and contrarian points of view fueled by data. Feedback loops from interactions with customers, suppliers and other outside parties broaden employee participation, invigorate the creative innovative process and help root out unconscious bias.
In summary, directors and CEOs face three givens. First, speed matters. Speed is dictated by the market and is influenced by external and internal factors. Markets evolve, and so must companies — at speed. The tailwind effect from embracing relevant change at market speed breeds confidence in the C-suite and boardroom.
Second, customer loyalty is fleeting unless it is earned with superior products and services. Thus, business in the digital age is like a Formula 1 race: If the car isn’t fast enough, its driver has no chance of winning, much less competing. To manage at speed in business, the company must at least be as fast to adapt as — with emphasis on being faster than — agile followers in the industry.
Finally, as trite as it may sound, talent wins. The war for talent is over. Talent won because there simply isn’t enough of it walking the streets.
The business reality of the digital age is that time and speed in business have evolved beyond the tactical to emphasize a more strategic and holistic view that challenges conventional thinking, transforms customer experiences and disrupts long-established value chains. Armed with a deep understanding of emerging and maturing technologies and the ability to apply them in imaginative ways to drive disruptive innovation, directors and management must continuously rethink the organization’s business model and its role in the value chain.
Questions for executive management and the board of directors
Following are some suggested questions that senior executives and their boards may consider, based on the risks inherent in the organization’s operations:
- Are the CEO and board aligned in setting the tone for speed through actions and words that emphasize the importance of staying close to the customer, keeping an eye on relevant market trends, organizing for speed and embracing change? Do the C-suite and board agendas allocate sufficient time to discussing the company’s innovation strategy and culture? Is this dialogue supported with appropriate innovation-related metrics that summarize the results the strategy is delivering, actual versus expected return on investment, and the effectiveness of the company’s innovation culture and capabilities?
- Are senior leaders and the board satisfied that their organization is capable of challenging conventional thinking and disrupting long-standing ways of working that are obstacles to improving the customer experience? Is the company recognizing market opportunities and emerging risks at speed and addressing them with timely adjustments to its strategy, infrastructure and front-line processes?
- Does the organization have a deep understanding of digital business concepts, building digital ecosystems and the potential of digital hyperscaling platforms that facilitate growth? Is the company driving innovation in its industry and investing in data, advanced data analytics and technology to enable continuous improvement?
- Do management and the board have access to regular reports of intelligence regarding changes in competitors, customers, suppliers, new technologies, regulatory requirements and other relevant external forces? Is the velocity of the organization’s decision-making in responding to market trends sufficient to drive improvements to customer-facing processes at market speed?